Jesse Felder, editor of The Felder Report, gives us his take on inflation and warns listeners about the risks he sees in today’s market. He breaks down how Federal Reserve policy has changed since the last time we dealt with inflation fears… how to position yourself for higher prices across the board… why he’s watching corporate profit margins… and where he sees value today. Jesse also explains how to profit as the COVID bull market in certain stocks comes to an end. [17:33]
Then, Daniel and I take a look at Berkshire Hathaway’s annual meeting, including management’s comments on Robinhood, bitcoin, climate change, and more. We also discuss the irony of Treasury Secretary Janet Yellen’s recent comments on interest rates. [52:16]
Today’s episode of Wall Street Unplugged is sponsored by Blockchain.com… one of the most trusted cryptocurrency platforms in the world, with over 70 million wallets. Not only can you trade your favorite cryptos… you can also earn up to 13% interest annually on cryptos like bitcoin and ethereum… and stablecoins like USD Tether.
To start your account, visit Blockchain.com.
- Guest: Jesse Felder, editor of The Felder Report [17:33]
- Educational: A look at Berkshire Hathaway’s annual meeting [52:16]
Wall Street Unplugged | 772
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street, right to you on main street.
Frank Curzio: How’s it going out there? It’s May 5th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down headlines and tell you what’s really moving these markets. So, I drove to Atlanta this past weekend. My daughter had a state competition in Georgia for gymnastics. And yes, we live in Florida, but on the Florida-Georgia border, and she goes to Georgia because there’s a very, very good coach there. So, we drive everywhere, two our drives, different competitions. This is the state competition and it’s in Atlanta, which is six hours away, six-hour drive.
Frank Curzio: So, I told my 10-year-old that if she falls off the beam or makes any mistakes in the vault or floor routine that she’s going to have to walk home. But she was laughing and yeah, so it was crazy. It’s a long, long drive and my daughter, she killed it. In her division, she finished second in the beam, second in the vault, third in the bars, and seventh in the floor routine. And the floor routine, it was weird because when she did it, she wasn’t doing full extensions, and seems like something was bothering her. I didn’t know, I was hoping it wasn’t the Crohn’s or anything, if her stomach was hurting, it was weird. She came off and then we asked her after, I said, “What happened to the floor? You really could’ve finished first in this whole thing.” And she said that she had a wedgie.
Frank Curzio: Now, some trivia for you, which is interesting, I didn’t know this. In gymnastics, when you watching Olympics or whatever, as soon as they give you the okay to do your routine, no matter which… Whether it’s the beam, floor, bars, anything, you can’t pick your wedgie. You get points off of that. That, and fixing your hair. So, once they give you the signal, if you do… I didn’t know that, she knew that, and her team was all laughing at her, everybody’s laughing about it and stuff. She’s like, “Man, I wish I didn’t have a wedgie.” But it was just funny. But she did fantastic; she’s really happy. Finished third overall and her division, highest placing yet. So, she had a best performance on the biggest stage, and her team came in first. So, really, really proud of her.
Frank Curzio: Even more proud than considering if she finished 12th, I probably would have been a little pissed off about it. We drove six hours, you finished 12th? But six hours there on Friday and six hours after the competition driving back on Saturday. So, I’m glad it all worked out, and she did really, really well, so it was awesome.
Frank Curzio: But Atlanta is a weird place. I mean, I’ve been there just… Atlanta is like the hub for Delta, and if I want to fly across the country, I usually fly to Atlanta first and then go to Vancouver, California, everything. So other than that, I really never spent time in Atlanta, but stopped at restaurants, we went to different stores, gas stations. The rules were relaxed, where most people, they’re wearing masks when I went inside these places. But there was some people that did not wear masks at all. No one was yelling and screaming at them or anything which maybe these people got vaccinated. You got vaccinated, you shouldn’t be wearing a mask now anyway, right? So, I get it.
Frank Curzio: But at the competition, it was crazy. Because it’s like Fort Knox, a mask over your nose and mouth at all times, signs everywhere. Then they had the national anthem at the beginning of the competition, so it’s about the start, some guy gets on a loudspeaker and says, “If you don’t have your mask covering your mouth and your nose, we will disqualify your child and her team from the competition.” I said, “Are you serious right now?” I mean. How crazy it that? So, if the mask falls below my nose, which the only way you can get COVID from me as if I shoot mucus from my nose perfectly into your mouth, which I probably couldn’t even do on purpose if I tried 100 times. If I did it by accident, you going to kick my child, her team, my wife, you going to kick us out of the whole entire place after driving for six hours?
Frank Curzio: It’s become a real big problem in America. I think it’s that people really don’t know what to do, what the rules are, we kind of know, but we don’t know. But most of us approach things with common sense. And as of today in most states, I have to wear a mask when I walk into a restaurant or a bar, but I can take it off the second I sit down to eat or drink. So essentially, I’m walking by people without masks that are sitting at the tables, sitting at the bar. But I need to have my mask on until I sit down because there was a lower chance of me transmitting that disease to someplace to someone.
Frank Curzio: I mean, you look at the places, you look at the people, you look at what’s going on and it just doesn’t make sense and people are more confused than ever. It gets even worse with the vaccine, which we were told, “Once you get the vaccine, you’re good, you’re good.” The chances of catching COVID are minimal. I mean close to impossible, the same rate someone has who had chickenpox and will get it again. And most people that said, “Well, I got COVID twice,” probably you got misdiagnosed, which happened a ton, which we’ll find all those stats out later on. Just the way that we’re taking the test, it’s just yeah… You really don’t know.
Frank Curzio: So rarely, rarely, rarely will that ever happen, that you’re going to catch that version of COVID again? If you get the vaccine, you still have to wear a mask. Why? Why do you have to wear a mask? And why do people who have been vaccinated, why are they so pissed off at people who don’t get vaccinated? I mean, you can’t get COVID from them, you’re vaccinated. Can’t give it to them. Why you so angry? I mean, people are angry, “You got to do it. I did, so you have to do it.” What are you worried about? I can’t give it to you, you can’t get it, what do you care? That’s your choice.
Frank Curzio: Anyway, I won’t go off on another rant about COVID. You’ve heard those enough. The lies the politicians told us and is still telling us about COVID. Why every state and school in the US is not open to full capacity right now, which is interesting. Why is that not the case? Why they all not fully open? We know the stats. Why people who got COVID and already have antibodies, why they got to be mandated to get the vaccine? You say, “Mandated? No. They said no mandates.” No, it’s mandated. My nephew just told me his girlfriend goes to upstate New York College to take his summer classes, had to get the vaccine or she couldn’t take the classes, that’s mandated. Corporation is going to start requiring this now they’re opening up, mandating it.
Frank Curzio: Again, I’m not going to go off on this again. You guys heard it on this financial podcast. But I want to bring up a bigger point here, because going to Atlanta, it was a really tough ride. Because my daughter’s best friend, and she’s in a couple levels up from her, they’ve been doing gymnastics for probably three, four more years than my daughter, and she was supposed to be going to this competition, but she didn’t go to this competition. We found out that… And we know her parents well, and hang out with them, but her dad was diagnosed with stage two cancer. And they found a huge tumor the size of a hockey puck in his chest, and he’s undergoing immediate chemo treatments. He’s in the medical field, travels a lot, he’s getting great care, he’s able to find it quick because he had trouble breathing. And immediately, it’s nice when you have everything… works in hospitals and stuff, so he’s able to get X-rays and everything.
Frank Curzio: They found it basically as early as possible. And then we got news that an uncle on my wife’s side passed away from cancer, and he was battling for a while. It was really, really bad, he was hospice for a few weeks. So, it was expected. Also, a really cool guy. Met him lots of times in Long Island, New York. Celebrated holidays at his house. He works in construction. Great family, three kids. He’s in his late 50s, maybe early 60s. My daughter’s best friend, her dad, who was just diagnosed cancer, I think he’s in his early to mid-40s. And we spend so much time on bullshit, arguing politics, being pissed off on social media, getting upset in traffic, arguing with family members over stupid things, but just always complaining about stuff. That’s a new America, right? Being pissed off at everything. That’s what the media feeds us on both sides.
Frank Curzio: You’re not going to watch a channel that’s not going to piss you off. If you’re a Democrat, CNN, you’re going to fricking hate Republicans. If you’re a Republican bunch of fucks, you’re going to hate Democrats, that’s what they want. I mean, that’s what they’re conditioned to… They want that divide, right? They all make more money from it, everybody gains more power from it. Not just the media, social media as well. I mean, they feed that to us on every single platform. There’s just so much bullshit.
Frank Curzio: And when you take a step back, you just need to realize, put things in perspective, that life is short, it’s really, really short. It can be over before you know it, it can happen when you’re 80, when you’re 60, 40, at 25. We know young people who passed away, probably everyone listening to this know someone that’s young that passed away. I guarantee when those people, when they’re on their deathbed, you’re probably thinking about all the regrets, right? All the things that I wanted to do. How you wish you spent more time with your family, your kids, how stupid it was to get upset about meaningless things.
Frank Curzio: For me, I always looked at life this way, like it could and tomorrow. I was a punk from Queens, New York, hung out with the wrong crowd, was an underachiever, real underachiever. My seventh grade teacher actually told me, “Frank, you’ll never amount to anything.” She actually said that, seventh grade, I’m 13. I’m 40, I’m going to be 49 this month. I know, approaching 50. 50 man, that’s crazy. I remember thinking when my parents were 50 how old they were. So yeah, anyway, I feel better than ever. But 13 years old and now being 40, I still remember that like it was yesterday. But I have two beautiful girls, and a great family, I’ve traveled everywhere, started my own business. I went to the Super Bowl, watched my favorite team win, thank God, because it cost me a fortune. Which is really cool. Wouldn’t be that bad, but my wife was like, “Hey, can I come too?” Bang, double everything. I was like, “Man, holy cow.” But they actually won. It was the best Super Bowl ever, by the way, as you know. Eagles over Pats, by far the best Super Bowl, by far. Yes, I’m 100% based on that. What a Super Bowl.
Frank Curzio: For me, I always use negativity as a motivational tool. You tell me you can’t do something, I can’t do it, I’m going to be better than you at it. That’s how I always approached it. I won’t amount to anything, my seventh grade teacher told me. Okay, well, I did start my own company, became one of the first podcasts ever in finance. The first to create a security token that trades on a foreign exchange, it’s pays dividends, available for any investor to buy. And you know what? I’m just getting started. There’s a lot of life ahead of me that I’m looking forward to. When those achievements happen, it comes back to the point where life is short, do what you want to do. And everyone has those things. I don’t care if you’re 70 years old, you want to drive a race car, drive a racecar, go drive a racecar. Go crazy, go nuts, do irresponsible things. Have fun. Everyone can’t be responsible. All this responsibility. Go have fun, do something stupid, get into trouble. It’s okay. Those are the times you’re going to remember for the rest of your life. Trust me, trust me, trust me on that.
Frank Curzio: I don’t remember the test I studied. I don’t remember all this stuff, or initially starting the business, which was really cool. But I do remember all the crazy times I had with my friends, every one of them. Every time we see, we laugh, we joke around, it’s awesome. Want to travel around the world? Travel around the world. Why? Why won’t you travel around the world? Yes, I’m talking about… We have COVID and there’s restrictions, it’s going to be lifted pretty soon, hopefully in the next year or two. Probably 10 years from now in Canada. Those guys are crazy over there. And if you’re passionate about something and you want to be the best at it, work your ass off. Work your ass off to become the best and surround yourself with great people. When I say great people, not people are going to say, “Hey, great job. That’s awesome. Here’s a 12th place trophy.” No, people that are going to ride you. They’re going to criticize you. They’re going to make you better. Those are your true friends. Those are the people you want to surround yourself with.
Frank Curzio: I got yelled at by Cramer, I got yelled at by my dad. You kidding me? It wasn’t easy. In the scheme of things, it was the best thing that ever happened. If you have fears, conquer them, and one of the bravest things I’ve ever seen, the bravest things I’ve ever seen was when I went to college, and I went late, like 29 years old. There’s a lot of younger kids, I think this was an 18-year-old kid who had a stuttering problem and I had to take elective, so I took this drama course which included public speaking. So, you had to give presentations, a lot of people are nervous about making presentations. That’s not a big deal. No, this kid, this kid got up in front of everyone, did his presentation, and he had stuttering problems. That’s why he took this course. So he knew going up there that some of the kids may make fun of him, it may be crazy, but he said, “You know what? Eff that, I’m going to conquer this.” I’ll never forget that. And he was a really good kid and I had projects with him and everything.
Frank Curzio: I’m sure a lot of people I know that had stuttering problems when they’re younger, don’t have them now. That kid definitely doesn’t have it. He definitely conquered it. But just, I mean at 18 years old doing that in front of everybody knowing how hard it… And then everyone just started cheering him on, and it just motivated people. And to me that is incredibly brave. But he conquered his fear, it’s a great courage to do something like that. If you’re afraid of heights, go skydiving. I know it sounds absolutely crazy. But trust me, once you land, you going to feel like you could conquer the world. You’ll never fear anything again.
Frank Curzio: You have those tough problems, tough situations to deal with which we all have throughout our lives no matter what. I went through a divorce, thank God I didn’t have kids during it. I went through my dad passing away, you see other people passing away, friends passing away, just different time, different things. Everyone has problems, but now you have the confidence to figure those problems out and to deal with them. But life is really, really short guys. It’s really short. And you get one shot at it. That’s it, one shot and you’re done.
Frank Curzio: So, what do you want to achieve before you go? What’s your marking on this world? How are you going to change it? What do you want to do? Want to just sit home watch TV, play video games, be an underachiever? Fine, some people fit into that category, if that’s you. But the answer to that question is different for every one of us. But whatever it is, hopefully get off your ass and do it. Because when you’re lying on your deathbed all you’re going to be thinking about is what I didn’t do, what I needed to do. How come I didn’t do this? You’re going to wish you did a lot of stuff before your life ends. For me, if I got hit by a bus tomorrow and died, a lot of my lifetime subscribers would be really, really pissed off. But I lived the good life. Left it all on the line, worked hard, spent time with my family. Done lots of crazy things like skydiving, bungee jumping off the ledge building in Vegas, traveling all over the world Europe, China, started my own business. Not bad for a kid who grew up in Queens, New York who was a complete underachiever.
Frank Curzio: So anybody could do it. Serious guys, life is short, it could end at any moment. And to my seventh grade teacher that said I won’t amount to anything, blow you fucking raw. Thank you for that motivation, I appreciate it.
Frank Curzio: So, I have a great guest for you this week. By the way, the guest and the interview is being sponsored by Blockchain.com, the most trusted cryptocurrency platforms of the world, over 70 million wallets and over $800 billion in transactions since 2011. You can trade fair cryptos on Blockchain.com, lots of crazy trading going on as you see in crypto space. You can do that at Blockchain.com, but you can earn up to 13% interest annually in your crypto. That includes Bitcoin, Ethereum, stable coins, Tether. For more information, start your account, visit Blockchain.com, support our sponsors, guys, it’s Blockchain.com. Great, great company, somebody that I use.
Frank Curzio: So our guest, first timer, is Jesse Felder. So Jesse, pretty big name in the space. He has like 120,000 followers on Twitter. He began his career at Bear Stearns, made and co-founded a multi-billion dollar hedge fund, has his own podcast called Art Of Worldly Wisdom, which he started in 2017, interviews a lot of great people. There’s also a blog and newsletter called The Felder Report. So Jesse, really, really smart guys, as you’ll see in a minute. Some deep conversations about inflation, FANG stocks, record amount of fraud, scams taking place, SPACs. And you could always have an opinion on everything. But you always want to have the data to back it up, and that’s what I love.
Frank Curzio: Even if you have different opinions on people or not, whatever, you want to read that… For him, he’s a data guy, he breaks down his methodology for picking stocks. Great, great conversation, guys. Jesse’s also going to share some of his favorite ideas with you. So, let’s get to that interview right now. Jesse Felder, thanks so much for coming on Wall Street Unplugged.
Jesse Felder: Hey, Frank, I’m thankful for the invitation. Glad to be here.
Frank Curzio: So, you’ve been at this for a long time, enough to either study or maybe remember, I don’t know how old you are, I won’t ask you how old you are, but the ’70s the ’80s type of inflation. And we never really had crazy inflation, we could say some certain periods since then. But I think people do not understand what runaway inflation is and how there’s nothing you could do other than take money out of the system.
Frank Curzio: You’ve been talking a lot about inflation as a big concern for you. Why is it different this time? And what could happen to the markets? And what has you worried here, because it sounds like from everything I read, you cite tons of stats on your blog about inflation going crazy right now, but what has you worried the most?
Jesse Felder: Well, yeah, I do think it’s not so much trying to worry people, I think it’s just to be aware, and the Fed has been very, very communicative, very open about what they intend to do. Jay Powell to me, you know that I think the simplest way to explain it is this inflation rethink is essentially the opposite, the mirror image of the Volcker Fed. Obviously, Paul Volcker reined in runaway inflation in the early ’80s, by essentially breaking the back of inflation, but the way he did that was by changing inflation expectations, and basically convincing the markets, convincing consumers that he was going to do whatever it takes to rein in inflation.
Jesse Felder: And so, since that time of last 40 years, we’ve had a disinflationary environment, and that part of that is inflation expectations. There are other things I think, demographics and globalization that have played a big role, too. But now we have a Fed that’s basically doing the opposite of what Paul Volcker did, we just said, “We’re going to do everything in our power to create inflation, allow inflation to run hot.” And at the same time, we’re seeing fiscal policy step in with a very similar mandate. And I think that’s what is the main difference between what we saw kind of during the financial crisis and in the early years coming out of the financial crisis, which was all just monetary policy back then. And quantitative easing didn’t result in inflation because fiscal policy… We saw the Tea Party take a lot of control in Congress, and there was a lot of fiscal… Not austerity in the way that we saw in some places in Europe, but relative to what we’re seeing today, there was serious austerity on the fiscal side.
Jesse Felder: So today, we see a Fed that wants to create inflation through monetary policy, and fiscal policy spending trillions and trillions of dollars in ways that we haven’t seen in generations. And so I think together, you have to take… Then there’s the famous adage, don’t fight the Fed. Well, the Fed is right now saying, “We’re going to create inflation, we’re going to allow inflation to run hot.” And I think investors should… If you believe don’t fight the Fed, you need to protect yourself against these inflationary impulses.
Frank Curzio: Yeah, we’ll go over that, how to protect yourself, and that’s a great segue. But first, we you talk about Volcker. He also raised rates incredibly, right? I mean, the primary was 20% back then, it resulted in two recessions, right? And just a massive slowdown. So, it’s almost like you’re taking the leverage out of the system, right? So you mentioned a lot of good points what the Fed say, “We want inflation,” but does the Fed actually know how much inflation is actually out there? I mean, not that anyone’s smarter than the Fed, I’m not saying that. But when I look at the CPI, your goal was 2%. On a compound annual growth rate based on the last number, it’s over 4%, core import prices, same thing. CAGR is over 8%.
Frank Curzio: We’re seeing businesses around me in Florida and my podcast, just like your podcast… Talk about that later, amazing podcast that you have. I get tons of emails from all over the country, all over the world. And just especially the US, not just in Florida, businesses are open at 60%, 70%. Not because they’re not allowed to be open 100%, because they can’t find employees. And what do you see, wages starting to rise, right? It’s going to result in much, much higher prices, you got to pay these people even more money.
Frank Curzio: For me, it seems like the Fed should be like, “Okay, we’re achieving that.” But it’s still pedal to the metal, right? Buying bonds, QE, trillions more coming into the market after 10 and a half trillion already injected into this market. And the Fed just came out, Powell came out and said, “Hey, we’re going to have low interest rates through this year, maybe through next year.” Can we see a double digit inflation rate? Because once it starts going, it’s like a train going downhill. It seems like it can’t be stopped. And right now just seems like the time like, “Hey, everything’s pretty much working. Everything’s at all-time highs,” other than market fell off a little bit today. That’s kind of what has me nervous, but I don’t know, and I’m using that word nervous or cautious while I’m positioning myself for inflation, but I don’t know if… Do you think the Fed’s behind the curve here?
Jesse Felder: Yeah, I absolutely do think they’re pretty far behind the curve. And that’s by design. I mean, that is exactly what they’re trying to do with this inflation rethink. It was probably 2018, ’19, they did their listening tour, I think they called it where they wanted to hear from consumers and businesses and people who were maybe unhappy with the way Fed policy have worked in previous years, and I think the conclusion that they came to, and that they’ve told us, is that, in trying to get ahead of inflation and be too hawkish, they’ve potentially prevented a lot of people from maybe earning as much money as they should be earning, and really seeing the full employment that they would like to see.
Jesse Felder: So this, allowing the economy to run hot, allowing inflation to run above 2%, is all supposedly in an effort to get a lot of the low-wage people who have wanted a job, maybe haven’t been able to get one over the past cycle, to really push the limits of the what full employment looks like, and then push wage inflation. So, I think Joe Biden is talked about, and I think Jay Powell is on the same page here, is that this inequality, wealth inequality, income inequality, these are challenges that I think Joe Biden sees as his primary mandate, is he wants to be the most labor friendly president in history, he said that. And I think Jay Powell looked at it as his job to enable that, encourage that in any way he can.
Jesse Felder: And so allowing inflation to run hot, is his way of saying, “Okay, we are going to help try and push wages up, we are going to try and get more of these people on the kind of lower rungs of the workforce the opportunity to work and to earn more money than they’ve maybe been able to earn.” Like you said, the risk to that is allowing inflation to run hot and inflation expectations to really run away, and I think that’s the danger that the Fed is playing with here. That if you allow inflation expectations to start really running away, and people… You look at the real estate market, I think the real estate market is probably a good example of what we might see in the real economy. So, you have people paying incredible prices for real estate, prices are up 20% year over year in a lot of places, like they are here in Bend, Oregon. And people aren’t shy from bidding well above asking price and these types of things, because they believe, “If I don’t get into the real estate market today, I may never be able to buy a house in the future.”
Jesse Felder: Now, that’s the mindset that creates these runaway prices. And if you see that mindset shift to things in the real economy, like groceries and gas and lumber and all these things, we’re seeing prices already take off, but if that inflationary mindset shifts to, “You know what, I need to fill up my gas tank today, because gas prices are going to be higher next week.” Energy companies have already said, “We could have gas shortages, we could have gas stations run out of gas this summer.” Kind of throwback to the ’70s. And so that inflationary mindset can become very problematic for the Fed.
Frank Curzio: And you cite a bunch of reasons on… Again, you can follow Jesse, Jesse Felder though his website, we’ll get that in a little bit and his podcast and that which is really, really cool, and his blog. But you’re talking about some of the effects of this where it sounds like you’re expecting peak earnings per share growth, you’re looking at margin contraction, right? We’re in the growth market now, where expectations are high for these companies have continued to grow. We all saw the FAANG names, I know you cover them as well, those earnings were absolutely insane, 30% above the estimates. And also you cite the insider selling too what you’re seeing, and you provide a great chart and you say, “Just showing how during these periods, when you see excessive insider selling, it’s usually just that pre warning that the market comes down.”
Frank Curzio: So I guess, how do you position yourself if you’re seeing this type of environment? Because when you have inflation in the early stages of inflation, if you want to say this is early stages of inflation, you see a lot of asset prices rise tremendously. And they could go, as you know, much further than anyone ever believes, and same on the downside. So, how do you position yourself? I mean, you’re looking at gold, is it Bitcoin? Is it cyclicals or tips? I mean, how do you position yourself to protect yourself? And what are your telling your subscribers?
Jesse Felder: Well, yeah, I think, to first look at the equity market, I think a lot of people don’t appreciate the fact that if you’re trying to fix these problems with the wealth and income inequality, what that means, another way of saying, “I’m pro labor,” means I’m… And Joe Biden will never say this, and Jay Powell would never say this, but pro labor means you’re anti capital. I’m not saying anti capitalism, but the main thing I look at is corporate profit margins. And if you look at the last a couple of decades, the last 10, 15 years, specifically, we see corporate profit margins are higher than they’ve ever been in history. And that is the direct inverse of labor share of income.
Jesse Felder: So, labor share has gone to the lowest levels in history. So, how do you promote labor? How does labor make more money? How do you fix this income inequality? Well, labor takes share back from capital. What does that mean? That means corporate profit margins come down, and we’re seeing the Biden ministration say, “We want to raise corporate taxes. We want to create a million new jobs through this infrastructure package. We want inflation and the economy to run hot.” All of these things are pointing to lower corporate profit margins. And if you lower corporate profit margins, valuations today are already off the charts. Equities have never been more expensive than they are today.
Jesse Felder: In fact, I just put out a piece to my subscribers, it shows based on the Warren Buffett yardstick, which kind of takes margins out of the equation and shows I think the true valuation of equity market, we’re about 40% more expensive than we were at the peak of the dot-com mania today. Which means stocks would have to fall 30% today, just to get back to the peak valuation they saw 20 years ago. So, there’s a lot of potential risk in the equity market. Returns over the next 10 years, 20 years could be very, very meager relative to what we’ve seen over the last 10, 20 years.
Jesse Felder: I do think the only value, the only actual investment case that could be made for anything in the markets today is things focused in real assets, things that are outside the purview of the manias in equities and ESG. Think of all the popular strategies today, cryptocurrencies. To me, I think where I’m seeing real value in the markets today and real compelling investment case is in the energy sector which have been pounding the table bullish for the past six months, and in the precious metals. I do think gold is probably the most tried and true way to protect yourself from currency debasement and inflation, historically. And ironically, today with the fundamental case for gold improving so much I think over the last few months, it’s ironic to see so much money flow out of gold ETFs and sending them towards the precious metals, generally become very, very depressed. I think it creates a very interesting opportunity.
Frank Curzio: Now, in all fairness, because I hear the same argument with dot-com and I agree with you, stocks are expensive. But is it a fair comparison, because I remember the dot-com era, and it was just you saw so many companies that don’t have earnings. They have Facebook reporting 55 billion in sales, hundreds of billions of dollars on the balance sheets of these companies, they just so much bigger, where even… Yeah, they’re trading at 23, 24 times earnings based on those crazy earnings that they just reported, which I don’t know if it can be repeated going forward. Some of them, when you look at Facebook and other things, and also Google, Alphabet.
Frank Curzio: So, is it an apples-to-apples comparison? Because I remember back then where to me, it seems like crypto was more like the dot-com era where these things just nobody even knows what they do. I mean, you only had a couple of webpages then, these guys have billion dollar valuations. But you’re looking at some of these big technology companies and the profits that they’re generating, I could see margins contracting, but is it going to be like a dot-com thing where that was a massive… People don’t remember that sell off, right? I mean, we have sell offs now, they happen within like, a few weeks. And even we look at COVID, the last sell off, big sell off, 30% plus, and S&P 500 took place pretty much over a month, maybe 40 days.
Frank Curzio: When the tech market blew up. I mean, that was a three-year painful 75% decline. So, do you think that we could see that? Or is it more like these things really need to correct where we have valuations that are more in line with the potential growth? Which, we’re not going to see this exceptional growth, right? This is after COVID and stuff. So, I was just curious on your thoughts on that.
Jesse Felder: Yeah, obviously, it’s not a apples-to-apples comparison. History rhymes, it doesn’t repeat. But I do think there are a lot of parallels, I think if you actually were trading through that period in 2000, 2001, 2002, my investors had a wonderful time through that period. There were tons of stocks that were actually really, really cheap in 2000. These were typically the kind of bricks and mortar, old economy stocks, if you will, that we’re kind of left for dead when technology was taking off through ’98, ’99. And so you look at the Russell of 2000, and it actually was flat or even gained from 2000 to 2003. And that was because Russell represented a lot of those kind of more value kinds of stocks. I don’t think it does today.
Jesse Felder: Today, I think when you look at the median stock in the S&P 500, it is 50% more expensive than the median stock was back in 2000. So, I think back then, it was really a tech-focused bubble. There are a lot of blue chips that got really expensive too back then. I think the bubble in equities is much broader today. My friend John Hussman has done some terrific work on this where he shows the cheapest decile, the cheapest 10% of stocks in the market today are significantly more expensive than they were in 2000. And so, the breadth of the overvaluation in the market today is more significant. It’s much harder to find value. Yes, those stocks, Google, Apple, Facebook, are probably not the best examples of the overvaluation in the market today. I think, probably the best examples are going to be a lot of the EV names, a lot of the SPAC focused stuff.
Jesse Felder: There’s just a lot of stocks. I think, to me, things that I’ve been shorting over the past few months are a lot of these stay-at-home stocks got incredibly overvalued. Peloton, Zoom, not only were the stocks popular with the stay-at-home traders, but it really benefited from some kind of one-time unique boosts of their top line, very similar to the dot-com bubble. A lot of people forget one of the drivers of the dot-com bubble was this Y2K potential disaster. That people thought a lot of computers were just going to crash when the calendars rolled over from 1999 to 2000. And so there was a huge boom in spending on computers and software and all this kind of stuff leading into that. And also left a huge hangover after the calendar rolled over the 2000, there weren’t any problems, a bunch of demand had been pulled forward from the future, there was kind of a… You saw a lot of these companies that were great companies have kind of a real hangover that was represented in their numbers.
Jesse Felder: And I think we’re seeing that in a lot of these stay-at-home stocks, and they still are terrifically overvalued, most of them. We could probably see that too in even a lot of these popular names, you look at Apple, had a huge quarter because selling 5G phones and people are excited to get back out and shop and I think we’re probably seeing that in Facebook and Google’s numbers too, where a lot of companies are like, “Okay, we really need to get ahead of this boom in the economy through advertising.” And those are probably one-time gains. Amazon is probably another good example too. I don’t think it’s a coincidence that Jeff Bezos is retiring today and potentially wanting to go out on top. Amazon is clearly one of the beneficiaries of a lot of the stay-at-home stuff.
Jesse Felder: You mentioned my insider selling metric. Jeff Bezos has been selling massive amount of stock over the past six, nine months. And the numbers generally suggest that insider selling has been off the charts, we see massive inflows into equities on the part of retail investors. And conversely, we’re seeing insider selling. And the IPOs are very similar to the Coinbase IPO, where a lot of these investors want to cash out of these things. The smart money is cashing out while retail money is clamoring to get in, that’s typically a late cycle sign.
Frank Curzio: You break a lot of these things down in The Felder Report and your blog, and podcast, stuff like that, but you also bring in the point where you see a boom in fraud, that usually happens closer to market tops, right? And you bring up some great things like the price manipulation, where you seeing… Look at Dogecoin, right? I mean, it’s incredible. GameStop and you mentioned SPACs, right? I won’t get into SPACs. It’s just great how they’re structured and now the SEC is finally saying, “Okay, we have to count for warrants a certain way,” but it’s just like a get-rich-quick scheme. And as long as a retail investor is buying it, it’s going to work and now the retail investors not really buying it, so they’re probably going to go away like they did in 2017.
Frank Curzio: But you also talk about the ESG policies, where some of these policies companies are just announcing that they had these policies or announcing that they had Bitcoin in the balance sheet and that kind of manipulation. So, you do provide a lot of evidence, right? I looked at your research and you’re not a permabear or anything, but there’s a lot of things that are coming together that’s suggest that your thesis could be right.
Jesse Felder: Well yeah, the fraud thing is important. I think it was “Manias, Panics, and Crashes,” I pulled a quote from that book where they, I think it’s Charles Kindleberger, points out that very late in manias and bubbles, you start to see a lot of fraud revealed, and a lot of times that fraud can precipitate a stock-market crash, because it changes risk appetites. We were talking about 2001 and 2002, and WorldCom and Enron were two massive frauds revealed when the bubble was bursting. And in the wake of the dot-com mania, I’m just seeing so many frauds revealed today that it absolutely suggests we’re late cycle, whether it’s Greensill or Wirecard fraud in Europe, but we’re seeing plenty of them here in the United States too.
Jesse Felder: And to me, I’m going to bungle the quote, but Kindleberger says, “That’s a sign that potentially, liquidity can be waning. And a lot of these fraudsters see the window closing and their opportunity to cash out or take the money and run.” And so a lot of these things are the result of that feeling like, “Okay, now is my opportunity to cash out and if I don’t take the money and run then I’ll never have the chance to do so.” I mean, the cryptocurrency frauds in Turkey that we’ve seen billions of dollars essentially embezzled. There was another, I can’t remember, there’s another example in the post that I put up, a central banker who had stolen $300 million or something like that from the central bank. It’s worldwide and it’s just becoming so rampant that to me, it’s like, this is a sign people need to be more skeptical than usual, really need to start taking a defensive posture.
Frank Curzio: Now, let’s talk about your newsletter, The Felder Report, you have a background, you worked at Bear Stearns, you also co-founded a multi-billion dollar hedge fund. What made you switch to becoming a publisher to becoming more of a newsletter writer? Because that’s a big transition, I’ve done both as well. But I really like it where I help an individual investor having freedom, right? My freedom where you not under anyone’s umbrella or anything, where you kind of have to support their agenda sometimes. But let’s get into that, because it’s pretty exciting stuff that you’ve been doing this for a long time.
Jesse Felder: Yeah, I think what really precipitated for me is my passion for the business is really on the research side of things, I just love looking for investment opportunities, analyzing investment opportunities. And so the other side of that, too, is the research business, the newsletter business allows me the freedom to focus on that. But also I started the blog back in 2005, and that was kind of precipitated by the real estate bubble. I had gone through, I was the head trader of a hedge fund through the dot-com mania, watched that, I kind of a front-row seat, watched people make terrific fortunes and lose everything in the bust.
Jesse Felder: During the real estate bubble, I kind of felt the same way that this is deja vu and it’s only five years later. So, I kind of started the blog in a way to say, “Hey, I think if I can help spread the word here at all, and maybe save people some money, then that’s worth it to me.” Yeah, the newsletter allows me to, I guess, help educate people, help share my passion with people. It’s a price point where hopefully anybody can be able to afford it, and that’s vastly different from running a hedge fund where you have to have qualified investors. I really do, I think, much prefer teaching a man to fish rather than giving people fish and I think that the newsletter business is much more suited to that.
Frank Curzio: No, it’s great stuff and you get… I mean, it’s thefelderreport.com, guys, hit the subscribe scribe button if you want and really great stuff, you have a blog. Another thing I want to go over here is the podcast, it’s nice to see… Art Of Worldly Wisdom is the name of your podcast, and you’ve been doing it believe since 2017. I mean, I’ve been doing this for 14 years and nobody knew what a podcast was, back at TheStreet.com days, when I was working with Cramer on Wall Street. But it’s nice to see so many people getting into it, and you’ve got into pretty early now, everybody has a podcast now. But talk about the podcast, you interview some great people here. What made you launch a podcast? Because I get that question a lot. I’m sure you do, too, where people want to have that voice, but also for me, interviewing guys like you and interviewing people for 14 years, every single week, the benefit is mine, just as it is for everybody listening to this, right? I mean, it’s incredible what the contacts and the network that you build up. But what made you do it? And I’m glad you’re doing it, and it’s great to see you doing a podcast.
Jesse Felder: Well, I put out a lot of free content that, in addition to the blog, I have a Saturday morning email that goes out and I started the podcast kind of in the same vein where I look at those platforms as an opportunity to really highlight the work of people who I think are doing fascinating work. And so, the podcast was an outgrowth of that. That Saturday morning email, I try and put out research pieces or charts or just highlight other people’s work that I think is really valuable to me. The podcast was kind of an outgrowth of that, I said, “There are people that I really admire in this industry, who I think are doing terrific work and maybe don’t have the exposure that I feel like they should have.” And so I see the podcast as my selfish opportunity to really pick their brains for an hour or however long we spend.
Jesse Felder: Then also to just highlight and share the work they’re doing with my audience. And so yeah, it’s given me the opportunity to interview Roger McNamee, one of the first investors in Facebook and multi billionaire who’s now kind of turned tech… I don’t want to say anti tech, but anti surveillance economy, and talked to somebody like Diego Parrilla , who I spoke to about not just the bubbles in the markets today, but how to take advantage of the anti-bubbles. What are the opportunities that are created by these bubbles for investors who are looking for them? So, it’s just been a lot of fun for me to do the podcast. I’m really not very good at it, but it’s been a blessing to me to be able to talk to a lot of these people who I just really admire.
Frank Curzio: Yeah, no, actually, it’s really good. So, “Art Of Worldly Wisdom,” I appreciate the modesty. Now, last thing here, we’re coming to the end of it. So, someone subscribes to your newsletter, which this is one of the things I love talking to my guests about, especially analysts, what is your methodology? Sounds like it might be top down, because we’ve been talking about the economy inflation, how to position yourself, is it bottom up where you look at individual companies and earnings growth potential? Or, yeah, I don’t know, technical, value base, fundamental, this way people know what they’re going to get when they subscribe to your product and some of those ideas?
Jesse Felder: It’s a good question. I really consider myself a jack of all trades, master of none. I really started out as a fundamental kind of value investor, but over the past 15, 20 years, I’ve incorporated some other disciplines. So really, the core of what I do, and this is really kind of more for the pro subscription, is I’m looking for opportunities, a lot of that comes from studying insider buying and selling. So, I’m looking for a stock that’s cheap, maybe has a significant amount of insider buying, that kind of validates my idea that it’s cheap, and not cheap for a good reason, but undeservedly so. I do use a lot of technical analysis and sentiment work to kind of improve my timing.
Jesse Felder: I met Tom DeMark about 15, 16 years ago, and have been studying momentum really since then. I had Michael Oliver on my podcast, who founded Momentum Structural Analysis, and he does some fascinating work in that space, too. So, I do think as a value investor, it can be really critical to be able to add this kind of a momentum and analysis looking for signs of exhaustion and downtrends. And traditional stuff that swing traders might use, but using it on a longer-term kind of investment basis, and I think that’s really helpful. I mean, it was one of the things that really turned me bullish on the gold price in 2015, ’16, and turned me super bullish, like I said, on energy last year. The evaluations got incredibly cheap. At the same time, we saw massive insider buying in stocks, like continental resources, and a lot of the energy infrastructure stocks. I look for a margin of safety, but I also want a lot of those a lot of these signs of momentum and insiders to kind of confirm my ideas.
Frank Curzio: And it definitely makes sense. And speaking of ideas, which my audience always loves, and I’m sure your audience always loves from your guests, do you have any individual ideas, and if you can’t share them, I don’t want you to share anything that people are paying for in the newsletter. But I know you said you like gold, different sectors, inflationary sectors that we talked about earlier. Is there any individual names that you’d like to share?
Jesse Felder: There are several that I still own. I think right now, I’m probably more focused on the short side. And then on the long side, I do think we’re kind of potentially at another turning point in the major trends. I think, like you’ve mentioned, I’ve seen SPACs fall off, a lot of these things that have been the real focus of risk on risk appetites have reversed and rolled over. A lot of these SPACs are down 40%, 50%. I think we’re seeing a lot of… To me, that’s a sign of breadth divergence in the market and potentially shifting risk appetite. I’ve been focused on, like I said, shorting a lot of these stay-at-home stocks, I think the ARK Innovation Fund is pretty vulnerable right now. And small caps, I think small caps have gotten extremely overextended, overvalued, and they’re basically a huge play on this reflation trade.
Jesse Felder: One of the signs I look at to kind of analyze that reflation trade is you look at the relative performance of cyclical stocks, and that peaked back in February and is potentially rolling over right now, which is not a great sign for risk on trade, that reflation trade. And I think small caps might be one of the more vulnerable areas.
Frank Curzio: Definitely makes sense. Definitely makes sense. So yeah, I agree with you. I mean, those short opportunities very, very good. And even though outside of today, where the markets are coming down pretty sharply, the markets are very deceiving, trading all-time highs, where you’re seeing ESG names, a lot of these SPACs starting to get nailed now pretty hard. So, it is interesting.
Frank Curzio: So, this is the last question I’m going to ask you. I hope the answer is yes. Even if it’s not, if I were you, I’d lie about it and say yes. But I see the guitars in the background. You have any relation to Don Felder? And I don’t know if you got that question before and somebody wanted me to ask you that, and I said, “I can’t find anything.” But now you got the guitars in the back, I’m hoping the answer is yes.
Jesse Felder: Yes. Don is my dad. And yeah, so… Yeah, I have a guitar hobby, and it’s probably pretty obvious where it comes from.
Frank Curzio: That’s great guys. Just in case you don’t know, but you should know, lead guitarist for the Eagles for a very, very long time. We could have talked about the whole podcast just about that. So, I’m glad I waited ’till the end, so this way we’re kind of out of time. But just thanks so much for coming on. I appreciate it. I love the work that you do and I really got a chance, in the past four or five days, to really go through everything, which I do, I like vetting, this way I fully vet interviews and just seen a lot of stuff that you’ve been writing about. Just really cool and also the people that you follow. If someone wants to follow you, how can they do that? And also if you want to give me a Twitter handle as well, because I know people love to follow people on Twitter?
Jesse Felder: Yeah, I do. I’m fairly active on Twitter, I do a lot of reading and things and I usually tweet out probably way too much, but it’s a lot of the stuff that I’m reading and I’m finding valuable. It’s just @jessefelder and then the blog and the newsletters at thefelderreport.com.
Frank Curzio: Yeah. And again, being modest, I think you have120,000, or over 100,000, followers, so you know you’re doing something right when you have that many followers, which is really cool. So, thank you so much for coming on. And yeah, if you ever need anything, feel free to give me a shout. I’d love to talk research and talk stocks and talk ideas with you. But I really appreciate you coming on, means a lot.
Jesse Felder: Yeah, it was a lot of fun, Frank, thanks for having me on.
Frank Curzio: All right, bye. Take care. Hey, it was great stuff from Jesse. Just awesome. Can’t believe he’s at that many followers on Twitter. Can’t believe he’s related to Don Felder. That’s the biggest thing, right? The Eagles? Forget about everything he said, regardless, I mean, that was the biggest thing. That’s awesome. Which is really cool. So I was hoping that was the case with… If you watch on our Curzio Research YouTube page, we do all videos for this whole podcast, but you’ll see he has guitars, really nice guitars in the background and stuff. So yeah, I was hoping that was the case, which is awesome.
Frank Curzio: But hey, he’s a really smart guy. I love this take on inflation, seems like he’s a bit bearish, much more bearish than me, I am cautious. But yeah, he’s shorting different things, a lot of things getting killed out there. But I love that interview, that was really great, first time guests. But this podcast is about you, not about me. Let me know what you thought at firstname.lastname@example.org, that’s email@example.com.
Frank Curzio: Now, let’s bring in one and only Daniel Creech, senior analyst at Curzio Research, where we break down most important stories of the week, and try to have a little fun with it, make it a little entertaining. But a lot going on. I mean, Dan, what’s going on? How’s everything.
Daniel Creech: Frank, what’s happening? Happy Wednesday. Yeah, lots going on. We got a Berkshire Hathaway meeting, cryptocurrency’s Dogecoin, or however the hell you say that, and all kinds of things, FedCoin. Man, we can go anywhere and everywhere. Plus, there’s a rich single woman out there looking for love.
Frank Curzio: There is, and that is Melinda Gates. I mean, it’s no surprise, I think, right? Billionaires get divorced. If you want to be really great at something, which most billionaires are, or be the best at something, you have to sacrifice a lot. I mean, even when it comes to sports, and Jordan, I think, got a divorce, it’s going… It’s very hard, because you’re giving up everything. But if you’re going to give up everything, do it when you’re worth hundreds of billions of dollars, right? Because you get a pretty nice check, I think, which is cool. I don’t know, I mean, I don’t know what Bill Gates is doing. I don’t know what he has on his profile, or if he’s going to online dating services, making sure everybody that he looks up has the vaccine, of course.
Daniel Creech: Well, yeah.
Frank Curzio: And definitely believes in green energy and stuff. But I don’t think it’s going to be hard for him to get any single woman he wants. Doesn’t matter what you look like sometimes. It’s like a band member, right? I mean, if you’re a band member, it doesn’t matter what you look like, you’re going to have girls all over you. Man, me, I was always a chubby kid at school, I wasn’t that lucky.
Daniel Creech: I’m heartbroken for him. I really am. But it’s a good life lesson. I guess, love, you can’t buy happiness. That’s another age old saying, which is evidently true. But half of, what, 160, 170 billion. Yeah, right. I mean, that’s got to sting. But they’ll both be all right, so I-
Frank Curzio: I mean, yeah, I don’t know. Does it sting? I guess, at that level? Is Jeff Bezos really pissed off? I don’t know. But-
Daniel Creech: I would be, I’ll be honest, I would be. Giving up half of anything? I don’t care how much you got. It would suck.
Frank Curzio: Yeah. And that’s both sides. I mean, if the woman makes the money, if the man makes the money, but just giving up half it’s… Yeah, that’s pretty… And prenups, prenups are all about pre, before, okay? Now, he made a ton of money over the past whatever years, decades, they’ve been married. So yeah, it is interesting. But I think Forbes is going to have to create a bigger list of billionaires since, right away, you automatically have more and more billionaires the more people get divorced, right?
Daniel Creech: Yeah, absolutely.
Frank Curzio: Instead of one, it’s two, and that’s awesome. Pretty cool. Anyway, I just thought, yeah, that was everywhere in the news. I could tell, sometimes it’s a slow day at the office or a slow day… There are earnings coming out like crazy, but yeah, they made a very, very big deal about that. But-
Daniel Creech: Hey, speaking of billionaires, we got to get to this. I’m dying about this Berkshire Hathaway meeting. I loved that.
Frank Curzio: Yep.
Daniel Creech: They share the same opinion basically on Bitcoin. Bill Gates, which we can get to later was bashing Bitcoin and it was an older quote, but he was talking about the amount of electricity it uses per transaction versus any other service payment movement known to mankind, I believe is how he said it, to get good things. But Buffett and Munger, man, how often do you get to hear from the greatest and his right hand man Buffett and Munger? Only about once a year they do the Berkshire annual meeting, it was six hours, Frank. One, two, three, four, five, six is how long I believe it lasted, that’s impressive considering these guys are old.
Frank Curzio: We looked how old they are, right? I mean, I didn’t realize… I knew Buffett was up there, 90, and Munger-
Daniel Creech: I had a chance, I… Frank would have lost a drink that easily because I knew Munger was over 94, 95 and he’s like, “I don’t think…” He’s 97.
Frank Curzio: He’s 97 years old. Holy cow.
Daniel Creech: And they’re both sharp as hell. I mean, when you listen to them, they’re incredible. But anyway, what do you want to touch on? They were talking about cryptocurrency-
Frank Curzio: I mean, the Bitcoin… Munger trashed Bitcoin right? He said ,and I’m quoting, “I think the whole damn development is disgusting and contrary to the age of civilization.” Hey, Munger, tell me how you really feel. But yeah, and like you said with Bitcoin, the electricity argument is just so funny, right? I mean, as people are on their computer, driving their cars, heating their homes, cooling their homes, using all the electricity in the world, they’re like, “Bitcoin’s going to ruin the world.” From mining operations and stuff. I just think it’s kind of hilarious. But look, I agree with Munger to a certain extent, right? You have XRP, which is a BS, no utilities and Doge… Did you see the market cap of Doge, Dan?
Daniel Creech: Yeah, it’s close to 70 billion now.
Frank Curzio: 87 billion.
Daniel Creech: 87, wow.
Frank Curzio: 87 billion. I mean, you’re looking at-
Daniel Creech: I know I’m one up here for you, but you got to explain to me, why is everybody so upset about this coin skyrocketing? Everybody that knows it… You can’t hear it mentioned without it being told it’s a joke, and it is. It has no value. Everybody already knows that. So, why does it trigger everybody, including the Frank Curzio? Because he goes off on this and I love it. Why is it bad for crypto? And why is it like… Why does it make everybody so passionate and angry?
Frank Curzio: Dan, for me, it makes me angry because this company, we’ve actually… I believe in crypto so much that we have a security token, right? So, I really believe in this industry, I believe in DeFi, decentralized finance, and NFT’s had their place, I think 90% are worthless, but I get it, the blockchain technology. But you’re seeing worldwide adoption and the chance for all this disruption. But then, you have the bullshit like Dogecoin when you have billionaires promoting it. I’m happy for them. Listen, I’m happy for people that make money, good for you. It’s cool. But just to put this in perspective of Dogecoin, the market cap right now is bigger than FedEx, GM, Sherwin-Williams, Gilead, CME Group, and ConocoPhillips. And you know what, that’s not bad for a company that doesn’t give any equity to shareholders and does not have to report any financials. You know how much money they generated last year? Dogecoin? You don’t know. Nobody knows, because they don’t have to report it.
Daniel Creech: Hey, is this the most successful joke of all time?
Frank Curzio: It’s going to be-
Daniel Creech: It’s got to have the entire market cap.
Frank Curzio: I think WorldCom was $100 billion… was one of the biggest in the world frauds, $100 billion. And then you had, I think it was 80 billion for Enron. So, this is going to be up there as one of the biggest frauds ever. And again, I would just try to create a business model or do something, I mean, try to… GameStop’s trying to create a business model saying, “Hey, we’re going to get into online gaming.” No kidding. Now everyone can download… Even the new PlayStations, PlayStation 5, they have two versions, one, you can still use a disc, the other one is all downloads, all downloads. So no need to go to GameStop. And I’m a GameStop fan because you go in there, they know every game, everything, which is awesome. And you go to Walmart, you ask them, they read the back of the box to you, “This game…” I’m like, “Forget it. Just tell me you don’t know.”
Frank Curzio: I mean, why do people don’t say they don’t know? I never figured… I hate people that just… It’s okay to say you don’t know, not everybody knows everything. Just say you don’t know. Somebody asked me about… Even if it’s a popular stock that I didn’t cover, I’d be like, “You know what? I don’t cover it, I don’t know.” Why don’t people just say, “I don’t know.”
Frank Curzio: Anyway, with GameStop too, at least they trying. They’re raising money now, they got a new CEO, and said, “Oh, we’re going to get into online.” Which is ridiculous, right? But at least they’re trying. Dogecoin’s like, “I don’t even care.”
Daniel Creech: I got to stop short of comparing it. And I agree with you about the big frauds and stuff. But how is it a fraud if you tell everybody it’s a joke? I don’t see the fraud there. That’s what I think, it triggers everybody, and I understand. I get your argument about it’s bad for Bitcoin or it’s bad for cryptos in general. I guess I understand that, I just I have to stop short of thinking it’s a fraud. I don’t think it’s bad. I really don’t. I think it’s hilarious, and I think it’s good PDR.
Frank Curzio: Okay, how many people, as a percentage, honest question, do you think own it, that have no idea that they don’t need to report financials and you’re not getting equity stake? I would say 90% of the people.
Daniel Creech: Oh, yeah. And I would-
Frank Curzio: That’s why… Because they don’t understand it. We understand it, we’re in the industry. We get it and I know this. That’s what bothers me-
Daniel Creech: I could be totally wrong here. I think the vast majority of the people all know that it’s a joke or a game of musical chairs, and I think everybody’s just having fun. And when something’s 10 cents or less or a fraction of a penny or 50 cents or whatever, you can have a lot of fun.
Frank Curzio: Yeah, listen, everyone’s making money, I get it, you’re looking at a Reddit crowd-
Daniel Creech: And I’m not alone. I don’t have any, I wish I did. I wish-
Frank Curzio: I don’t have any either. And I’m not bashing people who own it. But when it does blow up, just be careful, because for me, that the thing that bothers me the most is not that people are making money on it or, “Oh, it’s…” It’s just when I look at this… That’s the biggest story in crypto right now and it shouldn’t be, and when this thing blows up, that’s going to give so much skepticism people, right? They’re going to be so skeptic now, saying, “Well, crypto, all this bullshit. Look at…” And it’s sad that that has to happen because you’re going to see fraud, you’re going to see different things. But to see how Mark Cuban actually says this is a joke, and what’s he call it? Dogecoin or something?
Daniel Creech: Yeah. I’m not sure but-
Frank Curzio: Listen, he’s a millionaire and he’s-
Daniel Creech: I know him and Musk have fun with it. And like I said, it’s a joke.
Frank Curzio: It is. And Elon Musk is tweeting about it with… He’s the Dogefather. He’s going on Saturday Night Live and all this.
Daniel Creech: That’s this weekend, I believe. I think that’s when he’s hosting it.
Frank Curzio: It’s going to be hard for him on Saturday Night Live, because a lot of those people don’t like him.
Daniel Creech: Oh, really?
Frank Curzio: A lot of the… Yeah, they came out and said they weren’t happy that he is going to be on again, that’s a big hardcore leftist crowd, so it’s going to be interesting how they treat him or how it’s going to go. But again, it is Elon Musk and Elon Musk could do whatever he wants, and this is par for the course for him. But okay, that’s one thing that they said with Munger and Buffett, they attacked Robinhood, right? Which is interesting, because Munger came out and said, “Listen, they use payment of orderflow.” That’s their business model. So, that’s how they get paid. That’s how they generate revenue. They don’t do it through commission, so if they’re not doing it on commissions-
Daniel Creech: That’s how they offer free trading and such, yes.
Frank Curzio: Yeah. So, it encourages trading at all cost. And I understand that, and you’re getting a lot of young people on the platform, and then they’re watching these YouTube videos that’ll tell them, “ESG companies,” and they went up 300%. Now, they’re all down 60%, 70% from their highs and getting murdered. So you’re seeing a lot of this stuff out there. I get it. But that’s also the same business model for E*TRADE, Ameritrade now, right? They’re not charging commissions, but they’re making it through orderflow. They’re making it through different products. But wouldn’t you say that about the whole industry?
Daniel Creech: Yeah. I mean, I think that’s part of it. I’m not saying it’s a good part of it, but there isn’t anything for free. So, I know this argument has been hashed out a long time with the Robinhood stuff. But if you think that you’re going to get a service for free, that’s just misleading. So, they have to stay in business somehow. The orderflow payment… I love how they take stances. Munger is always on one side or the other of the fence. Buffett, he’s good at straddling the fence. He doesn’t get the name Uncle Warren for anything, one of the most cutthroat, amazing business guys in the world has the media just eating out of his hand. But I like their bluntness about that.
Frank Curzio: You sounds like you’re all pissed of-
Daniel Creech: No, I respect him. I like him. Because, to my point… So, real quickly on Robinhood, it’s fine to call it the gamification of it, and they do. I mean, when you place an order… I’ve seen screenshots. I mean, there’s like balloons going off, it looks like somebody sent you a happy birthday text. And they’re playing on the emotions, that’s typical marketing, but I guess I have a dark soul, I don’t care about any of that. I did like their comments on it and how Buffett said he was looking forward to reading the S-1. If you work at Robinhood, you know you’re sweating because you’re having to disclose everything, that guy’s one of the smartest readers and that’s just… I liked how he ended on that.
Daniel Creech: Real quick on the fence thing, though, because they turned to… There was a question about their ownership. I don’t have in front of me, I’m sorry, that’s lazy. But they have a lot of money in Chevron, as a stock holding. Well, Chevron is ruining Mother Nature. So, that’s not good right now with all the woke people. But I like he straddled the fence and just said, “Listen, we can’t go carbon neutral as fast as everybody wants to, it’s going to be a transition.” And he didn’t back down. He didn’t go out and say how crazy people were. He did a little bit, but he didn’t back down from owning that. And I really respect that. And he’s so smart, he’s not going to get a lot of pushback. The ESG people and the client environmentalist, they’re not going to go after and boycott, seize candy, or anything like that.
Frank Curzio: Yeah, and it’s interesting. The whole ESG-
Daniel Creech: And, if they do, sorry, they had the best Geico commercials with that little Geico gecko, who can go out in front everybody and make everybody love them.
Frank Curzio: They do. They do have great commercials.
Daniel Creech: It’s brilliant.
Frank Curzio: But yeah, I mean, look, the whole Green Movement, people want to save the planet, whatever. It was funny how Biden, and I think this might have been a mistake when he said it, said that, “We’re going to do everything we can to prevent climate change and provide a safer environment, low-carbon emissions,” but at the end of day, he also said, “But we’re doing a great job because it only accounts for the US, and it accounts for 11% the carbon emissions and the rest of it…” wherever, China, Europe, and all the coal and everything that they’re using, and I don’t know if you ever been to some of these cities in China, Beijing, you have to wear masks there, it’s not because of COVID, that’s how bad the air is over there. But even if the US went carbon, whatever, by 2030, there’s no boats, there’s no cars using gasoline, nothing, whatever these stupid… whatever they want to say about it even though it’s never going to have by 2030 or 2080, it’s still not going to make a difference because nobody else is doing the same thing.
Frank Curzio: But yet, what does that mean? Nothing. If you’re an investor because companies are being pushed in this direction right now, and they didn’t come out with all these ESG strategies before Biden. They know the current administrations there, people want it and they want to make money and be in the right areas where there’s less controversy as possible, so everyone’s going to mandate that and say, “Well, we got to do it. This was spending hundreds of millions of dollars every year to provide a cleaner environment to this and that.” The end of the day, it’s just… Yes, you could make money on this trend, but you’re seeing a lot of these stocks got ahead of themselves and many, many solar companies, you look at wind companies, ESG companies. I mean, guys, they can destroy just like SPACs.
Frank Curzio: They also talked about SPAC, Daniel, how they’re probably going to go away pretty soon. And you’re seeing that, you’re seeing some of this BS in SPACs that the SEC came out and said that they have the account, in their accounting measures, they have the account for the warrants. And wait ’till you see that. Wait ’till you see that information comes out how much money these people have generated with warrants, the prices they got in, wait till you see this and you’re going to be like, “Holy crap.” Because their risk, these things come out $10, they take over a company, comes out $16, $15. And then you get old retail investors to buy, go up to $20. These guys are in like $1. They don’t even care. They don’t even care $10, $8, they’re making a fortune. That’s how venture capital works. That’s how these guys work. They make money with zero risk. That’s their goal, zero risk, make as much money as you can. And that’s why SPACs were hot, and they’re no longer hot now, because retail investors aren’t buying them.
Daniel Creech: Yeah, I mean, another great Buffett, I’m paraphrasing here, but he said, “Wherever the money goes, Wall Street goes,” and they’re going to do a great… They’re going to play the game better than most. And yeah, it won’t last forever. Again, every musical chairs games ends up ending at some point. So, I like how he summed that up. How to turn the ESG into valuable information for all you listeners and future subscribers. Did you see there are some rumors going out, and I want everybody to pay attention as you watch the news flow over the next however long months this takes to debate the multi trillion dollar infrastructure program between the Rs and Ds. ESG people are going to be pissed, Frank, because you know what’s rumored to get government subsidies going forward to help the clean environment?
Frank Curzio: What?
Daniel Creech: Uranium. And uranium companies. So uranium is spiking today, uranium companies several of them are, because there’s rumors floating around that there’s not going to be happy people, but you’re going to slide all this kind of stuff into these bills at the last minute, and who knows what’s all going to be in there. But uranium has been on a great run, uranium stocks, excuse me, because you’ve talked about how the price and the stocks are moving, or one’s moving versus the other. But if any of this is true, if you believe that, if you believe any person in power on the Democratic side about changing the earth, buy uranium stocks, or at least have some exposure, we’re doing very good on a couple of the picks in Dollar Stock Club. We’ve been in and out in different newsletters. But this is one of those macro things that you can’t pick the rules, so go along for the ride.
Frank Curzio: Yeah, and uranium at the end of the day, people want to complain about it that you’re going to die. It’s one of the safest, if not the safest form of energy, and also the most powerful form of clean energy, it’s 100% baseload power. So, that means you can use it 100% of the time, you can’t do that with wind. You need the wind blowing, you need the sun out for solar. It’s just everyone went crazy. You see Fukushima, you see Chernobyl, and people go crazy, “The world’s going to die,” and everything and all kinds of crazy stuff. But if you look over years, it takes a while for people to get over this. People are against it. But that is the ultimate form of clean energy, the best by far because it’s 100% baseload. So, you could have it going all the time, every day, power everything 24 hours a day. And that’s really important.
Frank Curzio: So, it’s nice to see that these mandates come in for uranium. And yeah, these stocks have done incredibly well off a very low basis. And we’ve heard the uranium argument, I’ve heard it from the smartest people around, I speak at conferences all over the place, Vancouver, especially, at least two or three times a year, listen to the great guys uranium telling me that prices have to change no matter what. This was 13, 14, 15, 16… Finally, you’re seeing it where there’s a huge supply, demand, imbalance and prices. I’m surprised prices aren’t higher, it’s still 30 bucks, put that in perspective, I think it was 120 pre-Fukushima. And it’s been super depressed where the average price to produce uranium is around $50, $55.
Frank Curzio: So, just to show you how electricity companies have to lock in prices, I don’t know why they’re not locking them in there right now at these cheap levels. But you’re going to see prices really, really spike soon. That’s the last component. For me, I’m a little worried that they didn’t spike. So, I don’t know if I’m going to go all in at this price with uranium. I have a lot of uranium in my portfolio that I’ve owned and go into private placements. I sold about half of those about two months ago, a little bit early. A lot of these things have gone up higher. So, I have a lot of exposure to uranium, but I need to see prices really go high because that’s making me a little nervous that they’re not going higher when they should, and I don’t know why.
Frank Curzio: But yeah, uranium is a big deal. And a couple other things they said, Daniel. How Buffett said, “We’re not going to have much luck acquiring companies in this market where it’s like a casino valuations are stretched.” And these are guys that like to do acquisitions, but do you know how hard is to acquire a company that’s trading at 50, 60, 70 times forward earnings? I mean, it’s not easy, right? It’s crazy. So, I see that point. And one of the best things I heard is how they defended buybacks. Did you think you’d listen to that part?
Daniel Creech: I saw Munger defended better than Buffett. I didn’t see any comments that he made. But yeah, I thought it was great, he justified, “Hey, if you’re buying it to push up the stock price like a lot of companies do, and nothing’s illegal about that, there’s a lot of creative accounting that goes on, that’s one thing. But if you’re buying it because you have value for future shareholders, that’s another thing.” And it’s hard to argue that Berkshire Hathaway isn’t a buy based on inflationary and everything that kind of is being talked about, and the operating businesses that they own. They’re a wonderful conglomerate. And yeah, I did like that. That’s a long answer. What stood out to you on that?
Frank Curzio: What stood out to me is buybacks just get a bad rap. They’re like snakes. My snake, I love my… I never really touted my-
Daniel Creech: Snakes deserve a bad rap.
Frank Curzio: Yeah, you’re not crazy about snakes. I mean, my snake is the nicest thing in the world, nicest animal in the world, they’re really cool, they don’t bother you. If you trap them, they’re going to get upset. If you have food on your hand, they’ll bite you. But they’re very cool animals, and they just… Everyone’s like… It’s like alligators in Florida. Everyone’s like, “Alligator!” Everyone outside of Florida, “Alligator! You’re going to die.” Have you ever seen an alligator come out of the water and attack an adult? Never happens. If you go in the water as a kid, fine, but they really don’t attack. But everybody’s deathly afraid of them, right? That’s just the way it is.
Frank Curzio: The same thing is with buybacks, because the argument here, Daniel, is that, “Well, these guys buy back their stock, they artificially inflate earnings, and then the CEOs pay themselves more money.” Okay, you have a little bit of an argument there. But let’s go a little bit further here. Because it’s the easiest way to increase earnings, right? You’re taking that supply off the market, you’re going to increase earnings. When earnings go higher, what do you do? You spend more, right? On CapEx, which goes into the economy. As earnings grow, your company grows, and what do you do? You’re going to hire more people. If you look at buybacks, being pissed off at buybacks, the stock market’s near its all-time high. Most of these companies that bought back stock, made a fortune off of that, increased their price, created amazing shareholder value, because people are shareholders, not just the CEO and the bonus and the compensation stuff.
Frank Curzio: But the benefits of buybacks, I mean, man, there’s so many worse things on Wall Street to complain about than buybacks. Buybacks actually help shareholders, they going to help the economy. When I look at this, and just… Again, nobody cares about facts. If you don’t like buybacks, it doesn’t matter what I tell you, you’re never going to believe in them, you’re going to be like, “It just makes people richer.” But it also makes the shareholders richer, which is the point of owning stocks, right? So for me, I don’t understand that. If you have a huge buyback and the market crashes 30% and stays down for many, many years, then not the best use of capital. But when I see Google announced a $50 billion buyback and Apple a $90 billion buyback, I mean, you’re looking at… When I say 150 companies have a bigger market cap than that, than the 50 billion. It’s probably like 50 companies, or 90 billion.
Daniel Creech: Yeah, it’s wild.
Frank Curzio: 100. But it’s crazy that these guys have so much cash, it’s just a portion of their cash, but they think that’s the best value for it, and it probably is. It has been in the past, they’ve done good, buying it at the right levels, because we’re near all-time highs. But just the positives certainly outweigh the negatives. It’s not all positives. Yeah, you’re right. CEO will inflate earnings, and they get paid packages. Look what Elon Musk did, right? Which you love.
Daniel Creech: Yeah, I mean, it’s a financial swear word. But like you said, it creates a lot of value. You can use it in wrong ways, but that’s not that big of a deal. And Buffett’s been, to his credit and his criticism, he’s always talking about when managers are buying back stock at the wrong time. It’s always difficult because you’re going to have to look back and say, “Okay, well, you bought shares at X and Y price, what’s the trade net today? Was that a value or not?” But yeah, they have a tremendous track record, and people blow it out of proportion.
Daniel Creech: The big deal right now is because it’s a political hot arrow is that you can go to an airline company and say, “Hey, why do you need whatever billions of dollars to stay in business when over the last X amount of years, you spent X amount, billions and billions and billions and billions on buybacks?” So, that’s the political narrative and why it gets bad. But, of course, that doesn’t mean it’s all bad. And that was a great answer, and like I said, he’s rewarded shareholders probably better than, or if not better, than anybody. So, it’s a good thing.
Frank Curzio: Yeah. And when I look to the airlines, you’re forced to close. It’s not like you did anything wrong. And a lot of these businesses-
Daniel Creech: Hey, hey, hey, don’t mix common sense with the arguments.
Frank Curzio: Yeah, the arguments for that-
Daniel Creech: I just pointed out political, Frank-
Frank Curzio: Are just ridiculous. If you had a huge buyback and your stock gets crushed, and then you just get bailed because you didn’t execute and then you get bailed out, I see that point. That doesn’t usually happen, unless you’re the banks during the financial crisis, right? Because you took on risk, you made a fortune, you burned through everybody else’s taxpayers money and then you got paid back and now the banks are the biggest in the world. I get that point.
Frank Curzio: But yeah, for buybacks, I don’t know. When I look at… I see when people get pissed off at, not just buybacks, but if you look at Elon Musk, I mean, he sold Bitcoin. Why? It added 25 cents to earnings. I think the stock did okay after earnings, but it hit a certain milestone where he got a $2 billion payment, but he’s like, “Oh, I just wanted to show how we could see…” No, you wanted to inflate your earnings, right? So again, just say what it is and move on. But when I look at this, Daniel, I just think it’s kind of funny one.
Frank Curzio: Yeah, I see some of the people’s points, I get it, but overall, buybacks are very, very… If you’re a shareholder of a stock, buybacks are very, very good, you should be happy a company’s buying it back because when it… It almost prevents it… Not completely prevents it, guys, as you know, no guarantees. But as this thing comes down, that’s the buying power coming in, where these guys could really buy this stuff. And if it gets cheap enough, then you’re going to see insiders buying. When you see buybacks and insiders buying, it’s usually a really, really good buy signal, especially in this market when everything’s so freaking expensive.
Frank Curzio: So, if you didn’t get a chance to listen, definitely listen, those guys are still sharp, they’re all there. I love that, even though they’re 90 and 97. It was really, really cool just to hear them get up there and do this for a bunch of hours for everybody. And I know there was one other thing that you wanted to talk about, which is a hot button for you is Janet Yellen saying that we have to raise rates like, “Hey, no kidding.” It seems like a lot more people are getting on board all of a sudden. I mean, maybe they kind of looking at the stats, with them going on? I don’t know. We’ve been sounding ominous for I think three or four weeks now. It’s amazing how many people are coming and going, “Well, maybe,” but I don’t know if Janet Yellen still thinks she’s the Fed chair and not as treasury secretary. And remember, the Fed and politics supposed to be separate from each other, which they haven’t been ever, at least like 20 years. But I just thought that was funny, right?
Daniel Creech: Yeah. Real quick on this just for, like you said, listeners, just pay attention going forward, because you’re going to hear a lot of back and forth about this. Buffett and Munger talked about inflation, inflationary prices all over. Basically, right now, this consensus is the only people that think inflation is going to be transitory, meaning short lived, or just because you’re comparing it over a week, year over year comparison’s coming through lock downs is basically Fed pal. Everybody else is starting to talk about it. Company on earnings calls. Excuse me, CEOs are mentioning it more and more.
Daniel Creech: So, the big takeaway here is, Janet Yellen was speaking somewhere and said, “Hey, rates might have to rise.” So, the fun fact there is she’s treasury secretary, no longer Fed chairwoman. That’s Jerome Powell now. So she quickly walked it back because there was market headlines everywhere. And if you don’t think the current administration looks at the stock market exactly as much as the last administration, you’re not paying attention out there. So, get with it.
Daniel Creech: As soon as the market starts selling off, everybody took the headline and ran about Yellen changing her mind or raising rates. It took her, what, maybe 90 minutes to walk it back. So, just know that. Until further notice, those are all buying opportunities, because they’re still going to do all their manipulation with interest rates going forward. So, don’t fall for those headlines, and gut reactions.
Frank Curzio: See with me, I think she was… I’m going to say this, and I believe it, being honest. I mean, it’s really smart to say that, we finally had somebody within… I’m not going to say she’s in the Fed, but she was a recent Fed chairman. None of them believe that we’re in an inflationary environment. They’re like, “Yeah, it’s a little bit, it’s going to die down or…” I mean, come on, even the metrics that you use, which would change in the Reagan administration, they almost show no inflation ever, the CPI and PPI. Oh, even those are getting inflated right now.
Frank Curzio: So, you’re looking at real rates here. Real rates are negative, which is insane. Real rates are negative, and we have GDP that’s going to grow at more than 7%. We have commodity prices at record highs, almost everything’s at record highs, we have huge labor shortage. I mean, what do they need to see to actually start… I think it’s smart to start talking about it, because that’s what the Fed does. It’s all about expectations, “This is what we’re going to do.” Throw it out there, but… All the Fed governors are not really… Yeah, we’re seeing mild… We’re not seeing mild inflation, we’re seeing very, very, very high inflation right now.
Frank Curzio: I mean, if you look at a compound annual rate, so if we see prices rise by the same amount last month, and we continue to see it for the rest of the year, we’re at 4.1%, 4.2% around there on the CPI. They’re like, “Hey, it’s 2%. Well, a little bit over that will be fine and inflation is going to cool off a little bit.” Yeah, how’s inflation going to cool off if you keep handing people money, right, directly? If you keep buying bonds with QE, right? You still doing that and you keep interest rates low, which Powell came out and said, “Hey, you know what? We’re going to keep interest rates low through 2022, 2023,” whatever. I’m like, “Holy cow.” I mean, this to me is… this is double digit inflation unless you stop it. And you got to position yourself, inflationary place is going to be placed that workplace that don’t work.
Frank Curzio: But it there is cause for concern. It’s nice to see a lot… Jeffrey Gundlach just come out and said, “Holy cows, inflation is getting crazy.” We saw a lot of very, very smart people come out on it because the reason why for me three weeks ago is the numbers changed drastically. When it comes to economic data, when it comes to commodity price, take it another leg up, copper new all-time high, everything, lumber was always expensive, now it’s really, really expensive. Which by the way, Daniel, Lumber Liquidators reporting the stocks down a lot. How’s that possible? I mean, its earnings season is kind of weird, right?
Frank Curzio: I mean, we’ll end on this because we got to talk about earning season because we’re seeing the FAANG names report blowout numbers to the point that they’re not really that expensive, considering how much that they’re growing. But yet even at companies that reported very, very, very good numbers are falling, falling a few percentage point, 2%, 3%, 4%, but the ones that are missing are getting nailed a lot more. I mean, is this a sign of things to come where, hey, a lot of this is baked in or not? I don’t know.
Daniel Creech: Yeah, let’s hope so. I mean, expectations are high across the board. So if you miss, it’s going to really look bad. Everybody’s still kind of in the murky gray area for going forward. Nobody wants to get out in front of that and give a lot of guidance, depending on what sector you’re in. So yeah, expectations will come back, we need a little bit of middle ground here in between everything. So, somewhere between high sky expectations and estimates will be a good little… That’ll be a good spot for the market to kind of bounce around.
Frank Curzio: Yeah, one of the things you like too, I say, because you talk about Devon, that’s an old portfolio holding, come out that special dividend. That was pretty cool, right? I mean, you see in some of these companies and oil companies reported great profits, a lot of these companies are reporting blowout numbers, but again, they’ve run up tremendously to this point. And maybe expectations are baked in a little bit. So, will we see a slowdown? I don’t think we’re going to see a slowdown in at least the next quarter or two.
Frank Curzio: But going forward, it’s about comparative analysis, right? You want to compare and say, “Well, we grew 20% year over year,” that’s comparing Q1, which they’re reporting to Q1 last year. Last year, again, that growth is coming through COVID. So now, we’re seeing the next couple of quarters are where COVID’s are worse, where earnings came to… So, you’re going to see massive growth numbers. But then, what about when they start reporting the comparisons? We saw that with stay-at-home stocks, like Netflix, they were expecting 8 million new subs, and they had like, what, 1.8 or something? And they were like, “Well, we expect we added 10 million last quarter,” when you we expected two, because everybody was staying at home. But that’s what’s going to happen to a lot of these stocks right now, we’re not going to see this massive, incredible earnings rating. And you’re definitely not going to see it once the new tax structure comes in.
Frank Curzio: You could just look at earnings, Dan, through… Like when the tax cuts were initiated in 2018, I mean, earnings weren’t growing year-over-year for these companies, until we saw that tax cut, whether you agree with it or not. I’m just saying these guys are going to have a tough time growing as much they are. And they’re going to have to cut back because there’s a lot of risks in the marketplace. And it’s going to be interesting to see when that happens. I don’t know, maybe the markets adjusting and saying… It’s always fallen looking, and maybe they’re saying, “Okay, well, we’re not going to see the growth a year from now. And you guys are already trading 30, 35, 40 times earnings.” Yes, you had those earnings, but maybe you won’t have them. It’s just amazing, but it is also cool to see companies like Devon really issue special dividends and stuff.
Daniel Creech: Yeah, absolutely. Yeah, it’s good to see commodity price companies like gold and silver and also oil companies kind of get their head on and not overspend. So, Devon tied the dividend to a fixed plus variable, they’re going to allocate maybe up to 50% of free cash flow per quarter towards an extra dividend. And I think that’s brilliant. And it’s getting rewarded. It’s up over 8% last time I checked, and it should be, it’s great.
Frank Curzio: Yeah, that’s cool. All right, Dan. So listen, thanks for coming on. And I’m going to put you on the spot now, buddy.
Daniel Creech: Oh, boy.
Frank Curzio: Don’t go. But we do have a product called The Dollar Stock Club, which is a product that I created. Because right now to grow our business, guys, can’t be more honest than this, when you have a business and you start a business, you’re always going to get the people that know you, that follows you over your career, they’re always going to come in and that’s great, and they’re going to buy newsletters and stuff like that. But now to really become the biggest in the industry, your job as a business, which is the hardest part ever for every business is bringing the Curzio Research name to everyone who never heard of you.
Frank Curzio: So, what we do is create a newsletter that’s incredibly cheap, it’s $4 a month called The Dollar Stock Club, and what we do is we take a pick every week from our guests, and sometimes it’s a pick that’s offline when I’m talking to them, so if this person is talking about one pick that they like, it might not be that pick. We look at the pick, we vet it, and we’ll put a pick in the newsletter, so every single week you get a new pick. Almost every single week. Sometimes, I have a guest that’s an influencer or something like that, but I would say more than 40, 45 picks a year for $4 a month. That’s why we called it The Dollar Stock Club, and it’s $1 a week basically. So, that product has really taken off for us. Daniel, we need to talk more about it because you are big… You write it, we go over it together, but this is your baby.
Daniel Creech: Yeah, it’s a lot of fun, it’s kind of a welcome or big macro view newsletter. We give you a quick one page write up on a stock or an idea, sometimes it’s a long, sometimes it’s short, most of the time it’s long, but sometimes we do put hedges in the portfolio. Yeah, we try to get three good talking points tied in with the conversation, like you said, we take an idea of what everybody was talking about between you two and yeah, it’s great. It’s worth it, it gets your mind going, it makes it a simple investment thesis and it’s a lot of fun to track and yeah, I mean, we’re definitely participating in the bull market. We got a lot of good winners and hopefully listeners and subscribers are enjoying that.
Frank Curzio: Yeah, and it also gives you exposure to… It is a unique product. I don’t know any product like it on the market and I’m not trying to sell it to you here, but it’s unique because you’re getting ideas from some of the smartest minds on Wall Street. Usually you’re going to get ideas from that person writing the newsletter, right? And maybe they have a pick in a particular sector that they’ve graded to gold or technology, whatever, or they cover a lot of from markets. But to get these ideas from so many different people and some of those ideas, like I said, Chris MacIntosh, he was on last week, was telling us to buy oil. And I didn’t agree with it seven, eight months ago. And it turned out, at first, it came down a little bit, it came down 15%, 20%, think we bought a ETF, and then it really surged, and we’re doing fantastic on it.
Frank Curzio: But that’s the benefit of it. Because just tracking these ideas, it also allows me to track the performance of a lot of guests. And if I’ve seen guests have three or four bad picks, I’m not going to put those guys in front of you. I mean, that’s my job, right? I got to vet these people, I’m not going to get someone out there who’s promoting all bullshit to you. That’s never going to happen, because you listen to the Curzio, right? Curzio Research at Wall Street Unplugged. My job is to put the right people in front of you with the right ideas. So, it gives us a chance to track these things too, and we can highlight who’s been red hot. Andrew Horowitz had a great a couple of great picks, John Petrides had a couple great picks, Charles Payne came on and recommend an amazing company that’s up tremendously. We had uranium picks.
Frank Curzio: So yeah, it’s for every sector, it could be anywhere, it could be crypto, different… So, it’s a lot of fun, it’s a unique product. And again, the reason why I do that is it’s an introductory product to Curzio Research, you get to listen to our podcast, you get to see everything that’s going on, you get to see the pick, we have a buy-up-to price, we have a stop on it, and we tell you exactly what to do. It’s a nice one page report. But it’s really cool for the price and with the intentions of, “Hey, if you see how great that research is, then it’s going to open a door to say, ‘Hey, you know what? Curzio Research has a lot of great products.'” And that’s what we’re trying to do with this. So, that’s why we have such a very, very low price tag on it.
Frank Curzio: You can cancel anytime, you don’t have to worry about, “Oh, I can’t cancel it,” like a Peloton membership or something like that, and you got to go through like 20 different sources. No, it’s not like that. If you want to cancel, cancel. If you want to subscribe, subscribe. You could do so, curzioresearch.com. Just go to our website and there’s a Dollar Stock Club link there that you’ll be able to click and get that deal. So Dan, thanks again so much for coming on. I really appreciate it. Love having you on buddy.
Daniel Creech: Yep. Great as always, see you next week.
Frank Curzio: All right, you got it. And that’s it for me. Guys, thanks so much for listening, appreciate all the support, I really do. A lot of exciting stuff coming out with our token and doing a whole bunch of really, really cool stuff that I can’t wait to explain to you because we’re going to have our annual event, our annual meeting pretty soon, in a couple of weeks, just waiting for our audit to be finished, which is almost finished now. And once that happens, we’re going to have an annual meeting. And we’ll talk all about our company, our fundamentals. Not like Dogecoin, you’re going to see our fundamentals, you’ll see everything and all that’s going to be audited, which is going to open up the door for us to really trade on Coinbase, once they have security tokens. They’re going to list those.
Frank Curzio: And all these exchanges and alternative trading platforms, I should say, that are launching in the US, a ton of them are launching in the US, but having audited financials, having a great company that’s growing, it’s going to open a door to get a lot more volume, and that’s our focus. That’s what I’m doing right now, which is really exciting. So, expect to hear some pretty good news in the coming weeks.
Frank Curzio: That’s it from me. Thanks again so much for listening. As always, I’ll see you guys in seven days, take care.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
On today’s show, Frank and Daniel also break down The Dollar Stock Club, where Frank’s Rolodex of Wall Street insiders share their favorite ideas. And tomorrow, subscribers will receive Jesse’s favorite play based on today’s conversation…
For the price of membership—$4 a month (yes, $4!)—you can be one of the first to get in on this recommendation… before it shoots higher.