In this episode of the VALUE: After Hours Podcast, Jake Taylor, Bill Brewster, and Tobias Carlisle chat about:
- Will The Small Value Rally Continue?
- Hanging Out With Tom At The Markel Annual Meeting
- Breathing Can Help Your Investing
- When Does Value Work Best?
- Which Business Has Surprised You Most?
- The Physical Effects Of FOMO
- AT&T’s $43 Billion Deal To Merge WarnerMedia With Discovery
- Chips & Semiconductors In Short Supply
- How To Avoid FOMO
- Mudita – Taking Joy In The Good Fortune Of Others
- If Rates Go Up, The Whole Jig Is Up
- Pabrai And Munger Bought $BABA
- Buffett On Envy
- The Supply-Chain Traffic Jam
- FAANG’s Are Value
- If You’re Holding Cash, You’re Fighting The Tidal Wave
- The Body Keeps the Score
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
Jake: And we’re live. What time is it, Toby, around the world?
Tobias: It does say we’re live here. Redirecting to YouTube. Here we go.
Tobias: The magic is happening. We’re live. Yeah, I think I forgot to send out the message this morning, but it’s 10:30 AM West Coast, 1:30 PM East Coast. How are you, fellas? What’s happening? Welcome back back.
Jake: Feeling refreshed.
Tobias: Welcome back.
Jake: Welcome back.
Jake: I missed you guys.
Bill: How’s camping?
Jake: He said with a derisive tone. It was good. It’s relaxing out there.
Bill: Was I derisive?
Jake: No, I was joking.
Bill: Okay. I still don’t know what that word means.
Bill: It sounds provocative, though.
Jake: Yeah. [giggles]
Tobias: We don’t know what it means, but it sounds provocative.
Bill: It gets the people going.
Tobias: It’s provocative.
Jake: Camping was good. Lots of fresh air and a little bit of nature and overindulging on s’mores, all the good stuff.
Bill: Mm. I like s’mores. That part of camping, I would definitely take.
Tobias: [laughs] I was going to say you’re getting the s’mores [unintelligible [00:01:14]. You have to go and do all that other stuff.
Jake: It’s not the same.
Bill: Yeah, that’s right.
Jake: They don’t taste as good.
Bill: It’s close.
Jake: That s’mores pop tart?
Bill: Yeah, that’s right.
Bill: [crosstalk] Unless they make it for you.
Bill: I’ve had better days, Toby. I’m in the process of a move– [crosstalk]
Tobias: Yeah, mid-move.
Bill: I’ve got a dispute with the landlord.
Bill: I’ve got no cable. I’m at my grandma’s. Shoutout to the curtains behind me.[laughter]
Bill: Anyway, there’s just a lot of shit going on that could be going a little smoother in my life. And I’m going back to Chicago in a week. So, there’s a lot of stuff. Kids are ending school. I’m going to have to be around them again. Got some stress.
Tobias: Your grandma ironed the curtains, but you forgot to iron your face this morning.
Bill: Did I? Wait, yeah, I’m a mess. But you know what? This is an audio production first.
Tobias: That’s right.
Bill: And YouTube is kind of just there.
Tobias: That’s right.
Jake: Your voice is still very sultry. So, it’s all good.
Tobias: Yeah, you took the mic. That’s the most important part.
Bill: Yeah, I thought so. I’m not on the computer, but if I get pixelized and whatnot, fair warning to everybody.
Tobias: We’ll just fill in.
Bill: Yeah. Feels a little bit like April, except the difference is now, we’re at all-time highs, and back then we were not.
Jake: That was February. [giggles]
Bill: Yeah, we were crashing. But this is the whole setup. I thought about going in the closet.
Bill: Because of the proximity to the router.
Tobias: So, what’s your topic today, JT? What are you doing?
Jake: Ah, I went hard on electrical engineering last time, and to a mixed review apparently from The Ten.[laughter]
Jake: Some people liked it, and others not as much, and were happy to point out all the potential errors that I said. So, I appreciate that. I’m going the other direction this time, we’re going pretty soft. I’ve got this term from Buddhism that we’re going to crack into, and see how it can help us, and maybe others. So, we’re keeping it– We’ve got a lot of range on the show.
Tobias: I like that.
Tobias: What about you, B? What are you doing?
Bill: Just real quick by range, you mean that you went one way, everybody corrected you, so now you’re going a different way that we think we’ll get closer to correct, yes?
Jake: No, I just talk about whatever I’m interested in the last 15 hours, and that’s basically how–
Tobias: Since you woke up this morning.
Jake: Since I woke up this morning. That’s what we’re going to talk about.
Bill: I like it. I’m going to talk about Markel, and my experience around a group of humans. It was glorious.
Tobias: Is that the first time you’ve been around humans in the last 12 months or so?
Bill: Uh, no. I live in Florida.
Jake: He’s in Florida.
Bill: Yeah, so we haven’t really believed in COVID for a while, but I would say that it was the first time around a gathering of humans.
Tobias: I had fun dinner on Sunday night with Chris Bloomstran, Moses Kagan, and Alex Rubalcava. It was cool. I’ve had a couple of — it’s like the third time I have caught up with other human beings who are outside my family, so it was fun. I’m no longer laughing maniacally all way through [laughs] because I was so excited to see people. The first two times, I’ve got myself back under control, which means that I’m unlikely to be committed to a cycle anytime soon, but–
Jake: Lot of awkward hugging?
Tobias: It’s hard to know what you do, because I’m a bit of a hugger. I don’t mind a big hug.
Hugging Tom Gayner
Bill: I hugged Tom Gayner. Tom said that I can hug him. Yeah, well, I asked permission. Well, I didn’t really ask.
Jake: Was it from the front or the back?
Tobias: Typhoid Bill.
Bill: That’d be super weird, if came up and hugged him from the back. No, he was cool with it. I told him, I was like, “I’m so happy to be here in public. I could hug you,” and he was like, “You can hug me, man.” So, then we hugged. It was nice.
Tobias: Ah, what a legend.
Bill: Yeah, so, then I bought all– my whole entire portfolio’s Markel. That’s due diligence.
Jake: [laughs] Yeah, that’s the deep, deep dive.
Tobias: Yeah, they get little bit of– you get diversification through them. It’s like Charlie and his three companies, but his three companies are all Berkshire, which is pretty diversified.
Bill: Yeah, Costco and Li Lu’s fund.
Bill: It bothers me when Charlie says that, but he has enough goodwill built up that he can lie a little and I won’t be upset.
Tobias: My topic is going to be–
Bill: Hang on, wait, I want to get back to this dinner. Did you guys drink red wine?
Tobias: We did. [crosstalk] Bloomstran drank red wine.
Bill: Yeah, Bloomstran, he knows wine, doesn’t he?
Tobias: Yeah. He selected a couple that might have been more at the growthy end of the spectrum of value, but they weren’t the deep value that I’m usually used to.
Jake: Wasn’t GARP–
Bill: Yeah, he’s a GARPy wine buyer.
Tobias: You couldn’t twist the lid off these ones, you had to pull them out with a corkscrew. There’s a whole ceremony at the table, looks great.
Bill: Yeah, you swish it around?
Jake: Did you get to do that?
Tobias: You’ve got to do to that.
Tobias: Make it look like you know what you are doing. [chuckles]
Bill: That’s right.
Tobias: So, I’m going to be talking about the small cap run, is it going to continue on. I found some research from these guys called Bridge– not Bridgewater. Bridgeway, very cunning, never heard of them before but they’ve said some stuff that confirms my priors, so I’ll be talking about it.
Jake: Yeah, perfect. Let’s get– [laughs]
Tobias: That’s how I choose it.
Bill: Do you guys remember when we used to be able to make the “gonna, not gonna work your” joke anymore?
Tobias: You’re not allowed to do that anymore.
Jake: Yeah, no, you can’t say that.
Bill: Oh, no. That sucks. That was fun. I feel bad that I offended that dude.
Jake: Simpler times. [laughs]
Bill: Yeah, they were. I guess the notoriety is nice, but some of the freewheeling spirit has had to go.
Bill: Oh, well.
Jake: Don’t let it die, Bill, keep it.
Bill: I think I’m pretty good at offending people. So, let’s keep it rolling.
Tobias: Well, anytime you’re talking on the internet, you’re going to offend somebody. So, you can’t worry about that too much.
Bill: That’s fair.
Tobias: There’s no malice. As an old mate says, “No mercy, no malice.” That’s the way to go.
Bill: Is your old mate Scott Galloway, who pasted your head on his body?
Tobias: Yeah, that’s right. I forgot that.[laughter]
Tobias: He’s got nice bicep vein that we’re all trying to get without doing anything.
Bill: He looked better with a Ben Graham tattoo on him, I’m just saying.
Tobias: He looked better with my head on him too.
Bill: That too. That helped.
Jake: Oh, yeah. Full head of hair.
Tobias: All right, let’s jump into this. Put everybody out of their misery.
Will The Small Value Rally Continue?
Tobias: Everybody knows small cap value has had this terrible run until recently, and it started running. So, the question that I get a lot from everybody is, this has been a very violent runup, is this [unintelligible [00:08:28] discount. Do you think this is going to still keep on going on? Bridgeway has taken a look at it. They’ve used price to book. It’s imperfect, but whatever, that’s what they’ve chosen to do. It’s still an interesting analysis. So, they say that most of the run has been in the size factor, which is an observation that I have made too. It’s more size than value, initially, for the small cap stuff, because it did impact– The run was in the smalls rather than in value. But small value was a beneficiary of that run too. So, they say, “Based on our analysis of relative book to market valuations through the end of March, prices of small value stocks would have to rise another 43% relative to the broader US market to get back to median historical levels.”
Jake: How much should April and May already do that?
Tobias: Well, it hasn’t done much. I think it’s been a little bit flattish through the last–
Jake: Oh, okay.
Tobias: There’s a squirt through beginning of Q4 last year, end of Q3 until really the end of Q1, which is March 31, and then, I think it’s been a little bit flatter recently.
Jake: Ran out of juice. [laughs]
Tobias: Yeah, it seems to have a little bit– I get a little bit nervous when I see all of the big techie stocks falling over the way they have, because I don’t think it’s rare that doesn’t bleed over into the rest of the market. It may not, but I think that it probably will end up doing that, and then I can’t see how the little value stocks survive something like that, but I’m hopeful that they do.
Bill: What has bled in?
Tobias: To the rest of the market?
Bill: Yeah, I mean we’re off the highs.
Tobias: You can still see the highs from here, though. What are we off?
Bill: Yeah, but it’s not as if big tech can’t see the highs. You know what I’m saying? Google is all of– I don’t know, it’s 23, 29, it top ticked at 24, 30.
FAANG’s Are Value
Tobias: See, I think those kinds of companies, the FAANGs are almost value these days. There’s stuff in– [crosstalk]
Bill: Yeah. Well, so what? You’re talking like Fastly and shit?
Tobias: I just mean stuff that’s in ARK. Basically, ARK.
Bill: Ah, fuck that stuff. That stuff doesn’t matter.
Tobias: Well, there’s a lot of money in it. It’s heavily traded. It’s down from– I think it topped out at 156 last time I looked, the close was close to 100.
Jake: Yeah, it’s 35% off now, I think, somewhere around there.
Bill: This feels like fear porn to me.
Tobias: Which part?
Bill: I think worrying about some of these smaller– Look, it’s a lot of money. So Palantir, I guess they used to be an $80 billion dollar company. Now, they look like they’re a $40 billion company. $40 billion used to matter. On the other hand, $40 billion is only what like– not a whole lot anymore relative to the total market. So, yeah, I need to do aggregation, but it seems to me like, Postmarket said this, shoutout to them. This time was different, because all those guys– a lot of those really growthy names sold off 50%, and the market jumped right through it.
Tobias: Well, that’s the 1999-2000 scenario, wasn’t it? When the dotcoms came off a lot, but the rest of the market was okay, but then there’s the tough recession through there too from 2000 to 2002 when the market did eventually come off itself. That’s what I’m alluding to when I say, I don’t see how tech can come off like that, and then not have that bleed over into the rest of the market.
Bill: I guess why? Why does it have to bleed off?
Tobias: Well, I guess that there are people who have holdings in one thing. Sell one thing to buy another thing, that’s how it always works, isn’t it? There are cross holdings that you can’t necessarily see. Why do all of these things sell off at the same time? Why do they all sell off as a group? That’s the thing that never makes any sense to me.
Bill: Yeah, but what I’m thinking is, while they’ve been selling off, other things have been catching a bid. It’s almost like a rotation thing. So, I hate saying that it seems zero sum, especially without data, I’m sure one of our listeners is going to be like, “You are so wrong,” and you know what? I probably I am, I haven’t done shit to research his opinion.
Tobias: That’s how you learn.[laughter]
Bill: So, you want to research for me, thank you. I just don’t know that that’s what’s going to bring us down, and with all the stimulus, I don’t know that I see a recession necessarily coming. So, that’s the thing that’s tough–
Tobias: I don’t know, either. I just think that it’s a risk. I didn’t know what’s going to happen, either. It’s been a long time since we’ve had a proper– We had a flash crash in March 2020 last year, but we haven’t had a grinding bear market since 2007, 2009. So, I just don’t know– not that I really know what I’m going to do in that period either. So, [crosstalk]
Jake: We don’t have those anymore. We are done with those, Toby.
Tobias: We sold the business cycle somehow. That’s great. I didn’t know it was that easy.
Bill: Well, you just push risk elsewhere. What if it actually is solved for a while?
Tobias: Would you invest on that basis, though? Would you assume that– Would you have run it red line and leave it up?
Bill: No, I wouldn’t lever it. But I also would not hold 30% cash banking on a drawdown.
Tobias: Ooh, it’s fighting words. It’s exactly what [crosstalk].
Bill: I’m not trying to fight.
Jake: Coming right at me. [laughs]
If You’re Holding Cash, You’re Fighting The Tidal Wave
Bill: No, that’s not I’m trying to do. I just think if you’re holding cash, you’re fighting like a really, really big tidal wave of policy and incentives, and that’s really tough. I know a lot of people that have done it a long time.
Tobias: It’s always the case.
Bill: But there were people that were 35% cash in 2014 saying, “Oh, it’s not cheap enough,” and they have been getting destroyed.
Tobias: Value investors.
Tobias: Value guys. [chuckles]
Bill: Yeah, but at what point are you just wrong? Eight years, what’s the average person’s career, like 50 years? You’re going to take eight and a half, 35% cash against this bull market? I don’t know that you survive that. Now, maybe if you’re running your PA, but you’re getting relatively less wealthy that whole time too.
Tobias: Yeah, but then when the market comes off–
Tobias: Well, it will eventually.
Bill: It did in March.
Tobias: Yeah, that was a flash crash rather than a– that wasn’t a grinding bear market. That wasn’t the real thing.
Bill: I know, but dude, that was a pandemic that the economy stopped in and the market sold off and you’re saying to me, that’s not enough. So, I guess what I’m saying back to you is, I agree that that wasn’t like– in my world, if you put that much leverage in the system and stop the economy, that’s the perfect recipe to have a crash, and if that wasn’t the outcome, then to me, betting on the outcome coming seems really, really hard for me to get my head around, even if that’s all predicated on N=1, and there was a ton of policy, and there’s going to be a lot of unintended consequences.
Tobias: But I don’t think you even need to know how it’s going to happen or what’s going to happen. You just have to know that it’s within the range of possibilities that it could happen, and you should be positioned appropriately in the event that it does.
Bill: Yeah, I don’t disagree. I guess we probably would just be talking about the probability of the event plus the expected downside, and whether or not you can time that.
Tobias: But then, you’d look at your opportunity set and look at why you want to be long, and like the opportunity set, market’s expensive. There aren’t a lot of options around that you don’t want to be– 60/40 sucks. Everything sucks. There’s nothing really where you can stick your money, maybe, goldminers look cheap–
Tobias: It’s entirely possible. That’s, every single time the markets look like it’s going to fall over, we’ve had a melt-up. So, I’m not saying that’s not also in the range of possibilities. That is in the range of possibilities.
Bill: We might be long on the melt-up thesis, which pains me to say as the key melt up– I don’t know, we’ll see.
Jake: He’s saying longer inning than previously. Is that what you’re saying [crosstalk]
Bill: Yeah, it’s frustrating to not be in inning two anymore. But with all the policy response, and even though I do think that a lot of the inflation is probably going to be transitory, it’s hard to argue that if rates go up, the market– it would be tough for the market to melt up or rates go up, that would be a difficult thing for me to fathom.
If Rates Go Up, The Whole Jig Is Up
Jake: If rates go up, the whole jig is up on all of this stuff.
Tobias: Rates can’t go up, basically.
Bill: I don’t know.
Jake: Dude, I know can’t have a 3% earnings yield on the S&P and 5% Treasury.
Tobias: But you’re not going to get a 5% Treasury, because once you get over 2%–
Jake: You get to back to 10? [laughs]
Tobias: Yeah, once you get over 2, it goes to 50. I think the 2 is kind of– Basically, they’ve got to blow up the dollar. They just can’t let it go above 2, which means probably you want to be in crypto, gold and stuff like that?
Bill: I don’t think so at all. If rates go up, and it creates some bust, I don’t see how crypto and gold work. That’s a deflationary bust. You want cash.
Tobias: Well, I might carry 30% cash then.
Bill: Yeah, maybe, I guess. As long as you weren’t doing it since 2014, which– I think it’s just tough. I think positioning around beta exposure is very, very, very difficult.
Tobias: Well, part of the difficulty we have too is that with interest rates pinned so low, basically, in any other scenario through the data, you can run back, at the point that the yield on the S&P 500 deploy the 10 year on a Treasury, you’re probably better served being in the Treasury.
Also, because, when the bust comes, the Treasury runs up. That’s why 60/40 has worked so well, or any tactical move, any equity risk premium, anything like that has worked pretty well as an investor. But now, you’re in a scenario where it looks like inflation expectations are exceeding the 10 year, and then S&P 500 is nosebleed expensive. So, I don’t know where you put your money on. I like value. Value stuff looks relatively cheap, but not absolutely cheap.
Bill: But here’s the thing about value stuff that– again, I don’t have the data, so sue me if I’m wrong. Just as a generalization, you’re talking in value about companies that are probably on average, a little bit more capital intensive and slower growth?
Tobias: If we’re talking value–
Jake: Academic value.
Tobias: Yeah, exactly. If we’re talking that, I would agree with that. If you’re talking like– there’s a lot of stuff I think that’s high quality value, not necessarily.
Bill: Yeah, because when I hear value, I think of slower growing more capital-intensive businesses, and to me, rates going up would probably be indicative of some inflation, and if inflation came, I would be really worried about value stocks. I would be worried about the discount rate in growth stocks, but the actual underlying cash flows in value stocks more, if that makes sense.
Tobias: The problem with the asset-intensive stuff when it gets really inflationary– although I heard somebody say something other than this recently, but remember, Buffett’s old letter, where he talked about the problem is that the cash flows look really great, but then when you get–
Bill: You got to replace [crosstalk] Yeah, you’re fucked.
Tobias: Yeah, the capex is real, which is not caught very well by the financial statements.
Bill: Yeah. No doubt. That’s not what I’m saying. That’s why I’m saying that I think inflation is a risk to the actual underlying cash flow. The free cash flow to common equity in those, I think, is sort of at risk, whereas the discount rate is more the risk in some of the growthier names that are capital light.
Tobias: I think we’re seeing a little bit of that now. You say inflation strategy. I don’t know. I just don’t if there is a reason.
Bill: I don’t know either.
Tobias: I don’t really want to bet that it is though.
Bill: Yeah, but dude, here’s the problem that I have saying that it’s coming. We’re also working through a time when the entire supply chain was not allowed to go to work. So, this is the outcome of shutting the entire world down when consumption doesn’t stop. There’s no fucking inventory anywhere.
Tobias: It’s not just inventory too. It was also the shipping got all jacked up through the Suez and in other places too.
Bill: That’s why I think it’s tough for me– and it’s also on the back of all the tariffs that Trump put on. Now, the other part of the argument that makes a lot of sense is, look at COVID, what’s that going to do to supply chains? Are things going to be on shored, that’s inflationary? So, I don’t know. I really don’t know.
Tobias: It’s way too complicated. All this macro stuff’s way above our pay grade, but it’s fun to think through and talk about.
Bill: For sure.
The Supply-Chain Traffic Jam
Tobias: The other point that I would make, JT pointed it out, you can’t just– well, maybe you can, but I don’t know. Maybe it is hard to get everything jumpstarted again to get all of that stuff coordinated. It seems to me like that the bigger issue is that every single business is just one part in a long chain of events that need to occur in sequence for whatever consumer product to wind up at your door. And if you mess around with that chain too much–
Jake: It’s like a traffic jam.
Jake: This part can’t move to this next part, because it doesn’t have the previous thing behind it.
Tobias: It’s all in series, and so, any break in that series and you’ve got little bit of trouble, and what the world has been doing has been optimizing for efficiency and now, maybe we’re going to go in the other direction. Maybe that too is inflationary, optimize a bit more for robustness.
Bill: Yeah, I don’t know. All I know is I’m driving a purple minivan with a fucked-up paint job because I can’t get myself to buy cars where they are, and I know that there’s no cars coming because they’re all waiting on semiconductors. So, I’m just going to drive this thing until it falls apart or I actually lose my manhood, which is pretty much gone.
Tobias: You can’t get a battery anywhere, because everybody’s had their cars parked in the driveway and haven’t started their cars for a year, and so, everybody starts their cars, cars don’t work. We’ve had to replace two batteries, and there’s just no batteries around and they’re all stuck on shipping containers somewhere.
Bill: Hmm. Get long AutoZone.
Tobias: Yeah. [giggles]
Bill: Price gouging and buybacks. That’s a beautiful combination.
Tobias: Have a look at the chart on–[crosstalk]
Jake: Buffett wet dream.
Tobias: God– [crosstalk]
Bill: Sweet, sweet buybacks.
Tobias: Is that Eddie Lampert? Who’s that makes all that happen?
Bill: I think that was Eddie Lampert.
Bill: Shoutout to you, Eddie. You get a feather in your cap, which is then removed by Sears.
Tobias: Should we do– Who wants to go next?
Jake: Let’s keep it fun, let’s go Markel.
Bill: Okay, well, actually, it’s a decent transition at the Robotti event, which is somewhere on YouTube, you can find it. Maybe we can throw it in the show notes.
Bill: Yeah, I hate doing show notes. Anyway–
Tobias: You can tweet it out from your Twitter account.
Bill: I already did, man. That’s why it’s like– We show note– Sometimes, people are like, “Oh, you should have detailed show notes.” “Well, then you should pay me something to do that, because I’m saving your time,” but I also get it. I don’t know. It’s something that I think about. Anyway, I digress.
Hanging Out With Tom At The Markel Annual Meeting
Bill: A lot of the people that were at the Robotti event, and by a lot, I mean the people that I can recall, so maybe it’s just sampling bias or anchoring, or whatever the biases that I’m displaying. They like commodities, and a lot of the reason is, a capital cycle supply chain. A lot of the commodity companies are so– henpecked is the only word that I can think of it’s not the right usage of it, but they don’t want to expand capacity, because they’ve been through 10 years of shit–[crosstalk]
Tobias: They’ve all got religion– [crosstalk]
Jake: Yeah, [crosstalk].
Bill: Yeah. On top of that, you’ve had some industry structure consolidation–
Tobias: Balance sheets will create lots of cash flow. They look good.
Bill: Yeah. The only problem, man, is I was listening to somebody who’s actually pretty smart on a podcast, and he was like, “Oh, they’re trading at 15 times earnings, and they used to trade it this.” I was like, “Yeah, but like one was peak and one was nothing, and what are we doing here?” Don’t pitch a commodity company in that way. Anyway, that was that. Then at Markel, the thing that I like about that event is you can really talk to the managers. At Berkshire, it’s big enough that it’s hard to find the managers–
Tobias: How big is Markel? How many people showed up to that?
Bill: It’s not that big. Six food trucks could serve us all?
Tobias: So, mostly value guys, mostly value managers who are clued into what Markel is?
Bill: Ah, yeah, I think so. I think that’s true. Some guys that cover insurance and whatnot. But I talked to the guy from Virginia Sprinkler, and I’d say that, he said everything that you would want a portfolio company to say about– So, he said that, basically, they’re run exactly how you’d want to. Very hands off, very decentralized, send the excess cash to the corporate, and run your own business. I thought that was super cool. Tom’s the man, he’s a nice guy, and I was really grateful that he took what I think is actually a risk to say, “You know what? We’re doing our annual meeting in public.” I thought that was a nice– I think that’s leadership. I don’t think that’s the easiest thing in the world to say to people right now.
Tobias: Rather than doing it over Zoom or something like that.
Bill: Yeah, and honestly, fuck Zoom. It’s time to get back out there. There’s enough– Come on. So, anyway, I think it was also– [crosstalk]
Jake: [crosstalk] on Zoom.[laughter]
Bill: Yeah, well, there’s some good parts about it, but I was talking to somebody after and she was like, “Oh, did you feel safe?” It’s like, “Yes, I felt safe. I’m vaccinated. What are you talking about? What are we doing here? Why are people so worried?”
Tobias: You live in Florida.
Bill: Yeah, it’s crazy.
Jake: You’ve already gotten every strain of this thing at this point.
Bill: Yeah. I don’t know. It was really nice to be around people. It was super cool. Bob Robotti had me moderate a panel and meeting him, that was cool for me. It was a nice event. I thought they did a good job all around.
Tobias: Domo arigato. Mr. Roboto.
Jake: Mr. Robotti.
Tobias: Did you hit him with one of those? Everybody must.
Bill: I did not. I don’t even know what you’re saying right now, to be honest.
Jake: Just backwards hugs.[laughter]
Bill: Ah, we didn’t do that.
Bill: No, it’s nice. I guess the other takeaway that I would have is, I got to hang out with some people from Markel, and then we went out to an alehouse, had some adult beverages, and–
Jake: All normal again, huh?
Bill: Yeah, man, but the way that the person that I’m thinking of in particular talked about the company– It was a nice glimpse into culture that I think that, if you’re long, you’d be really happy that you saw it. Now, whether or not people like the business, do your own work, figure that out, but as far as the warm and fuzzy stuff about how the business feels, I think it– I have always thought it checks the boxes. I continue to think it checks the boxes, and perhaps, some of it’s because of when this occurred, but I left feeling quite good about that company.
Tobias: What’s the history of Markel?
Bill: I don’t know the detailed one, but I can tell you that it’s becoming from an insurance company that then invests in public equities, they’re now building out this private company machine where they use the cash flows from the private companies, and from the float to invest in further private companies, Costa Farms, I didn’t get a good sense of how big that was before, until they had that– I’m pretty sure that was the subject of the video. If it’s not, then I have horrible, horrible recollection. That’s a big operation. The amount of plans that they had on conveyor belts and stuff, it’s just good stuff to see.
Tobias: Tom Gayner was hired in by the family, wasn’t he? To turn it into a Berkshire Hathaway type vehicle?
Bill: I don’t know that it went down quite that way, but that’s certainly where it morphed to, yeah. I think that’s what they’re trying to do, yes.
Tobias: Where is the market cap these days? I think it was $11 billion last time I looked at it. That was late last year. That was last year [crosstalk] double.
Bill: I was going to say 15. Let’s see. Ah, 16.8.
Tobias: There we go. All right.
Bill: Ain’t nothing cheap these days, jeez. No, I’m happy for him. That was a rough year. So, glad to see him on the other end of it.
Markel: Richer, Wiser, Happier Book – William Green
Tobias: There’s a good writeup in William Greene’s book on Tom Gayner too. It’s worth taking a look at if you’re interested in Markel and Tom Gayner. You’ve got any Markel questions, JT?
Jake: No, nothing to add.
Tobias: Do you want to do–
Mudita – Taking Joy In The Good Fortune Of Others
Jake: Yeah, absolutely. So, yeah, last week was transformers and this week is, or two weeks ago, I guess, I should say. I came across this term in Buddhism called ‘mudita,’ M-U-D-I-T-A. Definition is sympathetic or vicarious joy. The idea behind it is that much of our world is colored, especially in the finance industry by one greed, envy, jealousy and then its cousin, schadenfreude. Meaning, celebrating when others blow up, and when others are having a hard time. I think you see that a lot. I don’t know what it is, what the pettiness comes from.
But this idea of mudita is the exact opposite of schadenfreude. So, if you see someone doing well, you can be genuinely happy for them. In a time like today where there are people that, to me, it doesn’t always make sense why they are having such good results and they’re doing things to me that seem very risky, and they’re working quite well for them. I’m thinking a lot of crypto, specifically, maybe in the most recent thing, but there’s lots of other things over the last–
Well, there’s always something happening like that, but they seem to be more acute right now. Maybe it’s just because anyone can get on Twitter and spout off about it or something, so there’s a lot of availability bias in the data set, whereas if some guy was making a ton of money in LA real estate in 2006, I didn’t hear from him. He’s not taking victory laps in my brain. So, there’s something a little bit harder about fighting it now, because it’s so in your face.
Buffett On Envy
Jake: I could choose to be annoyed and pissed off and think, “That person doesn’t deserve that. This is bullshit.” But what does that– One, that doesn’t do anything to him. This is the worst thing– Buffett’s joke before that envy is the worst of the sins, because you don’t even get anything good out of it. There’s no fun to be had, and it doesn’t bother the other person. In fact, they may have enjoyed the fact that they’re getting to you. So, it doesn’t help you at all.
The other part of it is that I think that there’s a ton to be said about cultivating from a selfish standpoint actually that equanimity, which if you break down the etymology of that word, it means level mind or even, I think I wrote it– oh, spirit, that was the other word I was looking for.
Tobias: Even spirit?
Tobias: Does equanimity mean even spirit?
Tobias: That’s great.
Jake: Even level mind spirit, like those two, equanimity put together.
Tobias: Spirit? Yes, that’s great. I just for a second, and I was thinking spirit in the sense of spirit level, but my spirit in–Yeah, Okay. Sorry. Ignore me. Keep going.
The Body Keeps the Score
Jake: Yeah. So, there’s some interesting research by this guy, Dr. Bessel van der Kolk. He’s a Harvard clinician. He’s done work on trauma actually for four decades, and he wrote this book called The Body Keeps the Score. There’s obviously when you have acute trauma, war PTSD, or sexual abuse or physical abuse, those are severe traumas and acute.
But he makes the argument that everyone has some trauma, maybe it’s not quite so chronic, but although the numbers are– we don’t talk about them very much, but in America, the numbers actually of those acute traumas are way higher than you’d probably guess. One in single digits for most of those people, like alcoholic parent, sexual abuse, physical abuse. Those are all– or seen your mother abused, all of those are more than– They’re like one in five to one in eight ratio. So, there’s a lot of us who have seen some shit in our lives.
But Dr. Van der Kolk says– and this is where the selfish part comes into it for me is that, you have to deal with this trauma, and get it figured out. He’s spent his whole career trying to figure out how to help these people. He’s tried all kinds of different modalities to help whether it was meditation, MDMA, micro-dosing LSD. You could imagine how it would help people, he’s tried it to cure people. This book that he wrote was his findings after doing this for four decades.
But back to that selfish part, the side effects if you don’t deal with this trauma are difficulty focusing, and memory problems, sensory overload, and inability to filter out what matters and what doesn’t matter. Trouble learning new info, and changing behavior, fear and anxiety around taking risks, maintaining motivation, and sense of purpose. Well, all of those things, if I want to be successful at this job, I have to have those things figured out. I can’t suffer from those side effects.
So, even though, it sounds like, “Oh, yeah, Jake, you just want to be this monk who is at equanimous with the rest of the world,” and, “Oh, it doesn’t bother me when everyone else is making easy money.” It’s not really even about that. It’s more about just having your own mind level to where you don’t suffer from all this stuff that may take your eye off the pitch that you need to hit. I guess, in a sense, this is a bit of a sermon in encouraging others to try to figure out if they have some of these problems. Really, it might be worth it to have the conversation and put in the effort to solve some of the past traumas, whatever modality you figure out that works for you.
But it’s hard to imagine being good at a game that will totally exploit any psychological weakness that you have. It will find it and tease that out and just monkey hammer you with it, if you are suffering from acute or less acute trauma. So, little bit of a PSA in this one today.
Tobias: What’s the book called?
Jake: The Body Keeps the Score.
Tobias: The Body Keeps the Score.
Breathing Can Help With Your Investing
Jake: That was the interesting thing to me about that, was that he’s actually going into the what’s happening at a hormone level, actually nervous system, what it’s doing. Because you’re in this constant sense of a little bit of fear and unknown, and your cortisol levels are always just a little bit elevated, your body’s always on this alert, and it can never reset and get back to a good place where it can then tackle things in the way that you probably need to be able to tackle them. And obviously, he’s measured every single modality that might treat this and to see like, “Oh, did their cortisol levels change?” and a million other variables of the biology of what’s happening.
I was surprised to read about this, but you can do breathing exercises, and there’s a bunch of different ones that will literally change the amount of nitrogen and nitrous or nitrous oxide and all these other chemicals that have been in your brain and in your body, that will literally change how you interpret information. We are just bags of chemicals, and if we can do anything to control them a little bit through our cognitive, executive function actions, we can really give ourselves a huge advantage.
Tobias: So, when you’re doing those breathing exercises, you’re physically blowing off these chemicals, or whatever you’re doing. They tell you not to do this, if you’re going to dive underwater for a long period of time– Some people do this, [rapid exhalation noises] blow out all of their carbon dioxide.
Jake: You are right.
Tobias: And it doesn’t make you better able to swim further. It just takes away the message that goes to your brain that tells you that you need to take a breath.
Jake: Right. So, there are some people who suffer and die from, they call it shallow water blackouts. You don’t get that signal of carbon dioxide buildup, which is the actual signal. It’s never that you’re out of oxygen in your body. The brain doesn’t– it never even wants to go to that level. There’s a margin of safety. Instead, what it senses as carbon dioxide buildup, and I guess if you’re free diving and you do that hyperventilation exercise and lower your CO2 level in such a way, you can actually just basically pass out without much warning, and it’s game over.
Tobias: So, basically, what these breathing exercises are doing is, they actually are having some physiological impact on your body. So, that all of the things that people might have been doing through meditation or through other things like that, that included some breathing exercise, they have actually been doing something physical, and then that’s also helped them in a spiritual or other way.
Jake: Yeah, and it’s wild. Actually, nitrous oxide is this miracle drug in some of the things that it does– William James, who’s the father of psychology, historians who study his work have like– they break it up into his pre-nitrous oxide usage phase, and then post. Winston Churchill, same thing, he apparently went on these vision quests with nitrous oxide. They used to have nitrous oxide parties, where rich people in Britain would just get together and get high on laughing gas, and have these epiphanies. I don’t know, there’s really weird stuff that happens there. It’s literally changing your brain chemistry, when it does that.
Tobias: What does it do for you, besides it makes you laugh maniacally according to the television shows that I’ve watched?
Jake: I’m probably going to totally mess up the explanation of this. I think it deadens certain parts of that are normally connected and that allows– or maybe it’s the other way around and connects things that aren’t normally connected, and lets you get past that sense of self that can block you from looking deeper into situations and ideas, because you just get hung up on your own–
Tobias: The ego is the obstacle.
Jake: Yeah, ego and even just your sense of like, “Oh, this is me in the situation.” I think it takes you outside of it in a way that you can look more objectively as an outside perspective.
Tobias: Your author of the book, did he have any preference for any of those modalities of treatment, or did he say it doesn’t really matter, whichever one works for you?
Jake: I think that would be too close to a prescription for us to be giving.
Jake: So, I’m going to punt on that.
Tobias: It’s him saying it isn’t?
Jake: Yeah, but nah, it’s too close for me. I’m not–
Tobias: All right. That’s the name of the book is The Body Keeps the Score for the people who are asking in the timeline.
The Physical Effects Of FOMO
Tobias: Yeah, that’s super interesting. The connection to FOMO is– Just connect it back to FOMO again for me.
Jake: Toby, why are you trying to– [crosstalk] dick head.
Tobias: [laughs] Sorry, mate. Sorry.
Jake: Okay. If I’m spending all my time worried about how everyone else is doing and it’s stressing me out, it is making physiological changes to me that are going to lead to me suboptimally doing what I know I can do well.
Tobias: It’s one of the keys to investing. It’s one of the things that makes everybody herd into stuff that’s been working. Is that FOMO? Cryptos run up, get into crypto. EVs run up, get into EVs. Options are popping off, get into options. Whatever is working in the moment for whatever reason, it’s the FOMO, we think that we can get there too that makes us run into it, which is almost the entire reason why we underperform.
Tobias: So, it’s useful. Yeah, I like it. Bill, you frozen there?
Jake: [laughs] Just lost in thought? Hey, I do have one other little thing. This is just another little addendum, it’s not even really related. We talk a lot about zero sum and non-zero sum kind of thinking, and we’re all drawn to that more win-win mentality, I think.
Tobias: It’s working.
Bill: Can anybody hear me? It is working?
Bill: Oh, okay. My bad.
Jake: [laughs] So, I saw something recently that I’d never seen anyone do before, but I thought it was worth sharing. A friend of mine who runs a small cap activist fund, and he’s the legit– He takes 20% of a company, gets on the board, does some real things, not just pretends to write letters and all that other stuff. So, if he has an idea that he really likes– He runs a fund and several funds, but he will start a special purpose vehicle, one-stock-specific SPV, and invest in that company with that one only for ones that he’s really into.
Tobias: Is your friend Bill Ackman?
Jake: No. Although, hi, Bill, thanks for listening. He signed an agreement with the CEO of the company that is in the SPV, and he will give him now 30% of the carry that he earns from the SPV to the CEO as a way of sweetening his comp package. I’ve never seen a manager do that before actually, it’s always typically come from the corporate level but this is one abstraction layer away. I was like, “Wow, that’s really smart of–”
Tobias: It’s an interesting idea.
Jake: I asked him, “Why set that up that way?” He said, “Well, the company couldn’t really go any more on his comp package the way that it was structured, and I want skin in the game as much as possible and alignment of incentives. So, I’m sharing the economics with him, if we do well.” I was like, “Wow, that’s really smart. I like that.”
Tobias: Are you allowed to do it? I guess you’re allowed to do it.
Jake: Who would say you can’t get on the same team as your CEO?
Tobias: The SEC. I don’t know.
Jake: I know.
Tobias: But the rules aren’t necessarily intuitive.
Tobias and Jake: Yeah.
Jake: The rules don’t necessarily create the behavior that you would want. [laughs]
How To Avoid FOMO
Tobias: I like the approach to avoiding FOMO, because I think that’s one of the challenges. The way that I’ve got around it is you have to define very clearly the thing that you are, that you want to buy. So, I’ll just limit my opportunity set to the things that I’m going to do. That way, if it’s outside of that opportunity set, it’s just not something that I’m going to do. So, I don’t necessarily get FOMO. I’d love for my stuff to start working, but I’m happy for everybody else’s to work as well. You guys got any great approaches. Say it again? I see you are saying, “I.”[laughter]
Jake: Well, it’s much easier said that than obviously. We’re for such comparative creatures that it’s tough to– [crosstalk]
Tobias: The only thing that would kill me is if my opportunity set popped off and I missed my opportunity set.
Jake: I’d be raffling it. Which goes back to, is the value rotation over, and even if it was, is there any way that you would be able to avoid that?
Tobias: No, no, absolutely not.
Jake: Right. You’re in that boat.
Tobias: That’s why I’m reading it. That’s why I’m confirming my prize.
Jake: I know. [laughs]
Tobias: But I’ll hear arguments the other way.
Tobias: Give us a mic test, Bill. [chuckles]
Bill: No, I have nothing to add.
Tobias: Throw in some questions, amigos. We’ve got about 10 minutes left. Is anybody watching the market through the trading? Is it just you say tech starting to rally again?
AT&T’s $43 Billion Deal To Merge WarnerMedia With Discovery
Bill: Yeah. I did say that. Somebody had asked a question on the Warner and AT&T and Discovery, I haven’t had internet for five days. I don’t know. My two cents, not knowing all the specifics is, I think a more focused AT&T is incrementally negative for all the other people that provide broadband, and a more focused big media company is incrementally negative for Netflix and Disney.
Then, I don’t know what the hell you do if you’re Comcast. I think they missed the boat, and I guess Viacom and Lionsgate are assets that are out there, but I don’t know what those do for people. I think that this is probably one of the last big set of assets that could merge and make a difference. I don’t know how to read Malone giving up control. Some smart people think that that’s a really bullish sign, I’m more sanguine on that.
Chips & Semiconductors In Short Supply
Tobias: Why are chip stocks and semiconductors often in such a huge shortage?
Bill: Because the market knows before there’s a shortage.
Tobias: Yes, it ran up beforehand.
Bill: Yeah. Twitter, all these generalists became semi-analysts. That’s your clear science top.
Jake: Usually the top.
Jake and Bill: Yeah.
Tobias: I wondered, because there’s some smart takes on Twitter. There’s some guys who– [crosstalk] there.
Bill: Yeah, no doubt, but the generalists are not the smart takes. That guy, The Mule, he was the smart take. There’s another guy– So, I just think in general, if you’re looking at the market, and you’re saying, “Why is this soft when the data is hard?” It’s probably because the market’s already ahead of what you’re thinking. It’s probably a good indication, if you’re asking that question on a stock you own, it’s probably a good indication to sell.
Which Business Has Surprised You Most?
Tobias: What business has fundamentally surprised you the most in the last year, changing your mind on it?
Bill: Unless you’re holding to the long term and you don’t care by the way, but then I don’t know why you’re asking the question. Can you repeat the question? I was stuck on my last answer.
Tobias: What business has fundamentally surprised you the most in the last year, changing your mind on it? I think it’s a great question. I’ll probably need a little bit of time to think about it, but changing your mind on it is the hard part.
Jake: Yeah, not going to [crosstalk]
Jake: Mm. Bullish or bearish? Which one to go. [laughs]
Bill: Oh, I think peloton is a much, much better business than people give it credit for. I think that people get hung up on the valuation and miss what’s going on in front of them.
Tobias: What’s going on in front of them?
Bill: It’s an incredible product. Absolutely rabid fans, they’re building out additional things in the app. I think people get hung up on the bike cost, and they’re missing the forest from the trees. It’s a subscription business. Could it all crumble? Yeah, but I think it’s much, much stronger than people just saying like, “Oh, this is just going to go away.” The iPhone was just going to go away too. Nokia was going to kill it. I don’t believe that Peloton just goes away. Now, is it worth $28 billion? I don’t know. Reasonable minds can differ on that question, but this brand is very, very real, and the business model is very real.
Jake: I would say I’d probably answer– the growth rates on the big tech companies, just the sheer volume size of them, have been surprising to me. I just would never would have thought that you could put up that kind of number already from such a large base. So, kudos to them.
Tobias: Yeah, that’s right. Particularly, Amazon 47% on a $100 billion base. Wow.
Bill: Yeah. Imagine going through a pandemic without modern tech.
Tobias: Sounds peaceful [laughs]
Bill: Oh, I think it would have been awful.
Jake: Sounds like equanimity.
Bill: Sounds like economic collapse to me.
Jake: I’m being a little glib, but yeah.
When Does Value Work Best?
Tobias: “Does value do worse in a market crash? Saw an interesting interview with Ross Yarrow that made me question a lot of my value assumptions.” My observation there is that, people who think that value seems to do better through a crash are typically talking about 2000 to 2002, but the scenario, the circumstances were unusual in the sense that it underperformed in the runup to that point, and then it seemed to–
Jake: Starting business quality was–
Tobias: And the business quality was higher. Yeah. There’s some Cliff Asness AQR research that shows that the return on assets was better in the value bucket where typically you get a little discount. You get a slightly worse quality portfolio, but you get a bigger discount, and you rely on the discount for it to work. But my observation is that when you get a proper drawdown, when the market goes down, value goes down alongside it. If anything, value sells off first. Value falls as much as the market does, and then it seems to recover first.
Sometimes, it’s a measurement timing issue with that– You look at the year in which the crash occurred, and it looks like value did better, but it’s because value has just bounced earlier than the rest of the market. So, I don’t know that you can necessarily hide out. The only thing that I would say just ignoring the value, looking at the quality of the business, looking at the quality of the balance sheet does seem to be a better way of working out what’s going to do better through a crash, because if you have a company that maintains its cash flow through the crash, and it’s able to take advantage of the fact that its shares are undervalued, and they have management who’s aware of that and willing to do it, and they buy back a lot of stock, then–
Jake: It’s a 1 in 100 companies that are that–
Tobias: There’s not enough many–
Tobias: That at least you get that bit through– The companies buying back and the companies becoming that much more valuable through that period, you want that kind of industrial a CEO.
Jake: I do think there’s some argument to be made for the how far away are cash flows, and if rates go up at all, the closer the cash flow is to today, the less of the hit that it is when you– as opposed to if the cash flow is projected in the story 20 years from now why they’re going to make so much money, but you raise the rate on a 20 year out, boy, that pile of money gets a hell of a lot smaller. So, if your version of value is cash today versus cash tomorrow, I think there is a little bit of argument to be made that theoretically shouldn’t get beat up as much, if you were to have a reassessment of really how much hyperbolic discounting is there of cash flow.
Tobias: The only thing that I would say to that is that it seems to be– when we get a proper selloff, the correlations go to one, everything just seems to sell together, because there’s these weird cross connections underneath that you can’t see. Someone’s selling their least worst position, because they need to find something else somewhere else. I’m always struck by how weird it is the way that strategies trade together and basically inversely correlated to ARK, and there’s no reason why you shouldn’t have strategies [unintelligible [00:56:12] should be but it just happens to be that way.
Jake: Yeah. Does it feel like that that is a bigger part of things now too? I don’t know if it’s like ETFs, or indexing or balances or something, but feels like there’s something structural where that’s a bigger thing now where everything moves together, this teeter-totter feeling?
Tobias: I don’t know is the answer, because that feels true. I just don’t know. I’ve never seen any data in that regard, and I think that there’s– Michael Green’s got the flows argument where he says that the big market capitalization weighted index, S&P 500, Russell, those styles of companies, because they get the flows, then they weight disproportionately into these companies and so, that’s why they seem to behave in a way that isn’t necessarily tied to fundamentals. It’s tied to when the flows come in, when the flows go out. But then, this thematic ETFs underneath it, I just don’t know if they’re big enough to push the market around although ARK certainly is relative to its investing–
Jake: [crosstalk] pieces.
Pabrai And Munger Bought $BABA
Tobias: Yeah. But it’s active, so they don’t necessarily have to trade in, according to any existing rule. They don’t have to trade in size, they can trade in according to what they think is the most undervalued or the best opportunity, however they’re doing it. Did we talk about Pabrai and Munger buying Alibaba? Have we already done that?
Tobias: Do you guys have any thoughts on that one?
Jake: He did.
Tobias: [laughs] It happened. Can’t confirm.
Tobias and Jake: Moving on.[laughter]
Bill: Yeah. I think it’s not a huge secret that they will speak to Li Lu. So, it’s probably Li Lu’s idea. Li Lu seems reasonably smart. They seem reasonably smart. I think there’s probably worse things to buy. I don’t have a good sense of the quality of the accounting. I suspect Charlie may have outsourced that a little bit. So, I don’t know.
Tobias: [chuckles] I got Mike Mitchell in the comments. He wants to know what this has to do with the lumber market. Good question, Mike. [laughs]
Bill: Not much, Mike. Sorry.
Jake: I was thinking about you when I said that near term cash flow idea, actually.
Bill: And to be fair, I talked about commodity companies at Robotti. So, Mike, you got your piece today.
Tobias: Resident home shopping aficionado and lumbersexual, Mike Mitchell– [laughs] [laughter]
Tobias: Welcome, Mike. I think it’s funny. The thing about Alibaba that I think is funny is that I find the financial statements really hard to read. I find it just– I can’t figure it out what’s going on. There are too many subs and things for me. So, I just pass on it. And there are some good websites out there that people do deep dives, and they don’t necessarily like what they find either. You can find those websites. So, I think it’s funny when Munger buys it and then Li Lu, yeah, two very, very smart guys. Very, very good investors. But then, I just feel like there’s a lot of follow-on from that. It’s popped up in a lot of 13Fs and so they’ve come out with an–
Bill: Let me throw a counter at you. If you’re a website and you throw out this big negative Alibaba writeup, if that’s right, you’re a hero, and if it’s wrong, it doesn’t matter. It’s just some random article you wrote on the internet. So, I tend to put more– if somebody was like, “I’m short in size, and this is why I’ve listened to that person.” If you’re just writing something on that blog, rather listen to people with money on the line.
Tobias: That’s fair. I just think that the shorts tend to do a lot of work– the site that I’m thinking of is dedicated to Alibaba, and they just point out a lot of things. They’re not arguing that– and it’s been around for a long time, that site’s been around for a long time. The name of it escapes me at the moment, but there’s some reasonable–
Bill: Yeah, no, if they’ve got money on the line, then I’d listen.
Burry Shorts $TSLA
Tobias: Man, I don’t know. They may. Speaking of somebody who’s got money on the line, Burry, we didn’t talk about his short on Tesla. We’re just about out of time.
Bill: He’s probably going to get killed on it.
Jake: You think so?
Bill: Yes, it’s a widowmaker. People have been short that thing forever. He might make it. I hope he does.
Tobias: He is in the puts.
Bill: I root for Mike Burry. Mike Burry and I made money together on Qurate. Shoutout to you, Mike.
Tobias: That’s it for this week, folks. Thanks so much. We’ll catch you next time. Oh, hang on. Let me not do it that way.
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