VALUE: After Hours (S04 E01): Value is the Widowmaker Trade, EO Wilson, Tobacco Stocks for Divvies

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In this episode of the VALUE: After Hours Podcast, Jake Taylor, Bill Brewster, and Tobias Carlisle chat about:

  • Warren Buffett Schools ARK’s Cathie Wood
  • Value is the Widowmaker Trade
  • E O Wilson – Of Ants and Men
  • Jeremy Grantham – My Sister’s Pension
  • Find A Way To Stay Invested
  • Why Is Elizabeth Warren Taking On Big Meat?
  • The Big Problem With Trying To Pick The Bottom
  • Tobacco Stocks For Dividends
  • Acquiring vs Organic Dominance
  • Crashes Are Made Up By Bears
  • US vs Europe Growth & Value
  • Ray Dalio Predicts A 30% Chance Of US Civil War In The Next Decade
  • NIFTY 50 Performance
  • The Iron Bowl
  • Bullish Marketing Of ETFs
  • Xpel Paint Protection Film

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:

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Full Transcript

Bill: Yeah. I’m not going sober-sober. Sober-sober is crazy.

Tobias: We are streaming.

Jake: [laughs] That’s for lunatics.

Tobias: This meeting has been live streamed.

Jake: Yeah, I’m not. No, I don’t want that. I legit think that pot helps me as a husband and a father. So, I don’t understand the point dropping that for me. But booze, I understand the point of dropping.

Tobias: This is Value: After Hours.

Bill: Welcome to Value: After Hours.

Jake: [laughs] And we are live.

Bill: I am one of the hosts, Bill Brewster, with my esteemed colleagues, Tobias Carlisle and Jake Taylor.

Jake: I missed you, guys.

Bill: Thank you to the 10. It’s been a while. We’re sorry that we took a break.

Tobias: It was good, completely disconnected. Didn’t check Twitter once.

Bill: Bro, I spent some of my break listening to Ray Dalio and I’m pretty convinced the US is fucked.

Jake: Oh, Man. Already?

Bill: Yeah.

Jake: We are getting into that. [laughs]

Bill: Yeah, I’m there. I’m all in on short the US.

Jake: Well, let’s save that for a topic but I want to– [laughs] Let’s unpack that one.

Bill: Happy New Year.

Jake: Yeah. Toby, other than the imminent demise of the Great Republic, what do you have for today?

Tobias: I’m just blanking on it. I sent you guys my little link yesterday and–

Bill: Value’s day in the sun, the Widowmaker Trades.

Jake: The widowmaker.

Tobias: Oh, yeah. Cheap stocks to finally have their day in 2022. I think that article has been written every year since 2016. Yeah.

Jake: [laughs]

Tobias: That was one where they describe it as the widowmaker trades. That’s the only thing I want to talk about.

Jake: Oh, my God.

Tobias: What do you got, JT?

Jake: I have a piece prepared that’s a little tribute to E. O. Wilson, who passed away over our break, and he’s just a really cool guy, and I want to highlight some of the stuff that he shared with the world.

Tobias: That sounds good.

Bill: You want me to go first?

Jake: Yeah, let’s– [crosstalk]

Tobias: Much hell [crosstalk] Yeah, let’s jump into why we’re doomed and see [crosstalk]

Jake: Yeah. Let’s get to that first.

Ray Dalio Predicts A 30% Chance Of US Civil War In The Next Decade

Bill: I like it. I like it. So, first of all, he was on with William Green on We Study Billionaires. Good signing for Preston Pysh and Stig Brodersen, by the way. I’m selfishly– [crosstalk]

Jake: Yeah, that was interesting.

Bill: Selfishly happy because it adds the podcast back to my listening repertoire at least for a while.

Jake: Whoa, what about the Mastermind Updates with–?


Tobias: [unintelligible 00:02:35] now?

Jake: Yeah.

Bill: I popped in occasionally.

Jake: Oh, okay. [laughs]

Bill: But the other thing is, he was on with Lex Friedman and it was quite good. I don’t know. He had that answer on China. I can’t recall what it is but the perception of the answer was not exactly great.

Tobias: I, for one, welcome out. New overlords, that’s what he said.

Bill: Oh, I don’t know. But like I–

Jake: [crosstalk] involved hot dogs. There was no hot dog in there.


Bill: I guess what I’d say is I do think that these two interviews are probably worth listening to. He’s going over the same thing a lot and I wonder why he’s doing it. Also, I don’t know how he handicaps things but he’s put like– I’m bound to mess this up. Sorry, to our Bridgewater fan. Holler at me sometime, by the way. I think he’s got the probability of a Civil War in the US approaching a third and the probability of armed conflict with China approaching third– [crosstalk]

Tobias: Third? A third–

Bill: That’s what I’m saying. You play the simulation three times and we go to war once, that seems a bit high.

Tobias: Robert Mackay says Dalio is kind of deterministic.

Bill: I don’t think so.

Tobias: [crosstalk] kind of deterministic.

Bill: I think he is very probabilistic.

Tobias: See, I think he’s deterministic. That’s good. Let’s talk about that in a little bit. We’ll come back to that.

Bill: Okay.

Tobias: I don’t want to interrupt you. I don’t want to derail you. Keep going.

Bill: I mean I don’t know how to summarize it.

Jake: What’s the other third? We just muddle through? [crosstalk]

Bill: Yeah, well, I just– Look, man, I just think that fundamentally, if you look at our politics, they’re super, super polarized. We’re spending a ton of time fighting amongst ourselves. I think that it’s hard to argue that the society is as hungry as some of the emerging countries. We’re definitely spending more than we’re making. That doesn’t feel great to me. So, I would say check out what he says and listen to him more than my summary of him.

Jake: Stock prices, bro. [laughs] I was kidding.

Bill: But that’s part of– that’s like dollar debasement, maybe not relative to other currencies. But this is what Preston was talking about a while ago when he said like, versus M2 or whatever you’re only up 6% in a decade or whatever. I don’t know. Not impossible for me to buy into the theory.

Jake: So, the war part was the main takeaway, the biggest thesis part?

Bill: I think, really, where we rank on education of the middle of our country, like primary education, we still have a monopoly on great universities and that’s a good thing. But I think the fighting amongst ourselves, they’re not producing nearly as much as we’re buying and undereducation of most people. I viscerally agree with those, I haven’t put data to it, and it’s just not very uplifting.

Tobias: Gents, we got £25. Shoutout from Colm Moore. Thanks, brother.

Bill: Shoutout to you, man. Thanks for sending that.

Tobias: I didn’t see your name [crosstalk] the icon, I knew who it was.

Bill: That is what is up.

Jake: That’s a lot.

Tobias: Here’s my problem. The Berkshire AGM Guinness fund. Good, excellent.

Bill: Nice.

Tobias: Yes, we’ll make sure we get you one of those there.

Bill: I may just bring you an edible. I may not go back to booze.

Jake: [laughs]

Bill: Fair warning.

Tobias: I’m going to be there this year. JT is going to be there. You coming, Bill? Are you doing Berkshire’s– [crosstalk]

Bill: Oh, yeah.

Tobias: All right, good. We’re on.

Bill: Miss Berkshire? Hell no.

Tobias: Is it going to be on? Omicron is not going to derail us?

Jake: Ah, I sure hope so. Daily Journal is remote. I saw–

Tobias: That’s a bummer.

Jake: I know.

Tobias: How far away is Daily Journal?

Jake: February.

Tobias: Okay.

Jake: Mid-February.

Tobias: Three months.

Jake: Yeah.

Bill: Ooh.

Tobias: Maybe, somebody will be looking a little bit better.

Jake: Yeah.

Tobias: Let’s get back to Dalio. I think that Dalio markets himself as being probabilistic and he has all of this radical honesty, the transparency, and all that stuff. And then, I read his stuff and I always think, “This is so deterministic,” like including that article, why the economy is a beautiful machine? It’s just the wrong analogy. And then, you think about what macro is, often it doesn’t have to be this way. But to get the convexity in the trades, you need to get a number of things that occur in sequence. That’s the way that the macro guys often think about this stuff. So, Dalio is a macro guy and he thinks about these machines that all this stuff occurs in sequence, and you get this up at the end. I just fundamentally disagree that’s how anything works. It’s way too unpredictable. To say that there’s a 1/3rd chance of a Civil War in the States is bonkers.

Bill: Yeah. One, I may have miscited that, but I don’t think I did. I think he actually said that. And two, I do think there’s some marketing speak when you’re assigning probabilities. I would be interested to see the card on his chest or whatever that he wears around Bridgewater, that talks about his strengths and weaknesses. I would not be shocked [crosstalk] this is in public, sometimes, you are a little bit hyperbolic on your probabilities.

Tobias: I mean I get it. As a marketing tool, it’s pretty good. Here we are talking about it. I don’t know if I want my portfolio manager talking like that though.

Tobias: Well, it matters what he does, not when he says. I’m not trying to say he’s doing stuff and saying different things. I don’t want that to come across. I know I just said it but I’m not trying to say it. Yeah, I don’t know how much that’s a true assignment of probabilities and how much of that is, “I’m speaking to the common person via podcast in order to wake them up. I’m going to say this probability.”

Tobias: I still think it means you dismissed by a lot of other people who are just like, “That’s just ridiculous,” 1/3rd. Even saying 1 in 10 would be extreme like that. The US has had a Civil War. It was a long time ago under an entirely different system. If you go back and read any ancient history, Civil Wars happen all the time in every little town all the time. but they don’t happen at peak prosperity. I realized that’s not evenly distributed, but I think people have got a lot of money at the moment. Maybe, drain away some of that money.

Jake: Did he put a timeline on that? Because that’s another that drastically changes your probability.

Tobias: This year, 2022.

Bill: No, I thought he said in the next decade.

Jake: Okay.

Tobias: I think that does change the calculation a little bit but I still don’t think so. It’s something that’s way too high.

Jake: I tend to agree with you.

Bill: I also don’t know what the definition of a Civil War is. You start to get into what’s the definition of is–

Jake: Calling each other names on Twitter.

Tobias: [laughs]

Bill: Yeah. I don’t know.

Tobias: I’ve been fighting that war for a long time. [crosstalk]

Bill: I think that broadly speaking, the message that he’s saying is maybe worth listening to and thinking about a little bit.

Tobias: Josh Stonko says, “It’s not a 1/3rd chance. It’s a 40% chance.”

Bill: Hmm. Well, that’s high. I don’t know. I haven’t done the analysis myself.

Jake: That’s even more ridiculous as a–

Bill: It seems like that– [crosstalk]

Jake: I think [crosstalk] come up with that level of specificity. [laughs]

Bill: Seems like it deviates from the base rate.

Tobias: There are a lot of other things that are much more impactful to society that are much more likely to occur than a Civil War. Like just a big stock market crash, it’s got to be a reasonable possibility at some point, just because of the overvaluation and all the other. Now, that we’ve seen– I still think that the fact that the tech wreck is occurring under the covers, and I don’t know how it is not impacting the indexes. But evidently, the FAANG or whatever makes up the top of the index, they’re still pretty big, good companies growing pretty quickly, the bulk of the index. So, that means in precious– [crosstalk]

Jake: 25%-ish at this point.

Tobias: 25% [crosstalk]

Jake: Not 5%.

Tobias: It’s crazy how big they are compared to everything else. It’s just hard to wrap your head around unless you don’t– Apple’s a $3 trillion company. There are plenty of companies in there that drop down pretty rapidly once you get outside those top five.

Jake: Yeah. Wow, Twitter’s off 5%, today? What’s Pinterest down?

Tobias: Beefy Capital says, “The base rate in US is 0.46% of the time.”

Bill: 10%?

Tobias: Is that for a Civil War, Beefy?

Jake: 24% of the time?

Tobias: 0.46% of the time.

Jake: oh.

Bill: Wow. Guys, tech is getting wrecked today. Did you guys know this?

Tobias: Yeah. So, ARK was down quite a bit. That’s one topic we need to talk about a little bit, too.

Bill: That is wild.

Tobias: It had a little rally yesterday. Tesla was up more than 10% yesterday. 10% on a trillion-dollar company.

Bill: Well, it used to matter.

Jake: [laughs]

Tobias: That’s $100 billion. That’s an airline market cap.

Jake: That might be the whole airline industry market cap. [crosstalk]

Tobias: The other thing was that Toyota has now surpassed GM in terms of– I think it was the number of cars sold in the States as the biggest automaker. And Ford had the best performance stock price of all the automakers last year.

Bill: Yeah, shoutout to Bluth Capital on that. He was early on that.

Xpel Paint Protection Film

Bill: I was doing some work on Expel and I misframed– They make the wrap, they call Clearbra for the cars, and I miss framed what I really think about it. Because I said like, “Why isn’t it massively cyclical?” That’s not really what I think. I guess, what I really think is deep into a run where the wealthy have gotten wealthier wrapping their cars for $10,000 seems like maybe they would do it.

Tobias: Is it $10,000 to wrap your car?

Jake: Well, I hear. Now, the Expel people are going to be like, “That’s not what it is.” I think it’s like six to eight to wrap a full car. I think you can get like a little strip for a couple of hundred on your bumper. I don’t know why anyone would do that. I think it’s like two grand to do the front of your car. But I don’t know, man. You’ve got to, A, really value your car or B, drive a really expensive car before the percentages seem to make sense to me. [crosstalk]

Jake: There’s a Roller on the pier that’s wrapped in this black, purple three-dimensional color. It looks amazing. There’s are orange rims. I don’t know who drives it. I’ve never seen him. I’ve just seen a car.

Bill: A what?

Tobias: It’s a roller. It’s like a Rolls Royce.

Bill: oh, nice.

Tobias: A wrapped Rolls Royce. It’s black but when the sun hits it, it’s like a purple kind of three-dimensional color to it with these orange [crosstalk]

Bill: They’ve got some dope shit, man.

Tobias: They do. It’s a very, very cool-looking car. I just bought some Expel. I think it looks cheapish.

Bill: I know that’s not true.

Tobias: That is true. I bought some Expel.

Bill: You bought Expel?

Tobias: Yeah.

Bill: Good for you. There you have it. I didn’t think it would scream cheap.

Tobias: Yeah.

Jake: I’ve never even heard of it.

Tobias: Expel?

Jake: No.

Bill: Oh, it’s a massive– [crosstalk]

Tobias: Really? Are you messing around with us?

Tobias: All the micro-cap guys have been all over that for about five years.

Bill: Yeah.

Tobias: It’s got a bit from its peak, though. It’s worth having, though.

Bill: It’s pretty cool how you can turn your car matte with a wrap too.

Tobias: Yeah.

Bill: I like that. It’s cheaper than painting.

Tobias: Can you peel that off at the end and hand back in a brand-new car?

Bill: Well, yeah, I think you can. Now, I don’t know– If you watch the videos on the internet, it’s pretty impressive what you can do to that stuff before you actually damage the car. Now, I don’t think some guy will jab a key into their car.

Jake: And use a sledgehammer at the window?

Tobias: [laughs]

Jake: Well, [crosstalk] the underline. It won’t strengthen your metal.

Tobias: Right.

Bill: But you can key it and it protects your paint. It’s pretty impressive.

Tobias: Yeah, I’m sure that those cars get key to what.

Bill: Well, if you’re going to key a car, a Bentley is what you would key or one of these matte paint jobs. So, I get it. I think I just don’t know how to underwrite the growth.

Warren Buffett Schools ARK’s Cathie Wood

Tobias: Let’s talk about Ark-Berkshire. Because Ark topped out at 156 bucks in February last year, and it closed out the year like in the 90s, I think. And then, I saw today after that, it’s off another 5% today. So, it’s like 91 last time I looked at something like that. That’s a very, very big drawdown. It’s like 35%. Someone want to do the calculation for me? And then, you contrast that with Berkshire on the other hand, which is up 35% year.

The differential in those two moves as representative of value versus growth, that’s an extraordinarily big move. It makes up for a lot– I don’t know what the difference is. It is like 70%, something like that over the course of a year. But that washes away a lot of sins. You’ve got to outperform by a lot for many, many years to catch up to 70% and then, you can do it in one year. So, I think that’s what [crosstalk] what’s happened in the market.

Jake: I’m sure the five year looks pretty good still for Cathie.

Tobias: It does.

Jake: But if you were trying to imagine that there was a regime change, then it might look a little like that.

NIFTY 50 Performance

Tobias: I saw a good tweet. I just follow the guy but I’m just blanking on the name a little bit. He said, “Ark could have owned all NIFTY 50 in the 70s.”

Bill: They would have outperformed over the long term. They had to make it.

Tobias: Did they?

Tobias: The NIFTY 50 did end up outperforming, yes.

Tobias: Is that right?

Bill: Yes, it’s correct.

Tobias: Well, [crosstalk]

Bill: You also had to live through a 90% drawdown, stay committed to the strategy, and end up having the timeframe. But yes, if you just look at stats, they worked.

Jake: How long did they take to get you back to breakeven?

Tobias: Yeah. When was it measured from?

Jake: I think it was like 40 years.

Tobias: Well, that’s value [crosstalk]

US vs Europe Growth & Value

Bill: To be fair, if you look at the paper that Albert Bridge put out, that’s how long value has underperformed– or 30 years.

Tobias: Okay. Yeah. I said that just before you did.

Bill: Yeah. So, it all depends where you’re looking from.

Jake: Shoutout to Drew, by the way.

Bill: I liked that paper.

Tobias: He had a good chat storm.

Bill: Did he?

Tobias: Yeah. JT just shared that. He makes a point that the fundamentals of growth have outperformed value in the US. He compares the US growth and value to European growth and value, and he makes the point that the fundamentals of growth have marginally outperformed value over the– I forget the time period. Jake, was it like 10 years? I think it’s the last 10.

Jake: I guess something like that.

Tobias: And then, he split the multiple expansion. It has been massively bigger for growth in the US versus value. And then, he looked at the European market because the fundamentals for growth haven’t been as strong in Europe. They haven’t performed as well as the US growth but there’s a much bigger premium for growth in Europe than there is in the US. So, the most expensive stuff in the world is European growth and the cheapest stuff in the world is European value.

Jake: Interesting. So, it’s kind of a ’99, even more so for the US than Europe right now?

Tobias: Right. Value Stock Geek says, “Jeremy Siegel did a study. I guess, it’s the NIFTY 50 performed but you had to hold it for 25 years.”

Bill: Yeah. I think he did that in like ’98 or so. So, you go peak to peak and whatnot. But it did end up outperforming.

Tobias: Let me do my topic.

Jake: Yeah.

Value is the Widowmaker Trade

Tobias: There’s nothing particularly stunning about this article. They’ve gone and interviewed a whole lot of fund managers and said, “What do you think’s going to work next year?” And everybody’s picked 23% value, 13% green, 11% small caps, 10% growth, 9.4% EM, US tech 6.6%, other 25.5%.

Jake: What’s in that other?

Tobias: I don’t know. [laughs] Is it equities?

Jake: Oh.

Tobias: I guess it was equities.

Jake: Yeah.

Tobias: Andrew Ang, Head of Factor Investing at BlackRock’s says, “You want to hold value in the long term because we’ll get back to normalcy.” That’s basically my view too. But the real reason that I wanted to share this is there’s this Widowmaker chart. This is high technology. I’m just going to hold it up.

Jake: Oh, Jesus.

Tobias: Does that work?

Bill: Yes.

Jake: No.

Bill: Now, we see it.

Jake: [laughs]

Tobias: You get the idea, basically, growth massively outperformed. But the really funny part is the name of that chart, they call The Widowmaker. Global value shares fell to a record low versus growth peers in November. [crosstalk] widowmaker trade down?

Jake: Move over short JGBs. We’ve got a new widowmaker in town. [laughs]

Tobias: I thought nat gas was the widowmaker.

Jake: [laughs] Oh. Do you want to be part of the widowmaker? Is that like a good contra or is that– [crosstalk]

Tobias: Mm. [crosstalk] You make your wife a widow.

Jake: Oh, okay.

Bill: Not to mention– I don’t know. I’m looking through this Albert Bridge thing. I don’t know. It has just been a shitty 30 years for value.

Tobias: Yep. Had a brief moment in between, like 2000 to 2007, but it’s been pretty gnarly. It’s been a one-way street.

Bill: Yeah.

Tobias: What’s 30 years? Run us back to the early 1990s, I guess. 1992 or something?

Bill: Yeah, that’s how the math works.

Jake: Math checks out there.

Tobias: [laughs]

Bill: That is how the math works.

Tobias: Well, when you go over the 1999, 2000, it’s harder to do the math. I’m trying to do math with my kids, it’s–

Jake: Yeah.

Jake: Got to learn these things.

Jake: Can’t be done once you– [laughs]

Bill: Talk about reasons to stay in the market. Since 1980, the market has been up for the year 83% of the time.

Jake: That’s wild, isn’t it?

Tobias: Since ’80? That’s from Drew’s–

Bill: Yeah. Since 2003, it’s even more impressive. Only two down years with an average return of 11.8% for the Dow and 12.8% for the S&P.

Tobias: He’s got a good [crosstalk]

Jake: Ken Fisher always says– Ken Fisher’s like, “If you’re going to get out of the market, you have to bet on down big and the probability that you’re right is like so low that it just doesn’t make any sense.” Because even down small, it doesn’t really matter.

The Big Problem With Trying To Pick The Bottom

Tobias: Even down big, here’s the problem with getting it right down big is that you have to get back in.

Bill: Yeah.

Tobias: It’s bloody impossible. If you go and look at any like, you don’t know, whether it’s a 2009 scenario or March 2020 scenario.

Jake: Second leg down.

Tobias: Or 1929. You just have no idea what the scenario is because the overvaluation on the upside is irrational and it’s entirely possible, you see undervaluation on the other side, that’s completely irrational too. I always attribute it to David Einhorn, but I don’t know who it is. But it’s like, what do you call a stock that’s down 80% that proceeds to go down 90%. That’s for the person who invests down 80%, they lose half of their net worth riding it down from 80% to 90%. So, the reverse compounding is so brutal that it’s just so hard to time it each way. You’re better off just expecting a 50% haircut once a decade and just gritting your teeth.

Bill: Yeah. Well, for US growth, the Russell value from 2009 to 2021 returned 292%, Russell growth 632, S&P value 298%, S&P growth 602%. So, you can lose 70% in a correction pretty much breakeven there. I mean not exactly. I know that math doesn’t check out, but it’s wild to see it in numbers. I like what you did. Thank you, Drew, for doing this. So, I just don’t know. If you’re going to pick that this is the year that value outperforms statistically, I think you’re going against the tide.

Tobias: I’d rather pick the Civil War happening. [laughs]

Jake: [laughs] Yeah. How did value do from 1860 to 1864?

Tobias: Strong. The toughest value have been like around tech. So, 1825 was a tough one because of the introduction of the steam–

Jake: Steamship.

Tobias: Steamship and the trains. Then, 1841 was the first tech revolution. That was the introduction of the telegraph. There have been a few others. They were like technological revolutions around cars. That was that the great writeup that came out of OSAM a little while ago. When they were building up the infrastructure for motor vehicles, it was tough for value because the tech stocks of the day were motorcars. That’s just unimaginable for us today, I know.

Jake: This is a little bit of the problem with all of this stuff, is, all right, how many crashes, real, real crashes do we have to measure? Like 10 or something?. I don’t know. It’s probably a little higher than that. But the dataset is not anywhere near robust enough to be able to draw much statistical inference. So, there’ll be dragons still statistically, I think.

Bill: It’s over hundred years of data.

Jake: I know, but the number of crashes in that– So, what’s the typical crash? Well, there is no typical when you have a small dataset.

Bill: It’s a hundred years. What do you define a long dataset as? A thousand years?

Tobias: What are we talking? Geologic terms? It depends– [crosstalk]

Bill: In the history of financial markets, a hundred years is like a pretty robust dataset.

Tobias: I saw something that the length of time for [crosstalk] currency is 70 years.

Jake: Each year on its own is not that statistically significant. I’m saying like the epics within financial history have only been a small number of them. So, we don’t have that much explanatory power.

Crashes Are Made Up By Bears

Bill: I guess. Honestly, I think crashes are made up by bears marketing material.

Tobias: Well, we have not– [crosstalk]

Bill: They still fucking happen that often.

Tobias: Yeah.

Bill: I know, people love to talk about them, but I think it’s mostly because of the fear response and how people get clicks rather than reality.

Tobias: They do come around. They come around about once every seven years.

Bill: No doubt.

Tobias: And you get the full– [crosstalk]

Bill: Then, money printer go burr.

Jeremy Grantham – My Sister’s Pension

Tobias: Yeah. What I’ve generally observed is that for the most part– Well, this is easy to say because we’re at all-time highs now but we’ve always gone back to– There’s a Jeremy Grantham article that a mate of mine sent through and I just don’t know if it’s a recent one or if it’s an older one. I didn’t look at the date. But he’s talking about his sister’s pension. Has anybody read that recently?

Bill: No.

Tobias: I think it’s called My Sister’s Pension, something like that. He just says that he’s run his sister’s pension since 1968 and she’s not really interested in the market at all. So, he’s never had to explain to her what’s in there. So, he just has completely free hand in this account and it’s in contrast that with his institutional investors who he has to justify what he’s doing to them all the time and they don’t like it. They want him to change allocations and things like that. Of course, his sister’s accounts done very well. He told her once what was in the account, and she was just like, “Sell it all.” So, he never did that again.

He makes the point that the underlying engine of stock market returns is ultimately GDP or what company’s earning. He said, that is incredibly stable over time. Basically, it moves 1% or 2% in any given year, and then you contrast that with the moves in stock prices, which can be like 19% to 20% on average in any given year. Well, on average. So, he says, you got 20 times the movement in– [crosstalk]

Jake: Yeah. I think I saw it. You said 17 times, if I remember that paper.

Tobias: It was 19 times.

Jake: Like I wrote that down one point– [crosstalk]

Tobias: Go back and look at it.

Jake: Okay.

Tobias: 19 times. 19% versus 1%.

Jake: The relative movement versus the price movement. Like, fundamental movement versus price movement.

Find A Way To Stay Invested

Tobias: Right. What I have observed is that every time there’s a gigantic sell off, like, it sucks for 18 months or two years that you endure and you feel stupid, and then you’re completely– that 18th– I always talk about the 18th value, or the 18th rally that gets sold, that’s when you’re just like, “Ah. It doesn’t matter anymore. I’m going to go be something else.

I’m going to do another job.” And then, that’s, of course, when it rallies, but what I have just eyeballed from the charts is that the portfolio’s run back up to where they would have been absent the crash. The crash, it’s there. But it’s almost like you could just erase it from history for the most part. Just rub it out and then just draw a dotted line from one part to the other part. I guess if you can take that view about it, you do pretty well.

Bill: Yeah.

Tobias: But it’s hard to remember that for 18 months. When I was marketing portfolios to people just after 2009 crash, I talked to a lot of people who had– and this is like 2012. I talked to a lot of people who had sold out of the market in 2009, basically at the bottom. 2007 was the half-year crash that sucked. 2008 was an entire year of just getting punished, including Q4 of 2008 when the market was off like 12% or 14%. So, people just said, “This is enough. I’m going to sell out of here,” and then they didn’t get back in.

So, the [unintelligible 00:30:05] I talked to, he just missed the entire rally back, the entire bounce. It made me realize that what you’ve got to do is you’ve just got to find a way to stay invested. If that means putting on a hedge, do that. If that means carrying cash, do that. If that means not looking at it, do that. Just whatever you can use this to keep yourself in there and just know that basically, it’s not your fault. The market sells off 50% every 10 years or so.

Bill: Yeah, but Robert Kiyosaki told me that he knows when it’s going to happen.

Tobias: Is that Rich Dad Poor Dad?

Bill: Yes.

Tobias: [laughs]

Bill: Just getting richer off more marketing.

Tobias: When’s it going to happen?

Bill: I don’t know. I need to subscribe to his [crosstalk] service for 20 grand a year.

Tobias: I think in our Christmas special last year, I said it was February. So, there you go, February– [crosstalk]

Bill: Bang.

Tobias: February to August. I’ll give them for free.

Jake: [laughs]

Bill: I don’t know, man. I think you hit on a key thing. I’m still working through why this current drawdown was tough on me. But I know for a fact that part of what it was. I helped my mom buy a house, a couple of cars that I bought. I started to break ground on this other house. It’s like a ton of liquidity going around. The idea… to raise cash at a time when things are selling off, that to me is the biggest sin that you can possibly make.

Tobacco Stocks For Dividends

Bill: So, part of why I like British-American Tobacco is I get a reasonably good dividend yield. What I really fundamentally believe is cash coming in all the time, I know this is so boomer, it gives staying power. So, sometimes, optimal performance, I think, like running all out and trying to be optimal all the time, it can actually potentially could have put me in suboptimal outcomes where you’re selling at the wrong time. So, having cash plus some dividend stocks, even though maybe it underperforms or whatever, I think, over the long term is what I’ve come up with.

Tobias: What about the tax efficiency of it? If you looked at just some sort of program where you sold– I know you’re getting a big dividend yield on British-American Tobacco. So, this may not work. But you can sell, say, 4% of your holdings every year and you get long-term capital gains treatment for that.

Bill: Yeah.

Tobias: But if you’re clipping a big dividend, you paying a higher rate.

Bill: Yeah. Look, I’m sure I have a suboptimal outcome. I have a suboptimal brain.

Tobias: When you could put it across whatever portfolio, positions that you like, there’s probably an ETF or something that matches that, and then you could just sell off some fixed portion of that quarterly or something like that, and then you’re paying tax at a– [crosstalk]

Bill: Yeah. I think Bill’s hit on an important aspect, in that there’s kind of the engineering answer and then there’s also the human answer. What the engineering answer would be optimizing like you’re talking about Toby. But the human answer for him is that continuing his ownership in a way where it’s not being diluted by selling, let’s him stay in that game for longer than he might otherwise. We’ve talked before about slack in systems and finding new levels of optimization by having slack. Having a little bit of slack in the mathematical part of the optimization might be allowing a psychological maximum to be achieved through being able to retain his ownership and collect the dividend, even though it’s not as tax efficient.

Bill: Yeah. And also, I think it’s like, do I actually think that I would sell 4% in the middle of a crash, and then, I would actually only sell 4% in the top during a mania, and would I be able to actually know–? The execution of a theoretical answer is the hard part. I am trying to figure out what I can execute, not what’s right.

Tobias: How’d you automate some of that stuff with– I don’t want to say– Betterment used to–There was a way that you could automate tax loss selling and a whole lot of other stuff in there. That might have been one of those things. I’m a big fan of automation. I’m not criticizing the approach. I think you can achieve the same ends in a different way, maybe in a more efficient way. But I’m not– [crosstalk]

Bullish Marketing Of ETFs

Bill: Well, you built your own ETF and I’m an idiot. So, that’s the difference the two of us.

Tobias: Can’t talk about that.

Bill: Well, that is factually what you did.

Tobias: Don’t let compliance–

Jake: Oh, my God.

Bill: And you don’t have to hide for the fact that you did that, do you? That’s what I’m saying. You optimize to a structure, them– [crosstalk]

Jake: Listen, you can promise 40% a year and there’s no issues.

Tobias: [laughs] Yes, there’s some bullish marketing of ETFs out there. I’m always impressed because my compliance would not let me get any of that through.

Jake: [laughs]

Bill: You talk about compliance. You’re in front of an Acquirers Fund’s thing. It’s not as if this is some secret that you haven’t yet– [crosstalk]

Tobias: That’s the firm.

Bill: Okay.

Tobias: That’s the firm name.

Bill: What does the firm do, Toby?

Jake: [laughs]

Bill: What is it that you do here?

Tobias: It’s a registered investment advisor.

Bill: Okay. All right, my apologies. [crosstalk]

Tobias: I just don’t want to discuss. You are not allowed to discuss securities. Otherwise, that triggers the Securities and Exchange Commission.

Jake: Solicitation.

Tobias: Yeah.

Bill: Okay.

Jake: No solicitation.

Bill: I don’t know.

Tobias: If you structure the same portfolio as a separately managed account, you can talk about it as much as you want.

Bill: All I know is that I am not you and I am trying to solve for me, and I have a lot of problems.

Tobias: [laughs]

Bill: I’m just trying to work around my problems.

Tobias: We’re all mates. We’re working through it. We’ve got three blue zipper pullovers and we’re solving these problems.

Jake: [crosstalk] Civil War. [laughs]

Tobias: I’d rather pick Civil War over value. JT, do you want to do your– I think we haven’t done your veggies, yet.

E O Wilson – Of Ants and Men

Jake: Yeah. Let’s jump into some E. O. Wilson. I don’t know. Are you guys familiar with him much? I don’t know if you’ve ever–

Tobias: I know the name, but I don’t know who that is.

Jake: He was born in 1929. So, he had a really long run. He died this just like two weeks ago or so. If you’re interested in learning more about him, there’s this 2015 PBS documentary called Of Ants and Men that was really good. I enjoyed it a lot. But he grew up in Mobile, Alabama, and as a kid, I think he was eight years old. He was fishing and a spine of a fish that he caught, poked him right in the eye.

Tobias: Oh.

Jake: And ended up being blind in that eye for the rest of his life. As a kid, he really liked nature, especially, bird watching actually. But because he only had one eye, he didn’t have stereoscopic vision anymore, like birdwatching doesn’t really work as well if you only have one eye. But that led them to him– he had actually really acute vision and the one remaining eye. It became supercharged, sort of. So, he had 20/10 vision. He could see things up close really well. So, he ends up looking at the ground more and studying insects, and he really gets into insects as a kid.

I love any kind of story where someone’s weakness gets turned into an eventual strength. I think this is a really cool example of that. Anyway, his parents also divorced when he was around seven, and he was sent to a military camp apparently, because he was a troublemaker. But he figured out really early on that he wanted to study insects. He had this wondrous relationship with nature through his entire life. Even they show him wandering around out in the woods when he’s 90 years old, you just see the joy of a child on his face the whole time. I don’t know. I find it very inspiring to see people that are so authentic to themselves that way.

But anyway, he gets into what’s called myrmecology which is, I guess, the study of ants. He lists a bunch of cool facts about ants, like supposedly ants, weigh four times– If we took all of the ants on Earth and put them into a pile, it’d be 4x the weight of all the land vertebrates. There are something like 10,000 trillion ants on Earth, which is a number that boggles your minds. [crosstalk] Yeah, Wilson did. One by one. But he had this like a curiosity and a real scientific mindset that gave him lots of insights over time that actually, starting off with ants, leading then into other social complex things like the human. He could see a lot of the human condition from his study of ants, which I think is interesting. He observed that we share the desire like ants to build complex societies.

In the 1950s, he was a professor at Harvard for 40 years, and he knew that ants must have some form of communication with each other but at that time, no one knew what it was. We didn’t know how it worked. He discovered through his research, 20 different pheromones that the ants use to communicate. He basically went through dissecting ants and crushing an individual organ inside of the ant, and then seeing how the ant would react. There’s this cool thing in the documentary where you see him smearing like an S line, and then, all of a sudden, you see the ants start to route around onto that S line. So, it was like the pheromone that the ants used to lay a track to where they found food.

So, shifting gears a little bit, in Krakatoa, you guys familiar with this volcanic explosion in 1883? Supposedly killed 36,000 people. The loudest explosion ever recorded on Earth. They could hear it 5000 miles away in the Indian Ocean. It was something like 10,000 times Hiroshima. Anyway, it destroyed all life on the island but it created this novel experiment where, how do species repopulate a new niche? How do they find dominance in this fresh new area? Scientists at the time realized this was a really interesting natural experiment taking place. So, a lot of people went there to go learn, and observe, and see, well, how does nature sort of fill this vacuum that was created by Krakatoa?

Well, Wilson ends up doing his own kind of mini-version of this. He went down into the Florida Keys and he found several islands, and they put basically, these tents over them. They’re little tiny mangrove– little islands. They fumigated those islands basically, killed everything was on the island. And then, they came back and observed how does nature fill this niche– [crosstalk]

Tobias: Real nature lover, this guy. [chuckles]

Jake: Yeah. [laughs] Sometimes, you’ve got to crack a few eggs to make an omelet, Toby. Come on. But it turns out that there are mathematical equations that are derivable that predict the number of species relative to the size of the island. This has pretty big implications for conservation. So, if you figure humans developing new areas and we create these little biological islands sometimes, well, the size of them actually matters a lot to how many species will live in that area and thrive, and therefore, how much biodiversity might we expect. Actually, Wilson invented the word ‘biodiversity,’ by the way.

This got me thinking about in a business context. Let’s say that there’s a new area opening up, I don’t know, cannabis, or electric vehicles, or whatever the hell du jour it is for today. But could you make the analogy that the profit pools that will eventually be available represent an island and it might then tell us how many different businesses could we expect to thrive in that size of an island? Let’s take it on one end to the extreme, how many lemonade stands could your neighborhood support? That’s probably a relatively small profit pool. That would be like a tiny mangrove island that wouldn’t support a lot of different—

But then, I don’t know, what are the five biggest industries on planet Earth? I happened to look it up. number five is life and health insurance, four is e-commerce, three, commercial real estate, two, construction, and one, financial services.

So, perhaps, those are the biggest islands if you will today, but who knows if they’ll be that tomorrow, like these things tend to turn over as well.

So, a couple of other interesting facts like, Wilson estimated that there are 10 million species on Earth and we’ve only identified like 2 million of them. So, we’re at like 20% sort of recognition of the actual total number of species, which is kind of mind boggling when you think about like– I don’t know, I feels like if you were to just guess at how many species, you’d be like, “Yeah, we probably got 90% of them at this point, right?”

Tobias: How would you know what you don’t know?

Jake: I don’t know. I think maybe like a rate of discovery or something? I’m not sure how you would know that.

Tobias: Sorry. I cut you off. Keep going.

Jake: No, that’s okay. So, Wilson also has this idea called ‘eusocial, E-U-S-O-C-I-A-L. It’s a concept where– here’s how you define it. It’s a group of individuals that live together at least two generations worth, the adults care for the young, and there’s a reproductive division of labor. It’s almost as if there’s a single super organism that operates with its own hive mind. So, we’ve discovered 19 eusocial lines, and 16 of them are insects. It happens that humans are the only primate that checks the boxes to be eusocial.

So, you can start to see how Wilson’s insights of studying ants for 50 years led him to have these observations about humans later in his career. It turns out that this eusocial approach is highly productive. Ants, and termites, and humans, they dominate their niches that they exist in. So, he started to wonder if natural selection could work, not just at the gene level which was the predominant theory, but also at the colony level as a whole. It became very controversial in social sciences. Richard Dawkins was very against it. He’s the author of The Selfish Gene, which was a much more gene-specific version. Stephen Jay Gould, lots of other people. Wilson has this kind of funny thing. He said that in reference to ants, Karl Marx was right. Socialism works. It’s just that he had the wrong species. Just funny.

Wilson also created his own whole new discipline, which is called sociobiology. The hypothesis was that behaviors might evolve in the same way that your anatomy would evolve due to evolutionary pressures. What’s crazy is that people did not want to hear that this was applied to humans at that time. Psychologists believe that we learn from culture only, there wasn’t any nature. It was all nurture, there was no nature. In fact, there were demonstrations against his classes. People came in and poured water on him in the middle of his class, picketing his class. He was a target in a big way. It’s really funny to see, because when you hear him speak and you see the things that he was writing at the time, it’s hard to imagine a more gentle-natured soul than this guy. Meanwhile, he’s like the target of all of these radicals.

But what ended up happening was that he made it safe for later researchers to explore things about human nature that now we all take for granted. He proposed this idea of group selection, also called kin selection, over not just the survival of the fittest individual, but also the survival of the fittest group and how they work together. So, evolution is operating at multiple levels, and he has this really nice quote that is cool. It’s like, “Within groups, selfish individuals win. However, groups of altruistic individuals always be groups of selfish individuals.” When you think about like sports for instance, that totally makes sense in a way of thinking about group selection. It’s really a ritualization of war.

The Iron Bowl

Jake: We think about like a college rivalry. Bill, what did Alabama and Auburn games look like in college for you?

Bill: Ah, people got shot.

Tobias: [laughs]

Jake: Literally?

Bill: Yes.

Jake: Okay. Well, that’s even more extreme then, I would guess.

Bill: Not all the time but definitely, one of the years, somebody got shot in a bar. I think the reason was I think they said that like a shot that Robert Horry hit against Chris Webber Kings. I think they said that was a worse defeat than an Auburn, Alabama defeat that had just occurred and they got shot.

Jake: [laughs] Wow, that’s wild. All right.

Bill: Yeah, it was crazy. People take it seriously down there. It’s not the base rate but there’s hatred.

Jake: Yeah, no doubt.

Bill: Fuck Alabama.

Jake: What do they call that? The Iron Bowl?

Bill: Yeah.

Jake: Okay.

Bill: I like to call it good versus evil.

Tobias: [laughs]

Jake: So, here we’re seeing tribalism expressed before our very eyes. But it kind of gets you thinking, “Which companies out there are creating a group selection? Where are they creating tribes within their customers, within their employees?” When the power of humans that eusocial element takes over, I think it can lead to some very radical outcomes. Maybe Peloton for you, Bill, is a potential idea that fits in with that.

Bill: Yeah. I think they got a little bit of a tribe thing going on. Lululemon certainly did.

Jake: One last quote I’ll give you from E. O. Wilson that I really liked. By the way, he wrote several book– Obviously, he did a ton of research but he wrote a lot. I think he want two Pulitzer Prizes for non-fiction. He won whatever the equivalent is for– It’s not the Nobel Prize but they have a version of that for his field and he won that. But anyway, here’s Wilson. “The early stages of creative thought, the ones that count do not arise from jigsaw puzzles of specialization. The most successful scientist thinks like a poet, wide ranging, sometimes fantastical, and works like a bookkeeper.”

And I like the idea that if you want to be a real scientist about whatever it is that you’re working on, maybe getting away from specialization sometimes, and thinking a little bit broader, and having some creativity, and maybe thinking like a poet, I guess, was what he would say, might lead to some interesting insights. And then, working hard diligently like a bookkeeper about it. So, I don’t know. It resonated with me for some reason, maybe because I’m a dork but that’s– [crosstalk]

Tobias: [laughs]

Bill: Oh, dude. This motherfucker, Chase Jones. You’re not a motherfucker but you just reminded me some asshole, a ‘Bama fan killed our trees. At Toomer’s Corner, we had these old trees. This jerk, they poisoned them and killed them, and then called up the radio and bragged about. Thanks, Chase, you just ruined my day.

Tobias: There was a podcast about that.

Bill: Yeah, the guy’s a dick.

Tobias: Or, it might have been a– Sorry. Excuse me. That might have been like a Sports Center 30 for 30 or something like that. [crosstalk]

Bill: Anyway, something I was thinking about, Jake, as you were talking about the maximum amount of species, there’s Spanish moss down here or like lionfish also do this. Where I am, people really want to kill lionfish and eat them because they just destroy everything around them. Spanish moss is the same way. It just grows like this weed. I just feel like the bigger these companies get and the more influence they have over Washington, the more I feel like they’re lionfish and Spanish moss, and the less that I feel like the ecosystem can thrive. I really think that Big Business and Big Washington has just gotten too far. Now, I don’t know what the answer is other than to reduce the role of government, but– [crosstalk]

Why Is Elizabeth Warren Taking On Big Meat?

Tobias: This is parody account– It’s not a parody account. It’s turns out she’s being truthful. But Elizabeth Warren has this account where she’s been going after Big Meat.

Bill: Yeah.

Jake: [laughs]

Tobias: If you go and look at the things that she’s targeted, they’ve got no margin. They’re not making any money in these businesses.

Bill: Yeah, grocery stores. Yeah, she’s a moron when it comes to this stuff.

Tobias: You could go and rank all of the businesses that are listed in the states by gross profitability. There are a handful of names at the top that probably really do have an outsized influence, and really are gouging consumers, and probably not great for everybody. They don’t seem to attract any attention. I don’t get it. Like, where does it–

Jake: cough, healthcare.

Tobias: It can be tough.

Bill: Yeah. Look, I will give her this. The chicken industry is very consolidated, and it is kind of an old boys’ club.

Tobias: [crosstalk]

Bill: Yeah, they would lose so much money. It has to be that consolidated for them to make money. So, I don’t know.

Jake: Ah.

Tobias: I always have problems too when she complains about capitalists and raising prices. I’m like, “What do you think pension funds are invested in?” Pension funds need returns. You just want to give those returns away? Good luck fulfilling the obligations.

Tobias: You know what? Speaking of that, I saw an interesting source for this. Actually, I was reading Les Schwab’s autobiography, which is the guy who was founded a tire shop and he had this interesting idea, actually, that he thought that the government should not be able to enter into any kind of contract that has a cost-of-living adjustment in it. So, if we put that constraint on it to where like, “Sorry, your there is no COLA adjustment for your, whatever it is that you’re trying to do,” boy, do they all of a sudden, maybe start minding the monetary side of things a little bit more. Because it’s like, “Well, I’m just going to pass that inflation through in my COLA. I don’t care about this.”

Tobias: Do you think they understand? Do you think they understand it?

Jake: I think you understand it more when you watch your actual cost of living go up and no adjustment on your pension. I think it starts to get real. You’d like the less– [crosstalk]

Bill: Does who understand it?

Tobias: Well, the people writing this contract.

Bill: Yeah. I think they understand everything. I just don’t think they care because their incentives aren’t to care. It’s to promise a bunch of shit to people. It’s pathetic. Politics, what a joke.

Tobias: We really are ruled by children when I see some of the stuff– [crosstalk]

Bill: Yeah. It is this scummy people want to go into politics, unfortunately. But I mean, it’s just so disgusting.

Tobias: I found the Warren thing really weird. Why go after meat? Is the thought process people going into the supermarkets and then, every time they go to buy meat, the meat is really expensive, so we’re going to tap into that growing anger with meat producers?”

Jake: Is there, actually, can you imagine a bit back from–

Bill: Yeah. It’s just populism in another forum.

Jake: Yeah. This isn’t even first-order thinking. It’s zero-order of thinking. [laughs]

Bill: Yeah. I shouldn’t say scummy people go into politics. I think scummy people are successful in politics.

Tobias: Succeed at politics.

Bill: Yeah, that’s different. Yeah. Yeah, because you’ve got to have no soul.

Tobias: The ones that we’ve been talking about all the time, these gigantic companies that are just like– I don’t think that Apple’s too aggressive, but then they might be using slave labor to build some of this stuff. So, maybe I’ll take that back.

Bill: 100% they’re doing stuff that’s like messed up.

Tobias: Why are we going after [crosstalk] meat?

Bill: Dude, their phones were made by a company that had to have nets around it so people wouldn’t jump to their death. This isn’t a– [crosstalk]

Tobias: Just so they can bounce straight back in and keep making those phones.

Bill: Get the fuck out of here.

Jake: [laughs]

Bill: Yeah. Like how the batteries are mined, come on. Get out of here. It’s nonsense. Because no one actually cares. It’s the same thing like when Nike was busted for child labor and people were like, “All right, well, as long as my Nikes are only 80 bucks.” [crosstalk] Nobody actually cares about human life as long as they don’t have to see it. It’s sad.

Jake: It’s right.

Bill: I’m a real downer today. 2022 was supposed to be good. This is what happens when I give up booze.

Jake: Bring on the Civil War. We need catharsis.


Tobias: Yeah. The odds have gone up. Maybe raise it or something.

Jake: Yeah. 40% sounds kind of low now. [laughs]

Tobias: The Civil War though, the funny thing is it’s not like it’s geographic. I guess it is a little bit now with the COVID stuff — Florida’s kind of open, Texas is open, everybody else’s clothes but– [crosstalk]

Jake: Yeah. Where does it break down? Does he have battle lines drawn?

Bill: Oh, I don’t know.

Tobias: It wouldn’t be intuitive. It’d be two houses next door to each other and be fighting each other.

Bill: Yeah. I don’t know. I bet it would be among economic polarity or something. I don’t know. [crosstalk] fuck around and fucking fights to the war.

Tobias: A cold Civil War.

Jake: Good thing we do have going for us is that we’re too lazy to bother going to try to kill each other. We’re just going to see what’s on Netflix instead. [laughs]

Bill: I’ll be on Twitter.

Jake: [laughs]

Tobias: It’s going to be the states that have got all the guns. California is in deep shit.

Bill: Florida will be all right.

Tobias: Florida’s going to be okay. [crosstalk]

Bill: At least where I am.

Jake: Do we have time to squeeze in a couple of questions before timer’s up? Pause.

Tobias: Yeah, that’d be good. Yeah, John McGuire’s got, “Print $10 trillion and blame meat companies when prices go up.” Increase the amount of dollars that are floating around by 40% over a year or so, and then prices go up 40%. How did that happen? It is just a mystery to me.

Bill: And allow a bunch of consolidation.

Jake: Yeah.

Tobias: But don’t make any money in those businesses. You need to consolidate so they don’t fail.

Bill: Forget about the meat company. That’s a moronic statement. I’m just saying broader issues.

Jake: [crosstalk] in general.

Bill: Yeah.

Acquiring vs Organic Dominance

Tobias: Google’s not really an anti– It’s not really an acquire– I mean it is an acquirer, but it hasn’t rolled itself up to its dominant size. [crosstalk]

Bill: Yeah. Well, that’s where I think it gets harder, when you build the dominant machine or Amazon, which is using internal cash to develop dominance. That I think is a harder question. Because I think that should be rewarded. Acquiring dominance, I think, is different and I don’t know why I have that distinction in my head but I do.

Tobias: They wouldn’t necessarily have a problem with them being that size. But I guess the issue is that they’re clearly like exercising some editorial– They have a point of view that they express through YouTube, and Twitter has a point of view that it allows to express– It seems strange to me that there are some experts out in some of these areas that just– The expert isn’t allowed to express their opinion, Twitter knows better. That just seems bizarre to me.

Jake: It took 15 minutes but we got demonetized.

Tobias: There we go.

Bill: Yeah.

Tobias: We did it.

Jake: We did it.

Tobias: 2022 is off to a great start. We got that £25 Guinness.

Bill: Yeah. That is sweet.

Tobias: [crosstalk] Colm Moore.

Bill: Shoutout to you.

Tobias: Well, it’s going to be quite a session. I think Colm’s– [crosstalk]

Bill: No. There are now only eight slots available to listen to. We have reduced it from 10 total listeners to 9. Two slots can go to him.

Jake: [laughs] Watch us get sued for antitrust for that.

Bill: Yes. We’re narrowing our own TAM.

Tobias: You’re saying that Facebook’s not harming consumers? FB, Google consumers are not harmed by those products. I don’t know about Facebook, Meta as its– Civil War in the metaverse. Yeah, I think — [crosstalk]

Bill: I’ll tell you what. I’ve been chewing up this Lex Friedman pod. He also interviewed the guy that started Instagram. That’s a fantastic, fantastic interview.

Jake: That was good.

Bill: That I would highly recommend people listen to. I don’t like finding other podcast hosts that I like because they are competition.

Jake: [laughs]

Bill: But–

Tobias: There’s a little bit– [crosstalk]

Bill: I’m happy he does it.

Tobias: There’s a little bit of competition out there.

Jake: Yeah.

Bill: Turns out, it’s a competitive field.

Jake: Turns out any jabroni can just get a microphone and record [crosstalk]

Bill: Oh. [crosstalk]

Jake: [crosstalk] three jabronis.

Tobias: Samson wants to know which month is the recession this year? I don’t know.

Bill: Yeah. Speaking of which, sometimes, I say stuff and I get DMs that people are like, “How could you say that?” I think people need to listen to me very carefully. I am an idiot.

Tobias: [laughs]

Bill: Okay?

Tobias: The Joe Rogan defense.

Bill: Yeah. If you think so, guess what? You’re probably right and I welcome the DM. Now, if I get a little bit upset and I shut you down in the DM, I would like it if you don’t post my DM publicly without context.


Bill: Because that lacks social awareness. But whatever. Do your thing. This is my two cents on that topic.

Tobias: Oh, yeah. Beefy says, “Facebook doesn’t harm people under antitrust law.” Yeah, I’m with you. I agree. I think there might be the tobacco companies, the tobacco CEOs having to justify that they had no knowledge. They are the last people in American who don’t know that tobacco causes lung cancer. Maybe, it doesn’t. I don’t know. I don’t have a view one way or the other. It’s full time. The hoot has blown. There’s no overtime. It’s not soccer. Thanks, fellas. We’ll see you next week.

Jake: Good to see everybody.

Bill: Have a good one, folks.

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