In their latest episode of the VALUE: After Hours Podcast, Tobias Carlisle, Jake Taylor, and Tim Travis discuss:
- Why Buffett Slashed His Apple Stake
- Why Investment-Grade Bonds Offer an Attractive Hedge
- Top REIT Opportunities
- Bruce Berkowitz, Sears, and the Perils of Concentrated Investing
- How Animal Tails Inspire Different Tail Risk Strategies in Investing
- Why BNP Paribas May Be a Hidden Gem Among European Banks
- How Polymarket and Prediction Markets Nailed the Election While Polls Lagged
- Will an End to the Ukraine War Stabilize Energy Markets and Drive Deflation?
- AI and the Future of Big Tech
- The U.S. Mortgage Crisis Isn’t Going Away Anytime Soon
- Is Carvana’s Sudden Surge a Sign of Long-Term Recovery?
- MicroStrategy’s Bitcoin Gamble a Genius Move or a Dangerous Bet
- How To Think About Investing Today
- Bank Stocks and the Rate Cycle: What Investors Need to Know
- Scottie Pippen’s $84,000 Bitcoin Dream
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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Transcript
Tobias: Hey, this is Value: After Hours. I’m Tobias Carlisle. Joined as always by my cohost, Jake Taylor. Special guest today is Tim Travis, T&T Capital Management. He’s a value investing specialist. We’ve had him on lots of times. Great to see you again, Tim. How are you?
Tim: Oh, I’m doing well. Thanks for having me, guys. Always a fun time being on the show.
Jake: Welcome back.
Tobias: So, one little update. Since we saw you last, you’ve become SEC registered. You’ve got out of California. Congrats.
Tim: Yeah. It’s a different ball game from a regulatory standpoint, but it’s signals growth. So, happy about that, for sure. Thank you.
Tobias: How are you seeing the investment landscape at the moment? We’ve had a pretty good run over the last 12 months. Things looking a little bit toppy, expensive? What do you think?
Jake: It’s leading to witness.
Tim: No– [crosstalk] Yeah.
Tobias: Objection. Objection.
Tim: Yeah, I certainly think so. It’s interesting. Valuations are at some of the highest levels since 2000. You look at where interest rates are. It’s interesting, because The Fed cuts 50 basis points, then another 25 basis points. But all bond yields did was go up, right?
Tobias: Yeah.
Jake: Yeah. What’s that about?
Tim: So, a lot of worry about, perhaps, inflation creeping back. What does that mean for the housing market? I don’t know if you guys have looked at mortgage rates or anything like that, but it’s absolutely brutal. For first time home buyers, they’re really struggling right now. So, for me, I think that it’s a good time to be relatively cautious with your investments, take advantage of the high yields that are out there.
Tobias: That’s an interesting move that rates have taken since they’ve cut rates twice. It looks like the market’s completely ignored that. I wasn’t aware that the market was allowed to do that. What do you make of that?
Jake: Yeah. Who’s smarter, the wisdom of the crowds or the PhDs at the Marriner Eccles Building?
Tim: Who knows? It’s an interesting dilemma that definitely puts the Fed in one, because the rate cuts did not have the intended effect. Long-term rates are rallying. I think the expectation really was that, okay, once we get to the election– I think probably the expectation was most likely Harris would win. Not the betting markets towards the end, but maybe at one point a couple of months ago that maybe the economy would go into a recession. After that, we’ve had so much spending, people are skeptical about the unemployment numbers. And so, okay, if we have a recession, well, lower rates are likely.
But now, I think there’s a lot more optimism in the economy and in the business principles that are going to be extolled, I guess you want to say. That’s having pressure on rates. So, it’s an interesting dilemma. It’s one where I think you just want to be fluid. You don’t want to make too big of a bet either direction, bond ladders, that sort of thing. Focus on valuations. A lot of people are just getting a little too aggressive, in my opinion. A lot of the portfolios we review, they’re just almost 100% stocks for a 70-year-old. It’s just not appropriate for a lot of people.
Tobias: What allocation do you recommend they make to bitcoin? Because—[chuckles]
Jake: Risk on, baby. That’s the answer.
Tobias: Risk on.
===
Scottie Pippen’s $84,000 Bitcoin Dream
Tim: Whenever anyone says bitcoin, I just say like, “Look, scratch that itch a little bit.” Because the worst thing you could do is not scratch that itch, and then it doubles or does something crazy. I’ve seen people literally put their whole retirement into it. It works sometimes, but then sometimes they can’t handle the volatility, or I’ve also heard of people that had their wallets stolen and stuff like that. So, like anything, if you scratch that itch a little bit, and in moderation, I think it can be reasonable.
Tobias: Bitcoin is at 88,000— [crosstalk]
Jake: Are the base rates for that that 60% of the time it works every time?
Tim: [chuckles] I guess so.
Jake: Yeah.
Tobias: Bitcoin is at $88,500 right now. Scottie Pippen, I think– I think it was Pippen tweeted out that. This is in like June. He said he had a dream where he was told that bitcoin would be $84,000 on November 5th.
Jake: I’ll get out of here.
Tim: I saw that. That’s incredible.
Jake: [laughs]
Tobias: We got to figure out what’s going on in Scottie Pippen’s dreams. [laughs]
Tim: Nostradamus there.
Jake: Laser eyes.
Tobias: Yeah.
Tim: Hopefully, he capitalized them. I’m sure he did.
Tobias: Yeah, he’s had a pretty good run.
Tim: Yeah.
===
Bank Stocks and the Rate Cycle: What Investors Need to Know
Tobias: Previously, we’ve talked about financials, but just– I know that you’re not entirely focused on financials, but I’m just wondering, because financials are sensitive to rates particularly, and they are sensitive to the business cycle. And so, I think it’s been a little bit hard to tease out, because it looked to me like the private sector has been quite weak and it’s been papered over by a whole lot of government spending. And rates, I have no idea what rates are doing.
The Fed’s cutting rates look like they’re running up. And then, we’ve got this yield curve inversion. It looked like it was undoing a little bit. I think that’s more real than the other two occasions where it looked like it’s normalizing, because it’s the front end that’s been coming down most quickly. I think that there’s a very complex backdrop for banks at the moment. So, I just wanted your take on what you think is going on, how you think banks are.
Tim: I agree. Yeah, there’s a lot of different revenue streams there. So, if you look at the big banks, they’ve got the investment banking side and then they’ve got the net interest margin type spread side. And so, at a certain point, rate hikes help and at a certain point, it doesn’t help, as we saw in the March 2023 banking crisis, if you want to call it that. I liked being on when that was going on, because I thought I was very overblown.
Tobias: Yeah, good call.
Tim: [chuckles] Thank you. And so, we saw a few rate cuts. The banks responded by lowering some of their deposit costs, the CD costs. And so, net interest margins are expected to be fairly stable, but net interest income might decline a little bit is the expectation.
What’s really important is credit and then lending growth. So, I think the expectation was with rates going down, you’d see more lending. But now, on the long end, it really hasn’t materialized as much as I think people expected, but you also have more optimism in the economy.
So, I’ve been reading a lot of private equity earnings calls and some of the bank earnings calls. They do seem pretty optimistic about the deal pipeline. So, I think that business is good for them. I think they’ll do well. And then, you get into the individual situations like– Wells Fargo’s an interesting growth story. They might get some relief on some of the regulatory measures that have been brought against them. Citigroup is in perpetual turnaround mode. They might be nearing an inflection point.
Jake: Since 1998.
===
Why BNP Paribas May Be a Hidden Gem Among European Banks
Tim: Yeah. But then, you look at valuations, guys. They’re looking a little stretched on a lot of them. It’s interesting that where J.P. Morgan’s trading and Buffett’s selling. Bank of America, another really well-run bank. But it does look a little pricey here to where I wouldn’t necessarily want to own it. So, yeah, I think you just have to be valuation specific. Some offer pretty good value.
Some of the European ones, like BNP Paribas is a really good bank in Europe, for instance. It’s trading at like seven and half, seven times earnings. It yields like 7.5% percent. It’s got a return on tangible common equity of about 11%. It’s very consistent. It’s a well-run quality bank. Credit is really not a big issue for them across a variety of cycles. So, something like that you’re probably going to do pretty well over the long-term, especially with that dividend. But I’d be wary about some of the high flyers here.
Tobias: What are the high flyers? What do you include in that group?
Tim: I’d say, the thing with banks and what a horrendous utilization of the last 15 years to be so interested in banks, to be honest with you, because it’s like, [Jake laughs] the worst regulatory environment ever for them. But the thing with banks is that if the economy or the stock market catches a cold, they have the bubonic plague. They just get absolutely murdered. And then, in any situation, it’s like, “Okay, well, your stock’s getting killed and there’s uncertainty. So, let’s stop share buybacks, because we got to conserve capital for the regulatory agencies,” and stuff like that. So, they’re not able to capitalize on some of the opportunities that other companies can.
So, yeah, I think just– Stuff that’s trading at a big discount to tangible book that still earns a decent ROTCE and that you feel good about credit with. Citigroup, I think is still reasonable. I like BNP a lot.
===
Top REIT Opportunities
Tobias: In other areas, you were talking about REITs a little bit before we came on. Do you want to give us your thoughts on REITs?
Tim: Yeah. So, REITs have been a successful investment for us. With the high-interest rate environment, a lot of these real estate investment trusts and real estate related companies, they saw their stocks decline by 50%, 40%, 60%. Valuations got quite interesting with dividend yields between 5% to even 8% on high-quality names that should be growing their dividends just about every year.
Most years, they should. You can look at the refinance risk. That’s one of the areas of uncertainty, how much debt do you have to refinance over the next year or two. And then, when interest rates started going down, they had big runs. A lot of these ran 40%, 50%. And now, with the interest rate volatility picking back up, some of these stocks are selling off a little bit again.
And so, you can lock in a 6% or even a 7% dividend that is likely to grow, and you’re paying maybe two-thirds of the normalized valuation on some of these. And so, for investors that are reasonably conservative are worried that the market might be in a little bit of a bubble. If there is a bubble and we get a recession, interest rates might go down. That’s going to be really good for some of these REITs. So, I do think there’s opportunity there.
Jake: I think one of the guys from Marathon who are famous for their capital cycle theory work said, I think that– I don’t know if he said commercial specifically, but basically the bottom was in the operations for a lot of these things that have been facing problems the last couple years.
Tim: Yeah. If you separate office, office is its own world. Even those stocks, if you look at them, if you look at like Vornado, or SL Green or whatever that one’s called, the New York SLG, if you look at them, the stocks have actually done quite well lately. So, they’ve definitely bottomed. But I still don’t want to play in that space. But the net lease area is really interesting. Cell towers, I think there’s opportunity. So, a few of the ones we like, we like Crown Castle. That one’s trading just above a $100. It’s got a dividend yield of about 6%. That was a $200 stock not that long ago.
There was a headwind from the Sprint merger. And so, there was some redundancy in the towers, and so they lost a little bit of their revenue there. But long-term, they should grow double digits organically. You’ve already got a 6% dividend that looks reasonably safe, barring if they divest a portion of their business, which is a potential outcome. Yeah, something like that.
Or, VICI Properties, the casino owner and entertainment property owner, that pays about 5.5% and still trades at a pretty low valuation. They have 100% occupancy, 100% rental payments even during COVID.
And then, another one we like is W. P. Carey. They are a triple net lease operator in America and Europe. They divested their offices. That was controversial. It reduced earnings in the short-term and reduced the dividend. It wasn’t well forecasted to investors. So, a lot of investors got burnt. They hate it. And so, now, it’s like, “All right, well, all these people hate it.” If you just look at it now, it’s a lot cleaner company trading at a really low valuation for the quality of its assets and it pays, I believe, a 7%, 7.5% dividend, somewhere around there.
Tobias: Do you follow what’s going on in office at all?
Tim: Yeah.
Tobias: You think that’s turning around?
Tim: No.
Tobias: You think the stock is turning–
[laughter]Tim: No, I don’t. I just think like anything, it just gets priced to oblivion.
Tobias: Yeah.
Tim: The big money people, like the really big– I saw an article in the Wall Street Journal today that some of the old family money in New York, they’re finally selling some of their stuff. But if you have really deep pockets and you can convert some of these things to condos or really upgrade the amenities– If you think more nefariously, let’s say you have connections in politics that might change an area like San Francisco, think of what you could do there if you just have a little bit of better policy out there with how cheap those assets are in San Francisco. I wouldn’t be surprised to see a renaissance, but you got to have deep pockets and political connections.
Tobias: Yeah. I think San Francisco turns around eventually. It has to get really bombed out first. It has to get really, really cheap. Some of those office buildings have been trading for just like– It’s just jaw dropping the distance some of those have taken.
Jake: Yeah. One dollar, take the debt.
Tim: Would you park your car up there?
Tobias: No. At some point, [Tim laughs] you can hold that. You could sit in that building– [crosstalk]
Tim: No, for sure. I agree. If I had that type of capital and connections, I think that would be one of the great turnaround potential opportunities out there.
Tobias: I think the tech rises again. But tech hasn’t fallen over yet.
Tim: Right.
===
Tobias: When tech falls over, maybe it rises again. Let me do a quick shoutout to the folks at home. BrownMaubozu. It’s hard to say. Toronto. Santo Domingo, Dominican Republic. What’s up? Boise, Idaho. Bendigo, Victoria. Good effort. Hamish. Early start for you. Moncton, New Brunswick, Canada. Another in Toronto. Bellevue. Savonlinna Finland. Good for you. You’re a regular. Tallahassee. Edinburgh, Scotland. Kennesaw, Georgia. Madeira Island, Portugal. Winning. Somerville, New Jersey. Thornhill, Ontario. Chicago. Cromwell, New Zealand. Another early start. William the Wizard of Waterloo in Waterloo, London. Bogota. Lausanne, Switzerland. Another regular.
Jake: It’s a good spread.
[crosstalk]Tim: Eclectic.
Tobias: So hard to scroll on this thing. Here we go. I’ll get everybody. Sooke, British Columbia. Brooklyn. Good.
Jake: Maybe we don’t have to do all of them.
Tobias: Good job, fellas. [Tim chuckles] I insist.
Jake: [laughs]
===
Why Buffett Slashed His Apple Stake
Tobias: Tim, one of the things we were talking about– Well, Buffett has been selling Wells Fargo for quite a while. So, Wells Fargo has idiosyncratic problems that he’s been selling. But I was a little bit surprised to see him punch out of so much Apple. If you read some of his comments before then, it did sound like this is one of his permanent holdings. Evidently, he’s just, I don’t know, trimmed because it’s run too much or something like that. But he’s been selling– [crosstalk]
Jake: Little more than a trim. [laughs]
Tobias: That’s a close shave.
Jake: Yeah. I was going to say, that’s like Tim went in for a haircut and got that.
[laughter]Tim: Yes, yes. Barber doesn’t cost me a lot of money, nowadays, thankfully. [Jake chuckles] Yeah, you look at the valuation. Charlie Bilello had a tweet, maybe yesterday or two days ago, where he talked about Apple’s valuation. All the metrics were like 50% higher than historical averages. The growth rates really aren’t there to justify that. We’d all agree it’s an absolutely amazing business with incredible competitive advantages that are likely to stay for quite some time. So, it’s interesting.
So, I think from a valuation standpoint, that’s probably a big part of it. And then, I think you guys would probably agree, there’s also some level where he’s thinking about how he wants to leave that company for the next CEO. If you have such a big stake in Apple, that’s a huge amount of pressure. Because if you sell, “Oh, this idiot sold, you know, and missed out on these billions of profits.” And if you don’t sell, it’s like, “Oh, my gosh, Buffett would have sold.”
Jake: Yeah. “You’re spineless. You don’t make your own decisions.”
Tim: Yeah.
Jake: Kind of a no win for Greg, right?
Tim: It really is. Exactly. Is Greg going to be managing the core investments or–
Jake: I think Todd and Ted are primarily doing that. But I think Greg has final say on just about everything. So, I’m not sure exactly what something like Apple would look like there.
Tim: Yeah.
Tobias: You don’t know whose book that counts towards whether it’s his or whether it’s the–
Jake: Yeah. Not sure exactly where that would fall.
Tobias: So, you think this is the selling is more about– It’s like a setting it up for the next guy rather than–
Tim: I think it’s probably like 50/50 to some extent. I do think he’s looking at it as like, “Okay, I’ve made so much money off this.” The valuation is really extreme. He got burnt holding Coca Cola for too long. He’s definitely sensitive to valuations. He knows that if he were to say, “Okay, look, the stock market is in a bubble,” that’s going to piss off a lot of people, including, honestly politicians. It’s like, “All right, well, this guy’s trying to cause a bear market.”
He doesn’t want that responsibility. He shut down the partnership in 1969. 2000, he did the Sun Valley speech, or was it 1999, whatever. When he did the Sun Valley speech, talking about the tech bubble. So, you can see how he feels about the market by his actions and aggressively selling Apple, aggressively selling Bank of America. So, yeah, I think it’s probably 50/50.
Tobias: One thing I think is interesting is around 2007, he was pretty bullish. You can find a lot of comments from him at that time where he wasn’t– He wasn’t publicly bearish. A lot of people said, “Well, that’s because he’s transitioned from– He’s now a steward of the entire financial system. He got too big where he can’t shit talk the valuations anymore. He’s probably– I don’t know. Have you seen any comments from him recently? Has he made any comments about the level of the market?
Tim: I haven’t heard much. How about you, Jake?
Jake: No, but he definitely talked in 2021 about relative– Last year, he did say, like, he thinks that this is the most gambling ethos that he’s seen, which really says something. That’s a lot of years of market history to filter through that prism and to find this period as the most gambly is. Yeah, that says something.
Tobias: I thought there was a lot of gamble in the market, but I haven’t been looking at it for that long. But I did see 2000. There’s a lot of gamble in 2000 too. I don’t know if there’s more gamble now. Maybe, because there’s so many other ways that you can gamble, including on elections.
Jake: Quite easy. Yeah.
Tim: Yeah.
Jake: Quite easy.
===
How Polymarket and Prediction Markets Nailed the Election While Polls Lagged
Tobias: I don’t want to get political, because I don’t want to turn off half of the listeners or 100% of the listeners. [Tim chuckles] I don’t want to lose 6 or 12. But the Polymarket, I was interested in that. I was following that and some of the other prediction markets against the polling. It’s funny how– I don’t know how long out from it, but it was like a month or a few weeks out.
Polymarket wildly diverged. The two chances like Trump ran up and Kamala ran down. That seemed to be true across all of the markets. Some people were attributing that to some whale coming in and moving those markets. But it seems like the prediction market’s got it right. JT and I talked about this a little. Because I was looking at it– Kamala was at 33%. So, you get three for one in a two-horse race. Kelly would tell you to put some capital to work a bit.
Jake: Put a little on.
Tim: I get the logic, for sure, on that. I bet on the prior election, and it didn’t work out too well for me. [Jake laughs] So, I was worried that [crosstalk] this one might be a little fortified. Yeah, it was quite a huge blowout really. So, it would have been tough to fortify it much, I think.
Tobias: Yeah. It’s interesting. The election markets seem to be– The prediction markets seem to be more accurate than the polls, like quite a bit more.
Tim: Polls were really bad again. It’s amazing that they– They were wrong every single time, but–
Jake: why do we even bother?
Tim: The best is like Nate Silver. He’s so shameless. It’s like, looking back, this is the most likely outcome. [laughs]
Tobias: I think, like Raygun from the Olympics. [Tim laughs] The enduring like meme from this Olympics is Nate Silver on election day, he said, “I’ve run 80,000 simulations.” I think he said Kamala wins in 40,006 and Trump wins in– just so, it’s basically a coin toss, but he was giving it to Kamala on that basis, but didn’t work.
Tim: Glad to see you give a shoutout to Raygun. Australia’s finest on display.
Tobias: Such a shame. [Tim laughs] There’s so many great moments from– The only good thing that’s come out of it though, it’s like, there’s been some great Halloween costumes.
Jake: Yeah. Name one Australian swimmer, the women’s who they crushed, right? You can’t, but you know Raygun. [laughs]
Tim: Yeah.
Tobias: She’s parlayed it into millions, I’m sure.
Jake: Legend.
===
Tobias: JT, do you want to do your veggies a little early and then we’ll-
Jake: Sure.
Tobias: -circle back?
Jake: They might not be cooked all the way, but okay. We could serve them up.
Tobias: I’ve got to tell you, guys, that the reason I laughed halfway through that last bit. Les Whynin has jumped on. He says he’s in Prominent Nob, Australia. It’s good to see you moving around, Les. That’s not a real place, ladies and gentlemen.
Jake: No.
Tobias: Maybe you do. So, I don’t know.
Jake: We’ve got a little Australia for you today.
Tobias: Well, good.
Jake: Today’s segment is on animal tails. This is not like Fievel going West.
Tobias: DuckTales
Jake: No, not DuckTales. This is the various tails in nature, and then torturing those into investment analogies. A quick shoutout to John Chu for sending me the initial inspiration on this. The first one we’re going to look at is nature’s incredible athlete of the cheetah. We all know it’s the fastest land animal, reaching speeds of up to 60 miles an hour. But the speed alone isn’t what makes the cheetah such a great hunter. It’s actually about the agility that the cheetah has.
And so, imagine if you’re going 60 miles an hour in a straight line, and then all of a sudden, you just make a 90-degree turn, super sharp without falling over and crashing into a million tumbles. But how do they do that? The answer is the cheetah has a remarkable tail which allows it to balance itself out. It’s like this high-speed counterweight. When it changes direction instantly, it acts like a stabilizer, so that it can stay balanced and pivot without losing control.
So, taking some inspiration for that, for our portfolios, the cheetah’s tail helps us stay balanced. A portfolio tail is a collection of perhaps smaller agile positions that give you as an investor, the flexibility and balance like a cheetah. Rather than being overly concentrated in just a few large names, I don’t know, maybe you’re a hippo, a tail of companies allows you to hold small stakes in a basket of various companies, and so you could make quick moves without losing balance.
A lot of times, investors feel pressure to make these big all in decisions and place large bets on a few big picks. Munger has been extolling that as long as we’ve been around to really bet, “Why put money into your fourth best idea?”
That’s fair. Especially, actually, if you manage money professionally and you have large LPs who use you as a sleeve for other investments, and you’re just a small portion for them and they are getting diversification across a bunch of different managers, there could be pressure on you then to really push into your best ideas, because that’s what they want. They want the highest-octane version of you, not some sensible basket, even though that might not best for you from a career risk perspective or even psychologically.
So, that super concentration can lead to over attachment to any one given name. When you have a lot riding on just a few, it can be harder to be objective and your emotions can really cloud your judgment. So, this portfolio tale offers a counterbalance to that, like the cheetah’s tail, and you can explore new ideas without perhaps having so much stress on you. If you’re not forced to immediately decide if a company deserves all of your capital, you can dip a toe in the water, get more familiar with the company. It’s really hard to know a company until you’ve actually owned it for a little while. I don’t know if you guys feel the same way.
I actually I have a friend who does– He’ll use deep out of the money call options to build a basket of names that he’s interested in. And then, this allows him to explore more companies without committing even less capital. It actually reminds me of NVR’s approach to the way that they do property acquisition.
Tobias: Like a land bank.
Jake: Right. So, if one of those ideas doesn’t pan out, not a big deal, you haven’t over committed. But if one shows a lot of promise, you have capital left to then scale it up. And in essence, the strategy really captures the speed and adaptability of the cheetah with a portfolio tail. So, I don’t know, TC or Tim, does this remind you at all of how you guys manage money at all?
Tim: Yeah, absolutely. We’ve taken pretty concentrated stakes and lived by them.
Tobias: What’s concentrated for you?
Tim: Like, 10% positions or even higher, but then also within an industry. So, you might have a couple of those. So, we did that when the odds are just stacked in our favor and when we really can’t find a way that we’ll lose over the long-term, we’ve done that. The thing that I’ve learned in the industry though–
So, we started this company 13 years ago. Been in the industry 20 years now. What I’d be comfortable with from a volatility standpoint or a hedge-fund type manager standpoint is not a level of volatility that many clients would be comfortable with. And so, I found that it doesn’t do you any good to try to maximize performance if that performance comes with way too much volatility where the client is not comfortable and they don’t benefit from it. So, we’ve gotten less concentrated over time. We’d still be open to it if it was just a perfect pitch in our strike zone. But yeah, I think you’ve got to keep in mind your investors and what they’re comfortable with really.
Jake: Toby, [crosstalk] you’ve been positions– [crosstalk]
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Bruce Berkowitz, Sears, and the Perils of Concentrated Investing
Tobias: I vastly prefer spreading the bets a little bit more, just because there’s so much idiosyncratic risk in every– I’ve worked in a public company. I was general counsel of a public company, and I used to talk to the analysts on the outside. I just thought it was crazy how much of a disconnect there was between what I saw was going on and what they thought was going on.
Getting some of that distance is probably a good thing sometimes, because maybe you can see things that people who are too close can’t see. So, it’s not just a one-way street. But I think that there are just a lot of ways to lose in this business. I think that if you have some edge, if you have some ability to find things that are undervalued, then the more you can let that edge express itself that’s not tied to one business, the better you’ll do over the long-term. But I can’t find fault with Charlie’s argument about, “Your fourth best idea.” I don’t really know what the answer that is other than diversification, variation is in and of itself a good thing.
Tim: I think Berkowitz learned that too, the hard way. Berkowitz was amazing. He is an amazing investor, and he had so many wins over his career and concentrated bets, really concentrated, gutsy picks. But so many people look at him and define him from Sears Holdings. That was just such a tough one. There was a lot of opportunity. There was a lot of logic in that thesis, but it seemed like Eddie Lampert got too attached to the retail business. It’s hard. It’s hard. You’re running a huge company, you don’t want to just lay off tens of thousands of employees. It’s a hard game when you get into the restructuring.
Tobias: So, when you said Berkowitz, I immediately thought of St. Joe’s. I thought St. Joe’s was his–
Tim: The monster. Yeah.
Tobias: But that’s right. I forgot he was very big in Sears as well.
Jake: And Fannie and Freddie too burned him.
Tobias: Yeah. Yeah, that’s a problem.
Tim: Those were logical bets too. Really logical bets. It’s hard sometimes. I think of a Puerto Rico assured guarantee– That’s a company I invested in for a long time. I know you invested in it a little bit, Toby. They reported earnings. They were really strong. But the situation in Puerto Rico was so bizarre, because you had this electric utility which is a monopoly. They really had liquidity issues and just huge corruption, huge fraud, where people are on the payrolls, but they’re not showing up to work. The most egregious stuff you could imagine.
Tobias: Like, a working [unintelligible [00:31:34]
Tim: It should have been a really easy restructuring. Like, “Okay, inject it with a little liquidity, put some capital in there, but put more efficiency controls,” that sort of thing. But it’s been going on for 10 years. They still haven’t restructured this one credit. It’s been 10 years since all the drama started. It’s like something that seems so easy, but it’s hard to tell political ramifications. That’s why I’m a little more sour on the banks than I used to. It’s just not a fun business to be in with all the regulatory risk that’s out there.
Tobias: [unintelligible [00:32:09] Yeah, it’s had a good run.
Tim: It’s had a great run. What’s crazy, is if you look at the book value per share growth of that company, it rivals just about any insurance company you’ll find. I was thinking about it with what you said, Toby is, there is danger being too close to a company, but it is nice when you know how a CEO will respond to adversity.
So, I remember during COVID and the lockdowns, that stock just plummeted, man. Like, a lot of them did. But I think one day, it went from $32 to $13, something like that. It was like, what was the news there? There really wasn’t any. There wasn’t any really news specific. The good thing about that CEO, Dominic Frederico is that he’s going to buy back his stock. Like, he’s going to take advantage of the massive discount. So, you’re going to see a huge growth in the per share metrics. That gives you a big degree of confidence. It’s amazing seeing it play out. He said longevity too. He’s been with that company since– They IPO-ed, I believe in 2003.
Tobias: It’s a good advertisement for smart buybacks, [unintelligible [00:33:26]
Tim: They are. Yeah. You don’t hear about them. Like, nobody really talks about them.
Tobias: If you look at it, then it just gets scarier. Like, the moment you start taking a look at it, it ensures unibonds and it’s– That always looks like a scare, anytime it pops up in the news, it’s because it’s associated with some bankruptcy somewhere. So, it’s never getting good news. It’s only ever the crises that attract attention.
Tim: It is. I saw today. So, their below investment grade exposure was at the lowest level it had ever been in. And then, today, they added, I believe it was $10 billion. I haven’t gone through everything yet. I believe they added almost $10 billion. It was these water companies in the UK. So, the Thames Water company, they’re having some liquidity issues. It’s a monopoly company in a good government. UK is generally pretty business friendly, or at least they were. So, it’ll probably work out fine. I don’t think they’re actually going to lose any money on it, especially when you factor in the premiums they’ve collected on it, but it’s like, “Okay, well now there’s such big numbers you’re throwing out there.” Like, “Oh, well, it’s a $5 billion exposure.”
So, exactly, it’s just always headline risk. So, we’re not as big there as we used to be. We just have a small position left, but I would definitely buy it if it went down. I was hoping it would go down actually.
Tobias: What’s the book value per share sitting at there?
Tim: Oh, man. The adjusted one is over 160 now. And then, the operating one is 111. So, just fantastic growth. Look, if you’re interested in stock buybacks done well, look at that company. Look what they’ve done. And look at how the returns on equity aren’t great or anything like that. It’s not a great business overall, but it’s been run well.
===
How Animal Tails Inspire Different Tail Risk Strategies in Investing
Jake: We have more Tales stuff if you guys want to–
Tobias: Oh, yeah. Sorry, JT. [unintelligible 00:35:18]
Jake: Yeah. No worries. [laughs] So, if we’re going to get a little closer to home for Toby. This is the old kangaroo tail. I don’t know. Is it true, Toby, that you have to fight a kangaroo to be considered a man in Australia?
Tobias: That’s the traditional method. Yeah.
Jake: Okay. Good. [laughs] All right. So, they’re famous for their hopping. Covering 25ft in a single bound. I don’t know. Have you ever seen that before?
Tobias: I’ve seen them in herds, like racing across the– I couldn’t tell you how big the leaps are. They’re pretty big. The bucks are pretty big. Could be.
Jake: Well, there’s something that makes those big hops possible. And it’s their tail. They even call it like their fifth leg for support and balance. Although, I’m not sure, do they have hands or is it all four legs?
Tobias: Yeah, they pause. Like, a little pause. Yeah.
Jake: Yeah. Okay. So, without that big tail, they’d be much more prone to stumbling, falling over as they were hopping. So, this concept of stability in the tail might be akin to tail risk hedging. In this instance, when the terrain gets tough for the kangaroo, similarly, when the terrain gets tough in markets, tail risk hedge can help your portfolio weather a very turbulent market conditions without losing your footing.
So, you imagine a market downturn. I know it’s hard to imagine, because we don’t do those anymore, but [laughs] the tail is this safe haven assets that can help stabilize the portfolio. So, people use different instruments for this put options, government bonds, gold, certain volatility strategies. They all act as this support system that helps the portfolio hop over rough patches without losing balance.
The next tail we’ll get to is the scorpion’s tail. It’s multifunctional tool. As you know, it has this venomous stinger on the end of it that lets it both play defense and offense. So, it can protect itself from threats, but it can also hunt and secure food with its tail. So, think about the tail risk hedging, in some instances, the way it’s done. During a downturn, you get the defense of the protected shield from losses. But then also, perhaps, just as importantly, you get fresh capital that you can then use to deploy and go on offense.
It’s quite a bit easier to have fresh capital as opposed to having to sell something that was suddenly trading. It was at 10 times earnings, and now it’s at 5 times earnings, and you’re selling it in order to buy something at three times earnings. That can be very difficult to do psychologically. But to have fresh capital instead and then you can go buy that thing at three times earnings, that’s a lot easier to execute. So, the scorpion’s tail embodies the same idea of protection and opportunity together that they don’t have to be mutually exclusive. And then the last one.
Tobias: It’s a good psychological– I think it’s a good psychological– The tail hedge is a good psychological hedge there as well. I think it’s really only effective if you can take the money and put it long again, which you can’t really do if it’s in a fund. Sorry to all my bull fund buddies. But if the money is in a fund, the money doesn’t get paid out or you can’t redeem it quickly enough, whereas if you’ve executed it through some option or something else like that, the money comes back to you and you can then stick it long again.
Jake: Right.
Tobias: That’s all I had to say.
Jake: [laughs] The last one we’ll look at are lizards. Many lizards, they use their tail for balance, obviously, but they also have this extra survival trick where they can shed their tail if they’re threatened. I’m curious if that hurts or not.
So, imagine a predator grabs a hold of a lizard’s tail. It can actually break off and let the lizard escape and survive. And for investors then, this shedding ability is similar to liquidating a small, flexible position within your portfolio when there’s need for liquidity. And so, you maintain this diverse tail of smaller, adaptable investments that you could shed certain positions when needed, but free up resources without really disturbing the core holdings. This approach lets the main portfolio stay safe and still allows you to also react quickly when something better comes along.
So, just to summarize, all these animals have been using tails for their advantage in a lot of different ways. It’s possible that we could think about how we craft our tails in the investment world to draw inspiration from that.
Tobias: I like that. Good one. Could be non-recourse debt as well. Like, if you’ve got a margin loan and you’ve got some path dependency on the position, you can’t shed it, whereas if you got– If it’s not tied to the position, maybe you can hold on to it a little bit longer.
Tim: Or, real estate. So many of those companies are giving up office buildings and walking away, but it doesn’t jeopardize the overall business.
Tobias: Yeah. Good one.
===
Why Investment-Grade Bonds Offer an Attractive Hedge
Tim: It’s hard. I don’t know. Whenever I buy puts as a hedge or something like that, which isn’t very likely or maybe I’ll have a client that requests it, it’s hard mentally for me, just because I know they’d cross-
Tobias: Cross spread.
Tim: -run against me. I sell options. And so, buying the put mentally for me is challenging. I do the tail hedging with bonds, more or less, if rates do decline. It’s easier now in this yield environment. It was so hard– I didn’t touch bonds for 15 years really. But now, there’s a lot you can do.
Tobias: So, you buy a government bond, a 10-year or something like that if it gets– [crosstalk]
Tim: Buyback investment grade bonds. Yeah.
Tobias: Yeah. If it gets gnarly and they drop rates, you get a rally in the bonds, so you get some [unintelligible 00:40:58] ballast.
Jake: Ideally, although that didn’t happen in 2022. It went the other way.
Tim: The starting base rate’s important.
Jake: We lost all bond.
Tim: Having a bond latter helps, for sure.
===
The U.S. Mortgage Crisis Isn’t Going Away Anytime Soon
Tobias: It’s just to return to where we were at the start. If the Fed cutting rates isn’t really impacting the bond market or isn’t– I’m not sure what rate we’re talking about when we’re talking about it rallying, but the mortgage rate certainly is. Mortgages are as expensive now as they have been at any point in time.
Tim: Based on the 10-year. The mortgage is based on the 10 year. So, yeah, it’s a scary time to look at a home, because you have affordability as bad as it’s ever been and then you have the financing costs. So, it’s brutal. I think that’s part of what you saw in election. If you don’t own a home, not only have you missed out on all this appreciation, but it’s really hard to get into one. So, it’s a huge wealth gap from that.
Tobias: They don’t resolve quickly either, those affordability crises. They take years and years and years to sort out, because house prices– [crosstalk]
Jake: They grow into it.
Tobias: Yeah, they don’t really collapse. I know that’s what everybody thought before 2006. So, that’s not entirely true anymore.
Jake: They just go up into there [crosstalk]
Tobias: They just go sideways. When I was studying it, that was what they used to say, “Don’t over capitalize your house. Don’t make too many improvements, because you never get the money back out. Like, house prices don’t go up.” That’s how long ago it was. [laughs]
Jake: But even then, let’s say you did buy a house opportunistically and you’ve done well on it. Like, unless you’re re-levering it, which dividend recapping your house, who cares. It’s just equity that’s sitting there that your cost of living, doesn’t like– You’re basically just tying up a bunch of equity at a low rate of return on it. It’s like, “Okay, what am I accomplishing here exactly?”
Tobias: The dividend recap doesn’t help you much either, because it’s a tie to your income. So, your income has to have given you a little bit more breathing room too.
Jake: Right.
Tim: If you didn’t buy one though– I remember we bought our house in 2018. It’s doubled. We’ve put some money into it too though. It’s a lot of equity that we’ve built up to it. So, if we bought a new home, we could use that equity and probably not even have any mortgage whatsoever. But if you didn’t buy a home, you’ve been renting the whole time, and prices have just gone up and they keep raising your rents, it’s just really hard. You still have to have enough for the downpayment and the financing costs are so high. It’s brutal. Especially in California, as you guys know, easily make six figures and not be able to afford a home.
Tobias: I saw a good chart of California, the other day, which had this little green line up against the beach, which was unaffordable paradise. And then, every other part of it, it was red or something like that. It was affordable, hellscape or something like that. Myth.
Tim: Right.
Jake: It’s not that far off, is it? People would probably be surprised to know, once you get out of the main city centers of California, like up in the mountains, it looks a little bit more like Appalachia than you might think. Trust me, that’s where I grew up.
[laughter]Jake: It’s a little redneck up there.
===
How To Think About Investing Today
Tobias: We’ll go a little bit macro. What do you think about–
Jake: Okay.
Tobias: Yeah. We haven’t done that for a little bit. Buffett selling. There’s not a lot of interesting stuff.
Jake: What does it all mean, Tim?
Tobias: Yes. That’s basically where I’m going. What’s the vibe?
Tim: Look, this is the time that taxes you psychologically. It’s easy to think like, “Okay, maybe you’re more optimistic because of the election,” whatever. You’re more optimistic because of the economy somehow. It’s easy to stray and maybe be a little more aggressive than you should. And then, something happens that changes the dynamic. Like, 2020, it was COVID and the lockdowns.
And so, I just think you want to be smart. You can make 7%, 8% in investment grade bonds right now and have very little risk. To me, that’s a good risk reward, especially after already having a really good rally. Park a little bit of money there to where if the market sells off and gives you real bargains again, you have ammo and you’re not having to sell stocks that are already down a lot.
So, I think it’s just a time you have to think long-term. The long-term returns from here over the next decade are not likely to be great, but who knows over the next year. And that’s what you’re battling against.
===
Is Carvana’s Sudden Surge a Sign of Long-Term Recovery?
Tobias: Yeah. What about the rally in Carvana? Did anybody pick up some Carvana on the way through? Have you watched that one?
Jake: You’re down 99% and now I think you’re 70x from the bottom.
Tobias: Yeah. 750% in 2024.
Tim: It’s insane. It’s always the highly levered ones where– I remember I looked at the bonds on that and I thought that the bonds might be an interesting play, because the technology platform is, you can see the benefits of it. But yeah, it’s one of those where– It could easily have gone bankrupt. It easily could have.
Tobias: Yeah. That’s what I thought too, without commenting on the management team, but it did seem like they had some bankruptcy risk there. Has that gone away now completely? Is that why we’re back to the races? It’s a technology company again?
Tim: If they’re smart, I’m sure they’ve done equity offerings. I haven’t been following it close enough, but that would be the smart move, for sure.
===
Tim: That’s what AMC did. What AMC did was actually pretty smart. And that was a horrendous balance–
Jake: Turns thin air into cash.
Tim: Yeah, that was a horrendous balance sheet with– What happened with the lockdowns in the movie industry businesses? Unprecedented. They were smart. Issue equity transition rig. I believe I mentioned the bonds the last time I was on the show, and I think they were yielding around 10%, maybe a little lower. But those have had a nice rally. They’ve done a similar thing where they’ve issued a little bit of stock, fixed the balance sheet. There’s a good underlying business, just a bad balance sheet. Now, there’s talk they might merge with Seadrill, which has a good balance sheet, but not as many rigs. So, we’ll see what happens there, but same principles.
Jake: Means [unintelligible 00:47:15] might be the king of this right now with [chuckles] issuing equity on a company and then turning around and buying bitcoin with it, levering up on top of that.
Tim: Unbelievable.
Jake: And then, just keep pushing that up issue more, like it’s working?
Tobias: That’s strategy. There’s no universe in which that strategy doesn’t work. It just continues to work forever that one.
Tim: [laughs] Oh, man.
Jake: This is like Hunt Brothers meets– Oh, I don’t know. It’s pretty wild.
Tim: Not investment advice disclosure on that.
Tobias and Jake: Yeah.
Jake: Be careful, please.
Tim: Yes.
===
MicroStrategy’s Bitcoin Gamble a Genius Move or a Dangerous Bet
Tobias: I was going to mention micro strategy. I just thought-
Jake: But it might work.
Tobias: -$2 billion at the market, and then plowed it straight into bitcoin. Bitcoin’s immediately rallied, because I don’t know how deep that market is, either because he’s bought into it or because who knows, there’s– Whatever way the election went, there was going to be a whole lot of money printing probably going on afterwards.
Tim: True.
Tobias: So, that’s probably how that’s–
Jake: I went and I watched the earnings presentation that they did this last quarter, because he had a pretty good– He talked for maybe 45 minutes or something, and he just went through how they think about everything. It’s quite interesting.
Tobias: Like, 45 minutes. Oh, there is this–
Jake: I know. Well, he’s got some slides. If bitcoin keeps going up and to the right, this is going to work really well. If it doesn’t-
Tobias: It takes one slide.
Jake: -that’s the one Jenga piece that if you pull that out, the whole thing collapses. But who knows? It’s not like governments are super chaste and everyone’s clamoring for austerity around the world. So, shit, man. Who knows? Maybe that does work.
===
AI and the Future of Big Tech
Tobias: What’s everybody think about Apple here? Because Apple’s been flattish over the last little while? Is Buffett selling, because it’s just so nosebleed expensive? I know other than what we discussed.
Tim: I think so. The valuation’s crazy, really. A lot of them. But that’s the market right now. You look at Costco, you look at Apple, it’s a very pricey, expensive market where there’s not a lot of margin of safety in there. So, yeah, I don’t think it’s particularly attractive.
Jake: Are these like bond yields or bond proxies at this point, basically? Everyone believes in these companies so much that they’re willing to look at that stream of cash flow as being money good effectively as almost as good as the government’s ability to repay, or maybe they’re more like tips, really. That might be the more reasonable interpretation.
Tim: That’s amazing though, because you have AI. So, you have like this mechanism which is going to cause so much disruption.
Jake: But it’s not a $1.50 fifty hot dogs.
Tim: Yeah, right. That’s true. It’s weird that the assumption is just that-
Jake: They are going to win.
Tim: -the winners are the ones that won before, pretty much, except for Intel. It’s interesting how that works.
Tobias: It seems that the cost of it is just like– Was it Sam Altman? What’s Japanese–
Jake: Masayoshi Son?
Tobias: Yeah, it was a Son. Was it Masayoshi Son, who came out and said like, “$9 trillion, this problem solved”? I was like, “9 trillion?” [chuckles]
Jake: [laughs] We were going to get AGI with $9 trillion spent.
Tobias: Something like that. He was just like, “Yes, I’m raising a $9 trillion onto something.”
[laughter]Jake: Oh, man.
Tobias: That’s not crazy enough Masa.
Jake: Where are we on that chart? Like, are we down at the bottom where it’s right at the inflection and it’s going to go the unicorn?
Tim: What did we print during 2020 though with all the stimulus? It was several trillion dollars just here, right?
Jake: Yeah. What do we run, like $2 trillion or $3 trillion deficit in that?
Tim: Yeah.
Jake: We’re at a one, one and a half now continually, even in the greatest economy ever?
Tim: Right.
Jake: It’s impressive
Tim: Unbelievable.
===
Tobias: Yeah, it does feel a little bit frothy.
Tim: Deficits, yeah, it’s hard. Think if you’re coming in honestly into this economy, it’s pretty challenging. You have interest rates where they’re not likely to be able to go down much further. You have very low unemployment that looks to be inflated by the government numbers. It would not be surprised to see more and more revisions, like we’ve already seen all year.
Jake: It’s just been government jobs that have been growing? Is that the takeaway?
Tim: Yeah.
Tobias: Plus, a lot of stimmy through the inflation reduction act and other things like that. If you pull that stimmy out, what does that look like? Gnarly, I think.
Tim: That’s what I’ve thought the whole time. All the credit related companies, it’s like they did a good job documenting, “Okay, well, our average saver has three times as much money in their checking account for $4,000 instead of $1,200,” or something like that. And now, a lot of that’s gone.
Jake: What is that, like two-months’ worth of rent?
Tim: Right. Yeah. Look at the Dollar stores. I mean like Dollar General. I think that stock was at $300 or something crazy like that. And now, it’s at below $80. They even say it’s like “Okay, the first three weeks of the month are okay, but then, once our average consumer runs out of their money, then they stop spending.” It just has a massive impact.
Jake: Totally anecdotal and N of 1. This could be chalked up to the $20 minimum wage thing that went through in California. I have a 16-year-old who’s looking for a first job thing and having a really hard time finding anything. You can apply, but they’re not hiring.
Tim: Do Chick-fil-A. I think they allow the workers that are there for a while to buy the franchise for super cheap. Yeah, I would definitely be doing that if I was a kid. Those things print money.
Jake: Problem is he’s got very limited hours because of baseball commitments in school. So, it’s like–
Tim: Yeah.
Jake: Yeah. Chick-fil-A is a little bit too serious of a job, I think.
Tim: [laughs]
Tobias: I think it’s hard to reconcile the Fed cutting given all the bitcoin at 90,000 bucks, stock markets at all-time highs, unaffordability issues with real property. Would you cut into this environment? Unemployment’s basically at all-time lows.
Jake: I don’t have a PhD in economics. Sorry, I can’t help you.
Tobias: But even the PhDs should be. It isn’t the playbook that this is the– If you’re a Keynesian PhD, which they all are, neo Keynesian PhD, that would say you would be recommending raising rates in this environment, wouldn’t you?
Jake: You can’t take the punch ball away.
Tobias: Well, you can’t the punch ball away.
Tim: I don’t see how you do anything. I really don’t see how you do anything.
Jake: You can fire if you do that.
Tim: The last 25 basis points, I didn’t really get either. It’s just seemed like super flow set at that point. But I would just sit and watch and see what’s going to happen. None of us have any real idea what’s going to happen. There’s just so much– You have high valuations, high rates. We’ll see what happens with these unemployment numbers. But until you get a recession, it’s tough to see rates really coming down to levels where people were expecting them to be.
Jake: Maybe there’s actually quite a bit of deflation on the come if China tips over even further. That’s a lot of commodity inflation that’s existed the last 20 years is they poured all the concrete that’s been poured in the 21st century, and a million other stats on how much natural resources they use.
Tobias: Into their ghost cities.
Tim: Probably see some steel tariffs even more which could be an interesting dynamic to watch.
Tobias: So, tariffs are probably inflationary. There’s an argument that inflation is a little bit harder to put back in the bottle once it starts that–
Jake: Well, look at the [unintelligible 00:55:33] pushing 40% pay increase into their contracts. That becomes structural at some point, right?
Tobias: Yes.
===
Will an End to the Ukraine War Stabilize Energy Markets and Drive Deflation?
Tim: Well, if the war in Ukraine ends, if that ends, which I think is likely, finally, that could have some interesting impacts, because a lot of the commodity markets were really altered dramatically by that, at least over the short-term. And then, during Trump’s last administration, it was drill baby drill.
I think oil for most of it was below $75, because there were drilling and it was very open. So, that could be deflationary if energy prices stay relatively low. So, it’s going to be interesting dichotomy. I wouldn’t want to prognosticate that. It’s just stay disciplined to what you can understand and don’t get lost in the macro would be my advice.
Jake: It’s quite an interesting counterfactual to imagine that we didn’t discover fracking. That didn’t never happen. The price of oil was $150 or $200 for the last decade instead of– US wasn’t exporting natural gas. We were importing still. All these things that like free that we were pretty heavily reliant on external sources for energy. That could be the equivalent of the Fed funds rate being like 7 or 8 or 10 or something with a $200 oil. Like, what would the economy look like if we hadn’t found that bailout, cheat code fracking?
Tim: Good point. I wonder if Munger never really changed his opinion or publicly about not drilling any of our oil, only relying on others.
Jake: Yeah.
Tobias: Not smart from a–
Jake: Save it for future generations.
Tobias: Not from a financial perspective, but from a, yeah, like a security perspective which is one of the reasons for the tariffs to try and bring some heavy production back home. But there’s a cost to that which is you pay more for the things that you produce here.
===
Last time, Trump came in, small value lit like Ruprecht when Michael Kane told him he was going to get the genital cuff taken. It took off like a rocket. So, I would like to see a little bit of that this time around. It did seem that– On the day of it, it did like 5%– [crosstalk]
Jake: Yeah, Russell was excited.
Tobias: Yeah. But I think all of that stuff is pretty short-term. I consult the Almanac. The almanac said that we’re always weak into the election and then from election to inauguration, it’s pretty strong. Stock market’s already at all-time highs, like run a little bit and then what happens? Then you’ve got to [crosstalk] by any measure.
Jake: Then you’ve got to face all these problems.
Tobias: Yeah, by any measure price to book price to sales. We’re bumping right up against the top of as expensive as we’ve been. Having said that, Japan went to 100 times,-
Jake: So far. Yeah.
Tobias: China went to 100 times. [unintelligible 00:58:33] at 37 times, going to 40 times. You could go two and a half times over that. [laughs]
Jake: Toby, where we’re going, we don’t need valuations.
Tobias: That’s right. We haven’t needed them for a long time. Yeah. Tim, we’re coming up on time. Any last words?
Tim: Not really. You can find me at ttvalueinvesting.com is my website. We have a newsletter you can sign up for. And my Twitter handle is @timtravisvalue.
Jake: I think Tim’s advice about being conservative, don’t get too caught up in the price action recently, which can often desensitize you to the risks that can be out there. So, just tread lightly, I would say-
Tobias: Yeah. Always-
Jake: -as Tim said.
Tobias: -sage words. JT, any developments at your end?
Jake: No, just happy to be home for a couple weeks before back on the road. Sleep in my own bed. That’s my favorite.
Tobias: All right, folks. Thanks so much for joining us today. See you next–
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