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There is one potential black swan out there that I see that I don't think it's a near-term risk. It's probably not a medium-term risk. I do think that among insurers there are a lot of problems. I think there's a systemic problem among insurers. >> Welcome to Thoughtful Money. I'm its founder and your host, Adam Tagert. Stocks enter the year trading at or near all-time record high valuation extremes. So when stocks look richly valued like this, short-term sellers take notice. Is it time to start shorting the market here? To find out today, we've got the good fortune of welcoming back to the program one of the best known short sellers in the business, Carson Block, founder of Moneywaters Research. Carson, thanks so much for joining us today. >> Yeah, thanks for having me, Adam. >> Hey, it's such a pleasure to have you back, Carson. I really enjoyed our first conversation and uh sort of the audience. So, I've been getting a lot of uh requests. Hey, when's Carson coming back on? So, thank you for making the time here. Uh happy new year, by the way. We're here still at the roughly start of the year. So, so to my question there in um in the intro about um shortselling. Obviously, Carson, you're one of the best in the business. Um valuations when we talked last were pretty stretched. uh they seem to be in many cases even more stretched right now, but looking at some of your recent uh writings and work and interviews, um it doesn't it sounds and correct me if I'm wrong on this, but it sounds like you think the current cycle still might have some juice left to left to run. I don't get the sense that you're saying it's time to go short. Is that correct? >> Yeah. So I I guess it might be fair to characterize me as somewhat of an apostate in the shortselling world. Um but you know the comeback there is it's now a very very small world when it comes to short selling. So um so there there are a few things here the when you when you talk about valuations okay prices have definitely decoupled from economic or fundamental value in a number of instances especially for companies that are larger portions of popular indices. But the thing is what there are reasons why that has happened and you have you know and this is this is a rabbit hole we've gone down a lot in our firm the past couple of years where um it really started with well okay it started by getting beaten up on shorts for a number of years right and >> got into these conversations um especially a guy named Mike Green of Simple Ify asset management who's been out there banging the drum for years about how passive investing is warping markets and >> start interject but just let you know this audience is pretty familiar with Mike and that passive bid framework. >> Great. So I know Mike and we started uh conversing about this you know maybe late 2019 early 2020 and what then you know what then ended up happening is we had somebody in our firm who ended up developing a systematic strategy a momentum strategy where we were going long constituents of the S&P 500 and you know was just we were measuring momentum in a way that's proprietary. But I was skeptical when he presented this to me and he showed me the back test numbers in mid 2024. And you know I I mean I was skeptical that there was real edge there and it just see sounded like it was too simplistic but we ended up putting this into practice in October of 24. And I mean we've shot the lights out. The the returns that we've made on this are just they're they're almost obscene. And you know, I really as as part of this and my my conversion to really, you know, I understood the arguments that Mike was making on an intellectual level, but I didn't really my bones want to believe it fully because of my orientation as a short seller. But, you know, having taken advantage of this effect, um, I do feel this in my bones, but we've gone down the rabbit hole and look, we really, we're not complimentary internally of the index providers, especially S&P, right? Like there those S&P chases momentum when they add names to the index, especially the S&P 500 index. And the dynamics of market cap waiting create basically this recursive effect where you know momentum just feeds upon momentum and then the smart companies which you know the a lot of these companies understand these mechanics they play into it through share buybacks and so it you know that that's why you have and I so many of these large companies where the prices are disconnected from what you would say the fundament al value should be. But should you short that? I mean, no. So long as you continue to get flows into these index funds, you know that that I mean, that effect is going to continue. And the fundamentals matter less and less. Yes, fundamentals can matter on the margins if there's a bad quarter, but again, it could, you know, that could shrink its, you know, given stocks percentage of the index. But if it's still on the winning side of that index, it'll continue to get flows. So it'll kind of just grow back up in in proportion of the index. So no, you shouldn't go and and short MAG 7 because you think it's overvalued or what have you. What I think the future of traditional short selling is, um, now keep in mind my firm, we're not traditional short sellers, we're activist short sellers. So >> for us the idea has always been to use shortselling as you know as an absolute return strategy but >> generally traditional shortselling is not absolute return. It's there to smooth out volatility over the long term and also to allow you to finance your longs ones that you really like. Well, the case for traditional short selling as a volatility hedge or as a downside hedge, it's not really there anymore at present or because when we have corrections, the corrections are so short in duration because the policy makers absolutely must prop up the markets. I mean we are you know we are so as an economy we are so heavily financialized that we cannot weather the pain of a real market correction or a severe market correction. So policy makers have the motivation and now they have the intellectual property um they developed it post GFC and you really saw this put to use in COVID when that correction was so short in duration. So that's why that that traditional view of well I want I want to allocate to short sellers um as a hedge you know for when the market corrects that's why that no longer holds water but to finance your longs yes but the problem that I mean short selling traditionally has been this discipline where you go out there and you say okay I want to find the companies where the price is the most disconnected from the value you know another way of think of phrasing it is I want to find the most screwed up companies. Now, when you get those massive disconnections, it's almost always because the company is actively doing something to cause that. They're hiding the ball. They're misleading investors. They're doing things to manipulate the perception of the company. So in this environment trying to identify those shorts to use them to finance your longs basically is a bad idea. So if you if you look at any given index and you break it down into quintiles or deciles, right? That that leftmost um in terms of the ones that underperform ultimately, you know, where they really crash. That's what everybody's searching for in terms of their mentality. But you but the thing is a lot of those that ultimately have those spectacular crashes, they just run hard. They rip for an unknowable but often long period of time before they crash. So rather than chasing that leftmost quintile or decile, I think that the discipline if you're a traditional short seller, you know, as in non-activist, needs to be that you're going in there and you're looking for the quintile or the decile that's going to be just a little bit to the left of the index mean. The mediocre companies that are kind of just sleepwalking through things, you're not finding anything revoly. you're not really finding things that the world, you know, the world doesn't know. You're just looking for those who are lagging the average, the mean performance of the index, which isn't that hard because it's only usually about 20% of the companies in, you know, like an S&P 500 or a Russell 3000 index. It's only about 20% of those companies usually that equal or exceed the mean of the index performance. You know, the the the mean >> or in the S&P case, 20 companies, not 20%. Yeah, exactly. Like that mean is driven by a really small number of companies. So rather than looking for the ones you think are going to be the worst, just look for the ones that are, you know, kind of, you know, somewhere in like the, you know, the second third quintile. Um, you know, or the, you know, the the third to, you know, sixth decile basically. That's that's where I think and you know what, and that's a that's a horrible job. Like it's not intellectual. Smart people don't want that job. So I think that that's why as a practical matter it would be tough to make that adjustment. But that's the adjustment that should be made if you say, "Hey, look, by being short these things that are kind of mediocre that are just going to underperform, I can really concentrate more in the things that I have confidence in that I really like because when there is, you know, beta move downward, I will have some cushion there, but I'm not looking at this as like an insurance policy, you know, because I think the market's really volatile and going to crack hard and, you know, I like it's not a pref market anymore. you just don't have the frequency of corrections and the duration of corrections that you used to have. >> Yeah. And it sounds like that because there's there's there's several things that are going on. I don't know if we can call them unnatural or not, but they are they are trends that that weren't there, let's say, 20 years ago that have a strong bias to keeping the market supported here. And you know, this audience, Carson, it's not a bunch of aggressive short sellers. Um, but I think there are a bunch of people in it who are believers, long-term believers in that stock should reflect fundamentals. They're looking at these distorted valuations um, ratios, particularly given, you know, the scope of history, and saying, "Oh my god, you know, they're at historic extremes. This can't last. Maybe I should go short this." Right? And I hear you saying, folks, that's that it's it's a risky game. and a guy who's very experienced in short selling like you. And we'll talk about the difference between ass active and passive short selling in a second. You're basically saying I wouldn't touch that or or or if I would, I'd do it in the very boring way that you just mentioned. >> Right. Exactly. I wouldn't be looking to hit home runs on on the short side, if I were doing this in a non-activist way. Um but yeah just you know so long as you have net positive inflows into you know into the index funds and a lot of that's target date funds you know the 401ks um without a a meaningful rise in unemployment that's going to reduce contributions to the target date funds and cause people to draw on those retirement savings. you know, until you get to that point, um, you're just fighting this incredible river of money. Um, you know, now Mike Green does say, and I I don't disagree, that the fragility of this situation is is significant, but, you know, that's but I I don't think, you know, I don't think we're anywhere near where we have to worry about that fragility basically where the flows start reversing because yes, when the flows reverse, >> you don't have a lot of active managers left to catch these falling knives and because of the disconnect between prices and fundamental values, you know, especially with the larger names in the indices because that is such a large disconnect. Those knives would have a ways default anyway, even if you did have a lot of active manager dry powder on the sidelines. Um, so it is it is a very worrying from a long-term perspective, it is a very worrying situation. Um, but you know, I'm I'm not presently I wouldn't lose sleep over it, you know, in the near to medium term. >> Okay. Well, and and so I got a bunch of questions I want to ask you that I asked Mike, but I want to hear your answers to them. Um, if we can, let me just give you the open invitation here, Carson, which is if and when you get to that point where you start losing sleep after you've told your Muddy Waters customers, uh, you got an open invitation to come on here and tell these folks as well. >> Well, I mean, look, we Okay, so from, you know, from a short seller perspective, and again, you you said we'll go into what activist short selling is versus, you know, non-activist or traditional. I mean, we've been, you know, we've done well, um, in, you know, in these bull markets. So, um, you know, it's it's never easy on the short side, but I'm, >> you know, I'm reasonably sanguin about that. Uh, I mean, >> sorry to interrupt, but just just so folks understand, activist, um, that's where you actually can sort of have some impact on the the the destiny of the company, right? where you you see a company, you think it's doing something distortive, kind of deceiving the market, and you say, "Okay, you know what? I think I can, you know, take a short position on this company, and then I, as an activist, can come in, and I can kind of poke that weak spot and hopefully make the market aware that this company has an Achilles heel that maybe it didn't realize before. Is that is that a good sort of simple summation?" >> Somewhat. I would I would add to it that the focus on in short activism is on the past right so it's just you know did the company accurately p did the company accurately present material information um did the company present all material information so the first one is has the company told a lie of commission has the second one is has the company told a lie of omission and the third question is does the market understand the information the company has disseminated you usually don't get a misunderstanding without either a lie of commission or a lie of omission. But basically, we're looking for companies that have egregiously misrepresented things in the past. So, we're not out there saying like, oh, you know, this competing product is, you know, it's it's a lot better than uh people think and it's going to take market share. We're generally not looking into the future. So, um it's backward looking. >> Hey, these guys cook the books and I've got the receipts here now. Yeah. >> Yeah. It's it's it's very similar to journalism like to investigative financial journalism. So >> you know that so we basically we are investigative financial journalists when we do this. Our revenue model though is shorting the stocks versus selling ads or subscriptions right. >> Um but so that you know that it gets harder you know I mean every year invest you know the market goes up investors are more and more anesthetized to risk. But on the flip side, the more egregious behaviors that used to be confined to lower rungs of market cap, well, now you find them in companies that have more cap and more liquidity. So, um, so, you know, we'll do okay there. Now, will I lose sleep when I think we're getting to the point where markets um are going to implode? Um I guess yeah I mean look I you know I haven't been there since COVID and you know in CO I definitely lost sleep. Um but yeah I I don't I don't see that I don't see that on the horizon you know imminently but you know certainly I'd say for most of these financial crises I've been early in my life. you know, back in I think 95 or n no 96 or 97 I started calling it a stock bubble. Um, good thing I didn't know what you know how to short at that point. Um, >> right. Because it still had three and a half years to run from that. >> Yeah. 2003 I started calling it a housing bubble because I just, you know, I was like there's no way homes can go up double digits, you know, when inflation is this low. >> Good. You know, good. I mean, you know, I Well, unfortunately, I didn't buy a house at that point in time because I thought that it was ridiculous. So, >> I'm right there with you on that, brother. >> Yeah, >> we we knew too much too soon. Yeah, >> I know, right? Like, you know, one of the best and truest things I've heard said about investing and maybe just life in general, but especially the investing industry, is that when you speak with them, pessimists sound smarter than optimists. Optimists live in bigger houses. Yeah. Yeah. Very well said. Well, all right. Well, look, um, just to reiterate, if and when you get to a point where you start not sleeping well on this, please come on the channel, let us know why. Um, all right. So, you know, I've talked with Mike at length multiple times um about uh his his passive flow framework. Um, actually, I'm getting gonna actually see Mike in person in two weeks, so I'm looking forward to that. So, that should be fun, too. Um but uh uh you know Mike first off he doesn't like this right he's not he's not happy about it he doesn't think it's healthy for markets he thinks that it is distorting prices and at some point if and when these capital flows go into reverse these net flows go into reverse he thinks it's going to be highly damaging to a whole bunch of people but it sort of just is what it is right we we we tra trade the market we have not the market we wish we have right Um there >> so you know I often ask him okay well you know what are the what are the most likely contenders in your mind to to change the status quo here and generally what I hear from him is is it it would probably have to be uh a weak enough jobs market that the uh the monthly flows that are coming in from these retirement plans they start shrinking right you you've had enough people laid off that uh there's just fewer funds that have to be invested every every month and and as that starts shifting from net growth to to shrinkage that's kind of when the wheels come off of this thing. Um is that your top contender as well or do you have a different understanding? >> Yeah, look my my views are highly influenced by Mike. Um and and look I've read some of the same source material he has but um that you know that is my view as well that once you start getting enough layoffs such that there are more people withdrawing money from their retirement accounts than contributing to them then yes I I think that that's when the wheels fall off. >> Okay. Let me ask you this. Um, so obviously if the unemployment rate spiked above 6% or whatnot in a short period of time, maybe we could have that, right? Um, what if we just had a a jobs market that didn't grow much? So unemployment kind of the employment levels kind of stay where they are, but we have more and more every month baby boomer retirees who are not working anymore and are starting to withdraw. Will will that demographic wave eventually pull this thing under? >> Well, yeah. And then you also have it's not just that the baby boomers who are retiring, but then you also have, you know, those target date funds that are targeting the, you know, suppose, you know, the eventual date of your retirement. They shift more from stocks to bonds anyway. So, they're they're selling those off. Um I mean but there's still somewhat of a you know as as bonds rise in value then you know you have to still have to balance it by buying equities but um the but yeah I mean there are there are conditions under which even without an abysmal um unemployment rate and and look when I and I I'm not really the person to ask what that rate is but you know you said 6% like 6% doesn't scare me. I mean I remember >> right of the air maybe. Yeah. >> I mean I remember when I was at USC as an undergrad in the mid 90s and was taking one of my you know 200 level or 300 level macro classes uh courses and I think we said that the the natural unemployment rate uh the estimate at that time for the US economy was in the low 60s and you know I mean and we've gone well below that obviously. So, um, no, I mean, of course, the flip side is that labor force participation rates have dropped. >> Has dropped. Yeah. We've got over 100 million adult US adults not doing anything or considered outside of the workforce. We'll put it that way. >> Yeah. Yeah. So, but you know, but basic I mean, I guess that's the other problem, right? When you get into if you're really going to be focused on the number, uh, you know, what is the unemployment rate? I mean there's so many caveats to the unemployment rate that and and other government statistics obviously you know plus the fact that I'm not sure that you know BLS it's going to produce bad news you know for at least the next three years anyhow um you know I like I I don't I don't think I I don't think you can I I don't think it's smart to try to come up with a number the employment rate hits this then you know then I'm going to panic. I mean you you know you'll you'll understand you'll feel in your interactions in the economy. I mean you know if you can find a babysitter easily worry you know I can't ever find one. >> That's a great real word indicator. Um well look um I was asking the question not so much to try to try to peg the magic unemployment rate but just to ask does this thing have an inevitable expiration date on it because of the demographic boom? Will it get so big of the retirees that that their withdrawals will force this thing negative at some point? >> Look, that's you know that that's that's the theory. But the other the other counterveailing for or the counterveailing force and I alluded to this earlier and I I do think that Mike, you know, talks about this as well, maybe not in this exact context, but it's the fact that policy makers have no choice. So I in a piffy way I like to call our financialized economy the powder keg economy right because you know we stuff it full of powder which is leverage it eventually blows up and the only response is to build a bigger keg and put more gunpowder into it. And so, you know, with some actual preparation, you know, not that the government believes in doing that anymore, but, you know, maybe we'll actually get to a point in our, you know, in our politics where some foresight is actually politically rewarded and and, you know, and enters the system. So, I guess what I'm saying in a sarcastic way is that, you know, we might end up, you know, we might end up anticipating this. We might end up preparing for it. It might not be the sky falls in. You know, Warren Buffett was always fond of saying never bet against America. um you know uh again my my best feeling is that there's no imminent issue and um you know short of like those UAPs attacking us and destroying humanity or something like that but you know I guess it doesn't really matter you know what you if you're long or short financial assets at that point but um yeah you know I so I think don't lose sleep over it now as the problem you know as it becomes more obvious that we're going that where the flows start netting out you know on a more frequent basis. Um then you know assess the situation and maybe there are preemptive policy measures that can be taken or you know maybe it's maybe it's time to go to cash and you know just get out of the way. >> Yeah. All right. Let me let me let me make a statement here and you correct it in any way you like. So, what I'm kind of taking from you, Carson, is is sort of like what I take from Mike is I don't love this, but it's the way it is. Um, these are my words, not yours. Um, the the passive bid is kind of like a sort of damocles um hanging over investors. Um, where everything's fine as long as the thread doesn't break. We just have no idea if and when that thing's going to break. But right now, it's holding. And so right now, you know, you're you're sort of like, I' i've kind of learned to love the passive bit as an investor cuz I can use that to make money. I can use that to make uh to outperform. Uh and so you're choosing to do that, but you've got, you know, one eye always up at the sword trying to look at the thread and seeing if that thread looks like it's getting any thinner. Um right now, you're not seeing any near-term signs, so you're you're you're dancing with the devil, if you want to put it that way. um and you think that could continue for a good long while. So until you see signs of that thread starting to fray, you're you're going to put this to your advantage on the long side. >> Yeah. Look, because if you if you go back and you look at the last, you know, three major crises, um well, let's look at the last four, one of which wasn't a financial crisis, but uh or but it was layered on top of um the internet bubble burst. Okay, so the internet bubble bursting was foreseeable. The timing, no. You know, that it would be in March of 2001. >> No, that wasn't foreseeable. But guys like you in 97 could see this is probably going to end in tears. Yeah. >> Right. That um 2008, you know, the the implosion of subprime, the implosion of real estate, the implosion of credit, that was foreseeable. There were a number of people who did foresee that. Um now 911 was not foreseeable. um you know its immediate financial impact you know was material but not you know but it you know it and it obviously was worse coming on the heels of the internet bubble bursting but it wasn't um wasn't that significant but that's something that's unforeseeable covid was unforeseeable so yeah you can always have you can always have a black swan event like that um but what I I think you know and co taught me something that actually was formative for me in in terms of you know my again my apostasy I I suppose as as a short seller which is um there is a tremendous resilience to to our society and so as fragile as the market is because of because of passive people are resilient and you know like it's unfortunate that a lot of times s that the things that are glaring problems never do get addressed until there's a crisis but they get addressed and we have successfully addressed these and you know I remember in the early days of >> sorry to interrupt but I mean addressing to your point the powder keg economy it's it's rarely by fixing the issue but just by window dressing it enough that it doesn't look you know we or maybe not window dressing but you know artificially papering over it um so that we can continue. >> Well, keep look keeping it going. I remember so back in 2005 I sat down with um a friend of mine. He's really a friend of my father's. He'd had his own global macro um investment firms since the 70s and he was really one of the early American EM investors actually. And uh his name is Monty Gild. And so I sat down with Monty and you know I'm just like oh we're you know the you know housing we're headed for another great depression and ah this is like there's no way out of this and Monty said to me he's like look I agree with everything you're saying about about the problems and you know I I do think we are going to have you know a real you know real correction he said but I you know when I was a young man like you I used to think that this and I'm talking the 1970s the 80s I used to think that the global financial system you know was too fragile of an artifice that it couldn't hold and I've been you know and I was waiting for it to to implode and what I've seen time and again is they put they can put the toothpaste back in the tube. >> Yeah. >> Um and you know and and I think I think that's correct and I philosophically don't agree how they did it. I mean in 2001 or I'd say by 2002 I was a papalttic you know looking at the response you know to the internet bubble imploding you know just to cut rates to you know I mean back then they seems like they were you know we thought we knew what you know zero rates were but um >> child's play back then >> yeah I I was a papalyptic about that because to me this did not address you know what I kept saying in 2002 my my verbiage was surplus capacity we' created all the surplus capacity you the economy through through unproductive capital investments that were funded by artificially cheap money and you know it's like so we're just making money even you know artificially even cheaper but I don't agree with the methodology but the results speak for themselves they do put the toothpaste back in the tube and we saw that following the GFC which um I mean they didn't have those tools and they also didn't have the political will back in 1929 to do this. So they do have the political will now. You know, we're we're trapped in this cycle. I mean, in theory, we come to this, you know, for we come to this juncture in the road someday where you can't do it. But then look at Japan. I mean, this is, you know, Japan's been doing this for a few decades. I mean for you know back you know back when Japan started just you know trying to reinflate its its uh deflated bubble you had all the western economists you know saying oh this is wrong you can't do that it won't make sense it won't work like you know it's not that Japan's with you know is without problems but they've kept that going for I mean you know 35 years now um so I you know there because there is a societal need to to fix the problem. I do believe in this resilience and look the you know to me the like the real smack in the face that taught me this was during COVID because I had you know good friend of mine I'd known for a number of years professional investor you know he went out and started buying shares in the cruise lines >> and look I had already felt that cruise like cruises are just kind of nasty you know like they're floating petri dishes now like everybody on them is getting COVID and >> right they were radioactive during CO yeah exactly >> yeah and I'm like dude nobody's going to go on a cruise after this there's, you know, that industry is ruined. And he's like, "No, you know, they're installing sneeze guards." I'm like, "Sneeze guards won't help. It's aerosol." Like, >> and he just, you know, he just went on buying and I went on freaking out. And guess who was right and guess who was not right. >> He was right. Cruise lines rebounded. He made money. and you know in July actually wasn't until August of 2020 when everything's ripping and we're like uh yeah we got to reduce short exposure here like all those easy gains we had early in the year uh you know we've given you know we've given many of them back so um >> you know like so I've I've learned I've learned the hard way and you know the the phrase that you know you you've used a phrase a few times during the you know during uh our conversation here about you know um that that's very similar to something that I say it's a criticism of short sellers and that is you know and and look this this was true of myself um and hopefully no longer is but you know on the short side I think we really have a tendency to see the world the way that it should be not the way that it actually is >> and you know and that that's also the case with businesses you know when you go and you short you short a company because you're like ah you know there there's no way they can get out of That's also failing to understand that people are resilient. I mean Tesla's a great example. How many times over the years have the Tesla shorts just screamed that Elon's done? Nobody is more resilient than Elon Musk. Look, I used to be one of them. I thought that he basically jumped the shark in 2018mm. So you know you you can't overlook the resilience of people of companies you know not not every company avoids failure not every company bounces back but I I do think that you know as a society you know and it might not be pretty and I might not agree with how we implement the you know the the recovery plans but we are resilient and you know and just people just need not or should not lose sight of that >> right or or your I'm taking from you is discount that resilience to at your your peril or your danger. Um, all right. So, I've actually this is going to be a great bridge to uh a question I have here for you. Um, but um what one other thing too that I I I'm kind of taking from what you say and and I've mentioned this in the past is um it's resilience, you know, it's it's what you're talking about, but it's also just self-preservation of the system. So, if you're betting on a reversal, you have to just keep in mind that every part of the system is fighting you, right? It's it's fighting to, you know, the people that are benefiting from the status quo, the the big parties that we all love to hate, you know, they're going to do whatever they can to keep their advantage. Um, everybody in government is going to do everything they can to keep uh any sort of pain from lasting for very long. and even the consu the the the public themselves um will oftentimes ask for more of the same type of rescue that guys like you and I think have created the distortions. But I think you know in co we we let a new horse out of the barn or genie out of the bottle with direct payments to households and I think we can we can probably feel pretty confident the next time things start feeling painful public's going to ask for that again and politicians will probably give it to them. So you you have to just keep in mind that the whole system is fighting you, >> right? Yeah. And and you know and the thing is when you have an economic you know potential economic calamity that's deflationary. So what does that automatically create license for you know the central banks of countries that borrow in their own currency or really the US? What does that create license for the Fed to do? Print money. >> Print. >> Right. It's you know and and I mean what it ends up doing is redistributing right like there there are on the back end of that I mean even if you say well in aggregate you know GDP has increased and but you know there's it's there's obviously a transfer from you know more people to fewer people because especially if you're long financial assets when you catch that reinflation wave but you know so it's not to minimize the dilitterious effects of this but the reality is that's the polic policy response and they have a lot of room to maneuver and you know and and again going back to what you know people what I what I think people get wrong you know the there I don't know that the you know I'm not going to argue that the Fed and Treasury you know our stuff are stacked with like our our smartest minds but they have a lot of people and there are lots of people who spent years you know theorizing as to what the proper policy responses should be in a great depression type scenario or edge of the great depression, you know, scenario. I mean, Ben Bernani had written, you know, that that was I think he wrote his PhD thesis. Um, >> that's they called him helicopter Ben because of his PhD thesis. >> Yeah. So it's, you know, so they're they'll, you know, the the the biggest problem that the US had in terms of trying to save off the GFC when, you know, Lehman failed was a political one that the authorities did not exist. Um, you know, although it's kind of funny they suddenly found the authority when it was AIG, not Lehman, because AIG was, you know, like that that was that was the real like holy type moment there. But um you know they'll you know eventually the the politics will you know will line up and you know what what needs to be done to you know try to pull things out of the nose dive will happen and they'll probably succeed. >> Okay. Um I'm getting to the question I referenced but but now I got to ask a question I think is on a ton of people's minds which is um hey Carson um uh I get it. Maybe I'm a little surprised at your new apostate role, but I'm I'm following the logic that you're you're mentioning here about not to step in front of this juggernaut prematurely. Um but I'm worried that you know if this system does get out of control for at least a little bit you know you're saying yes the reaction function of the central planners and it's going to be fast and furious but I don't want to be collateral damage in the period between when the the the threat of the sort of damocles breaks and then the central planners respond. I don't want to lose 30% half you 50% of what I have if there's a big draw down there. Um, do you worry like let's say the sword thread snaps for a bit. I know you think the policy folks are going to respond as quickly as they can, but in the interim, how bad do you think it it could get given the distortions of the system? >> Well, I mean, certainly equities, you know, would be pummeled. I mean your S&P 500 index um you know nominally right because there's companies that had led the way up are going to lead the way down you know would be uh I mean it would be a crash um you know that would certainly have knock-on effects I mean you'd immediately have you know credit markets responding and credit markets I mean liquidity would recede instantly >> ice up yeah >> yeah um so you would have real world layoffs you'd demunition in other asset values. Um you know it would be I mean it would be similar to the GFC but probably the movements you know the downward movements in the markets would be more profound. Um so I mean in the short term look the you know you know as a as a matter of just general principle you don't want to have too much leverage. Right. Right. And this is also where having a real asset and you know so owning a home um but ha you know not having too much debt on it um would you know would be you know would be a benefit right don't have all you certainly don't have all your eggs in the equity market basket I mean particularly if you know you're at the point in life where um you know you're you know you're middle-aged or or older um >> you don't have a lot of time to recover. Yeah. >> Yeah. you don't have a lot of time to recover, you know, and you don't want, you know, and if you have a job where the, you know, the job goes away because of damage to the real economy, you do want to have cushion. Um, I mean, if you're listening to this and you're 26 years old, I mean, you're you can't wave a magic wand and suddenly have, you know, reserves, but um, you know, but then on the other hand, time is on your side. Uh so you know I I just think it comes down to you know at the end of the day you have to be prudent and you shouldn't ever get too greedy you know. So if you're hearing me talk about you know the equity market at least the index you know that's going to rise until you know the world falls apart. Okay. Like you know if you like that thesis fine. You want you want to you want to play along great. But don't go all in or anywhere close to all in on that, you know, have, you know, have a cushion there. Um so that's you know I I just think that's it's basically you know that that's where I know a lot of people in in a bull market people will deride diversification as diversification and like yeah okay but you know where it works >> is you know when things when things do become uh you know somewhat you know semi catastrophic. >> Okay. Um, and in terms of duration, and I know I'm asking you to to prognosticate a lot here, so I I understand that this is just gut feel here. We're not holding you any of this, but going forward, it sounds like you think that um market downturns like this or or we'll call them sort of systemic downward surprises like this, they're they're going to they're going to be more kind of like the COVID era um in duration versus the GFC era, right? GFC, we had, you know, multiple quarters of it just feeling terrible and and it took a while before people started to feel like it was getting better. COVID was almost kind of like you blink and you miss it, right? Markets plunge, but then they recover pretty damn quickly because the reaction function was so sharp and so unprecedentedly massive, >> right? Well, yeah. Look, I think, you know, I do think that's the case. And actually, you know, I I I hate to do this to you because it's kind of out of sequence. I mean, there is one potential black swan out there that I see that I don't think it's a near-term risk. It's probably not a medium-term risk. I do think that among insurers, there are a lot of problems. I think there's a systemic problem among insurers because, you know, you have you've had the situation where a lot of insurers have been acquired by private equity. um the rating you know these ratings agencies that you know will rate the you know rate the bonds are you know once again you know reasonably pliable I mean actually let's call it corrupt and so they're using the assets to fund um you know to fund LBOs to basically build their businesses the other thing that's really funky about a lot of insurance and I've never understood the case for this is you have captive reinsurers And those captive reinsurers are often in jurisdictions in which you have very little transparency or visibility into the financials of the reinsurers. And so, you know, what a game that I suspect a number of insurers play is, you know, they seed, you know, liabilities to their, you know, to their captive reinsurers and they'll inflate the value of the liabilities that they've seeded, you know, meaning make their balance sheet appear to have fewer liabilities and they'll inflate the value of the reinsurance asset that they get because probably the stuff that's on the balance sheet of the reinsurers, you know, even bigger garbage. Um, so I do think that that could be a systemic type issue, especially because, you know, speaking with somebody recently who's done work in the space, you know, he said that like a lot of these really the poor insurers are just reinsuring to each other. So you have this like web of like crappy insurers, uh, poorly capitalized insurers that are reinsuring each other's, you know, balance sheets. um you know that but a lot of times these insurers issue um life insurance and annuities. So these are longtail liabilities. So it's not it's not clear to me that there's that there's an imminent risk but you know again like let's say that blows and so if you had if you had that blow up in a big way one you know I think you'd see an immediate impact on the credit markets you know you would have a you know liquidity would recede because these guys are obviously big players out there in terms of providing liquidity for you know acquisitions etc. um you know spreads you know spreads blow out some but I just think you know the government has the toolkit to you go in and you know and fix it. I mean maybe there's you know a gap there during which um there's some real world pain but you know rates get cut, Fed buys bonds, you know does what it has to do. So um but that that's another that's another hiccup. shouldn't call it a hiccup, but that that's that is something that I do see that that could be a problem at some stage. >> That's super interesting and I'm resisting the urge to try to peel that onion with you, but given the time we have left, I want to I want to squeeze in a few more questions before we're done. And you answered my big one on that, which is when you mentioned it, I was like, whoa, what what happens when the backs stoppers can't do that anymore and need their own backstopping? But it sounds like you think it's it's not a hole that's too big for the Fed and the other central planners to fill. >> I mean again like that that's the beauty of all these problems. They're deflationary, right? So that gives you lots of headroom to just print money. You know now in Europe the pol the response is always going to take longer because you know you've got multiple nations that have to agree you know the ECB none of them you know they all borrow in a common currency not their individual currencies. So for them, they're always going to move more slowly, but um you know, in the US, >> you know, to date, um you know, it's it's it's a great thing that we get to borrow in the currency that we print, >> right? Great thing for for us that benefit from it, and that's largely the asset owners. Um you know, not a great thing in the long run, especially for those who don't own assets. And you're nodding as I'm saying this. Um, all right. If you don't mind, then just giving the time. Um, I want to do a little bit of rapid fire with you if we can. Um, and by the way, Carson, this is great. I' I'd love to have made this a three-hour interview, but uh I understand uh we got >> there's not a market there's not a market for three-hour interview with me. >> You know, it's funny, though. I have yet to find the the maximum uh tolerance level of this audience. Um I've done some interviews that have been two plus hours and had people say, "You should have kept going." So, it it is interesting. Um there there is there is a there is a cohort of very thoughtful people out there that really like this this deep discussion. Um so I was just listening to um an interview with um we were talking about the all-in guys with Chimath uh was interviewing Howard Lutnik and it was actually really just it it was super fascinating. I I recommend it on X to anybody who just wants to get a better understanding of our tariff policy. And and love it or hate it, I think it's a really it's a really educational discussion about kind of just wh why the current tariffs were structured the way they were, how they get structured that way, and then just mechanistically how it all works. Um, so super interesting and I'm not saying you have to necessarily share this, but uh, listening to folks like Lutnik and Scott Bessant and whatnot. I mean obviously they're going to be putting out the best uh the best most optimistic guidance they can because they're the guys that are running the system but they are really saying hey look you know we have laid a lot of pipe in 2025 for um economic tailwinds that are going to start beginning this year and some of them are kicking in now. Um, and they're saying, "Look, don't be surprised to see 5%, maybe even 6% GDP growth here in 2026." Um, when it comes to the current estimates for GDP uh growth for 2026, are you more willing to take the over or the under? >> Um, I thought this was going to be a tariff question, you know? >> Yeah, sorry. Um uh yeah, I I I'll go with the uh no no view on that now. But I do have I do have something on the tariffs though. >> Sure, go for it. >> Um you know, one of the things because we've done a lot of work in Vietnam. We have an office there. You know, got a tiny funds that's been investing long in Vietnam. And one of the things that we learned from that was when the tariffs were imposed. I I I think this I think this speaks to why they're a bad idea, but also why they don't really seem to matter when it shows up. Um is that all of these exporters and and also on the import side, you know, same incentives. They basically that they basically said, "Oh, well, you know what? actually since these tariffs are only levied on products. Uh well, you know, there's a lot of IP that goes into my widget. And so, you know, basically what we're going to do is, you know, we're going to say that, you know, this is really IP. It's a service. So, when you know, I the manufacturer, the exporter, I'm selling this to you. You know, this portion is actually the IP I'm licensing to you. So, the widget cost is much lower. And so, so like that's why I don't think it's mattered much because everybody has then tried to engineer around it so that it's not that impactful. Why that's a bad idea? What is that like? That's exactly the US tax code. Okay. the higher you make taxes, the more guys who can afford it like pay, you know, just I mean, when you step back, you know, I'm not not like a huge Arthur Laugher fan, but I heard him interviewed once and he was just talking about what an absolute waste it is that we spend so much of our wealth on guys who are trying to figure out how to engineer like, you know, through the cracks of rules and and laws, you know, tax savings. So like that's basically what I think we've you know the the net result of of tariffs is I mean obviously there's some increase in you know in the cost of goods right and the treasury has collected some money but the reason I don't think it's really been that profound is because you've just forced people to you know turn into highincome American taxpayers and high you know and hire you know think of creative ways to you know minimize the taxable values. >> Okay. Um I' I'd love to dig more deeply in that too, but but we'll have to save that for a different discussion. At a higher level, let me ask you this. Um the world does seem to be um fracturing into more into trading blocks um versus the era of globalization that that preceded it. um in this new world trade order um if you're looking at the risk board um whose prospects do you favor most US, China, somebody else? Ah well so that it's actually that you know the my my mention in Vietnam was great because in April of 2020 you know my my revelation was that um that coming out of COVID it was going to be the biggest geopolitical realignment since World War II and it was going to be about each country in the world its relationship uh with China. And so what I saw as the biggest net beneficiaries overall be the countries that are kind that are non-aligned. So like your Vietnams or India's you know I mean if you look at Vietnam for example Vietnam does not like China they cannot you know they they cannot ever trust China. But by the same token they cannot anger China. And uh you know it's interesting the Vietnamese perspective on the war in Russia and Ukraine shortly after that war started. You know what Vietnamese government officials would say is they thought that was actually Ukraine's fault because Ukraine did not balance its neighboring giant with the west. So I think that countries I think that the winners the the net b you know biggest beneficiaries of this world are those that can play the United States and China off one another. >> Okay. So maybe poor analogy but sort of the Switzerlands of the world the countries that can be more independent versus just bolted to one superpower. >> Yeah. Yeah. Exactly. But I mean from a from a trading and economic perspective I mean I Switzerland doesn't have like a ton to give the world anymore. Um you know but from you but I which is why it's not the world's best analogy. >> Yeah. But like Vietnam and India and I mean look we're very we're very bullish on India. We're you know we're in the process of launching an India fund as well. So um you know so and this is but this is not just me talking my book. our book is reflecting that you know my world view there that these less aligned or non-aligned countries are the ones that are set to benefit the most. I mean obviously look the you know with the problems in the relationship between the US and China that's going to be that's bad for the US in certain ways. That's bad for the Chinese in certain ways. It's bad for the Europeans in certain ways. Um but it's you know so the countries that were kind of insignificant and and aren't really the movers and shakers of world affairs, they're the ones that I think are best positioned. >> Okay, great answer. Um, all right. So, uh, I'm gonna ask you about gold. Um, and I'm gonna ask you about gold for two reasons. Um, one, because when I was doing research for this this discussion, um, you you've had some com your firm's had some comments, uh, in the news about gold. Um, you also mentioned um, you know, the prudence of owning some real assets in the current environment as as you told us a few minutes ago. Um, I do have to say though before I ask the question, um, uh, it it sounds like your firm has taken a long position or at least, um, identified as a good long-term play or good good, sorry, long play a company called Snowline Gold. Um, and I mention this only because uh, I own Snowline Gold. So, I've got a selfish interest in your answer, but I also just want to be transparent here, folks, that I'm I'm asking a question about a company that I actually honed in my personal portfolio, >> but um gold and silver have had a a phenomenal year in 2025 and and the momentum is continuing as of the day we speak. I haven't looked at it since we've been talking, but this morning, silver, I think both gold and silver futures hit all-time highs yet again. Uh silver was like 89 something. I mean, it's bananas. Uh so um one I just love to hear any thoughts you have right now about kind of what's happening with the metals, what you think might be driving it, how sustainable you think this is. Is obviously the big question on a lot of people's minds who have been precious metals investors for a long time is is this the great repricing we all we we bought in for and were hoping for or is this a a blowoff spike like we saw in 2011 and 1980 and is this going to come crashing down and be dead money for the next 10 years. So, love to get your thoughts on that and then anything you want to say about Snowline Gold, I'd love I'd be very interested to hear. >> Sure. Um, all right. Well, you know, I'm gonna I'm gonna disappoint on the on the first one. Um, we launched Junior Mining Fund in 24. I mean, had phenomenal year last year, even though we run it on delta adjusted basis, only net 50 60 long. Um, our macro thesis on launching the funds didn't have to do with metals prices though. And our macro thesis on why you should invest in junior mining, if you know what you're doing, is that there's been a massive underallocation of human capital to the mining sector for the past couple of decades. You know, smart people have not want I mean, it's a miserable lifestyle to be in a mine. >> They've been running out of engineers, right? Like folks didn't want to go into that profession or hadn't wanted to. Yeah. >> Right. So there's real edge if you know what you're doing in looking at junior minors and interpreting the data and and look we brought somebody in who does you know in my view have real edge otherwise we wouldn't be doing this. Um so you know we don't our macro thesis had nothing to do with the the metals. I mean look at a high level we believe you know to the extent that you know society does get serious about in increasing the amount of electrification of you know of our economies like that means a lot of stuff needs to be pulled out of the ground you know the base metals um particularly copper um you know as for gold I mean yeah look everything I've said about the consequences of our financial over financialization of our economies and and the policy respons response is, you know, does imply that over the long term you, you know, like gold is going to continue to go up and to the right. I mean, you know, gun to my head, do I think it it really corrects for a s sustained period of time from here and that these are like all-time highs? No, I do not. But that's not really, you know, I that that's me somewhat outside of my, you know, I'm definitely outside of my uh my lane on that one. You know, for us it was really about the the lack of human talent in the operating space and also capital allocation uh side of um of resources. Um as for Snowline, yeah, I mean that that to us, you know, we think a major is going to is going to have to acquire it. I mean majors have not spent much money on green field ex exploration, you know, since the GFC. And I mean, Snowline is really the only deposit. I mean, and first of all, it's in a functional jurisdiction, right? It's in it's in Canada. We think it has the potential. Um, so the so some of the some of the concerns about it have been like, well, logistically, you know, it's remote. It's in the Yukon. There is infrastructure there. They will have to develop the road network some. Um but we think that this deposit or you know that that these deposits are so significant that this will turn into a mining district and that snow line will be the engine for that. So we do expect a major to acquire it within the next you know c you know I think highly probable within the next three years and the longer it takes for major to acquire it probably the more they end up paying especially if we do see you know price of gold continue to trend upward. >> Okay. Um and so uh and I don't think I'm saying anything that hasn't been said publicly. Um but because of that buyout premium um you actively think it's it's a it's a long to consider if you're interested in this space. >> Yeah. Yeah. We're we're long that you know we're yeah we remain long that. So definitely I mean to you know we think this is the you know this is the the one real worldass green field opportunity that um exists in you know in a jurisdiction that's credible. >> Okay great. Um, all right. Two real quick questions as we wrap up here. Um, one is, is there anything that's that's you're really covering passionately right now or that's really burning brightly on your radar that I just haven't thought to ask you about yet, Carson? >> Um, well, I mean, look, you know, our our, you know, our core business is still activist shortelling. Lots of companies out there are still doing things that they shouldn't be doing. Um, that's human nature. So, you know, we're, you know, we're still grinding away there. Uh we've covered momentum um and you know especially within the indices and and flows um and why that's it's a space the kind of returns that you can get shouldn't exist but they do. Um you've covered uh some geopolitics and then also metals. So no I think we've I don't know that these you know and insurance you know insurance is insurance is one of these you know things that's a little bit of a sleeper. I'm not sure exactly what to do with it. I don't know yet that I have actionable short thesis in the space. It's just seeing a decent amount of these problems. And so, you know, I think it I think someday, you know, it it will become a systemic issue. But, um, you know, so, but the fact that we even covered that, I think it's been pretty comprehensive. >> All right. Good. Well, again, if if you get to the point at some point in the future where you're beginning to really actively worry about the insurance space, again, come back on. I'd love to have that conversation in greater detail with you. Um, just on the Mike Green thing for a second. So, I'm taking away from this, and you just told me if if I'm taking away correctly, but um, you know, my one of the last times I talked to Mike, he he talked about how they his firm Simplify had really isolated this passive factor uh, in a way to be able to trade with it. And it sounds like that's kind of what you're doing there as well at Mighty Waters. So it sounds like you're saying, "Hey, there's really something there there like this this actually is something that gives you alpha as an investor." >> Yeah. And I I mean look I can't speak to how you know how Mike and Simplify are doing it but um yeah I mean the you know if you're looking at you know like moment momentum is real and what we found actually it's kind of interesting in looking at how our book has performed in real world and and also some portion predating October 24 you know or on back tests you know like even this past this past year like we were really our you our strategy was really not in mag seven much only had minimal MAG7 holdings. Um you know it was so it can kind of you can find like leading indicators. So for example our largest holding um in strategy the past two and change months has been Western Digital and and also um you know Mike Micron was uh was up there too and so it seems like there's sometimes signal and momentum that's telling you something that's about to happen. And so the the memory squeeze you know so and when on back tests you know we saw rotate you know there was a rotation into energy on back test that pre you know that preceded um you know real out performance there um so and you know so so what that's one of the interesting things about momentum is we're seeing you know and I don't have high high conviction in this yet because you know I want to run this a few more years before really pounding the table but at least as we measure momentum like there there are ways you can measure momentum where you find signal about the future um in it. That's that's what we're you know that that's one of the the theories that you know we're developing based on our experience here. So yeah, I I do think there's something to this. >> All right. Well, super fascinating and I I hope it keeps working for you for as as long as you need. >> Me, too. >> It's a lot easier than shortselling. >> I I it's I'm imagining. Right. Exactly. Right. So, you can kind of understand the switch to the apostate role. Um, last question before we get to the most important one. Um, looks like you rock. Do you? I'm basing that off of your the picture on your ex profile that I Oh, no. That was uh I was doing the Murf uh the Murf challenge. So, that was a weight a 20 pound weight vest. I was doing uh push-ups. Um I I don't know why I put that up there. It was a little bit of a a flight of vanity, but uh >> No, no, you should. Look, if you do Murf with a weighted vest on, that's a flex. Look, I've >> I was the only person there doing it. I was the last person to finish because I was the only person with the weighted vest. I thought everybody would have the weighted vest, but uh yeah, you know, and the only reason I was able to finish on the pull-ups was because my son was there and I just kept thinking like, man, you do not want to teach this kid like to give up. Like, I don't care. Keep doing the pull-up. >> That's super. So, for folks that don't know MURF, um it is a I think I think it's a a workout that's originated in CrossFit. Uh it's dedicated to fallen soldiers. Um and it is 100 pull-ups, uh 200 push-ups, and 300 what? Air squats. >> Yeah. So, you run >> Oh, sorry. You have to run a mile at the start and you have to run a mile after you've done all those, right? >> Yeah. >> And you're doing that with a 20 pound weight vest on. >> Yeah, I did that with a 20 pound weight vest on. Pretty pretty impressive, buddy. Good job. >> Yeah. No, I'm now I'm now training for marathon. Be my first uh and then I'll start doing um some of the uh Spartan races. I I did Deca Fit in the fall. That was my first. So >> Oh, cool. >> Yeah. No, I I lost over 50 pounds uh back in 22 and uh that just kind of got me in this like Well, you know, >> you lost 50 pounds in a year. What'd you do? Saw your legs off? >> Yeah, I know, right? It was medium COVID that caused me to lose 15 in two weeks, very unhealthy way. But I was suddenly sleeping a lot better. My my blood test, which I happened to go for my physical right after that, I thought was going to be abysmal. It was the best it had been in years. And so I said, you know what? You know, the formula, follow it, see how far you can go. And you know, no GLP ones. From that point on, I dropped another, you know, like 35 to 40 pounds. just eating better, eating less, like avoiding snacking, drinking less, and ex, you know, making the time and exercising regularly. And um and yeah, so it's, you know, just kind of been a celebration of that. And, you know, I've got a my, you know, my son now is 12, but he's a really good distance runner. And I just, you know, we were went for a hike one day on a trail shortly after I'd lost, you know, 50-ish pounds. And he just took off and started running. And I was like, you know, frozen for a moment. And I thought, you know, you're you're in good enough shape. You could probably keep up with this, dude. Let's try it. And we just started running the trail and I was like, man, like this is awesome. I I got to see what else I'm capable of. So that's what I'm doing. >> Good for you, Carson. So on this channel, as regular viewers know, um is a wealth buildinging channel, so we talk about money all the time, but I do try to to reiterate to folks as often as I can that money is a means to an end. It's not the end in and of itself. And true wealth research is pretty clear on it. Really boils down to quality relationships, having purpose in life, and good health. And I love it when, you know, experts that folks really respect like yourself here reflect back on people that, yeah, I'm I'm a successful investor. I run this, you know, big famous Muddy Waters company. We we we try to, you know, give great financial gains for our folks, but in my own life, you know, I'm really focused on the things that matter. >> Yeah. So, actually, can I riff on that for one quick moment here? >> Please. >> So, to me, I like to distinguish, you know, the between rich, being rich, and being wealthy. Um, >> you know, like in finance terms, I mean, I'm I'm not, you know, I'm not that rich. I mean, they're look around the industry, guys are, you know, I'm a rounding error. Um, but >> I think I'm one of the wealthiest people I know. And it's because I've become really focused on how I use my time. And so to me, wealth is the ability to use your time in the way that you want to use it. >> So, I mean, part of that's saying no to a lot of travel. It's having my own business. It's a mature business. I've hired people to do things, but it's given me the ability to put the time into exercise and to spend all this time with my family. So to me like that's the goal I think is to having is to have control over your time. So >> very very well said my friend. All right. Well look here we are at the end. Last question for you Carson. Um for folks that have really enjoyed this conversation and would like to follow you and your work in between now and your next appearance here. Where should they go? >> Um so on on Twitter I refuse to call it X. I'm at muddywaters rere um we also have the muddywater www muddywaters research website where we post our reports but yeah just the Twitter is the best way and maybe that that Twitter account to which you referred where I posted the picture that's carson_c_block I'm not really sure what content I should post on that it's kind of rare but maybe someday I'll have something profound to say that gets you know placed on there. >> All right. Um well, look, Carson, I I I can't thank you enough. Um it's always wonderful, but um it just very much appreciate you coming on here, especially so early in the year. Look forward to having you come back on this year. I mean, I'll reach out at some point, but like I said, if there's something that's really starting to catch your attention, please let me know. We'll pull you back in for that. Um but, uh just thanks so much, buddy. And continue focusing on being the the wealthiest guy, you know, where it matters. >> All right. Hey, thanks a lot, Adam. Really enjoyed it. >> All right. All right. Well, now is the time in the program where we bring in the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by uh the lead partners there, Mike Preston and John Lodra. Gentlemen, it's great to see you. Uh John, why don't we start with you? Um lots to talk about. A lot going on the markets as we speak here, but uh any key takeaways from the Carson discussion you'd like to to highlight for us here? >> Hello, Adam. Great to be with you again and thank you for having us. uh got to thank you. I think many of your viewers oftentimes so compliment you on introducing them to new new voices and names and uh I got to say personally I wasn't familiar with Carson enjoyed his talk and so thank you for introducing us to another another viewpoint. Uh I just want to put right out here and this is not uh in any way a criticism just a statement that um you know there are many styles of investing many tools in a toolkit and uh you know many right ways. In fact um our our toolkit does not involve shortselling uh and certainly does not involve shortselling in the kind of systematic disciplined way that uh that many firms have have uh taken that strategy as part of their their uh their their flagship uh approach. Um, you know that with that aside, you know, I guess I want to comment on a couple things. Um, Carson um did talk about the difficulty of the market to traditional short selling. You know, in fact, we can go back and look in recent years and there's been some very high-profile names that I don't want to say throw in the towel, but kind of have. you know, you you go you look at uh folks like u well even the the movie the big short that you know for many lay people that was their first even um introduction to what it even means to sell short. You obviously this was the big uh tale of the the few souls that had the had the foresight to short uh big into the the housing collapse of uh 089 made a movie of and a book out of that. So many people I lay people that was the first introduction to sell short. Um but uh almost like one after another the the big names in short selling have thrown in the towel. Um you know Michael Bur himself you know the one of the key uh characters in that movie in that book um you know basically shut down his his firm Scan Asset Management I think for a lot of the same um uh reasons that um Carson spoke about it being a difficult market to be a traditional short seller you and the list goes on. uh Hindenburg Hindenburg Research was a was a notorious short seller in January of 2025. they shut down their their their their fund and I think it speaks to as as Carson uh you know spoke um the markets have become very much controlled by policy versus uh good oldfashioned market discovery and you know we can go on and wax poetic about uh how right or wrong that is but it's the reality and uh and many short sellers and many fame fables of of shortselling successes happened in in an era way way before things like quantity TV easing were even a uh a talking point never mind a a fixture in in the central bank's toolkit. So it is a different environment and it is we think a key reason why despite the tremendously high valuations that we and and others have been talking about for a long time um it hasn't mattered yet. Uh we don't think it doesn't mean they won't matter. It just means this this u extended pretend is has been um uh elongated for longer than than normal market forces would probably allow for. Um so in that sense uh you know we we can kind of relate to a Carson share because you know if it were purely due to valuations in the US stock market we could make a case to be essentially out of the US stock market altogether yet we're not and nor have we been um you know we we are underweight uh stocks and where we are uh invested in the stock market we are picking certain sectors and avoiding other sectors based upon our systematic tools and we have a not an insignificant um uh intentional allocation to non US stocks um both emerging in developed markets um you in part because they're actually quite uh on a momentum and relative strength basis have exerted themselves quite nicely. Um but they're also at much kinder valuations than than the US market. Um so a lot of what he talks about as being a frustration for him as a short seller we can relate to as just a a prudent manager of of funds for everyday people. And I'll just say short selling is is you know we we've talked a lot. I'm sure we're going to cover at length here today. Uh silver has done silver and gold and precious metals have done phenomenally well. Um but you know as much as we celebrate and folks are will celebrate reading the headlines. You know there are times where that investment has um been frustrating. You know you go back over the last uh decade there there are some times you had to be a faithful convicted believer that there was a a true fundamental play here. and it all it pay back all at once, so to speak. And that's that's the way short selling works, not just once in a while, but all the time. True shortselling is you got to be you have to have the patience of job and you have to have the liquidity and and and and the fund funds to um hang in there until the big payoffs happen. And most people don't have the the the composition to do that. nor do most every people everyday people have the the financial ability to do that because they need their retirement savings to to create that paycheck that they need to live on. Um so those are a couple big takeaways. I just don't I want to talk about you know he alluded to what and he he references Mike Green a lot who we obviously uh uh have have followed and understand his take on the the passive bid that has has has um underllied these these relentless markets if if you could use that word. Um you know what stops this train? Um, you know, I think we agree with a lot of the same things he talked about. You know, just even on the margin, a a slowdown in the pace at savings in in kind of retirement plans, for example, or even even worse, go, god forbid, we have a recession, which uh, you know, we have little doubt we will have one. They're not they're not banned from the uh future of of humankind. We we have little doubt about that. and it just takes on the margin a shift towards more um conservative positioning or starting to sell down to to fund retirement. Uh taking out um hardship loans and things like that. If you look at some of the data, there's been a a modest but trending upward trend in in things like hardship withdrawals from 401ks. Um it'll matter in in a probably in an instant, so to speak. So, I wouldn't take um this and and like um like Carson, we don't we don't fret every night the imminent collapse. We think there's ultimately a very large reset in stock market, but right here and now, we're not worried about it being imminent. Um but, uh I wouldn't want folks to take that to mean you shouldn't be concerned, especially folks that are inclined to just be passively invested. um that is we think going to be a recipe for very big disappointment if not financial disaster for real people if they just you know tune out for the next decade. So I'll stop there. Those are some big picture takeaways. >> Okay. No, I think those are great. Let me let me pull in a few of those strings. Um so as I you know I mentioned to Carson a lot of people watching the video right now um they uh they may intellectually understand that uh if and when we have that big correction a corrective event John um that the Fed the central planner reaction function might be swift right um but as I was talking about with Carson there's a period in between when the pain happens and when the response happens and then you get the benefit of the response. Um, and a lot of people here don't want to be collateral damage of that that interim period, right? They don't want to necessarily look down, you know, at their statement and see that they're down 40%. Or whatever, right? And there's no guarantee that the rescue is going to bring asset prices right back to where they were before, right? I mean, that would be the intent of the rescuers, but it might not happen, right? So, you know, the big question is is okay, so how do you navigate this um such that you are getting everything you need in terms of the income off of your portfolio if that's what you're living on in your retirement or just the capital appreciation that you need because you still have a decade or more until when you're going to retire. Um but have some downside protection in case that corrective event happens, you know, during that period of time. Um, that's kind of where you guys live right now as as capital managers for your clients. So, just do me a favor. Just just summarize real quickly kind of the new harbor approach to that. Um, because you're not hiding in the bunker, right? U, but you're not blindly long either. >> Yeah. I'll just start with where we're currently positioned. We're about 47 and a half% in in equities, traditional equities. Uh, nearly approaching half of that now is in non- US equities. Okay. Um, we also have about uh another 10% in gold mining equities. Um, we've always thought of those as different than traditional equities, but if you add that in, we're close to 60% equities, but you know, we very um, you know, we for a long time have have thought of gold mining stocks as as different stocks. So, you might as well say we're underweight to traditional 6040 stock portfolio. But uh even within that I'd say we're we're uh there there is refuge to be had and there has been in non- US stocks uh in certain geographies like we have have done. So so you can again uh some of the valuations that we have long kind of fredded in the US markets aren't so uh extreme in in in non- US markets. In fact, all you all you need to do is look at a chart of those markets going back to 2008 and they're not much up from there versus you look at the S&P 500 and it's like you know 2008 looks like a little speed bump way in the past. I mean that's a very simplistic way to look at the relative you know valuation differential. Um but um you know it starts with well I'm going to get philosophical first of all. It starts with with one's ability to sleep. You know, there are plenty of our clients who have worked really hard, sacrificed and and and created a stable situation and being at peace with that. Their biggest risk, you know, should be not missing out on, you know, the last gasp stages of a of a a market that's way out over skis, but in unwittingly suffering a decline that that forces them to try to have to do a do over, which they don't have the the primitive privilege of doing. Now, um that that requires a uh an emotional toolkit more than an investment toolkit. One that uh is able to be okay. Um not winning in every last point, so to speak, right? And everybody has to and and we do do a lot of work with our clients helping them find their own piece of where that is, right? um calling their own top, so to speak, and being okay if if their family members or their neighbors are boasting more loudly at certain events if things are, you know, getting, you know, more frothy than than they're fully enjoying. That's okay. Coming to terms with that form of regret is a very important investment skill. But getting to the toolkit, the investment toolkit, having a systematic approach to to scale up and down risk as the markets speak to us. Um, not in what valuations say, but you know, um, you know, we we look at a broad array of of breath and momentum indicators. And sometimes that just has to be listened to. Um, and sometimes it's at the m the the market level or or at the sector level. We have long, as I I I think we talked about last week, we've long felt the energy sector had been left out of the party and and uh had had been from a valuation standpoint relatively uh quite compelling, but uh it lagged even despite that until like late last year, last quarter, let's call it, of last year. and we saw some technical improvement there and some of the systematic indicators saying, "Hey, this is a place that's not only attractively valued, but it's actually now got the wind out of the pack, so to speak." Um, and it's so it's important to have a a rules-based emotionless kind of uh guide to to to help navigate what you know will likely be very volatile markets and and going in places that uh you know right now as bullish as we are as precious metals I mean um base metals are actually uh quite attractive. They've been performing very well. >> I just and we have some exposure to that intentional exposure on an international level. I just saw we just saw a chart today in our investment chatter that you know looked at the u you know the costs for for major uh copper mines and uh almost every last one the the where current prices of copper are imply very large margins relative to the cost. So, so I would not be surprised to see that sector. It probably won't be as explosive up like uh like precious metals have been and are notorious for being, but there there are lots of places to find um value and opportunity even despite this uh policydriven distorted market that we we all have talked about. >> Okay. Um All right, Mike, I'm going to come over to you. Um, first you want to add anything to what John said and then I want to talk with you about the action in the precious metals cuz it's been fast and furious. >> Yeah, I know. I think John covered it really well. Um, I think that maybe one thing I'd say is like um is there's I think a lot of agreement in in the the notes that I've taken and um you guys talked about Golden Junior Miners. on positive um that Carson talked about was that there's a macro tailwind because of what central bankers have been doing. They basically buy every dip and you know that's bullish for gold. That's bullish for real assets. The world seems to know that the ultimate answer is just going to be more printing. you know, when you have uh some of the things that have gone on lat lately like criminal kind of charges against the Fed for not dropping interest rates faster. Um you know, that's not a safe environment for investors if there's if you the central banks are not completely independent. And so on that news, the metals took off. And so we we completely agree with that part. We'll talk about that in a little bit in a minute, but other than that, I don't really have too much else to add. I think you guys covered it pretty well. >> Okay. All right. All right. Well, look, let's talk about the precious metals. So, this we're recording this on Wednesday. I don't think this video is going to run until the weekend. So, who knows where the precious metals are going to be when this video airs, Mike? Because just every time I look, they get higher and higher and higher. Um, I was watching last night as I think the price of uh of silver uh went into, you know, zoomed up to high 80s, broke into the 90s. Um, as of this morning, silver futures opened around 92 an ounce. I think they've come off just a little bit since then, but pretty crazy, Mike, to be sitting here talking with you about $90 an ounce silver, especially when a year ago it was like 288 bucks an ounce. Um, and you and I were we were bullish on where it was going to go. We thought it could have a breakout opportunity. I'm going to say neither you nor I thought it would go this far this fast. Um once we're up here above 90 bucks an ounce, the the the the tractor pull of the big round number of of $100 an ounce uh silver starts getting into investors minds and usually that that helps kind of pull prices to that big psychological goal that that folks want it to get to. Um so you tell me what are you expecting here in terms of the momentum uh of the precious metals here? they are they are so uh stretched from their moving averages that there's you know a real danger of a snap back uh to those averages but at the same time you know they got a hell of a lot of momentum and they've got that that big round number now trying to pull them towards it. So what do you think? >> Well let's look at some charts. It's it's difficult at times like this to stay unemotional. Part of our job at New Harbor is to help people not feel emotional or certainly not to act emotionally. Charts don't tell everything. They can only tell you where we've come from. You can make a guess as to where we're going because of them, but certainly you can take a look at them and tell them tell when things are getting extreme. And all I can say is that when things are getting extreme, particularly when they're extreme in your favor and all of your goals are getting met and then some, that's not a time to be greedy. That's the time to start thinking about doing something, taking something off the table. Let me just share a chart here, a couple charts. I'll start with the silver chart that we always look at. And uh you should be able to see it now. Oops. Actually, I'm just have to zoom out a little bit. All right. So, you should be able to see that. So, this is the daily chart of SLV, which is the ETF that tracks silver. You're absolutely right. We're almost at 90. Spot silver is about I don't know $67 higher than this ETF, but this chart gives you a pretty good idea of what the shape is. So, we've had nothing but gaps here lately. Gap, gap, gap, gap. Like five gaps in a row. The market's getting exuberant. One thing I've learned in my career is be careful about shorting parabolic markets. You never know where the top's going to be. So, I certainly wouldn't short this. But the the >> but you also have the the the axom that gaps ultimately get filled too, right? almost always they get filled and so we don't know if we're going to go higher and then fill these gaps. This is on the daily chart and at the same time we have the CME hiking margins. We just had another hike I think yesterday. This time it hasn't done a thing, right? So there's a lot of reasons why silver should keep going up and gold. We're big bulls on real assets. We're very negative on central banking. We think the world is finally coming to the realization that this game isn't going to go on forever. I think that's probably what we're seeing. But even with all that in mind, things are getting really really hot in here, you know. So, just just bear that in mind. This light blue line is the 20-day 21-day moving average. At a minimum, we should touch that at some point. This move has been so strong that we've gotten close to touching it, but then we've just taken off again. We haven't seen the 50-day in a long time. Now, I wouldn't wait around to touch the 50. All I can say is this. This is more and more and more parabolic. And in the last week or so, it's very vertical. We should expect some kind of correction relatively imminently. Would I bet on it? No, I would not. I would not short this betting on that. But if you have positions in metals that have doubled, tripled, or quadrupled, sell a little something and do something with the money. Do the home renovation, the kitchen, the dream trip, buy the RV, whatever it is. Take it off the table and make it real in your life. That's what we've been coaching people to do because they have so much. Uh some of these people that have bought back at 15 or 10 have nearly 10x their money. And so it's very easy to be allin. All-in thinking is not going to be very helpful psychologically and and or in terms of enjoyment in life because if you're all in, you never sell any. And a lot of people are like that. They just want to sit on it and watch it go up and up and up because it's fun. And you're never going to know when the top is. So, but now would be a good time to sell 5 10% 15% something like that if you haven't sold already. That's all I'm saying. So, >> you know, we're just who knows? We got the we got the round level of 100 coming up. I should show you the gold silver ratio here on the left hand side. 50 52 now. Um it was 103. >> Yeah. >> And we were talking about that back in April. Liberation >> that has Yeah. >> Yeah. So long long-term average is around 40 to 60. I mean some people will say the long-term thousands of years average is 15 and I I guess I can't disagree but I can tell you over the last few decades it's 40 to 60. So it has normalized. There's no longer a screaming undervaluation for silver. Why are silver miners underperforming? I have no idea. And take a look at silver up today. It's up about four bucks still. So take a look at that up there. I put in silver miners, sil. They're down on the day. >> Is that a signal, Mike? >> I don't think it's anything. I think it's uh I think it's the market not believing the silver move. >> That's what I'm saying. Is it a signal that the market doesn't believe that this silver metal move is sustainable? >> I think that's probably what it's what it's saying. Um there's a lot of hand ringing going on, I'll tell you that on Twitter and elsewhere about why silver miners are underperforming. I happen to think it's an opportunity. I don't think it's a negative signal if that's what you're asking. But the market is starting to think it's a negative signal. But if you take a look at SIL, it had a nice base breakout and then it broke out of this flat base right here. It's all beautiful. It looks good and and it's still holding. One thing I can say is that we're all impatient, including me sometimes. You know, we want instant gratification. Silver goes up, we want silver miners to go up 3x. It doesn't work like that in the real world. The the the market and I've learned this the hard way. The market rewards patience, not impatience. Here's the junior. Same thing. We broke out. Sideways action. The market, I think, is going to reward patience. If you're not overweighted here, don't worry about it. Uh there there's just I believe there's more upside in the silver miners than at silver. GDX and GDXJ have done a little bit better relatively speaking, but the shapes of all of these curves are relatively the same. So you we were basically saying with silver way back at 3035, watch the big triple top breakout. I mean maybe it can go to the weekly chart here down here. I still have the line there. One, two, three tops. This is a weekly chart. Look what's happened since then. I mean 1 2 3 4 5 6 7 8 nine weeks. If I go to the monthly chart, 2 3 4 5 6 7 8 almost nine months straight up. Look what happened back in 2011. This is strong, much stronger than the 2011 move. And what's different this time, not only is it more weeks, but it's more persistent, but at some point here, we're going to have a wicked red red bar here, and it's going to go that way for a couple months, and then we're going to have to see what happens next. So, that's all I'm saying to people. Don't get too in love with this. Sell a little bit on the way up because that'll give you staying power. >> Okay, Mike, can you go to the miners chart, the GDX chart here? Because obviously at New Harbor, um your positions more in the miners than the metals itself. And to to John's point, um you guys don't short um but you do purchase downside protection for your big positions through um options. So, where are your hedges right now on the miners? >> Well, we have kind of a unique situation in that we have half of our miners hedged and they're in the money. So, you know, right now on 50% of our position, we've taken an accumulated credits, but our strike on half of our position is 80, right? So, we might be capped out. You'd have to add up all of our accumulated credits, but we might have accumulated credits of six or seven or eight dollars. something like that. Let's say let's call it $7. So that means 80 + 7 is where we would be capped out at 87 on half our position. So that means we're we we missed out some upside on half of our position. That's okay. That's the cost of our insurance program. >> So sorry Mike, was that covered calls then? >> This is covered calls. Okay. >> We do not have puts in place right now. >> Okay. So So basically, okay. So it it you you you bought some covered calls to get some income, but you you cap your upside. The risk is that the the stock runs to the upside, which it did in this case. >> That's right. It did. Um put another line out of the way there. The stock ran up to the we had this and this has really been going on many different cycles here, but at present we've rolled up to 80 with accumulated credits, which I'm going to estimate are around seven. So that means we've got a covered call on 57%. I'm sorry, on 50% at at $87 or so. And that goes out to February, the third Friday in February. Now, here's the thing. If we keep going up and up and up, we're going to keep enjoying the ride. Now, our rebalanced position back down at like 60. We rebalanced to 10%. That model position is roughly, let's call it 14% now because of growth. And so, I know we always say 10%, but that's for new clients. We haven't rebalanced in in many months. And so our average client size is maybe 13 to 14%. >> Half of that is hedged at 80 plus the accumulated credit, so maybe 87. The other half is free to run. It's always a balance between dampening volatility and providing hedges and giving upside. I would expect at some point we're going to have a sharp pullback. We have a sharp pullback to the 21-day moving average or even the 50-day moving average down here. Well, guess what? The half that's unhedged does get a decline, but the half that is hedged has dollar fordoll offset because of the in the moneyiness. So, it works both ways. If we fly higher from here, we're going to ride the 7% that we have. If we tank from here or or correct, we're going to very quickly get back to close to 14% automatically. So, it's hard to visualize, I know, but that's how it works dynamically. And we're just trying to to smooth out volatility. All right. Um, well, really interesting times from here. So, let me ask you, um, real quick, Mike, do me a favor. Just pull up the chart of gold for a moment. >> Okay. >> Um, I was talking about the pull of the big round number when it comes to silver, right, with a $100 an ounce silver. Um, gold is trading now above 4600 an ounce. Um, is that starting to get close enough to the big round number of $5,000 an ounce that, you know, Wall Street starts thinking about that and the the tractor pull of the the mental desire to get there starts kicking in. >> Yeah. Let me show this chart here. This is GLD. Just don't have futures quotes on this platform we're using right here. So, you you know, we're 4,600. So, just imagine that this is 424. or it's about, you know, 400 points above that. Um, so this is would be 4,240, but another 4. So this gives you a good idea of the shape of the curve. Not the exact spot price. So you're right, we're getting close to 5,000, gold, 100, silver. I've got no doubt we're going to get there. I just don't know that we're going to get there now. That's the big question. I mean, if I go back into the longer term charts in these things and here's gold triangle sideways breakout triangle kind of up and then consolidation breakout again. But these these things are getting late stage. You know, here's a base, here's a base, here's a base, and a breakout. Third, three times in a row here, you know, the first time the whole world is kind of sleeping. The second time, half the players start to take notice. The third time, everyone notices, you know. So, I don't know. I I I think it might be exactly what the market often does is it gets close to a number and then it just slaps you in the hand, you know, and has a big correction. But I think a year from now or or more, we'll be above 5,000 gold and 100 silver. There's a lot of people all over the internet saying they think we're going to be there now. And to be honest, I wouldn't be shocked if we get there really quickly, but it's a super bullish chart. It's getting close. I don't know. Your guess is as good as mine, Adam. I'd still be ringing the register a little bit if I had a big position. >> Yeah. No. Well, I mean, I totally agree that, you know, either, you know, position rebalance, which we talk about doing all the time, or if if you've got ounces that you just don't want to sell, um, then hedge, right? And it's funny, I get so much push back against this because, you know, the metal's been running so hot. People have been saying, "Well, this is why you don't want to hedge." It's like, well, yeah. I mean, you never hedging is never sexy when prices are going up. you know, it's only sexy when when when the price action stops and then people all of a sudden really wish they had insurance in place. >> Um, personally, one man's opinion, so this definitely not financial advice. Um, I wouldn't be surprised, Mike, to see $100 an ounce silver. Uh, I think it's probably more likely given how close we are, but also um, $5,000 gold. I wouldn't be surprised to see those in the relatively near future. For me, the bigger question I have is just how long will those prices sustain? you know, do we do we do we touch them and then have a big pullback and, you know, some long period of time of trying to work through all the froth uh before they start going higher again or, you know, is it really truly a brand new price regime and, you know, those become the new floors? I don't know. Totally TBD. >> Well, we'll see. Um, just remember, we get these calls all the time for hedging. It's very expensive to hedge with puts. All right? So you you really want to be selling covered calls if you can. If you happen to own gold in the form of GLD, you can sell covered calls or you just want to be selling on the way up. I can give you a really quick example here. If I look at GLD and I go out to one year from now, you probably can't see this on the screen because it's so small, but the current price is like 425. And let's just see what that what it would cost to buy a put. If I bought an at the money put 425, it'll cost me $29 a share. 29 divided by $424 is like what? 6% maybe. That's a, you know, that's not horrible. I mean, I guess if you want to pay 6% of your pile, we can we can basically say you're not going to no matter what, you're going to be able to um, you know, offset the downside. But that gets pretty expensive over time, you know. So, it's much better to sell some covered calls and take in some income or just sell on the way up. >> All right. Well, look, um, wise advice as always, Mike. So, we'll wrap it up there. Just given where we are timewise. John, I'll punt it back to you for, uh, closing remarks here. Um you know for much of the past two months we had been advising people hey you know don't don't procrastinate in in taking uh care of whatever end of year you know uh deadlines you want you're going to need to meet whether it was minimum required distributions or charitable donations or whatever. Okay. So we're we're we're past year end now. Now that we're here at the beginning of a new year, do you have any advice for people in terms of, you know, things they should be doing now or considering now to set themselves up well for the full year that we have ahead of us? >> Well, yeah. I mean, um, a lot of last year was about, hey, uh, how do we kind of minimize realize most people had a, especially people that just sat there and did nothing even, uh, had a pretty good year and, um, maybe even better year than they imagined they would. And with those gains um, comes the possibility of capital gains taxes. So, uh, we certainly did all we could to mitigate how much realized capital gains our clients booked last year and and therefore owed taxes on and we did a pretty good job. We talked about our hedging strategy with the miners. One of the silver linings there, excuse the pun, is we were able to do in doing those call rollouts and rollups. We were able to harvest some losses on the way doing that. So, it's kind of like we got to keep the stock, still appreciate some upside, gave away some upside, but also harvested some losses in those call those calls. But now that we're in a new tax year, um this may very well, especially if you have an outlook like we do, that eventually we'll probably see some uh some some real downside in this market and very likely this year at some point. Uh by all means, uh think about taking some gains. U ideally, if they're long-term capital gains, you've held them longer than a year. Um you're going to get taxed at a favorable rate relative to most people's short-term capital gains tax rate. So, think about that. And you know, no better place to think about than than the the medals like we talked about. Um, selling some selling some winners here and and you know, right sizing positions is probably the most important thing someone can do uh even in a strong sector because if they're overweighted, it it it becomes unhelpful to the situation because it nothing goes up forever, not even precious metals. Um, so that's that. I'm looking I'm actually looking at some questions. We actually have a live Q&A. We do live Q&A for our clients every month. Uh, and we have one tomorrow. In fact, Adam, if if if you'll indulge us, we'll we'll, you know, we we do get a lot of prospective clients that join in these as well. Um certainly um your your viewers, if they wanted to tune in, they could find our live Q&A. I think we've had have it advertised on our uh LinkedIn page and um perhaps even uh uh uh Twitter. Um but we got a lot of questions. A lot of the questions have to do with uh inflation, uh precious metals. Is it too late to get in? Is it should we sell some uh taxes? I'm just looking at the other things here. Um you know the psychological aspects of money. So we we have a pretty far-ranging uh you know uh roster of questions that almost is like a day in the life of the kind of work we do with clients. Um and I invite your viewers certainly to to come join us uh submit questions in advance or or live during the uh the the broadcast. But uh um happy to happy to kind of answer any questions anybody has. Uh, but these are the real real everyday things we help our clients with. And uh, >> so so John, sorry, when is that Q&A? >> That's tomorrow. Uh, so I should have given you the >> Yeah. So just FYI, this video is going to be released after that. Hope hopefully folks can catch the next one that you guys do. >> Well, we do them every month. So every month uh, and I apologize for the goof up on the counter there. Yeah. But we usually do them on, uh, kind of first or second week of of the month and, uh, usually 2 p.m. Eastern for an hour or so. and um you know love to have people tune in. >> Great. Great. All right. Um just in in wrapping up this topic. Uh so you mentioned capital gains, John, and I I just want to give folks a quick refresher. Um so when you have capital gains in a financial asset, um there are two types of of uh capital gains taxes that can come into play. Um, one that definitely will is the federal capital gains. And those range from 0% capital gains tax uh to to 20% on your long-term gains. So, I'm sorry. Um, let me step back for a second. Um, two types of capital gains, short-term and long-term. Generally, if you've held the asset for less than a year, it's going to be taxed at a short-term capital gains rate, which essentially is going to be what taxed as as as uh income to you. So, whatever your marginal income tax rate is going to be, your short-term capital gains are going to get taxed at that. If you've held them for over a year, they'll be taxed as long-term capital gains. And there are three types of federal long-term capital gains tax rates. And they depend upon what your taxable income is. And uh you'll see here right now uh this this tax schedule here, but basically it's it's 0% below a certain threshold. Um uh above a certain threshold, it's 20% and if you're somewhere in the middle, uh they'll be taxed at 15%. So that's what the federal government's going to tax you at. And then um if you uh well depending upon what state you live in, uh you'll pay state capital gains tax if your state taxes capital gains. Not all states do. Um so like the state I live in, Nevada, doesn't tax t capital gains. It's one of the reasons why I moved here. Um but primarily it was because it doesn't have income tax in Nevada, which is the bigger deal for me. Um but uh uh the the way in which these capital gains are taxed by state differs. Um so uh for example, if you live in California, which is the state I lived in, um no matter whether it was a long-term gain or a short-term gain, they're going to tax it at your your top marginal income rate. Uh again, this all differs uh state by state, so obviously check with your uh your CPA or whatever. Um, but guys, I just wanted to share that because I think for a lot of people, um, they kind of know they have to pay capital gains, but they don't really necessarily understand all the math that comes into play. But those >> Adam glad that you highlighted that and and just like you did, I'll I'll reiterate this is not personalized tax advice because it gets down to very specific things. But other things you got to be careful about there is not un unsuspectingly uh invite other issues like there's there's there's a a a rule called Irma basically and I forget what it stands for. It's an abbreviation but you know capital gains uh realized adds to to income. So so in in respect of calculating social security taxation and Medicare uh um search charges and things like that. So you want to be careful that you don't um lose sight of some of these other tax related stuff and you know get an unexpected surprise there >> right and again I'm not a tax adviser um so obviously go do speak with yours but I am guessing too John as well that if you are uh taking on capital gains that are taxed as income um it could potentially if you have a big enough capital gain it it could bump you up into the next uh tax marginal tax >> absolutely yep absolutely absolutely can >> yeah One one thing you didn't mention, Adam, that we talk with clients about too, again, with the caveat that we're not tax experts is the NIIT. A tricky little tax called the net investment income tax. So, here's a little tricky one. I'll just show you right on the IRS's website. If you have income from investments, you might be subject to this. if your modified adjusted gross income exceeds 250k if you're married, uh 200k if you're single, and MIGI, by the way, Maggie, includes interest, dividends, capital gains, etc. So, even if you have, let's say, $100,000 income, but you take a $200,000 capital gain, that chart you just showed shows that if you're under 545, I think it is for a married couple, you're going to pay 15%, but guess what? you're also going to pay 3.8% NIIT. So, it's a little tricky, but um it's just an additional tax people should know about. And if you can avoid it by staying under those limits, I'd say avoid it. >> Okay. So, um I think I to the spirit of my original question to you, John, um I think maybe a really good thing that most folks should consider doing at the beginning of a year is revisiting their financial plan. >> Right. Um, let me let me update the financial plan. Let me, you know, what's changed over the past year in my life? Have my forward expectations changed at all? Let me get my financial plan up to date so I know where it's going. But then you can use that to kind of come up with your income projections for the year and whatnot. And then you can, you know, that can then really inform you for having some discussions with your tax advisor about, okay, how can we make sure I don't trigger some of these other additional taxes I might be subject to this year if I do things differently from the start. So, um, obviously you guys do a lot of financial planning for clients, correct? >> Absolutely we do, Adam. It's part of the, uh, part of the package. >> Part of the package. All right. Um, all right, folks. Well, look, um, highly recommend you set yourself up for success this year um, by doing a lot of the things we just mentioned there. If you do them on your own as a DIY investor, great. If you have a financial adviser who can do all that for you, great. Um, but if you don't, uh, or you'd like some help from, uh, one of the financial advisory firms that thoughtful money endorses, maybe you might even want to talk to John and Mike and their team there at New Harbor Financial, um, highly recommend you just take this action. So, anyways, uh, a really good first step to that could be, again, if you don't have a good adviser already advising you, talk to one of these guys, uh, that Thoughtful Money endorses to do that, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. Uh the consultations you'll have subsequent to that are totally free. There's no commitments involved. Uh either it's just a service these firms offer to be as helpful to as many people as possible. But the key thing is just make sure you're setting yourself up for the greatest chances for success uh at the beginning of the year for the full year. Um, also folks, um, if you'd like to see Carson, uh, come back on this channel again at some point this year, uh, please let them know that by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it if you haven't clicked that already. Uh just in talking about uh the precious metals, just a reminder that the uh special offer that the exclusive offer that uh Andy Sheckchman, CEO of Miles Franklin, uh has offered to the thoughtful money audience uh for buying junk silver for just $1.35 over spot. Uh supplies are still lasting on that for the time being. So, if that's something you might want to take advantage of, just fill out the very short form at thoughtfulmoney.com/bygold and Andy and his team will be in touch with you right away. Uh, and not only can you talk to them about the junk silver offer, but if you've got additional questions about buying, storing, or selling precious metals, they can help you with all that as well. John and Mike, thanks again for yet another great week. Um, new year's off to a a strong start. Thanks for being with me here. look forward to doing this with you all through the rest of the year. Um, and very much appreciate all the help that you guys have done for all the many people that the thoughtful money channel has sent your way. Uh, I I get a constant stream of folks saying how much they appreciate uh the service that you guys and your team provide them. So, just want to say thanks so much for your partnership. >> Thanks to you, Adam, as well and your viewers. Thank you very much. >> Thank you, Adam. Always a pleasure. Thank you for those kind words. We're uh privileged to be able to do what we do and uh thank you and all the folks that have reached out to us through thoughtful money. >> All right. Well, thanks so much. I got a lot of travel coming up in the next week or two, but I think we'll still be on the schedule here. So, look forward to having you guys here next week. Uh but yeah, I'm going to Houston and then I'm going to Vancouver all for conferences. Um but uh somewhere somehow on that road um we'll get together and and record next week so folks can hear your latest update. Thanks so much again, boys. Really appreciate you being on this journey with us. Everybody else, thanks so much for watching.
The Next Black Swan? | Carson Block
Summary
WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money’s endorsed financial …Transcript
There is one potential black swan out there that I see that I don't think it's a near-term risk. It's probably not a medium-term risk. I do think that among insurers there are a lot of problems. I think there's a systemic problem among insurers. >> Welcome to Thoughtful Money. I'm its founder and your host, Adam Tagert. Stocks enter the year trading at or near all-time record high valuation extremes. So when stocks look richly valued like this, short-term sellers take notice. Is it time to start shorting the market here? To find out today, we've got the good fortune of welcoming back to the program one of the best known short sellers in the business, Carson Block, founder of Moneywaters Research. Carson, thanks so much for joining us today. >> Yeah, thanks for having me, Adam. >> Hey, it's such a pleasure to have you back, Carson. I really enjoyed our first conversation and uh sort of the audience. So, I've been getting a lot of uh requests. Hey, when's Carson coming back on? So, thank you for making the time here. Uh happy new year, by the way. We're here still at the roughly start of the year. So, so to my question there in um in the intro about um shortselling. Obviously, Carson, you're one of the best in the business. Um valuations when we talked last were pretty stretched. uh they seem to be in many cases even more stretched right now, but looking at some of your recent uh writings and work and interviews, um it doesn't it sounds and correct me if I'm wrong on this, but it sounds like you think the current cycle still might have some juice left to left to run. I don't get the sense that you're saying it's time to go short. Is that correct? >> Yeah. So I I guess it might be fair to characterize me as somewhat of an apostate in the shortselling world. Um but you know the comeback there is it's now a very very small world when it comes to short selling. So um so there there are a few things here the when you when you talk about valuations okay prices have definitely decoupled from economic or fundamental value in a number of instances especially for companies that are larger portions of popular indices. But the thing is what there are reasons why that has happened and you have you know and this is this is a rabbit hole we've gone down a lot in our firm the past couple of years where um it really started with well okay it started by getting beaten up on shorts for a number of years right and >> got into these conversations um especially a guy named Mike Green of Simple Ify asset management who's been out there banging the drum for years about how passive investing is warping markets and >> start interject but just let you know this audience is pretty familiar with Mike and that passive bid framework. >> Great. So I know Mike and we started uh conversing about this you know maybe late 2019 early 2020 and what then you know what then ended up happening is we had somebody in our firm who ended up developing a systematic strategy a momentum strategy where we were going long constituents of the S&P 500 and you know was just we were measuring momentum in a way that's proprietary. But I was skeptical when he presented this to me and he showed me the back test numbers in mid 2024. And you know I I mean I was skeptical that there was real edge there and it just see sounded like it was too simplistic but we ended up putting this into practice in October of 24. And I mean we've shot the lights out. The the returns that we've made on this are just they're they're almost obscene. And you know, I really as as part of this and my my conversion to really, you know, I understood the arguments that Mike was making on an intellectual level, but I didn't really my bones want to believe it fully because of my orientation as a short seller. But, you know, having taken advantage of this effect, um, I do feel this in my bones, but we've gone down the rabbit hole and look, we really, we're not complimentary internally of the index providers, especially S&P, right? Like there those S&P chases momentum when they add names to the index, especially the S&P 500 index. And the dynamics of market cap waiting create basically this recursive effect where you know momentum just feeds upon momentum and then the smart companies which you know the a lot of these companies understand these mechanics they play into it through share buybacks and so it you know that that's why you have and I so many of these large companies where the prices are disconnected from what you would say the fundament al value should be. But should you short that? I mean, no. So long as you continue to get flows into these index funds, you know that that I mean, that effect is going to continue. And the fundamentals matter less and less. Yes, fundamentals can matter on the margins if there's a bad quarter, but again, it could, you know, that could shrink its, you know, given stocks percentage of the index. But if it's still on the winning side of that index, it'll continue to get flows. So it'll kind of just grow back up in in proportion of the index. So no, you shouldn't go and and short MAG 7 because you think it's overvalued or what have you. What I think the future of traditional short selling is, um, now keep in mind my firm, we're not traditional short sellers, we're activist short sellers. So >> for us the idea has always been to use shortselling as you know as an absolute return strategy but >> generally traditional shortselling is not absolute return. It's there to smooth out volatility over the long term and also to allow you to finance your longs ones that you really like. Well, the case for traditional short selling as a volatility hedge or as a downside hedge, it's not really there anymore at present or because when we have corrections, the corrections are so short in duration because the policy makers absolutely must prop up the markets. I mean we are you know we are so as an economy we are so heavily financialized that we cannot weather the pain of a real market correction or a severe market correction. So policy makers have the motivation and now they have the intellectual property um they developed it post GFC and you really saw this put to use in COVID when that correction was so short in duration. So that's why that that traditional view of well I want I want to allocate to short sellers um as a hedge you know for when the market corrects that's why that no longer holds water but to finance your longs yes but the problem that I mean short selling traditionally has been this discipline where you go out there and you say okay I want to find the companies where the price is the most disconnected from the value you know another way of think of phrasing it is I want to find the most screwed up companies. Now, when you get those massive disconnections, it's almost always because the company is actively doing something to cause that. They're hiding the ball. They're misleading investors. They're doing things to manipulate the perception of the company. So in this environment trying to identify those shorts to use them to finance your longs basically is a bad idea. So if you if you look at any given index and you break it down into quintiles or deciles, right? That that leftmost um in terms of the ones that underperform ultimately, you know, where they really crash. That's what everybody's searching for in terms of their mentality. But you but the thing is a lot of those that ultimately have those spectacular crashes, they just run hard. They rip for an unknowable but often long period of time before they crash. So rather than chasing that leftmost quintile or decile, I think that the discipline if you're a traditional short seller, you know, as in non-activist, needs to be that you're going in there and you're looking for the quintile or the decile that's going to be just a little bit to the left of the index mean. The mediocre companies that are kind of just sleepwalking through things, you're not finding anything revoly. you're not really finding things that the world, you know, the world doesn't know. You're just looking for those who are lagging the average, the mean performance of the index, which isn't that hard because it's only usually about 20% of the companies in, you know, like an S&P 500 or a Russell 3000 index. It's only about 20% of those companies usually that equal or exceed the mean of the index performance. You know, the the the mean >> or in the S&P case, 20 companies, not 20%. Yeah, exactly. Like that mean is driven by a really small number of companies. So rather than looking for the ones you think are going to be the worst, just look for the ones that are, you know, kind of, you know, somewhere in like the, you know, the second third quintile. Um, you know, or the, you know, the the third to, you know, sixth decile basically. That's that's where I think and you know what, and that's a that's a horrible job. Like it's not intellectual. Smart people don't want that job. So I think that that's why as a practical matter it would be tough to make that adjustment. But that's the adjustment that should be made if you say, "Hey, look, by being short these things that are kind of mediocre that are just going to underperform, I can really concentrate more in the things that I have confidence in that I really like because when there is, you know, beta move downward, I will have some cushion there, but I'm not looking at this as like an insurance policy, you know, because I think the market's really volatile and going to crack hard and, you know, I like it's not a pref market anymore. you just don't have the frequency of corrections and the duration of corrections that you used to have. >> Yeah. And it sounds like that because there's there's there's several things that are going on. I don't know if we can call them unnatural or not, but they are they are trends that that weren't there, let's say, 20 years ago that have a strong bias to keeping the market supported here. And you know, this audience, Carson, it's not a bunch of aggressive short sellers. Um, but I think there are a bunch of people in it who are believers, long-term believers in that stock should reflect fundamentals. They're looking at these distorted valuations um, ratios, particularly given, you know, the scope of history, and saying, "Oh my god, you know, they're at historic extremes. This can't last. Maybe I should go short this." Right? And I hear you saying, folks, that's that it's it's a risky game. and a guy who's very experienced in short selling like you. And we'll talk about the difference between ass active and passive short selling in a second. You're basically saying I wouldn't touch that or or or if I would, I'd do it in the very boring way that you just mentioned. >> Right. Exactly. I wouldn't be looking to hit home runs on on the short side, if I were doing this in a non-activist way. Um but yeah just you know so long as you have net positive inflows into you know into the index funds and a lot of that's target date funds you know the 401ks um without a a meaningful rise in unemployment that's going to reduce contributions to the target date funds and cause people to draw on those retirement savings. you know, until you get to that point, um, you're just fighting this incredible river of money. Um, you know, now Mike Green does say, and I I don't disagree, that the fragility of this situation is is significant, but, you know, that's but I I don't think, you know, I don't think we're anywhere near where we have to worry about that fragility basically where the flows start reversing because yes, when the flows reverse, >> you don't have a lot of active managers left to catch these falling knives and because of the disconnect between prices and fundamental values, you know, especially with the larger names in the indices because that is such a large disconnect. Those knives would have a ways default anyway, even if you did have a lot of active manager dry powder on the sidelines. Um, so it is it is a very worrying from a long-term perspective, it is a very worrying situation. Um, but you know, I'm I'm not presently I wouldn't lose sleep over it, you know, in the near to medium term. >> Okay. Well, and and so I got a bunch of questions I want to ask you that I asked Mike, but I want to hear your answers to them. Um, if we can, let me just give you the open invitation here, Carson, which is if and when you get to that point where you start losing sleep after you've told your Muddy Waters customers, uh, you got an open invitation to come on here and tell these folks as well. >> Well, I mean, look, we Okay, so from, you know, from a short seller perspective, and again, you you said we'll go into what activist short selling is versus, you know, non-activist or traditional. I mean, we've been, you know, we've done well, um, in, you know, in these bull markets. So, um, you know, it's it's never easy on the short side, but I'm, >> you know, I'm reasonably sanguin about that. Uh, I mean, >> sorry to interrupt, but just just so folks understand, activist, um, that's where you actually can sort of have some impact on the the the destiny of the company, right? where you you see a company, you think it's doing something distortive, kind of deceiving the market, and you say, "Okay, you know what? I think I can, you know, take a short position on this company, and then I, as an activist, can come in, and I can kind of poke that weak spot and hopefully make the market aware that this company has an Achilles heel that maybe it didn't realize before. Is that is that a good sort of simple summation?" >> Somewhat. I would I would add to it that the focus on in short activism is on the past right so it's just you know did the company accurately p did the company accurately present material information um did the company present all material information so the first one is has the company told a lie of commission has the second one is has the company told a lie of omission and the third question is does the market understand the information the company has disseminated you usually don't get a misunderstanding without either a lie of commission or a lie of omission. But basically, we're looking for companies that have egregiously misrepresented things in the past. So, we're not out there saying like, oh, you know, this competing product is, you know, it's it's a lot better than uh people think and it's going to take market share. We're generally not looking into the future. So, um it's backward looking. >> Hey, these guys cook the books and I've got the receipts here now. Yeah. >> Yeah. It's it's it's very similar to journalism like to investigative financial journalism. So >> you know that so we basically we are investigative financial journalists when we do this. Our revenue model though is shorting the stocks versus selling ads or subscriptions right. >> Um but so that you know that it gets harder you know I mean every year invest you know the market goes up investors are more and more anesthetized to risk. But on the flip side, the more egregious behaviors that used to be confined to lower rungs of market cap, well, now you find them in companies that have more cap and more liquidity. So, um, so, you know, we'll do okay there. Now, will I lose sleep when I think we're getting to the point where markets um are going to implode? Um I guess yeah I mean look I you know I haven't been there since COVID and you know in CO I definitely lost sleep. Um but yeah I I don't I don't see that I don't see that on the horizon you know imminently but you know certainly I'd say for most of these financial crises I've been early in my life. you know, back in I think 95 or n no 96 or 97 I started calling it a stock bubble. Um, good thing I didn't know what you know how to short at that point. Um, >> right. Because it still had three and a half years to run from that. >> Yeah. 2003 I started calling it a housing bubble because I just, you know, I was like there's no way homes can go up double digits, you know, when inflation is this low. >> Good. You know, good. I mean, you know, I Well, unfortunately, I didn't buy a house at that point in time because I thought that it was ridiculous. So, >> I'm right there with you on that, brother. >> Yeah, >> we we knew too much too soon. Yeah, >> I know, right? Like, you know, one of the best and truest things I've heard said about investing and maybe just life in general, but especially the investing industry, is that when you speak with them, pessimists sound smarter than optimists. Optimists live in bigger houses. Yeah. Yeah. Very well said. Well, all right. Well, look, um, just to reiterate, if and when you get to a point where you start not sleeping well on this, please come on the channel, let us know why. Um, all right. So, you know, I've talked with Mike at length multiple times um about uh his his passive flow framework. Um, actually, I'm getting gonna actually see Mike in person in two weeks, so I'm looking forward to that. So, that should be fun, too. Um but uh uh you know Mike first off he doesn't like this right he's not he's not happy about it he doesn't think it's healthy for markets he thinks that it is distorting prices and at some point if and when these capital flows go into reverse these net flows go into reverse he thinks it's going to be highly damaging to a whole bunch of people but it sort of just is what it is right we we we tra trade the market we have not the market we wish we have right Um there >> so you know I often ask him okay well you know what are the what are the most likely contenders in your mind to to change the status quo here and generally what I hear from him is is it it would probably have to be uh a weak enough jobs market that the uh the monthly flows that are coming in from these retirement plans they start shrinking right you you've had enough people laid off that uh there's just fewer funds that have to be invested every every month and and as that starts shifting from net growth to to shrinkage that's kind of when the wheels come off of this thing. Um is that your top contender as well or do you have a different understanding? >> Yeah, look my my views are highly influenced by Mike. Um and and look I've read some of the same source material he has but um that you know that is my view as well that once you start getting enough layoffs such that there are more people withdrawing money from their retirement accounts than contributing to them then yes I I think that that's when the wheels fall off. >> Okay. Let me ask you this. Um, so obviously if the unemployment rate spiked above 6% or whatnot in a short period of time, maybe we could have that, right? Um, what if we just had a a jobs market that didn't grow much? So unemployment kind of the employment levels kind of stay where they are, but we have more and more every month baby boomer retirees who are not working anymore and are starting to withdraw. Will will that demographic wave eventually pull this thing under? >> Well, yeah. And then you also have it's not just that the baby boomers who are retiring, but then you also have, you know, those target date funds that are targeting the, you know, suppose, you know, the eventual date of your retirement. They shift more from stocks to bonds anyway. So, they're they're selling those off. Um I mean but there's still somewhat of a you know as as bonds rise in value then you know you have to still have to balance it by buying equities but um the but yeah I mean there are there are conditions under which even without an abysmal um unemployment rate and and look when I and I I'm not really the person to ask what that rate is but you know you said 6% like 6% doesn't scare me. I mean I remember >> right of the air maybe. Yeah. >> I mean I remember when I was at USC as an undergrad in the mid 90s and was taking one of my you know 200 level or 300 level macro classes uh courses and I think we said that the the natural unemployment rate uh the estimate at that time for the US economy was in the low 60s and you know I mean and we've gone well below that obviously. So, um, no, I mean, of course, the flip side is that labor force participation rates have dropped. >> Has dropped. Yeah. We've got over 100 million adult US adults not doing anything or considered outside of the workforce. We'll put it that way. >> Yeah. Yeah. So, but you know, but basic I mean, I guess that's the other problem, right? When you get into if you're really going to be focused on the number, uh, you know, what is the unemployment rate? I mean there's so many caveats to the unemployment rate that and and other government statistics obviously you know plus the fact that I'm not sure that you know BLS it's going to produce bad news you know for at least the next three years anyhow um you know I like I I don't I don't think I I don't think you can I I don't think it's smart to try to come up with a number the employment rate hits this then you know then I'm going to panic. I mean you you know you'll you'll understand you'll feel in your interactions in the economy. I mean you know if you can find a babysitter easily worry you know I can't ever find one. >> That's a great real word indicator. Um well look um I was asking the question not so much to try to try to peg the magic unemployment rate but just to ask does this thing have an inevitable expiration date on it because of the demographic boom? Will it get so big of the retirees that that their withdrawals will force this thing negative at some point? >> Look, that's you know that that's that's the theory. But the other the other counterveailing for or the counterveailing force and I alluded to this earlier and I I do think that Mike, you know, talks about this as well, maybe not in this exact context, but it's the fact that policy makers have no choice. So I in a piffy way I like to call our financialized economy the powder keg economy right because you know we stuff it full of powder which is leverage it eventually blows up and the only response is to build a bigger keg and put more gunpowder into it. And so, you know, with some actual preparation, you know, not that the government believes in doing that anymore, but, you know, maybe we'll actually get to a point in our, you know, in our politics where some foresight is actually politically rewarded and and, you know, and enters the system. So, I guess what I'm saying in a sarcastic way is that, you know, we might end up, you know, we might end up anticipating this. We might end up preparing for it. It might not be the sky falls in. You know, Warren Buffett was always fond of saying never bet against America. um you know uh again my my best feeling is that there's no imminent issue and um you know short of like those UAPs attacking us and destroying humanity or something like that but you know I guess it doesn't really matter you know what you if you're long or short financial assets at that point but um yeah you know I so I think don't lose sleep over it now as the problem you know as it becomes more obvious that we're going that where the flows start netting out you know on a more frequent basis. Um then you know assess the situation and maybe there are preemptive policy measures that can be taken or you know maybe it's maybe it's time to go to cash and you know just get out of the way. >> Yeah. All right. Let me let me let me make a statement here and you correct it in any way you like. So, what I'm kind of taking from you, Carson, is is sort of like what I take from Mike is I don't love this, but it's the way it is. Um, these are my words, not yours. Um, the the passive bid is kind of like a sort of damocles um hanging over investors. Um, where everything's fine as long as the thread doesn't break. We just have no idea if and when that thing's going to break. But right now, it's holding. And so right now, you know, you're you're sort of like, I' i've kind of learned to love the passive bit as an investor cuz I can use that to make money. I can use that to make uh to outperform. Uh and so you're choosing to do that, but you've got, you know, one eye always up at the sword trying to look at the thread and seeing if that thread looks like it's getting any thinner. Um right now, you're not seeing any near-term signs, so you're you're you're dancing with the devil, if you want to put it that way. um and you think that could continue for a good long while. So until you see signs of that thread starting to fray, you're you're going to put this to your advantage on the long side. >> Yeah. Look, because if you if you go back and you look at the last, you know, three major crises, um well, let's look at the last four, one of which wasn't a financial crisis, but uh or but it was layered on top of um the internet bubble burst. Okay, so the internet bubble bursting was foreseeable. The timing, no. You know, that it would be in March of 2001. >> No, that wasn't foreseeable. But guys like you in 97 could see this is probably going to end in tears. Yeah. >> Right. That um 2008, you know, the the implosion of subprime, the implosion of real estate, the implosion of credit, that was foreseeable. There were a number of people who did foresee that. Um now 911 was not foreseeable. um you know its immediate financial impact you know was material but not you know but it you know it and it obviously was worse coming on the heels of the internet bubble bursting but it wasn't um wasn't that significant but that's something that's unforeseeable covid was unforeseeable so yeah you can always have you can always have a black swan event like that um but what I I think you know and co taught me something that actually was formative for me in in terms of you know my again my apostasy I I suppose as as a short seller which is um there is a tremendous resilience to to our society and so as fragile as the market is because of because of passive people are resilient and you know like it's unfortunate that a lot of times s that the things that are glaring problems never do get addressed until there's a crisis but they get addressed and we have successfully addressed these and you know I remember in the early days of >> sorry to interrupt but I mean addressing to your point the powder keg economy it's it's rarely by fixing the issue but just by window dressing it enough that it doesn't look you know we or maybe not window dressing but you know artificially papering over it um so that we can continue. >> Well, keep look keeping it going. I remember so back in 2005 I sat down with um a friend of mine. He's really a friend of my father's. He'd had his own global macro um investment firms since the 70s and he was really one of the early American EM investors actually. And uh his name is Monty Gild. And so I sat down with Monty and you know I'm just like oh we're you know the you know housing we're headed for another great depression and ah this is like there's no way out of this and Monty said to me he's like look I agree with everything you're saying about about the problems and you know I I do think we are going to have you know a real you know real correction he said but I you know when I was a young man like you I used to think that this and I'm talking the 1970s the 80s I used to think that the global financial system you know was too fragile of an artifice that it couldn't hold and I've been you know and I was waiting for it to to implode and what I've seen time and again is they put they can put the toothpaste back in the tube. >> Yeah. >> Um and you know and and I think I think that's correct and I philosophically don't agree how they did it. I mean in 2001 or I'd say by 2002 I was a papalttic you know looking at the response you know to the internet bubble imploding you know just to cut rates to you know I mean back then they seems like they were you know we thought we knew what you know zero rates were but um >> child's play back then >> yeah I I was a papalyptic about that because to me this did not address you know what I kept saying in 2002 my my verbiage was surplus capacity we' created all the surplus capacity you the economy through through unproductive capital investments that were funded by artificially cheap money and you know it's like so we're just making money even you know artificially even cheaper but I don't agree with the methodology but the results speak for themselves they do put the toothpaste back in the tube and we saw that following the GFC which um I mean they didn't have those tools and they also didn't have the political will back in 1929 to do this. So they do have the political will now. You know, we're we're trapped in this cycle. I mean, in theory, we come to this, you know, for we come to this juncture in the road someday where you can't do it. But then look at Japan. I mean, this is, you know, Japan's been doing this for a few decades. I mean for you know back you know back when Japan started just you know trying to reinflate its its uh deflated bubble you had all the western economists you know saying oh this is wrong you can't do that it won't make sense it won't work like you know it's not that Japan's with you know is without problems but they've kept that going for I mean you know 35 years now um so I you know there because there is a societal need to to fix the problem. I do believe in this resilience and look the you know to me the like the real smack in the face that taught me this was during COVID because I had you know good friend of mine I'd known for a number of years professional investor you know he went out and started buying shares in the cruise lines >> and look I had already felt that cruise like cruises are just kind of nasty you know like they're floating petri dishes now like everybody on them is getting COVID and >> right they were radioactive during CO yeah exactly >> yeah and I'm like dude nobody's going to go on a cruise after this there's, you know, that industry is ruined. And he's like, "No, you know, they're installing sneeze guards." I'm like, "Sneeze guards won't help. It's aerosol." Like, >> and he just, you know, he just went on buying and I went on freaking out. And guess who was right and guess who was not right. >> He was right. Cruise lines rebounded. He made money. and you know in July actually wasn't until August of 2020 when everything's ripping and we're like uh yeah we got to reduce short exposure here like all those easy gains we had early in the year uh you know we've given you know we've given many of them back so um >> you know like so I've I've learned I've learned the hard way and you know the the phrase that you know you you've used a phrase a few times during the you know during uh our conversation here about you know um that that's very similar to something that I say it's a criticism of short sellers and that is you know and and look this this was true of myself um and hopefully no longer is but you know on the short side I think we really have a tendency to see the world the way that it should be not the way that it actually is >> and you know and that that's also the case with businesses you know when you go and you short you short a company because you're like ah you know there there's no way they can get out of That's also failing to understand that people are resilient. I mean Tesla's a great example. How many times over the years have the Tesla shorts just screamed that Elon's done? Nobody is more resilient than Elon Musk. Look, I used to be one of them. I thought that he basically jumped the shark in 2018mm. So you know you you can't overlook the resilience of people of companies you know not not every company avoids failure not every company bounces back but I I do think that you know as a society you know and it might not be pretty and I might not agree with how we implement the you know the the recovery plans but we are resilient and you know and just people just need not or should not lose sight of that >> right or or your I'm taking from you is discount that resilience to at your your peril or your danger. Um, all right. So, I've actually this is going to be a great bridge to uh a question I have here for you. Um, but um what one other thing too that I I I'm kind of taking from what you say and and I've mentioned this in the past is um it's resilience, you know, it's it's what you're talking about, but it's also just self-preservation of the system. So, if you're betting on a reversal, you have to just keep in mind that every part of the system is fighting you, right? It's it's fighting to, you know, the people that are benefiting from the status quo, the the big parties that we all love to hate, you know, they're going to do whatever they can to keep their advantage. Um, everybody in government is going to do everything they can to keep uh any sort of pain from lasting for very long. and even the consu the the the public themselves um will oftentimes ask for more of the same type of rescue that guys like you and I think have created the distortions. But I think you know in co we we let a new horse out of the barn or genie out of the bottle with direct payments to households and I think we can we can probably feel pretty confident the next time things start feeling painful public's going to ask for that again and politicians will probably give it to them. So you you have to just keep in mind that the whole system is fighting you, >> right? Yeah. And and you know and the thing is when you have an economic you know potential economic calamity that's deflationary. So what does that automatically create license for you know the central banks of countries that borrow in their own currency or really the US? What does that create license for the Fed to do? Print money. >> Print. >> Right. It's you know and and I mean what it ends up doing is redistributing right like there there are on the back end of that I mean even if you say well in aggregate you know GDP has increased and but you know there's it's there's obviously a transfer from you know more people to fewer people because especially if you're long financial assets when you catch that reinflation wave but you know so it's not to minimize the dilitterious effects of this but the reality is that's the polic policy response and they have a lot of room to maneuver and you know and and again going back to what you know people what I what I think people get wrong you know the there I don't know that the you know I'm not going to argue that the Fed and Treasury you know our stuff are stacked with like our our smartest minds but they have a lot of people and there are lots of people who spent years you know theorizing as to what the proper policy responses should be in a great depression type scenario or edge of the great depression, you know, scenario. I mean, Ben Bernani had written, you know, that that was I think he wrote his PhD thesis. Um, >> that's they called him helicopter Ben because of his PhD thesis. >> Yeah. So it's, you know, so they're they'll, you know, the the the biggest problem that the US had in terms of trying to save off the GFC when, you know, Lehman failed was a political one that the authorities did not exist. Um, you know, although it's kind of funny they suddenly found the authority when it was AIG, not Lehman, because AIG was, you know, like that that was that was the real like holy type moment there. But um you know they'll you know eventually the the politics will you know will line up and you know what what needs to be done to you know try to pull things out of the nose dive will happen and they'll probably succeed. >> Okay. Um I'm getting to the question I referenced but but now I got to ask a question I think is on a ton of people's minds which is um hey Carson um uh I get it. Maybe I'm a little surprised at your new apostate role, but I'm I'm following the logic that you're you're mentioning here about not to step in front of this juggernaut prematurely. Um but I'm worried that you know if this system does get out of control for at least a little bit you know you're saying yes the reaction function of the central planners and it's going to be fast and furious but I don't want to be collateral damage in the period between when the the the threat of the sort of damocles breaks and then the central planners respond. I don't want to lose 30% half you 50% of what I have if there's a big draw down there. Um, do you worry like let's say the sword thread snaps for a bit. I know you think the policy folks are going to respond as quickly as they can, but in the interim, how bad do you think it it could get given the distortions of the system? >> Well, I mean, certainly equities, you know, would be pummeled. I mean your S&P 500 index um you know nominally right because there's companies that had led the way up are going to lead the way down you know would be uh I mean it would be a crash um you know that would certainly have knock-on effects I mean you'd immediately have you know credit markets responding and credit markets I mean liquidity would recede instantly >> ice up yeah >> yeah um so you would have real world layoffs you'd demunition in other asset values. Um you know it would be I mean it would be similar to the GFC but probably the movements you know the downward movements in the markets would be more profound. Um so I mean in the short term look the you know you know as a as a matter of just general principle you don't want to have too much leverage. Right. Right. And this is also where having a real asset and you know so owning a home um but ha you know not having too much debt on it um would you know would be you know would be a benefit right don't have all you certainly don't have all your eggs in the equity market basket I mean particularly if you know you're at the point in life where um you know you're you know you're middle-aged or or older um >> you don't have a lot of time to recover. Yeah. >> Yeah. you don't have a lot of time to recover, you know, and you don't want, you know, and if you have a job where the, you know, the job goes away because of damage to the real economy, you do want to have cushion. Um, I mean, if you're listening to this and you're 26 years old, I mean, you're you can't wave a magic wand and suddenly have, you know, reserves, but um, you know, but then on the other hand, time is on your side. Uh so you know I I just think it comes down to you know at the end of the day you have to be prudent and you shouldn't ever get too greedy you know. So if you're hearing me talk about you know the equity market at least the index you know that's going to rise until you know the world falls apart. Okay. Like you know if you like that thesis fine. You want you want to you want to play along great. But don't go all in or anywhere close to all in on that, you know, have, you know, have a cushion there. Um so that's you know I I just think that's it's basically you know that that's where I know a lot of people in in a bull market people will deride diversification as diversification and like yeah okay but you know where it works >> is you know when things when things do become uh you know somewhat you know semi catastrophic. >> Okay. Um, and in terms of duration, and I know I'm asking you to to prognosticate a lot here, so I I understand that this is just gut feel here. We're not holding you any of this, but going forward, it sounds like you think that um market downturns like this or or we'll call them sort of systemic downward surprises like this, they're they're going to they're going to be more kind of like the COVID era um in duration versus the GFC era, right? GFC, we had, you know, multiple quarters of it just feeling terrible and and it took a while before people started to feel like it was getting better. COVID was almost kind of like you blink and you miss it, right? Markets plunge, but then they recover pretty damn quickly because the reaction function was so sharp and so unprecedentedly massive, >> right? Well, yeah. Look, I think, you know, I do think that's the case. And actually, you know, I I I hate to do this to you because it's kind of out of sequence. I mean, there is one potential black swan out there that I see that I don't think it's a near-term risk. It's probably not a medium-term risk. I do think that among insurers, there are a lot of problems. I think there's a systemic problem among insurers because, you know, you have you've had the situation where a lot of insurers have been acquired by private equity. um the rating you know these ratings agencies that you know will rate the you know rate the bonds are you know once again you know reasonably pliable I mean actually let's call it corrupt and so they're using the assets to fund um you know to fund LBOs to basically build their businesses the other thing that's really funky about a lot of insurance and I've never understood the case for this is you have captive reinsurers And those captive reinsurers are often in jurisdictions in which you have very little transparency or visibility into the financials of the reinsurers. And so, you know, what a game that I suspect a number of insurers play is, you know, they seed, you know, liabilities to their, you know, to their captive reinsurers and they'll inflate the value of the liabilities that they've seeded, you know, meaning make their balance sheet appear to have fewer liabilities and they'll inflate the value of the reinsurance asset that they get because probably the stuff that's on the balance sheet of the reinsurers, you know, even bigger garbage. Um, so I do think that that could be a systemic type issue, especially because, you know, speaking with somebody recently who's done work in the space, you know, he said that like a lot of these really the poor insurers are just reinsuring to each other. So you have this like web of like crappy insurers, uh, poorly capitalized insurers that are reinsuring each other's, you know, balance sheets. um you know that but a lot of times these insurers issue um life insurance and annuities. So these are longtail liabilities. So it's not it's not clear to me that there's that there's an imminent risk but you know again like let's say that blows and so if you had if you had that blow up in a big way one you know I think you'd see an immediate impact on the credit markets you know you would have a you know liquidity would recede because these guys are obviously big players out there in terms of providing liquidity for you know acquisitions etc. um you know spreads you know spreads blow out some but I just think you know the government has the toolkit to you go in and you know and fix it. I mean maybe there's you know a gap there during which um there's some real world pain but you know rates get cut, Fed buys bonds, you know does what it has to do. So um but that that's another that's another hiccup. shouldn't call it a hiccup, but that that's that is something that I do see that that could be a problem at some stage. >> That's super interesting and I'm resisting the urge to try to peel that onion with you, but given the time we have left, I want to I want to squeeze in a few more questions before we're done. And you answered my big one on that, which is when you mentioned it, I was like, whoa, what what happens when the backs stoppers can't do that anymore and need their own backstopping? But it sounds like you think it's it's not a hole that's too big for the Fed and the other central planners to fill. >> I mean again like that that's the beauty of all these problems. They're deflationary, right? So that gives you lots of headroom to just print money. You know now in Europe the pol the response is always going to take longer because you know you've got multiple nations that have to agree you know the ECB none of them you know they all borrow in a common currency not their individual currencies. So for them, they're always going to move more slowly, but um you know, in the US, >> you know, to date, um you know, it's it's it's a great thing that we get to borrow in the currency that we print, >> right? Great thing for for us that benefit from it, and that's largely the asset owners. Um you know, not a great thing in the long run, especially for those who don't own assets. And you're nodding as I'm saying this. Um, all right. If you don't mind, then just giving the time. Um, I want to do a little bit of rapid fire with you if we can. Um, and by the way, Carson, this is great. I' I'd love to have made this a three-hour interview, but uh I understand uh we got >> there's not a market there's not a market for three-hour interview with me. >> You know, it's funny, though. I have yet to find the the maximum uh tolerance level of this audience. Um I've done some interviews that have been two plus hours and had people say, "You should have kept going." So, it it is interesting. Um there there is there is a there is a cohort of very thoughtful people out there that really like this this deep discussion. Um so I was just listening to um an interview with um we were talking about the all-in guys with Chimath uh was interviewing Howard Lutnik and it was actually really just it it was super fascinating. I I recommend it on X to anybody who just wants to get a better understanding of our tariff policy. And and love it or hate it, I think it's a really it's a really educational discussion about kind of just wh why the current tariffs were structured the way they were, how they get structured that way, and then just mechanistically how it all works. Um, so super interesting and I'm not saying you have to necessarily share this, but uh, listening to folks like Lutnik and Scott Bessant and whatnot. I mean obviously they're going to be putting out the best uh the best most optimistic guidance they can because they're the guys that are running the system but they are really saying hey look you know we have laid a lot of pipe in 2025 for um economic tailwinds that are going to start beginning this year and some of them are kicking in now. Um, and they're saying, "Look, don't be surprised to see 5%, maybe even 6% GDP growth here in 2026." Um, when it comes to the current estimates for GDP uh growth for 2026, are you more willing to take the over or the under? >> Um, I thought this was going to be a tariff question, you know? >> Yeah, sorry. Um uh yeah, I I I'll go with the uh no no view on that now. But I do have I do have something on the tariffs though. >> Sure, go for it. >> Um you know, one of the things because we've done a lot of work in Vietnam. We have an office there. You know, got a tiny funds that's been investing long in Vietnam. And one of the things that we learned from that was when the tariffs were imposed. I I I think this I think this speaks to why they're a bad idea, but also why they don't really seem to matter when it shows up. Um is that all of these exporters and and also on the import side, you know, same incentives. They basically that they basically said, "Oh, well, you know what? actually since these tariffs are only levied on products. Uh well, you know, there's a lot of IP that goes into my widget. And so, you know, basically what we're going to do is, you know, we're going to say that, you know, this is really IP. It's a service. So, when you know, I the manufacturer, the exporter, I'm selling this to you. You know, this portion is actually the IP I'm licensing to you. So, the widget cost is much lower. And so, so like that's why I don't think it's mattered much because everybody has then tried to engineer around it so that it's not that impactful. Why that's a bad idea? What is that like? That's exactly the US tax code. Okay. the higher you make taxes, the more guys who can afford it like pay, you know, just I mean, when you step back, you know, I'm not not like a huge Arthur Laugher fan, but I heard him interviewed once and he was just talking about what an absolute waste it is that we spend so much of our wealth on guys who are trying to figure out how to engineer like, you know, through the cracks of rules and and laws, you know, tax savings. So like that's basically what I think we've you know the the net result of of tariffs is I mean obviously there's some increase in you know in the cost of goods right and the treasury has collected some money but the reason I don't think it's really been that profound is because you've just forced people to you know turn into highincome American taxpayers and high you know and hire you know think of creative ways to you know minimize the taxable values. >> Okay. Um I' I'd love to dig more deeply in that too, but but we'll have to save that for a different discussion. At a higher level, let me ask you this. Um the world does seem to be um fracturing into more into trading blocks um versus the era of globalization that that preceded it. um in this new world trade order um if you're looking at the risk board um whose prospects do you favor most US, China, somebody else? Ah well so that it's actually that you know the my my mention in Vietnam was great because in April of 2020 you know my my revelation was that um that coming out of COVID it was going to be the biggest geopolitical realignment since World War II and it was going to be about each country in the world its relationship uh with China. And so what I saw as the biggest net beneficiaries overall be the countries that are kind that are non-aligned. So like your Vietnams or India's you know I mean if you look at Vietnam for example Vietnam does not like China they cannot you know they they cannot ever trust China. But by the same token they cannot anger China. And uh you know it's interesting the Vietnamese perspective on the war in Russia and Ukraine shortly after that war started. You know what Vietnamese government officials would say is they thought that was actually Ukraine's fault because Ukraine did not balance its neighboring giant with the west. So I think that countries I think that the winners the the net b you know biggest beneficiaries of this world are those that can play the United States and China off one another. >> Okay. So maybe poor analogy but sort of the Switzerlands of the world the countries that can be more independent versus just bolted to one superpower. >> Yeah. Yeah. Exactly. But I mean from a from a trading and economic perspective I mean I Switzerland doesn't have like a ton to give the world anymore. Um you know but from you but I which is why it's not the world's best analogy. >> Yeah. But like Vietnam and India and I mean look we're very we're very bullish on India. We're you know we're in the process of launching an India fund as well. So um you know so and this is but this is not just me talking my book. our book is reflecting that you know my world view there that these less aligned or non-aligned countries are the ones that are set to benefit the most. I mean obviously look the you know with the problems in the relationship between the US and China that's going to be that's bad for the US in certain ways. That's bad for the Chinese in certain ways. It's bad for the Europeans in certain ways. Um but it's you know so the countries that were kind of insignificant and and aren't really the movers and shakers of world affairs, they're the ones that I think are best positioned. >> Okay, great answer. Um, all right. So, uh, I'm gonna ask you about gold. Um, and I'm gonna ask you about gold for two reasons. Um, one, because when I was doing research for this this discussion, um, you you've had some com your firm's had some comments, uh, in the news about gold. Um, you also mentioned um, you know, the prudence of owning some real assets in the current environment as as you told us a few minutes ago. Um, I do have to say though before I ask the question, um, uh, it it sounds like your firm has taken a long position or at least, um, identified as a good long-term play or good good, sorry, long play a company called Snowline Gold. Um, and I mention this only because uh, I own Snowline Gold. So, I've got a selfish interest in your answer, but I also just want to be transparent here, folks, that I'm I'm asking a question about a company that I actually honed in my personal portfolio, >> but um gold and silver have had a a phenomenal year in 2025 and and the momentum is continuing as of the day we speak. I haven't looked at it since we've been talking, but this morning, silver, I think both gold and silver futures hit all-time highs yet again. Uh silver was like 89 something. I mean, it's bananas. Uh so um one I just love to hear any thoughts you have right now about kind of what's happening with the metals, what you think might be driving it, how sustainable you think this is. Is obviously the big question on a lot of people's minds who have been precious metals investors for a long time is is this the great repricing we all we we bought in for and were hoping for or is this a a blowoff spike like we saw in 2011 and 1980 and is this going to come crashing down and be dead money for the next 10 years. So, love to get your thoughts on that and then anything you want to say about Snowline Gold, I'd love I'd be very interested to hear. >> Sure. Um, all right. Well, you know, I'm gonna I'm gonna disappoint on the on the first one. Um, we launched Junior Mining Fund in 24. I mean, had phenomenal year last year, even though we run it on delta adjusted basis, only net 50 60 long. Um, our macro thesis on launching the funds didn't have to do with metals prices though. And our macro thesis on why you should invest in junior mining, if you know what you're doing, is that there's been a massive underallocation of human capital to the mining sector for the past couple of decades. You know, smart people have not want I mean, it's a miserable lifestyle to be in a mine. >> They've been running out of engineers, right? Like folks didn't want to go into that profession or hadn't wanted to. Yeah. >> Right. So there's real edge if you know what you're doing in looking at junior minors and interpreting the data and and look we brought somebody in who does you know in my view have real edge otherwise we wouldn't be doing this. Um so you know we don't our macro thesis had nothing to do with the the metals. I mean look at a high level we believe you know to the extent that you know society does get serious about in increasing the amount of electrification of you know of our economies like that means a lot of stuff needs to be pulled out of the ground you know the base metals um particularly copper um you know as for gold I mean yeah look everything I've said about the consequences of our financial over financialization of our economies and and the policy respons response is, you know, does imply that over the long term you, you know, like gold is going to continue to go up and to the right. I mean, you know, gun to my head, do I think it it really corrects for a s sustained period of time from here and that these are like all-time highs? No, I do not. But that's not really, you know, I that that's me somewhat outside of my, you know, I'm definitely outside of my uh my lane on that one. You know, for us it was really about the the lack of human talent in the operating space and also capital allocation uh side of um of resources. Um as for Snowline, yeah, I mean that that to us, you know, we think a major is going to is going to have to acquire it. I mean majors have not spent much money on green field ex exploration, you know, since the GFC. And I mean, Snowline is really the only deposit. I mean, and first of all, it's in a functional jurisdiction, right? It's in it's in Canada. We think it has the potential. Um, so the so some of the some of the concerns about it have been like, well, logistically, you know, it's remote. It's in the Yukon. There is infrastructure there. They will have to develop the road network some. Um but we think that this deposit or you know that that these deposits are so significant that this will turn into a mining district and that snow line will be the engine for that. So we do expect a major to acquire it within the next you know c you know I think highly probable within the next three years and the longer it takes for major to acquire it probably the more they end up paying especially if we do see you know price of gold continue to trend upward. >> Okay. Um and so uh and I don't think I'm saying anything that hasn't been said publicly. Um but because of that buyout premium um you actively think it's it's a it's a long to consider if you're interested in this space. >> Yeah. Yeah. We're we're long that you know we're yeah we remain long that. So definitely I mean to you know we think this is the you know this is the the one real worldass green field opportunity that um exists in you know in a jurisdiction that's credible. >> Okay great. Um, all right. Two real quick questions as we wrap up here. Um, one is, is there anything that's that's you're really covering passionately right now or that's really burning brightly on your radar that I just haven't thought to ask you about yet, Carson? >> Um, well, I mean, look, you know, our our, you know, our core business is still activist shortelling. Lots of companies out there are still doing things that they shouldn't be doing. Um, that's human nature. So, you know, we're, you know, we're still grinding away there. Uh we've covered momentum um and you know especially within the indices and and flows um and why that's it's a space the kind of returns that you can get shouldn't exist but they do. Um you've covered uh some geopolitics and then also metals. So no I think we've I don't know that these you know and insurance you know insurance is insurance is one of these you know things that's a little bit of a sleeper. I'm not sure exactly what to do with it. I don't know yet that I have actionable short thesis in the space. It's just seeing a decent amount of these problems. And so, you know, I think it I think someday, you know, it it will become a systemic issue. But, um, you know, so, but the fact that we even covered that, I think it's been pretty comprehensive. >> All right. Good. Well, again, if if you get to the point at some point in the future where you're beginning to really actively worry about the insurance space, again, come back on. I'd love to have that conversation in greater detail with you. Um, just on the Mike Green thing for a second. So, I'm taking away from this, and you just told me if if I'm taking away correctly, but um, you know, my one of the last times I talked to Mike, he he talked about how they his firm Simplify had really isolated this passive factor uh, in a way to be able to trade with it. And it sounds like that's kind of what you're doing there as well at Mighty Waters. So it sounds like you're saying, "Hey, there's really something there there like this this actually is something that gives you alpha as an investor." >> Yeah. And I I mean look I can't speak to how you know how Mike and Simplify are doing it but um yeah I mean the you know if you're looking at you know like moment momentum is real and what we found actually it's kind of interesting in looking at how our book has performed in real world and and also some portion predating October 24 you know or on back tests you know like even this past this past year like we were really our you our strategy was really not in mag seven much only had minimal MAG7 holdings. Um you know it was so it can kind of you can find like leading indicators. So for example our largest holding um in strategy the past two and change months has been Western Digital and and also um you know Mike Micron was uh was up there too and so it seems like there's sometimes signal and momentum that's telling you something that's about to happen. And so the the memory squeeze you know so and when on back tests you know we saw rotate you know there was a rotation into energy on back test that pre you know that preceded um you know real out performance there um so and you know so so what that's one of the interesting things about momentum is we're seeing you know and I don't have high high conviction in this yet because you know I want to run this a few more years before really pounding the table but at least as we measure momentum like there there are ways you can measure momentum where you find signal about the future um in it. That's that's what we're you know that that's one of the the theories that you know we're developing based on our experience here. So yeah, I I do think there's something to this. >> All right. Well, super fascinating and I I hope it keeps working for you for as as long as you need. >> Me, too. >> It's a lot easier than shortselling. >> I I it's I'm imagining. Right. Exactly. Right. So, you can kind of understand the switch to the apostate role. Um, last question before we get to the most important one. Um, looks like you rock. Do you? I'm basing that off of your the picture on your ex profile that I Oh, no. That was uh I was doing the Murf uh the Murf challenge. So, that was a weight a 20 pound weight vest. I was doing uh push-ups. Um I I don't know why I put that up there. It was a little bit of a a flight of vanity, but uh >> No, no, you should. Look, if you do Murf with a weighted vest on, that's a flex. Look, I've >> I was the only person there doing it. I was the last person to finish because I was the only person with the weighted vest. I thought everybody would have the weighted vest, but uh yeah, you know, and the only reason I was able to finish on the pull-ups was because my son was there and I just kept thinking like, man, you do not want to teach this kid like to give up. Like, I don't care. Keep doing the pull-up. >> That's super. So, for folks that don't know MURF, um it is a I think I think it's a a workout that's originated in CrossFit. Uh it's dedicated to fallen soldiers. Um and it is 100 pull-ups, uh 200 push-ups, and 300 what? Air squats. >> Yeah. So, you run >> Oh, sorry. You have to run a mile at the start and you have to run a mile after you've done all those, right? >> Yeah. >> And you're doing that with a 20 pound weight vest on. >> Yeah, I did that with a 20 pound weight vest on. Pretty pretty impressive, buddy. Good job. >> Yeah. No, I'm now I'm now training for marathon. Be my first uh and then I'll start doing um some of the uh Spartan races. I I did Deca Fit in the fall. That was my first. So >> Oh, cool. >> Yeah. No, I I lost over 50 pounds uh back in 22 and uh that just kind of got me in this like Well, you know, >> you lost 50 pounds in a year. What'd you do? Saw your legs off? >> Yeah, I know, right? It was medium COVID that caused me to lose 15 in two weeks, very unhealthy way. But I was suddenly sleeping a lot better. My my blood test, which I happened to go for my physical right after that, I thought was going to be abysmal. It was the best it had been in years. And so I said, you know what? You know, the formula, follow it, see how far you can go. And you know, no GLP ones. From that point on, I dropped another, you know, like 35 to 40 pounds. just eating better, eating less, like avoiding snacking, drinking less, and ex, you know, making the time and exercising regularly. And um and yeah, so it's, you know, just kind of been a celebration of that. And, you know, I've got a my, you know, my son now is 12, but he's a really good distance runner. And I just, you know, we were went for a hike one day on a trail shortly after I'd lost, you know, 50-ish pounds. And he just took off and started running. And I was like, you know, frozen for a moment. And I thought, you know, you're you're in good enough shape. You could probably keep up with this, dude. Let's try it. And we just started running the trail and I was like, man, like this is awesome. I I got to see what else I'm capable of. So that's what I'm doing. >> Good for you, Carson. So on this channel, as regular viewers know, um is a wealth buildinging channel, so we talk about money all the time, but I do try to to reiterate to folks as often as I can that money is a means to an end. It's not the end in and of itself. And true wealth research is pretty clear on it. Really boils down to quality relationships, having purpose in life, and good health. And I love it when, you know, experts that folks really respect like yourself here reflect back on people that, yeah, I'm I'm a successful investor. I run this, you know, big famous Muddy Waters company. We we we try to, you know, give great financial gains for our folks, but in my own life, you know, I'm really focused on the things that matter. >> Yeah. So, actually, can I riff on that for one quick moment here? >> Please. >> So, to me, I like to distinguish, you know, the between rich, being rich, and being wealthy. Um, >> you know, like in finance terms, I mean, I'm I'm not, you know, I'm not that rich. I mean, they're look around the industry, guys are, you know, I'm a rounding error. Um, but >> I think I'm one of the wealthiest people I know. And it's because I've become really focused on how I use my time. And so to me, wealth is the ability to use your time in the way that you want to use it. >> So, I mean, part of that's saying no to a lot of travel. It's having my own business. It's a mature business. I've hired people to do things, but it's given me the ability to put the time into exercise and to spend all this time with my family. So to me like that's the goal I think is to having is to have control over your time. So >> very very well said my friend. All right. Well look here we are at the end. Last question for you Carson. Um for folks that have really enjoyed this conversation and would like to follow you and your work in between now and your next appearance here. Where should they go? >> Um so on on Twitter I refuse to call it X. I'm at muddywaters rere um we also have the muddywater www muddywaters research website where we post our reports but yeah just the Twitter is the best way and maybe that that Twitter account to which you referred where I posted the picture that's carson_c_block I'm not really sure what content I should post on that it's kind of rare but maybe someday I'll have something profound to say that gets you know placed on there. >> All right. Um well, look, Carson, I I I can't thank you enough. Um it's always wonderful, but um it just very much appreciate you coming on here, especially so early in the year. Look forward to having you come back on this year. I mean, I'll reach out at some point, but like I said, if there's something that's really starting to catch your attention, please let me know. We'll pull you back in for that. Um but, uh just thanks so much, buddy. And continue focusing on being the the wealthiest guy, you know, where it matters. >> All right. Hey, thanks a lot, Adam. Really enjoyed it. >> All right. All right. Well, now is the time in the program where we bring in the lead partners from New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by uh the lead partners there, Mike Preston and John Lodra. Gentlemen, it's great to see you. Uh John, why don't we start with you? Um lots to talk about. A lot going on the markets as we speak here, but uh any key takeaways from the Carson discussion you'd like to to highlight for us here? >> Hello, Adam. Great to be with you again and thank you for having us. uh got to thank you. I think many of your viewers oftentimes so compliment you on introducing them to new new voices and names and uh I got to say personally I wasn't familiar with Carson enjoyed his talk and so thank you for introducing us to another another viewpoint. Uh I just want to put right out here and this is not uh in any way a criticism just a statement that um you know there are many styles of investing many tools in a toolkit and uh you know many right ways. In fact um our our toolkit does not involve shortselling uh and certainly does not involve shortselling in the kind of systematic disciplined way that uh that many firms have have uh taken that strategy as part of their their uh their their flagship uh approach. Um, you know that with that aside, you know, I guess I want to comment on a couple things. Um, Carson um did talk about the difficulty of the market to traditional short selling. You know, in fact, we can go back and look in recent years and there's been some very high-profile names that I don't want to say throw in the towel, but kind of have. you know, you you go you look at uh folks like u well even the the movie the big short that you know for many lay people that was their first even um introduction to what it even means to sell short. You obviously this was the big uh tale of the the few souls that had the had the foresight to short uh big into the the housing collapse of uh 089 made a movie of and a book out of that. So many people I lay people that was the first introduction to sell short. Um but uh almost like one after another the the big names in short selling have thrown in the towel. Um you know Michael Bur himself you know the one of the key uh characters in that movie in that book um you know basically shut down his his firm Scan Asset Management I think for a lot of the same um uh reasons that um Carson spoke about it being a difficult market to be a traditional short seller you and the list goes on. uh Hindenburg Hindenburg Research was a was a notorious short seller in January of 2025. they shut down their their their their fund and I think it speaks to as as Carson uh you know spoke um the markets have become very much controlled by policy versus uh good oldfashioned market discovery and you know we can go on and wax poetic about uh how right or wrong that is but it's the reality and uh and many short sellers and many fame fables of of shortselling successes happened in in an era way way before things like quantity TV easing were even a uh a talking point never mind a a fixture in in the central bank's toolkit. So it is a different environment and it is we think a key reason why despite the tremendously high valuations that we and and others have been talking about for a long time um it hasn't mattered yet. Uh we don't think it doesn't mean they won't matter. It just means this this u extended pretend is has been um uh elongated for longer than than normal market forces would probably allow for. Um so in that sense uh you know we we can kind of relate to a Carson share because you know if it were purely due to valuations in the US stock market we could make a case to be essentially out of the US stock market altogether yet we're not and nor have we been um you know we we are underweight uh stocks and where we are uh invested in the stock market we are picking certain sectors and avoiding other sectors based upon our systematic tools and we have a not an insignificant um uh intentional allocation to non US stocks um both emerging in developed markets um you in part because they're actually quite uh on a momentum and relative strength basis have exerted themselves quite nicely. Um but they're also at much kinder valuations than than the US market. Um so a lot of what he talks about as being a frustration for him as a short seller we can relate to as just a a prudent manager of of funds for everyday people. And I'll just say short selling is is you know we we've talked a lot. I'm sure we're going to cover at length here today. Uh silver has done silver and gold and precious metals have done phenomenally well. Um but you know as much as we celebrate and folks are will celebrate reading the headlines. You know there are times where that investment has um been frustrating. You know you go back over the last uh decade there there are some times you had to be a faithful convicted believer that there was a a true fundamental play here. and it all it pay back all at once, so to speak. And that's that's the way short selling works, not just once in a while, but all the time. True shortselling is you got to be you have to have the patience of job and you have to have the liquidity and and and and the fund funds to um hang in there until the big payoffs happen. And most people don't have the the the composition to do that. nor do most every people everyday people have the the financial ability to do that because they need their retirement savings to to create that paycheck that they need to live on. Um so those are a couple big takeaways. I just don't I want to talk about you know he alluded to what and he he references Mike Green a lot who we obviously uh uh have have followed and understand his take on the the passive bid that has has has um underllied these these relentless markets if if you could use that word. Um you know what stops this train? Um, you know, I think we agree with a lot of the same things he talked about. You know, just even on the margin, a a slowdown in the pace at savings in in kind of retirement plans, for example, or even even worse, go, god forbid, we have a recession, which uh, you know, we have little doubt we will have one. They're not they're not banned from the uh future of of humankind. We we have little doubt about that. and it just takes on the margin a shift towards more um conservative positioning or starting to sell down to to fund retirement. Uh taking out um hardship loans and things like that. If you look at some of the data, there's been a a modest but trending upward trend in in things like hardship withdrawals from 401ks. Um it'll matter in in a probably in an instant, so to speak. So, I wouldn't take um this and and like um like Carson, we don't we don't fret every night the imminent collapse. We think there's ultimately a very large reset in stock market, but right here and now, we're not worried about it being imminent. Um but, uh I wouldn't want folks to take that to mean you shouldn't be concerned, especially folks that are inclined to just be passively invested. um that is we think going to be a recipe for very big disappointment if not financial disaster for real people if they just you know tune out for the next decade. So I'll stop there. Those are some big picture takeaways. >> Okay. No, I think those are great. Let me let me pull in a few of those strings. Um so as I you know I mentioned to Carson a lot of people watching the video right now um they uh they may intellectually understand that uh if and when we have that big correction a corrective event John um that the Fed the central planner reaction function might be swift right um but as I was talking about with Carson there's a period in between when the pain happens and when the response happens and then you get the benefit of the response. Um, and a lot of people here don't want to be collateral damage of that that interim period, right? They don't want to necessarily look down, you know, at their statement and see that they're down 40%. Or whatever, right? And there's no guarantee that the rescue is going to bring asset prices right back to where they were before, right? I mean, that would be the intent of the rescuers, but it might not happen, right? So, you know, the big question is is okay, so how do you navigate this um such that you are getting everything you need in terms of the income off of your portfolio if that's what you're living on in your retirement or just the capital appreciation that you need because you still have a decade or more until when you're going to retire. Um but have some downside protection in case that corrective event happens, you know, during that period of time. Um, that's kind of where you guys live right now as as capital managers for your clients. So, just do me a favor. Just just summarize real quickly kind of the new harbor approach to that. Um, because you're not hiding in the bunker, right? U, but you're not blindly long either. >> Yeah. I'll just start with where we're currently positioned. We're about 47 and a half% in in equities, traditional equities. Uh, nearly approaching half of that now is in non- US equities. Okay. Um, we also have about uh another 10% in gold mining equities. Um, we've always thought of those as different than traditional equities, but if you add that in, we're close to 60% equities, but you know, we very um, you know, we for a long time have have thought of gold mining stocks as as different stocks. So, you might as well say we're underweight to traditional 6040 stock portfolio. But uh even within that I'd say we're we're uh there there is refuge to be had and there has been in non- US stocks uh in certain geographies like we have have done. So so you can again uh some of the valuations that we have long kind of fredded in the US markets aren't so uh extreme in in in non- US markets. In fact, all you all you need to do is look at a chart of those markets going back to 2008 and they're not much up from there versus you look at the S&P 500 and it's like you know 2008 looks like a little speed bump way in the past. I mean that's a very simplistic way to look at the relative you know valuation differential. Um but um you know it starts with well I'm going to get philosophical first of all. It starts with with one's ability to sleep. You know, there are plenty of our clients who have worked really hard, sacrificed and and and created a stable situation and being at peace with that. Their biggest risk, you know, should be not missing out on, you know, the last gasp stages of a of a a market that's way out over skis, but in unwittingly suffering a decline that that forces them to try to have to do a do over, which they don't have the the primitive privilege of doing. Now, um that that requires a uh an emotional toolkit more than an investment toolkit. One that uh is able to be okay. Um not winning in every last point, so to speak, right? And everybody has to and and we do do a lot of work with our clients helping them find their own piece of where that is, right? um calling their own top, so to speak, and being okay if if their family members or their neighbors are boasting more loudly at certain events if things are, you know, getting, you know, more frothy than than they're fully enjoying. That's okay. Coming to terms with that form of regret is a very important investment skill. But getting to the toolkit, the investment toolkit, having a systematic approach to to scale up and down risk as the markets speak to us. Um, not in what valuations say, but you know, um, you know, we we look at a broad array of of breath and momentum indicators. And sometimes that just has to be listened to. Um, and sometimes it's at the m the the market level or or at the sector level. We have long, as I I I think we talked about last week, we've long felt the energy sector had been left out of the party and and uh had had been from a valuation standpoint relatively uh quite compelling, but uh it lagged even despite that until like late last year, last quarter, let's call it, of last year. and we saw some technical improvement there and some of the systematic indicators saying, "Hey, this is a place that's not only attractively valued, but it's actually now got the wind out of the pack, so to speak." Um, and it's so it's important to have a a rules-based emotionless kind of uh guide to to to help navigate what you know will likely be very volatile markets and and going in places that uh you know right now as bullish as we are as precious metals I mean um base metals are actually uh quite attractive. They've been performing very well. >> I just and we have some exposure to that intentional exposure on an international level. I just saw we just saw a chart today in our investment chatter that you know looked at the u you know the costs for for major uh copper mines and uh almost every last one the the where current prices of copper are imply very large margins relative to the cost. So, so I would not be surprised to see that sector. It probably won't be as explosive up like uh like precious metals have been and are notorious for being, but there there are lots of places to find um value and opportunity even despite this uh policydriven distorted market that we we all have talked about. >> Okay. Um All right, Mike, I'm going to come over to you. Um, first you want to add anything to what John said and then I want to talk with you about the action in the precious metals cuz it's been fast and furious. >> Yeah, I know. I think John covered it really well. Um, I think that maybe one thing I'd say is like um is there's I think a lot of agreement in in the the notes that I've taken and um you guys talked about Golden Junior Miners. on positive um that Carson talked about was that there's a macro tailwind because of what central bankers have been doing. They basically buy every dip and you know that's bullish for gold. That's bullish for real assets. The world seems to know that the ultimate answer is just going to be more printing. you know, when you have uh some of the things that have gone on lat lately like criminal kind of charges against the Fed for not dropping interest rates faster. Um you know, that's not a safe environment for investors if there's if you the central banks are not completely independent. And so on that news, the metals took off. And so we we completely agree with that part. We'll talk about that in a little bit in a minute, but other than that, I don't really have too much else to add. I think you guys covered it pretty well. >> Okay. All right. All right. Well, look, let's talk about the precious metals. So, this we're recording this on Wednesday. I don't think this video is going to run until the weekend. So, who knows where the precious metals are going to be when this video airs, Mike? Because just every time I look, they get higher and higher and higher. Um, I was watching last night as I think the price of uh of silver uh went into, you know, zoomed up to high 80s, broke into the 90s. Um, as of this morning, silver futures opened around 92 an ounce. I think they've come off just a little bit since then, but pretty crazy, Mike, to be sitting here talking with you about $90 an ounce silver, especially when a year ago it was like 288 bucks an ounce. Um, and you and I were we were bullish on where it was going to go. We thought it could have a breakout opportunity. I'm going to say neither you nor I thought it would go this far this fast. Um once we're up here above 90 bucks an ounce, the the the the tractor pull of the big round number of of $100 an ounce uh silver starts getting into investors minds and usually that that helps kind of pull prices to that big psychological goal that that folks want it to get to. Um so you tell me what are you expecting here in terms of the momentum uh of the precious metals here? they are they are so uh stretched from their moving averages that there's you know a real danger of a snap back uh to those averages but at the same time you know they got a hell of a lot of momentum and they've got that that big round number now trying to pull them towards it. So what do you think? >> Well let's look at some charts. It's it's difficult at times like this to stay unemotional. Part of our job at New Harbor is to help people not feel emotional or certainly not to act emotionally. Charts don't tell everything. They can only tell you where we've come from. You can make a guess as to where we're going because of them, but certainly you can take a look at them and tell them tell when things are getting extreme. And all I can say is that when things are getting extreme, particularly when they're extreme in your favor and all of your goals are getting met and then some, that's not a time to be greedy. That's the time to start thinking about doing something, taking something off the table. Let me just share a chart here, a couple charts. I'll start with the silver chart that we always look at. And uh you should be able to see it now. Oops. Actually, I'm just have to zoom out a little bit. All right. So, you should be able to see that. So, this is the daily chart of SLV, which is the ETF that tracks silver. You're absolutely right. We're almost at 90. Spot silver is about I don't know $67 higher than this ETF, but this chart gives you a pretty good idea of what the shape is. So, we've had nothing but gaps here lately. Gap, gap, gap, gap. Like five gaps in a row. The market's getting exuberant. One thing I've learned in my career is be careful about shorting parabolic markets. You never know where the top's going to be. So, I certainly wouldn't short this. But the the >> but you also have the the the axom that gaps ultimately get filled too, right? almost always they get filled and so we don't know if we're going to go higher and then fill these gaps. This is on the daily chart and at the same time we have the CME hiking margins. We just had another hike I think yesterday. This time it hasn't done a thing, right? So there's a lot of reasons why silver should keep going up and gold. We're big bulls on real assets. We're very negative on central banking. We think the world is finally coming to the realization that this game isn't going to go on forever. I think that's probably what we're seeing. But even with all that in mind, things are getting really really hot in here, you know. So, just just bear that in mind. This light blue line is the 20-day 21-day moving average. At a minimum, we should touch that at some point. This move has been so strong that we've gotten close to touching it, but then we've just taken off again. We haven't seen the 50-day in a long time. Now, I wouldn't wait around to touch the 50. All I can say is this. This is more and more and more parabolic. And in the last week or so, it's very vertical. We should expect some kind of correction relatively imminently. Would I bet on it? No, I would not. I would not short this betting on that. But if you have positions in metals that have doubled, tripled, or quadrupled, sell a little something and do something with the money. Do the home renovation, the kitchen, the dream trip, buy the RV, whatever it is. Take it off the table and make it real in your life. That's what we've been coaching people to do because they have so much. Uh some of these people that have bought back at 15 or 10 have nearly 10x their money. And so it's very easy to be allin. All-in thinking is not going to be very helpful psychologically and and or in terms of enjoyment in life because if you're all in, you never sell any. And a lot of people are like that. They just want to sit on it and watch it go up and up and up because it's fun. And you're never going to know when the top is. So, but now would be a good time to sell 5 10% 15% something like that if you haven't sold already. That's all I'm saying. So, >> you know, we're just who knows? We got the we got the round level of 100 coming up. I should show you the gold silver ratio here on the left hand side. 50 52 now. Um it was 103. >> Yeah. >> And we were talking about that back in April. Liberation >> that has Yeah. >> Yeah. So long long-term average is around 40 to 60. I mean some people will say the long-term thousands of years average is 15 and I I guess I can't disagree but I can tell you over the last few decades it's 40 to 60. So it has normalized. There's no longer a screaming undervaluation for silver. Why are silver miners underperforming? I have no idea. And take a look at silver up today. It's up about four bucks still. So take a look at that up there. I put in silver miners, sil. They're down on the day. >> Is that a signal, Mike? >> I don't think it's anything. I think it's uh I think it's the market not believing the silver move. >> That's what I'm saying. Is it a signal that the market doesn't believe that this silver metal move is sustainable? >> I think that's probably what it's what it's saying. Um there's a lot of hand ringing going on, I'll tell you that on Twitter and elsewhere about why silver miners are underperforming. I happen to think it's an opportunity. I don't think it's a negative signal if that's what you're asking. But the market is starting to think it's a negative signal. But if you take a look at SIL, it had a nice base breakout and then it broke out of this flat base right here. It's all beautiful. It looks good and and it's still holding. One thing I can say is that we're all impatient, including me sometimes. You know, we want instant gratification. Silver goes up, we want silver miners to go up 3x. It doesn't work like that in the real world. The the the market and I've learned this the hard way. The market rewards patience, not impatience. Here's the junior. Same thing. We broke out. Sideways action. The market, I think, is going to reward patience. If you're not overweighted here, don't worry about it. Uh there there's just I believe there's more upside in the silver miners than at silver. GDX and GDXJ have done a little bit better relatively speaking, but the shapes of all of these curves are relatively the same. So you we were basically saying with silver way back at 3035, watch the big triple top breakout. I mean maybe it can go to the weekly chart here down here. I still have the line there. One, two, three tops. This is a weekly chart. Look what's happened since then. I mean 1 2 3 4 5 6 7 8 nine weeks. If I go to the monthly chart, 2 3 4 5 6 7 8 almost nine months straight up. Look what happened back in 2011. This is strong, much stronger than the 2011 move. And what's different this time, not only is it more weeks, but it's more persistent, but at some point here, we're going to have a wicked red red bar here, and it's going to go that way for a couple months, and then we're going to have to see what happens next. So, that's all I'm saying to people. Don't get too in love with this. Sell a little bit on the way up because that'll give you staying power. >> Okay, Mike, can you go to the miners chart, the GDX chart here? Because obviously at New Harbor, um your positions more in the miners than the metals itself. And to to John's point, um you guys don't short um but you do purchase downside protection for your big positions through um options. So, where are your hedges right now on the miners? >> Well, we have kind of a unique situation in that we have half of our miners hedged and they're in the money. So, you know, right now on 50% of our position, we've taken an accumulated credits, but our strike on half of our position is 80, right? So, we might be capped out. You'd have to add up all of our accumulated credits, but we might have accumulated credits of six or seven or eight dollars. something like that. Let's say let's call it $7. So that means 80 + 7 is where we would be capped out at 87 on half our position. So that means we're we we missed out some upside on half of our position. That's okay. That's the cost of our insurance program. >> So sorry Mike, was that covered calls then? >> This is covered calls. Okay. >> We do not have puts in place right now. >> Okay. So So basically, okay. So it it you you you bought some covered calls to get some income, but you you cap your upside. The risk is that the the stock runs to the upside, which it did in this case. >> That's right. It did. Um put another line out of the way there. The stock ran up to the we had this and this has really been going on many different cycles here, but at present we've rolled up to 80 with accumulated credits, which I'm going to estimate are around seven. So that means we've got a covered call on 57%. I'm sorry, on 50% at at $87 or so. And that goes out to February, the third Friday in February. Now, here's the thing. If we keep going up and up and up, we're going to keep enjoying the ride. Now, our rebalanced position back down at like 60. We rebalanced to 10%. That model position is roughly, let's call it 14% now because of growth. And so, I know we always say 10%, but that's for new clients. We haven't rebalanced in in many months. And so our average client size is maybe 13 to 14%. >> Half of that is hedged at 80 plus the accumulated credit, so maybe 87. The other half is free to run. It's always a balance between dampening volatility and providing hedges and giving upside. I would expect at some point we're going to have a sharp pullback. We have a sharp pullback to the 21-day moving average or even the 50-day moving average down here. Well, guess what? The half that's unhedged does get a decline, but the half that is hedged has dollar fordoll offset because of the in the moneyiness. So, it works both ways. If we fly higher from here, we're going to ride the 7% that we have. If we tank from here or or correct, we're going to very quickly get back to close to 14% automatically. So, it's hard to visualize, I know, but that's how it works dynamically. And we're just trying to to smooth out volatility. All right. Um, well, really interesting times from here. So, let me ask you, um, real quick, Mike, do me a favor. Just pull up the chart of gold for a moment. >> Okay. >> Um, I was talking about the pull of the big round number when it comes to silver, right, with a $100 an ounce silver. Um, gold is trading now above 4600 an ounce. Um, is that starting to get close enough to the big round number of $5,000 an ounce that, you know, Wall Street starts thinking about that and the the tractor pull of the the mental desire to get there starts kicking in. >> Yeah. Let me show this chart here. This is GLD. Just don't have futures quotes on this platform we're using right here. So, you you know, we're 4,600. So, just imagine that this is 424. or it's about, you know, 400 points above that. Um, so this is would be 4,240, but another 4. So this gives you a good idea of the shape of the curve. Not the exact spot price. So you're right, we're getting close to 5,000, gold, 100, silver. I've got no doubt we're going to get there. I just don't know that we're going to get there now. That's the big question. I mean, if I go back into the longer term charts in these things and here's gold triangle sideways breakout triangle kind of up and then consolidation breakout again. But these these things are getting late stage. You know, here's a base, here's a base, here's a base, and a breakout. Third, three times in a row here, you know, the first time the whole world is kind of sleeping. The second time, half the players start to take notice. The third time, everyone notices, you know. So, I don't know. I I I think it might be exactly what the market often does is it gets close to a number and then it just slaps you in the hand, you know, and has a big correction. But I think a year from now or or more, we'll be above 5,000 gold and 100 silver. There's a lot of people all over the internet saying they think we're going to be there now. And to be honest, I wouldn't be shocked if we get there really quickly, but it's a super bullish chart. It's getting close. I don't know. Your guess is as good as mine, Adam. I'd still be ringing the register a little bit if I had a big position. >> Yeah. No. Well, I mean, I totally agree that, you know, either, you know, position rebalance, which we talk about doing all the time, or if if you've got ounces that you just don't want to sell, um, then hedge, right? And it's funny, I get so much push back against this because, you know, the metal's been running so hot. People have been saying, "Well, this is why you don't want to hedge." It's like, well, yeah. I mean, you never hedging is never sexy when prices are going up. you know, it's only sexy when when when the price action stops and then people all of a sudden really wish they had insurance in place. >> Um, personally, one man's opinion, so this definitely not financial advice. Um, I wouldn't be surprised, Mike, to see $100 an ounce silver. Uh, I think it's probably more likely given how close we are, but also um, $5,000 gold. I wouldn't be surprised to see those in the relatively near future. For me, the bigger question I have is just how long will those prices sustain? you know, do we do we do we touch them and then have a big pullback and, you know, some long period of time of trying to work through all the froth uh before they start going higher again or, you know, is it really truly a brand new price regime and, you know, those become the new floors? I don't know. Totally TBD. >> Well, we'll see. Um, just remember, we get these calls all the time for hedging. It's very expensive to hedge with puts. All right? So you you really want to be selling covered calls if you can. If you happen to own gold in the form of GLD, you can sell covered calls or you just want to be selling on the way up. I can give you a really quick example here. If I look at GLD and I go out to one year from now, you probably can't see this on the screen because it's so small, but the current price is like 425. And let's just see what that what it would cost to buy a put. If I bought an at the money put 425, it'll cost me $29 a share. 29 divided by $424 is like what? 6% maybe. That's a, you know, that's not horrible. I mean, I guess if you want to pay 6% of your pile, we can we can basically say you're not going to no matter what, you're going to be able to um, you know, offset the downside. But that gets pretty expensive over time, you know. So, it's much better to sell some covered calls and take in some income or just sell on the way up. >> All right. Well, look, um, wise advice as always, Mike. So, we'll wrap it up there. Just given where we are timewise. John, I'll punt it back to you for, uh, closing remarks here. Um you know for much of the past two months we had been advising people hey you know don't don't procrastinate in in taking uh care of whatever end of year you know uh deadlines you want you're going to need to meet whether it was minimum required distributions or charitable donations or whatever. Okay. So we're we're we're past year end now. Now that we're here at the beginning of a new year, do you have any advice for people in terms of, you know, things they should be doing now or considering now to set themselves up well for the full year that we have ahead of us? >> Well, yeah. I mean, um, a lot of last year was about, hey, uh, how do we kind of minimize realize most people had a, especially people that just sat there and did nothing even, uh, had a pretty good year and, um, maybe even better year than they imagined they would. And with those gains um, comes the possibility of capital gains taxes. So, uh, we certainly did all we could to mitigate how much realized capital gains our clients booked last year and and therefore owed taxes on and we did a pretty good job. We talked about our hedging strategy with the miners. One of the silver linings there, excuse the pun, is we were able to do in doing those call rollouts and rollups. We were able to harvest some losses on the way doing that. So, it's kind of like we got to keep the stock, still appreciate some upside, gave away some upside, but also harvested some losses in those call those calls. But now that we're in a new tax year, um this may very well, especially if you have an outlook like we do, that eventually we'll probably see some uh some some real downside in this market and very likely this year at some point. Uh by all means, uh think about taking some gains. U ideally, if they're long-term capital gains, you've held them longer than a year. Um you're going to get taxed at a favorable rate relative to most people's short-term capital gains tax rate. So, think about that. And you know, no better place to think about than than the the medals like we talked about. Um, selling some selling some winners here and and you know, right sizing positions is probably the most important thing someone can do uh even in a strong sector because if they're overweighted, it it it becomes unhelpful to the situation because it nothing goes up forever, not even precious metals. Um, so that's that. I'm looking I'm actually looking at some questions. We actually have a live Q&A. We do live Q&A for our clients every month. Uh, and we have one tomorrow. In fact, Adam, if if if you'll indulge us, we'll we'll, you know, we we do get a lot of prospective clients that join in these as well. Um certainly um your your viewers, if they wanted to tune in, they could find our live Q&A. I think we've had have it advertised on our uh LinkedIn page and um perhaps even uh uh uh Twitter. Um but we got a lot of questions. A lot of the questions have to do with uh inflation, uh precious metals. Is it too late to get in? Is it should we sell some uh taxes? I'm just looking at the other things here. Um you know the psychological aspects of money. So we we have a pretty far-ranging uh you know uh roster of questions that almost is like a day in the life of the kind of work we do with clients. Um and I invite your viewers certainly to to come join us uh submit questions in advance or or live during the uh the the broadcast. But uh um happy to happy to kind of answer any questions anybody has. Uh, but these are the real real everyday things we help our clients with. And uh, >> so so John, sorry, when is that Q&A? >> That's tomorrow. Uh, so I should have given you the >> Yeah. So just FYI, this video is going to be released after that. Hope hopefully folks can catch the next one that you guys do. >> Well, we do them every month. So every month uh, and I apologize for the goof up on the counter there. Yeah. But we usually do them on, uh, kind of first or second week of of the month and, uh, usually 2 p.m. Eastern for an hour or so. and um you know love to have people tune in. >> Great. Great. All right. Um just in in wrapping up this topic. Uh so you mentioned capital gains, John, and I I just want to give folks a quick refresher. Um so when you have capital gains in a financial asset, um there are two types of of uh capital gains taxes that can come into play. Um, one that definitely will is the federal capital gains. And those range from 0% capital gains tax uh to to 20% on your long-term gains. So, I'm sorry. Um, let me step back for a second. Um, two types of capital gains, short-term and long-term. Generally, if you've held the asset for less than a year, it's going to be taxed at a short-term capital gains rate, which essentially is going to be what taxed as as as uh income to you. So, whatever your marginal income tax rate is going to be, your short-term capital gains are going to get taxed at that. If you've held them for over a year, they'll be taxed as long-term capital gains. And there are three types of federal long-term capital gains tax rates. And they depend upon what your taxable income is. And uh you'll see here right now uh this this tax schedule here, but basically it's it's 0% below a certain threshold. Um uh above a certain threshold, it's 20% and if you're somewhere in the middle, uh they'll be taxed at 15%. So that's what the federal government's going to tax you at. And then um if you uh well depending upon what state you live in, uh you'll pay state capital gains tax if your state taxes capital gains. Not all states do. Um so like the state I live in, Nevada, doesn't tax t capital gains. It's one of the reasons why I moved here. Um but primarily it was because it doesn't have income tax in Nevada, which is the bigger deal for me. Um but uh uh the the way in which these capital gains are taxed by state differs. Um so uh for example, if you live in California, which is the state I lived in, um no matter whether it was a long-term gain or a short-term gain, they're going to tax it at your your top marginal income rate. Uh again, this all differs uh state by state, so obviously check with your uh your CPA or whatever. Um, but guys, I just wanted to share that because I think for a lot of people, um, they kind of know they have to pay capital gains, but they don't really necessarily understand all the math that comes into play. But those >> Adam glad that you highlighted that and and just like you did, I'll I'll reiterate this is not personalized tax advice because it gets down to very specific things. But other things you got to be careful about there is not un unsuspectingly uh invite other issues like there's there's there's a a a rule called Irma basically and I forget what it stands for. It's an abbreviation but you know capital gains uh realized adds to to income. So so in in respect of calculating social security taxation and Medicare uh um search charges and things like that. So you want to be careful that you don't um lose sight of some of these other tax related stuff and you know get an unexpected surprise there >> right and again I'm not a tax adviser um so obviously go do speak with yours but I am guessing too John as well that if you are uh taking on capital gains that are taxed as income um it could potentially if you have a big enough capital gain it it could bump you up into the next uh tax marginal tax >> absolutely yep absolutely absolutely can >> yeah One one thing you didn't mention, Adam, that we talk with clients about too, again, with the caveat that we're not tax experts is the NIIT. A tricky little tax called the net investment income tax. So, here's a little tricky one. I'll just show you right on the IRS's website. If you have income from investments, you might be subject to this. if your modified adjusted gross income exceeds 250k if you're married, uh 200k if you're single, and MIGI, by the way, Maggie, includes interest, dividends, capital gains, etc. So, even if you have, let's say, $100,000 income, but you take a $200,000 capital gain, that chart you just showed shows that if you're under 545, I think it is for a married couple, you're going to pay 15%, but guess what? you're also going to pay 3.8% NIIT. So, it's a little tricky, but um it's just an additional tax people should know about. And if you can avoid it by staying under those limits, I'd say avoid it. >> Okay. So, um I think I to the spirit of my original question to you, John, um I think maybe a really good thing that most folks should consider doing at the beginning of a year is revisiting their financial plan. >> Right. Um, let me let me update the financial plan. Let me, you know, what's changed over the past year in my life? Have my forward expectations changed at all? Let me get my financial plan up to date so I know where it's going. But then you can use that to kind of come up with your income projections for the year and whatnot. And then you can, you know, that can then really inform you for having some discussions with your tax advisor about, okay, how can we make sure I don't trigger some of these other additional taxes I might be subject to this year if I do things differently from the start. So, um, obviously you guys do a lot of financial planning for clients, correct? >> Absolutely we do, Adam. It's part of the, uh, part of the package. >> Part of the package. All right. Um, all right, folks. Well, look, um, highly recommend you set yourself up for success this year um, by doing a lot of the things we just mentioned there. If you do them on your own as a DIY investor, great. If you have a financial adviser who can do all that for you, great. Um, but if you don't, uh, or you'd like some help from, uh, one of the financial advisory firms that thoughtful money endorses, maybe you might even want to talk to John and Mike and their team there at New Harbor Financial, um, highly recommend you just take this action. So, anyways, uh, a really good first step to that could be, again, if you don't have a good adviser already advising you, talk to one of these guys, uh, that Thoughtful Money endorses to do that, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds to fill out the form. Uh the consultations you'll have subsequent to that are totally free. There's no commitments involved. Uh either it's just a service these firms offer to be as helpful to as many people as possible. But the key thing is just make sure you're setting yourself up for the greatest chances for success uh at the beginning of the year for the full year. Um, also folks, um, if you'd like to see Carson, uh, come back on this channel again at some point this year, uh, please let them know that by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it if you haven't clicked that already. Uh just in talking about uh the precious metals, just a reminder that the uh special offer that the exclusive offer that uh Andy Sheckchman, CEO of Miles Franklin, uh has offered to the thoughtful money audience uh for buying junk silver for just $1.35 over spot. Uh supplies are still lasting on that for the time being. So, if that's something you might want to take advantage of, just fill out the very short form at thoughtfulmoney.com/bygold and Andy and his team will be in touch with you right away. Uh, and not only can you talk to them about the junk silver offer, but if you've got additional questions about buying, storing, or selling precious metals, they can help you with all that as well. John and Mike, thanks again for yet another great week. Um, new year's off to a a strong start. Thanks for being with me here. look forward to doing this with you all through the rest of the year. Um, and very much appreciate all the help that you guys have done for all the many people that the thoughtful money channel has sent your way. Uh, I I get a constant stream of folks saying how much they appreciate uh the service that you guys and your team provide them. So, just want to say thanks so much for your partnership. >> Thanks to you, Adam, as well and your viewers. Thank you very much. >> Thank you, Adam. Always a pleasure. Thank you for those kind words. We're uh privileged to be able to do what we do and uh thank you and all the folks that have reached out to us through thoughtful money. >> All right. Well, thanks so much. I got a lot of travel coming up in the next week or two, but I think we'll still be on the schedule here. So, look forward to having you guys here next week. Uh but yeah, I'm going to Houston and then I'm going to Vancouver all for conferences. Um but uh somewhere somehow on that road um we'll get together and and record next week so folks can hear your latest update. Thanks so much again, boys. Really appreciate you being on this journey with us. Everybody else, thanks so much for watching.