Hard Times Create Strong Men

In their latest episode of the VALUE: After Hours Podcast, Taylor, Hoffstein, and Carlisle discuss Hard Times Create Strong Men. Here’s an excerpt from the episode:

Corey: What do you guys think the Fed does? Do they become more dovish on hikes and more hawkish on the balance sheet? What do you think the path forward here is now that things got more complicated?

Tobias: I think their default setting is to print as much as they possibly can. The only reason that they were talking about doing anything was because inflation has been ripping. But now, they’ve got an excuse for inflation that’s got nothing to do with what the money that they’re printing. Now, they’re just back onto the– The print is going to run. I think that there might be some little– 25 basis point raise is meaningless and I’ll do a few of them probably just because it looks good. Then, in a few quarters, we’ll panic and we’ll reverse it all.

Jake: Put it back to zero.

Tobias: Put it back to zero.

Corey: Yeah, I would. The reason I asked is certainly, oil up in the short term is immediately inflationary by any measure. But long term, it seems to be deflationary because it creates negative economic growth shocks. Demand disappears, it is self corrects which is bad for earnings. So, the Fed, I don’t think wants to be hiking into that economic decline.

Tobias: It should have been hiking over the last few years, but they haven’t. Now, at the point of the cycle where you are right. Now, we should be lowering, because oil is going to do it. Oil is going to do what the hiking was going to do anyway. Oil is going to spike the bubble. Oil already has, I think.

Jake: Could be. Yeah, that was– [crosstalk]

Corey: Real bullish conversation today, boys.

Tobias: Yeah. Well, I think to be fair, I’m always pretty bearish.

Jake: [laughs] This isn’t new.

Tobias: Don’t come here for the sunshine.

Corey: All right, so maybe, by the way, I’ve just taken over as cohost.

Jake: Yeah.

Tobias: No, please. [crosstalk]

Corey: So, let me ask you this. What is the most bullish thing you can think of right now?

Tobias: Well, I like the fact that there are some names that I think– There’re some businesses that are too good for the price of the trading at the moment. I would prefer that the market get a little bit more beaten up, so you can swing through and hoover up some of those better names. Whenever there’s weakness in the market like this, I think it’s a great opportunity to upgrade the portfolio by some better quality at low prices.

Jake: My most bullish thing is looking longer term and saying that, humans, and ingenuity, and technology is going to help us have a better tomorrow. If anything, we probably needed a little bit of some hard times to increase our character and be a better version of ourselves [crosstalk] get there.

Tobias: Hard times make strong man.

Jake: Yeah, true. It can’t be easy and also get to that point where you need to be. I think long term, I’m incredibly bullish on humanity. Even the US, even some people seem to be a little bit– If you listen to Dalio at all, it sounds the US Empire is over, but I’m hopeful that we find ourselves again and go back to our roots a little bit as to what was important that got us here. Like trust, capitalism, democracy, free press, all those important things.

Tobias: I was watching Station Eleven. It’s post-apocalyptic a virus, a flu like virus kills most people. Then there are very little pockets of people around that– The episode that I got to last night, the kid, he downloads Wikipedia onto this little handheld computer, and he’s looking at the definition of capitalism, and he’s like, “Can we just delete it and pretend it didn’t happen?” Deluded.

Jake: Yikes.

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