Market Outlook: Guest sees disinflation pressures in the U.S. near term, making bonds comparatively more attractive than equities, but warns that liquidity-driven optimism is stretched.
US Treasuries: Near-term preference for government bonds if disinflation persists, while acknowledging longer-term risks to sovereign debt as structural imbalances persist.
Oil and Gas: Bullish long-term view driven by finite supply, underinvestment, and lack of cost-effective substitutes, with potential for prices to double or even triple over time.
Precious Metals: Positive on gold and silver as beneficiaries of eventual commodity-led inflation and as alternatives to long-term government bonds.
AI Sentiment: Belief in AI’s long-term potential but caution that current bullishness is overextended, increasing the risk of a sentiment-driven pullback.
Fundamentals First: Emphasis on quality growth at a reasonable price and corporate governance, with macro context and sentiment analysis shaping valuation discipline.
Key Companies Mentioned: Examples included ORCL, NVDA, MSFT, GOOGL, TSLA, COST, UBER, LYFT, GS, and OWL as context for broader themes, not specific recommendations.
Transcript
This episode is sponsored by Interactive Brokers. And are you looking to trade gold or silver, maybe platinum or palladium with low costs and global access? With Interactive Brokers, you can trade spot metals, futures, and options on major exchanges, all from one powerful platform. Get efficient pricing, deep liquidity, and institutional grade tools right at your fingertips. Whether you're hedging or investing or diversifying, Interactive Brokers puts the world of metals in your hands. Member SIPC futures not suitable for all investors. US gold trading is available only to legal residents of the United States, excluding residents of Arizona, Montana, New Hampshire, and Rhode Island. The best informed investors. Choose IBKR. Ready to get started? Visit interactivebrokers.com/metals and start trading smarter. The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. The walls are coming down. The house of cards exposed. We have economic data, by the way. Late, but we got it. And that concludes the last full week of trading for 2025. And our guest today is Robbie Miles, CEO of Live and Let Live. He's back. All this and much more on episode number 952 of the Disciplined Investor podcast. Wishing you and everyone you know a wonderful holiday. No matter what you celebrate or not. Maybe you do, maybe you don't. Basically, this is a time in the holiday season that we spend time with friends and family and we uh have those arguments and that fun. We talk about things like what's going on in the world and of course we talk about money and some of the things we're going to talk about today as well. Some of the things that happened over the last week and some of the things we think are going to be seen in the future. And we do have something to talk about because last week we did see that inflation is well less than anticipated. Magically, magically. It's a Christmas miracle. I tell you, they did some fancy averaging over the September to November period. And out came miraculously a November uh in November the um October CPI which is missing and the the the November core which is 2% on a month-over-month basis that's annualized at 2.4 still above the level that was concern of 2% and then the November core CPI on a year-over-year basis was 2.6% and that was versus an estimated 3.0%. So markets after a day on Wednesday, which we'll get to in a second, imploded on a lot of news that was very concerning. And when those people that are fundamentally driven look at the numbers, what we saw in the news on Wednesday, they say, "Wait a second." You know, earnings are the mother's milk of the markets. But yet on Thursday, we have all sorts of excitement and a rebound. basically recapturing most if not all of the losses from Wednesday due to the fact that we had a rather benign inflation number. So you have the economists the top down that are freaking out for a while there. Now they're coming back and saying well things are okay. We had the bottoms up that had a little bit of pain after a long time of saying things are really good. the fundamental side of things is actually confused. Not to mention that technically charts are still looking okay. We saw a little bit of a reaction to the downside inside of a longerterm bull market which keeps and holds the thesis that we are in an uptrend. So technically we're in an uptrend with a little bit of a dipsy doodle as my friend John C. D'vorak would say fundamentally two sides of that from a top- down approach. We have some things that are concerning. We have the employment situation, the slowdown in manufacturing and services. We have the concern about what's happening um with the sticky elevated inflation numbers. But on a bottoms up, all of a sudden we were really pretty satisfied with the earnings beats that we saw. We saw that Faxet came out with what 78% of earnings uh were ahead of for the S&P 500 ahead of analyst expectations for last quarter. We're seeing double digit year-over-year gains in in growth. So things are pretty good. And then all of a sudden we have a lot of this coming out that's pretty outstanding with capex expenditures. And we're going to talk about that and what the real story was. What happened on Wednesday, we've got to get to House of Cards. We called it maybe. Well, if you've been listening, I've been moaning. I I've been I've been groaning about this whole Oracle situation, which seems to be like forever. It's probably been the last four or five months. Definitely the last four months. They have definitely pumped up and now dumped the AI trade. Now, not in all areas, but pretty much the most speculative side of the entire AI trade was really put to rest recently as some of the new and improved numbers and realities came out from many companies and in particular the OpenAI commitments and Oracle with their loans, etc. But new out this week was some really concerning information about the postconference call, the post earnings call and um management had a lot to talk about. But after that, a day after there was a debt and financial commitments uh note put out, levels that were not even on the balance sheet as of the last update. And the question then was, wait, what are they trying to hide? Why is it that we have this enormous number of lease payments, this enormous number of um debt that was after the earnings announcement and after the conference call trying to put that out of the hands of investors and analysts and things got a little bit uh chunky right there. So the question is again, what are they trying to hide? And now that some of the financing is in question for Oracle's Michigan data center, there was a natural fallout. Now, fast forward a day after all that information came out about Blue Owl, which is a very, let's say, concerning lender, private debt type of company. Many are saying that well the markets misinterpreted that. That wasn't like a last minute thing at 3:45 p.m. on on Wednesday. This is an early day look at what is going on and the commitments that uh Blue Owl is possibly pulling out of this particular financing and Oracle will have to go somewhere else to get the financing and okay, Oracle has plenty of places to get it. But the question then remained again, why is this happening? Now, maybe it's because Blue Owl has her own trouble as we saw, but something is definitely a little bit off. And what that really is doing is evaporating the credibility of the entire money spend with AI, artificial intelligence, and the buildout of the data centers via capex that has been underpinning the AI trade and the tech trade for however long it's been. So where do we go from here? So some of the errors come out of the markets and in general we look at the S&P 500 with 38% of the S&P 500 being the you know the top 10 stocks and I don't know 65% of the NASDAQ 100 and that's why that got hurt on that Wednesday with again to come back at the end of the week to a degree. So, I think that we have a little bit of concern that's probably going to be in a lot of people's minds. Many don't want to sell by the end of the year because they'll have the capital gains on the growth that they had, which was been extraordinary on many of these names, maybe waiting into January. Something to think about. But this is still a long way to go with this technology and we still don't know the true potential of how it will be actually monetized. I think we're entering the next phase of this trade. And that goes from enthusiasm and excitement and just unrestrained and unbridled uh bullishness to a dose of reality. So I think that's a major part of where we are right now is that we're in an inflection point of people trying to understand where all this money is going to and do they want to continue chasing this particular trade if in fact there are some holes in the in in in the in the dam. And is is Oracle a canary in the coal mine, a one off, or is it the entirety of what's going on? And that's something that investors are going to have to deal with moving forward. Now, next up, before we dive into a discussion today uh any further, I want to take a moment to to zoom out a little bit. I wanted to think about decades and bubbles and crashes and recoveries and everything else in between because one thing has remained constant through all this. It it's the wisdom of those who've studied money and looked at behavior, behavioral finance and have been kneede in the markets long before any of us. and and I wanted to I pulled out a bunch of I would call them what timeless financial quotes and and and and sage advice on investing. They're short, but I thought it was ending towards the end of we're getting towards the end of the year here and through the holiday season. It would be good to go through these because these aren't just clever lines. What these are are battle tested principles that are forged through the experience and success and a lot of mistakes that go into this. So, let's kick things off with a few of these quotes, the kind that remind me of why we stay disciplined and thoughtful and informed and why that always pays dividends. So, uh, first up, you got to talk about, uh, what would Warren Buffett say, right? I want to talk about this one. He says, "Be fearful when others are greedy and greedy when others are fearful." That's kind of the blood in the streets discussion, right? Buy when there's blood in the streets, which he's done over the years. Remember during the financial crisis when Goldman Sachs was going under and he and he and he issued a $5 billion note bailout basically to them at some at that time exorbitant rate. Everybody's like, "What? How is that going to happen? And he made his money back and did really well with it. Now, that item there that buy when there's blood in the streets or be greedy when others are fearful, that's always a question, right? Because markets can extend a lot longer. Markets can move a lot lower for a period of time and it can move a lot higher for a period of time. So if you're fearful when others are greedy, maybe you get out too soon. When you're greedy when others are fearful, maybe you get in too soon. And that brings us to what John Mayor Keys would say, KEES would say, the market can stay irrational longer than you can stay stay solvent. If in fact we are in a situation where markets are seemingly, you know, up up up and you decide you want to short that market and all of a sudden it continues up another 20 30%. That's not going to look good on paper, is it? And you may in fact get blown out of a position, forced to cover, and that is going to uh maybe uh take its toll on your portfolio. And going back, there's a few of these from there's like two or three of these that I picked up from Warren Buffett. Risk comes from not knowing what you're doing. Not knowing that in fact things can go against you in the wrong way is a risky proposition. If you know what your limits are, what your ranges are, if you know in fact where your risk tolerance lies and what your greatest out-of- pocket loss may be, risk could be averted to a degree or at least lessened. Then we got Benjamin Graham saying buy not on optimism but on arithmetic talking about in a way of course the greatest value investor of all time right wrote the book on it value investing understanding the fundamentals and not necessarily the momo. Now we would have some kickback on this from our momentum traders right we have plenty of those that have been on the show over the years. the idea that you want to, you know, get on that train and ride it for as long as you can. Get off when things aren't looking good. Plenty of people I've talked to over the years that have this advice for you. But what we're talking about here is looking at the arithmetic, looking at the underlying, picking up the hood, checking out the engine, seeing if that car is sound, and then making a decision to buy it. Not just seeing it in the street that it's all pretty, looking good, and everybody's swarming around it. Maybe the engine is dead. And by the way, that comment that I made about the time to buy is when there's blood in the streets is actually been associated with Baron Rothschild. Now, there's another one. Formal education will make you a a living, but self-education will make you a fortune. Jim Ran. Self-education. That's what we're doing here. That's what we're doing on this podcast each and every week. We're getting disciplined. We're learning. We're learning from the best investors that are out there. We're talking it through. We're understanding it. We're making commitments. We're then acting upon them and then staying in the course. Keep educating yourself at all times. Sometimes the best is a self-education and a self-education sometimes making may may mean making mistakes. Sometimes the best education is a mistake that you won't do again. Something to think about and I think something to live by. So, what else do we got here? Um, Phil Fischer, the stock market is filled with individuals who know the price of everything but the value of nothing. Think about that. They know the price of everything but the value of nothing. Back to what we'd say that we'd have some of the greatest value players out there, right? some of the players that look at that like a Benjamin Graham looking at understanding what the value actually is and then you have things like what what what the great van great late John Bogle from Vanguard would talk about time is your friend impulse is your enemy so this is there's a lot of themes that are building upon each other here the idea that impulse or the shiny car the new shiny penny the momentum play you know what's what's what's happening here and now versus time in the market, not timing the market. Underlying fundamentals matter. The economic backdrop matters. Not always. There are times it doesn't. And it seems like over the last number of years with the Fed intervening on a regular basis and stimulus coming out of every single area of the government that it doesn't really matter as much when capex from these companies is so exorbitant that nobody cares about any of the other things that are going on. But you know what you talk about understanding what you have and understanding what you want and what understanding the stock that's out there. Peter Lynch would say behind every stock is a company and find out what it's doing. These are the people who talked about, you know, buy what you know. Think about all the things that you know. And sometimes, take a moment. I'll give you a little advice here. Something I want you to think about. Sometimes you don't think about what you know that could be a really great opportunity. If you loved early days Starbucks or you say maybe you were the first with an Apple iPhone or maybe you think about, well, you know what? uh I'm changing over to uh you know Direct TV from Comcast or yeah whatever's going on and think about the things that maybe aren't so obvious as opportunities. There's something think about how maybe you know you prefer Uber over Lyft and maybe a lot of people are talking about that. So there's a lot of different ways to get to the same place and sometimes in investing what is comfortable is rarely profitable Rob or not. He talked about that Robert Oda he said you know maybe it's not the most comfortable being in something but it is going to be possibly uh the opposite would be uh more more profitable and that really deals with a risk and stand deviation and risk return profile. But these are the things um that we look at when we talk about our money because money is a terrible master but an excellent servant. PT Barnum. And uh I think when we sum all this up, it's all about risk. Warren Buffett talks about that. Warren Buffett talks about the stock market as a device for transferring money from the impatient to the patient. Again, time in like we talked about John Bogle, time is your friend. talk about the the idea of you maybe uh self-educating and also at the same time uh looking at the the value of something or looking at what the company does like Peter Lynch find out what the stock is doing or Warren Buffett you know risk comes from not knowing what you're doing but understanding what more about what there is so all these things I think come together in a really nice tidy type of way of thinking of things by the greats. And I think these are things that we could really utilize uh in our best efforts to make sure that we are doing what we can to become and stay disciplined investors. Now, before we get to our guest, Robbie Miles, this is an interview, by the way, that we did about I guess about a month and a half ago, and it's been something that we've been trying to get on because we've had so many guests and we were backed up and we had some that were scheduled. And this is really interesting. You're going to love it because some of the things he talked about are actually coming uh not only true, but I mean, wait till you hear some of the things he's talked about. Pretty cool. And the rationale of where it's going. So, I'm going to I'm going to keep you in suspense of that. I think it's going to be really interesting. But I want to talk about interactive brokers because investing is seeing the bigger picture. But sometimes the connections between all aren't so obvious. We talked about that a minute ago. That's why Interactive Brokers created connections. With connections, you could explore related stocks and ETFs, futures, options, and even forecast contracts all in one place. Discover trends, compare companies, and uncover the opportunities that are there across 160 global markets. You know, the best informed investors choose Interactive Brokers. Interactive Brokers is a member of SIPC. The risk of loss in online trading of stock, options, and futures can be substantial. Learn more about all of this at ibkr.com/connections. Now, going to tee this up a little bit. Robbie Miles, he was a portfolio manager for many years. um he's now the CEO of Live and Let Live. We'll talk about that and have him explain about that because it's it's about uh a big picture, but also we get into a discussion um and I ask a lot of questions and I have a lot of things on the docket to talk about with regard to um where things are going whe whether it's about technology, whether it's about bonds, whether it's about uh more broadly and and and and I have to ask about the whole sustainable issue the ESG because that's something that he was very much involved with for a while. So, let's get right to it. And our guest today is Robbie Miles. And uh well, instead of me doing the introduction today, I thought I would let him do it since he's at a new position. Robbie, how are you all the way from Hawaii? >> Hey. Hey, Andre. Yeah, I don't sound like it, but I am in Hawaii. >> Yeah. >> Yeah. It's great to be on again. >> We could have the uh Tiny Bubbles music uh Don Ho play in the background. Tell me now, I know you have left your position. You used to be with Alons and you were in charge of the um the the sustainable portfolios there. Uh you're now a CEO at a nonprofit called Live and Let Live. Tell me about that. >> Yeah, Live and Let is a reconciliatory force in the world. I was invited to run it by the guy who founded it, Mark Victor, and it was the biggest compliment anyone's ever paid me. I so believe in this mission to reconcile the differences of a very polarized society around one thing. Well, I guess two things. One thing being don't aggress. No one wants to be a victim of a crime, so let's agree on that. And then the other is let's treat each other well, but not because we're forced to, but because it's the right thing to do. And that is a a universal philosophy that's been in that's featured in every religion. It's the golden rule. And we've codified that first part don't aggress quite carefully to to say which bits are clearly an aggression and which bits are clearly unclear. Um you know many many issues in the law are continuum problems. So we shouldn't fight about an absolute right answer. But just recognize that reasonable minds disagree. That's the that's that's the path to peace. Uh we need to tolerate differences if we're going to co-inhabit a peaceful world. And I think we need to co-inhabit a peaceful world because the world is getting more complex. Um it's it's the complexity is stacking on it on itself and there are some big um kind of scary challenges. I'm I'm generally an optimist. I think we'll face these challenges well. But we can't ignore that there is a global aspect to our community. Now someone can cause a risk in a farway country that affects us even if we have a totally different set of rules over here. Um, so, so we need to think about reconciling globally around something that is universally simple like don't aggress. >> Okay, I got that. That's a big that's big. That's that that's that's all-encompassing. What are the crimes? What are the things? What are the areas that you're would be focus Give me an example of something. >> Yeah. Yeah. So, a good example of something, if I was to smoke a joint, um, put, you know, some some marijuana in my body, that might be bad for me. We might even agree that's immoral. It might be a bad use of my brain, but there's no victim. I I'm doing that to myself. So, to lock me in jail for that would be an initiation of aggression. So, it's the people that that lock up people for victimless crimes that are initiating the aggression. So, we need to stop uh doing that. We need to stop punishing people where there are no victims. And there are there are hundreds of these examples. Another good example might be if if um if Bob and Bill want to contract to work for each other and Bob offers Bill $10 an hour and Bill's happy to pay that, but that $10 an hour is below the minimum wage threshold. Who who if you're going to come if a third party comes in to punish those people, it's the third party that's aggressing, not Bob and Bill. Um >> so both these both these by the way sound like less government to me. Those those two examples. >> Yeah. So this is where um a lot of us did did have some sort of a libertarian background, but we're really different to libertarians in in a few ways. One of them is that libertarians are orientated to freedom and we're orientated to peace. So the freedom part is the don't aggress. We voluntarily add be an excellent human or kind of be decent to each other because it's really important if we're going to get rid of the social welfare system because it's based on coercion. What are we going to replace it with? Are we going to replace it with independent people silos with, you know, armed fences saying don't tread on me or are we going to replace it with voluntary kindness? We're we're pretty clear that it has to be the latter if if this is ever going to be appealing to people. Um, so in some ways what what our main focus is is creating a community of people that are demonstrating this voluntary kindness, elevating each other, enjoying each other's friendship. >> And again, this is this is big. This is a big it seems almost too large for me to consume right now. So I'm I'm going to try to continue breaking this down a little bit. Um, it doesn't necessarily revolve around a particular item social social or or country. uh or social e socioeconomic. I it's it's it's um it sounds like it's item for item, you know, what things can we do to make I mean the old world a better place obviously that's that's something big, you know. Uh but but is there a particular is there something that you pick up on that you are currently working on? Uh and then who does the financing? This is a charitable organization. I'm assuming you have a portfolio that you run there too to keep the charitable fun uh funds active so there's more in the future right so uh let's start with the first question is what what particular item are you focused in on now and then we can talk about um you know areas that you know how the operation works >> you're definitely right to identify that this is a huge mission our our motto is aim high fall short do well so the the goal is is world peace and we'll fall short of that. But if we can move the world to a more free, prosperous, and peaceful place, then we've done our job, even if it's slightly incremental. Our our focus at the moment is f is identifying those areas that reasonable minds disagree on. And those are going to be topics that we're not going to concede that our position is is wrong. You know, there there are many many hot hot button issues in the US right now. Um, for example, I'm kind of hesitant to talk about it because it's so divisive, but abortion that there are extremely strong views on either side about the the right of choice for the mother and the protection of the life of the baby. And it's it's going to be pretty unlikely that either side ever reaches agreement with the other person. the the person who is pro-life is never going to be pro-choice. The question is, can we tolerate each other's views? Because if we can't tolerate each other's views, then we have what we have today, which is an endless cycle of lawfare where the red party comes in, imposes their morality on the blue party, who then come in and do the same. And we're stuck in this cycle forever, and the law gets ever more complex. >> But aren't we aren't we aren't we stuck in a cycle? And it's it's, you know, you would have to break the back of religion. I'm not talking about just abortion because my god is better than your god has been a a a a a fighting point since since when since ever, right? Isn't that always been the case? You know, my team's better than your team. Uh we we we we we gather around and that has to do with the same thing with with all sorts of things. Doesn't have to be just religion, right? It can be a lot of different fundamental values and people get uh like they feel good holding on to certain things and threatened by people that want that have an opposing view. >> Totally. Yeah. And so we need to recognize that that threat that threat um can be solved by by letting local communities decide. So if if one is again if one is pro-life, one can live in a pro-life community and and everyone around that community can agree that that pro-life is the right answer. They don't have to even um concede that they they might be wrong on that, but they have to tolerate they have to recognize that other people do disagree and and tolerate that tolerate their views if we're going to stop the end of cycle of warfare. And I reckon I I take that as a good trade because if we don't do that, it's not like everyone's going to be pro-life anyway. You know, it's not like it's not like you're by by kind of entrenching ourselves in our righteous positions, we're going to actually solve anything. But we can continue chipping away and trying to change minds. But on the religion thing, the I think at the heart of every religion is love. And it's um in in Christianity, it's love thy neighbor as thyself. But but that kind of golden rule does feature in all the major religions. So if we can recognize that common thread of religion, then we don't have to decide which one is right. Again, we can I can I could be a seek and be devout seek um and and never be convinced by um daoism, but but and same same with the dowist can be all in on Daoism, but as long as we can agree not to aggress against each other, then we can co-inhabit the world peacefully. And that's really the key. And there are nine forms of aggressing um which we we probably is too much detail but um if anyone's interested uh www.3l.org has a bit more information. And then on on the investing side luckily we've got a very generous founder Mark Victor who's currently donating enough for me to work full-time on it. Um, and I'm trying to avoid the temptation of getting too sucked into markets because I'm totally addicted to looking at markets and I love it. But, um, as you say, it's a big project I'm working on now and I'm I'm trying to focus on the big project. >> So, you but you get So, so are you managing the portfolio for the charity at all or or uh just your own stuff these days? >> Just my own stuff. And what I'm trying to do is demonstrate these community values by basically just sharing my trades on a on our membership platform for free. So that it's it's basically like, you know, many many people offer a newsletter. I'm just offering mine for free. >> All right. So, but you're but you're still in the thick of things there. you're still you're still I mean you're working like everybody else does but you're still in things with um you know producing information and doing the research in the areas that you need to to make appropriate decision making on uh a trade or not a trade or sector you're following things closely. Yeah, I mean I was I was very I was all in. I mean I had a huge imposter syndrome as a portfolio manager. So I worked extremely hard and that only finished in June. And so naturally there's a an afterglow of um insight that that's that I'm making the most of. But I would guess that that slightly dims over time as I as I focus more on um on the project of of telling the story of why I live and let live. And then you hire people like me to manage your money. So anyway, but let's talk about uh let's talk about some of the things that you did observe recently with regard to the markets because you wrote me an an email. We talked about a variety of things and um you you you have been a reluctant bull which I by by the way I don't think you're alone there. I think that most people out there are I don't care if you're professional or you're an amateur or you're just following along. people have the sense that you know um I'll go along with this because you can't uh go against this trend is so strong but at the same time I may not like it. We've seen this before in many different areas. The most hated bull market in the world was like back in 200 uh was called 10 2011. I mean it was like no this can't be the case. It can't be coming back. Same thing with with with the postcoavid but what did you see differently this time? >> I I always break it down into different fractal layers and the biggest fractal layer the kind of long the mega history is always one of improvement. So to be bearish is really to not to be bearish permanently is to not understand the trajectory of history. things things do seem to get better. And then this the one level down from that is almost like I would call it like the tide. Which way is the tide going? And and there I'm a bit more cautious. The tide seems to be indicating that we have some structural problems, some some structural addiction to money printing. And right now that addiction is is kind of helping risk assets as liquidity improves. um the US dollar has been weak helping liquidity and interest rates have not been so high that they are debilitating. So it's in some ways a bit of a Goldilocks period now where um it's the Austrian economists see it as a crackup boom. But I would say that right now some of the indicators point more towards a disinflation rather than um inflation increasing or even staying stable at these higher levels. >> May may I interrupt? Is that focused on the US or is it the world? Where are we talking? I'm usually focused on the US, okay, but um I think that they kind of lead the world. So >> in the US, the housing market seems like it might be showing some signs of stagnation. And then wages, particularly in service areas, have been increasing but but at a decreasing rate. And then the third pillar of of what causes inflation would be the underlying commodities. And the oil price at $64 is not it's not particularly inflationary. That's a decline year-over-year. So, I would say that all of that's pointing towards a slowing down of inflation, which could give way to disinflation. Deflation is a big a big word, so I'm not going to go that far. But generally, I would say that I observe this kind of reflation narrative to be very strong right now. And I think that's also underpinned by huge optimism in AI and I share the u belief in some of those long-term promises of what AI might might bring to the world. But I then layer on this uh basically behavioral analysis. And to me it seems that the bullishness is a little bit over its skis and and if we do start to see this disinflation then I think um actually bonds would be a more attractive place to be than equities. Even though long term I think there could be some irony in calling it the risk-free rate and treasuries. You know I could yeah >> let let's I'm going to switch this up for a second. I'm going to do a hard right turn here. I am going to do a uh from where we are and and and where the markets look right now because I want to come back to that in a minute, but I want to do a post-mortem of you running money at a major firm. Can we do that for a second? >> I'd love to. Yeah. >> So, you were running I when we first met you were running well first it was my concept was ESGish, right? that conceptually of ESG based analysis research uh pool of assets but you're al so it was more sustainability right which I don't know if there's a difference in that much but um can we take me back to some of the research you were doing back then because that was very hot for a while because people were like well okay this is a great little tool to use and by the way the way I got to you let me just give you this one more point I attended years and years and years ago, I think I don't even know it was it was it was years before it became popular, a a luncheon that I was invited to because I was kind of intrigued with this whole ESG thing like what is this about? I let me I need to understand it better and was invited to this uh portfolio managers and I had lunch uh and we talked about um you know the idea of using a an ESGbased process because the research has shown that ESG companies that do environment and social and governance and all this other stuff they have better ways of they're better better run company essentially right they have better values the whole and in the the mark the stocks do better. That that was the concept initially and I was like okay. But then I found out that a lot of these companies were developing these ESG indices and then selling them and then it was kind of being fed on by the people that were reinvesting in the ETFs, the indices, uh the passive investors. Uh but but and then it kind of blew up a little bit with like is this really this is just crap. I mean that's what a lot of people ended up saying about a lot of this. All right, I'm going to throw it all back to you. give me some thoughts on all that. >> Yeah, Andrew, I I feel so grateful for the last 11 years of of working in investment management because to me it's like being in the crow's nest of the global economy and you're looking out o over all the things that matter to people's lives uh and they just show up as numbers on a screen. to try and form internal imagery that that brings together all those numbers and paints a scene of where we're are where we're at and how to allocate capital accordingly has been such a a joy. But I would say that the the sustainable investing story or theme has been um bumpy. I when I first started out, I was very much bought into this idea that if you increase your awareness of pretty much any topic, you're likely to have more useful in inputs that improve your ability to respond appropriately. And sustainable investing really means looking at issues that don't show up so clearly on a profit and loss or a balance sheet. Things like um employee satisfaction. I I find things like glass door reviews really useful both as a stock picker and as a a consumer of products in the market if there's a company with miserable employees. I'm I'm kind of minded to expect a miserable service. Um and and similarly a miserable stock price. Um there's a company called EquaBridge which is looking at the reputation of the of businesses in the minds of the customers that use them. And I think those kind of data points again they don't show up on a profit and loss but that's that's extremely valuable. Um so I always like those alternative uh inputs to broaden out a holistic investment case. But I think where sustainable investing's gone wrong is the myth that morality shapes your stock price performance. It's it's somewhat true sometimes, but if I say that I don't like fossil fuels and therefore I exclude them from my portfolio and I think my portfolio is going to go up, there's some there's some um errors there in the logical thinking because just because you don't like fossil fuels doesn't mean people aren't going to use them. I mean, the UK at the moment isn't isn't using any of its own fossil fuels or very little and it's importing fossil fuels from basically enemies. I mean, it's it's totally ridiculous. And it's all stemming from the this idea that fossil fuels are evil, but somehow if we if we just ignore them or get them from other people and rather them get them ourselves, that should solve the problem. And it it's kind of like a child putting their hands in front of their face and and now assuming that no one can see them. >> Yeah. hand in their ears and saying la I don't hear anything. Right? So, right, >> but the thing that's the funniest part of it is that the manipulation of the process. So, therefore, you have these certain uh scores, let's call it, that went into the input to figure out if this company gets a nine ESG score, right? You follow me? And so, what do you do? Well, we're polluters. We're ter but we're buying carbon credits, so we net that out. I was like, "Wait, wait, but you're still polluting, right? This whole idea of of of I guess it's called greenwashing. That's what they called it in the end." Because I questioned this from the beginning. I'm like, I don't understand. You have all these things going on in the in the company. They know what it takes to get into that index. They're smarter than all these other people. They'll figure out a way to financially engineer, buy carbon credits, do something to offset somehow to make it look like so they can fit themselves in in order to get themsel in there so they can ride the wave. That's what happened in the end, didn't it? >> Yeah. And and also I think this is a great allegory in general of why regulations tend to bolt the gate after the horse has has left um shut the gate after the horse has bolted because early on again we had this recognition that more awareness of more inputs should eventually with with passed through should lead to better results but of course then other copycats jumped on the bandwagon and said oh we're sustainable too just like you know I'm Brian too from life of Brian every everyone was sustainable suddenly they >> and and actually of course they weren't they were just chasing the gravy and and so the regulator then comes in and says okay there's clearly people who are being disingenuous with this stuff so we're going to mandate what it means to be sustainable investing and and of course like they've just they've just been focusing on some other random policy in healthcare or education and suddenly they suddenly they're now all all knowledgeable on sustainable investing except of course they're not and now the whole industry the innovators and the lagger guards are all required to focus on the regulators way of doing sustainable investing. And that's where it got really ridiculous. Like you know, we found one of the most sustainable turbine companies in the world. People are going to use turbines even if you don't like fossil fuels. And we weren't allowed to invest in them. Uh even though that was directly channeling capital to companies that were really pushing forward human efficiency. Uh and there were many examples of really great sustainable sustainable companies that we could no longer invest in because of very arbitrary broadbrush policies uh that we had to comply with to basically stay out of being fined or you know worse. Uh and that's where the the industry got very unappealing. >> Not to mention what it actually cost companies. I have people that I know that are are in management of publicly and private but publicly traded companies and private. They have put had to put in so many strange uh human relations, HR, people uh people related oversight and certain people of various backgrounds into the firm whether they liked it or not. certain amount of women, certain amount of men, certain amount of people of color, certain people, it it was absurd. And the management of that because those people who came to the firm as a required part of the inclusion into the various sustainability indices uh they knew it and basically took advantage of it while so I think actually in the end crazy this is my thought. Uh, you may disagree. I'm not saying it was a good thing. This is not a good thing. So, so just bear with me. I think it actually cost companies more money than it was really thought to in the beginning because companies ended up backing into it rather than just getting what it was in order to as we said and um, you know, in the end I think that everybody realized this and I don't know where that is and there's probably people look there's there's no vice funds out there. There are funds that say, you know what, you can't have uh Rick's cabaret. You can't have uh um alcohol, tobacco, marijuana stocks. There's funds that do that and maybe they're successful, right? It's possible. I'm not saying they're not. But as an investor, Robbie, do you think now that we should limit Would you limit yourself today? Today, would you limit yourself to buy not buying that turbine company? >> Absolutely not. No, I never wanted to limit myself. I I was always spending I mean even myself as an investor I felt a real obligation to my clients to deliver great performance. You know these were pension funds people that really depended on that money for a good retirement. I took it very seriously and to not be able to buy companies that I thought were going to go up and then watch them go up. Um, that would have been like, you know, some of these companies, my process was always trying to buy companies that were great for the investor and great for society. And the great for society one was just a very simple investment thesis that if it is great for society, people are going to demand it more. >> Well, of course. Right. Right. And so you have this um positive positive feedback loop. Um but in general the big problem with all of this stuff is trying to solve morality via the stock market. It doesn't work like that. If if something is >> backwards. >> Yeah. If something is again if something is aggressing we need to stop it via the law. And this is where you know allocating capital in the stock market is not going to stop pollution but laws that stop pollution would. So that's why I think sustainable investing has become worse than useless because it gives a false sense of security that these problems are being solved where they're absolutely not. Right? And >> it was bastard. It was bastardized in the name of making money. That's what it was in the end. It was all about making money like these companies are better because you'll make more money with them. It wasn't because oh you want to be with these companies because they're actually good companies because >> they're charitably inclined. They're good to their employees. you know, this whole laundry list of of real real things that may have been the things that were the original thesis behind all that. So, all right, we beat that to death, but I'm glad we we talked about that. Talk about the process. How do you find a company that is good for society? >> I had a Yeah, I had a framework that I was really proud of that basically saw energy as the foundation of all economic activity. So everything in this in in the economy is energy transformed. So that that process is three parts. You take the energy from from the environment in some way could be solar panels, wind turbines, nuclear, whatever. And then you convert the energy into some sort of a a useful thing via basically industrials and all those kind of companies. And then you have all the consumerf facing companies that is using that converted energy into some product that people want. It could be health care, could be, you know, food, water, that kind of stuff. So, seeing it as a as this life cycle, um, I then found 40 themes that that matched onto those three general areas and and tried to think about what what was enhancing the energy efficiency, like the the least amount of energy wasted between the harnessing and the use of that energy um, and maximize the benefit to the to the end consumer. And that that was really helpful in identifying what was uh what what which companies were were creating positive change. >> So I want to I want to talk about some of the things you sent me and in particular you you you said this. I'm going to quote you. It says investing is properly about fundamentals. Investing without fundamental analysis like getting Jack GBT to write your essay for you. It's possible but there's no substitute long-term for understanding how businesses work within their ecosystems. So, uh, let's break that down. Okay. Fundamentals, one of the most important parts in your opinion of finding a company that will have long-term profitability. Is that is that a true statement? >> Yeah. So, generally, I I was an investor that didn't like to identify as one particular type. So, just I'll definitely answer your question, but in some ways, this this focus on fundamentals is is like the Ben Graham approach. Um, it's a com combination of the Ben Graham approach and the Silicon Valley approach. which is like the value and the growth investor. Uh and then and then trying to find companies that that meet that what I synthesized it as and many people do quality growth at reasonable price was always what I was trying to find but >> Garp. >> Yeah. So I'll go into that. So quality it does include things like the governance you know is the is the agency risk between the management and the shareholders well checked by a chairman and a board who are actively trying to get the most out of that management team. But it also includes things like the historic returns, the margins. Again, I talked about equibage, the the employee and customer satisfaction and the overall competitive competitive advantage, the poris by forces, all that stuff. And then the the growth is this the second component of the fundamentals. And then it's basically an extrapolation of historic trends and um and and again whether it solves society's problems which is why I had that 40 themed thematic lens. And then the the final bit the the reasonable price. This is much more art than science. And this is where I think you have to have a macro framework. A lot of the a lot of the people I used to work with didn't like thinking about macro cuz it's very difficult and they thought it was a waste of time. But from my perspective, it's it's really important, even if you get it wrong, to try and figure out the macro backdrop because otherwise, what context is there for the valuations you're paying? You know, is is 30 times PE for Nvidia expensive or cheap? Well, it kind of sounds expensive, but then you compare it to everything else and the time we're in and you know, and if you have that >> and their growth and their growth potential. >> Exactly. Yeah. So looking context to the to the growth the PEG. >> Let me let me bring you back peg I love a PEG ratio by the way people if you haven't looked at PEG ratio as a tool because on TV on the radio everywhere you hear about well it has a 30 PE ratio which is a little bit higher than his peers which by the way means at Robbie back me on this means nothing >> true >> zero. >> Yeah. >> Uh you know you talk about somebody talks about a bank oh the bank's got an eight. I'm like we don't look at banks with PE ratios. uh we look maybe price to books or something of that nature but there's other things anyway the PEG ratio which is price earnings to growth if if if if actually uh Nvidia just has a number doesn't matter the number uh as an example 30 times forward PE but yet it has a 40 uh% growth rate over the next 5 years that's the estimate and actually is below one when you do the division growth versus the the um the PE and and actually makes it's cheap so anything under one is quote unqualor and overvalued is over one. >> Yeah. The third thing you have to factor in is the quality. So something like Costco always looks ridiculous on a peg. It's got like a peg of six or something. A peg of six you would just not touch with a barge pole. But then again, you would have historically been wrong to not touch it because people just love Costco and they're they're very willing to keep coming back to that company. and it's a safe haven in a recession. Um, so, so sometimes people I mean I'm not willing to pay six peg for Costco, but some people are and you know they've probably got it more right than me. But I would generally say a peg below two is interesting. A peg below one is compelling. Um, and and then the quality has to be layered on on top. >> Let's go back to this governance issue. So, you mentioned something that was really interesting and just flashed, not only flashed, it like it it it was a bang right to my head. You talked about, you know, is the chairman and the CEO, are they aligned? Are they doing the right thing for the company? So, back when we're looking at things like that as a top level, one of the uh one of the areas that we look at for uh sustainable investing, good investment opportunities, long-term, good for society, Tesla, uh they can't pass that. Yeah, Tesla's one of those things. So, there's annoyingly with with fundamentals, there's usually a rule to to prove the rule is not valid and it will all there's usually an exception to every rule. The Silicon Valley approach to stewardship, the Stanford University approach to stewardship is much more about empowering the CEO and I I sympathize with that. If you if you have a visionary CEO, you don't really want checks and balances to slow them down. You want them to be visionary and act on it. And and Tesla is one of those companies with in terrible corporate governance. But it's one of those companies that's going to work until it doesn't. And and when it doesn't, you look into the share pledging that Elon Musk has done, which can be very recursive on the way down into, you know, if the share price goes down such that Elon Musk has to sell his shares that he's collateral for loans, then that would put exacerbated pressure on the downward selling. and and that hasn't really we haven't seen that play out. >> Well, he doesn't let that happen. He makes sure that shares are propped up all the time somehow, >> right? Yeah. So, you know, we we never invested in Tesla, but I always respected the company and, you know, clearly was wrong not to invest. It was one of the best companies. We we got some other good ones. we we played in video better, but um the corporate governance was basically the reason that I did find it a bit difficult because he he just has so many friends on the board and and that's nice again and it's great. >> You're putting that very politely. Friends, yes, >> his brother. >> His brother. He's got a brother and everybody else who will do what he wants. Why not? They get make plenty of money by doing so. I wonder what actually a I got to look this up. what a Tesla uh board member makes per year. I mean, is it is it 500? You think? Yeah. Look that up. >> I've got no idea. >> It's got to be a lot of money and something you don't want to give up. Um let's kind of just sache over to um the area of macro. So one of the things about macro is for a long time many years ago many many years ago I was under the impression assumption belief that macroled macroled the economic conditions were such that uh we have to really put them into my calculus when it comes to do I want to buy the stock or stocks or the market or whatever this is how I'm going to create my portfolios my asset allocation my you know positioning in in equities, bonds, real estate, whatever. Uh lately, since when I say lately, since 2010, there seems to be less of a reason to do so because the amount of money that's being pumped into not only the United States, but countries around the world is such that it's it's it's masked the problems with with macro. How do we reconcile that today and utilize it or should we just throw it away and not even deal with it anymore? when it comes to our thinking >> I think we have to incorporate that pumping that liquidity pumping into the macro as as probably the most important macro component. Um, so I agree with you that macro leads. I would say if anything what leads macro is sentiment and and that's you know we we are a herd animal and and this is where I find technical iss if you look in the wild a herd of gazelle the time when they're most relaxed is when the lion is in the grass eyes fixed on the weakling and and ready to pounce and they just haven't seen it. That's then their peak relaxed. The time when they're most stressed out is actually when the lion is least dangerous. The the teeth are already into the weakling and uh they're not chasing anyone else, but the rest of the herd is still terrified. Um if you can start to be able to predict whether the herd, the human herd is generally complacent or fearful, that I think is the most important um thing to to get a sense of, which is why I like Elliot waves. And you can I I don't know whether there's any science to this, but I see Elliot waves in in macro indicators. Uh I see it in in even like liquidity charts, like global liquidity. Um so that's that's like an open-minded approach that may be completely debunkable, but um that that's that's the way I I looked at macros, just synthesizing all these things. Again, more is more was was my approach rather than kind of less is more. >> Yeah. I mean because there seems no end in sight by the way and the the idea of having debt I remember when we had uh Greece and the pigs right with uh what was it one point o over over 100% of GDP to debt debt to GDP I should say and it was like look at those guys they suck I've never invested money over there and now where are we right here in the United States and around the world it's interesting because Japan has now started to back off they actually talked about increasing interest rates once again and The Bank of Japan just just not too long ago talked about how they're going to stop or not stop not stopping uh the slowing the purchase of ETFs and reach in the market. So that's something of interest there. But the world has become addicted and and on this idea of uh of excessive amount of stimulus. In fact, company upon company upon company are doing it on their own these days. the the concept of circular and uh vendor financing. So, how great would it be, Robbie, if you and I you're in business and I give Well, we are, right? So, I give money to live and and let live and you give it back to me in the form of payment for advertising, let's just say, or whatever. Okay? No, better yet, I give you a million dollars. Okay? You give me back $250,000 a year for the next four years and I take the money off of my books and I put it as income. It looks good for the the world and then my stock price goes up. Not a bad deal, right? >> It's a good deal. Reminds me a bit of Nvidia and Open AI. >> Yeah. Microsoft and all the other companies that they put on to go onto the Azour and then uh Microsoft and and I mean Google and companies out there too. This is kind of what's going on. It's like I I explained it on a show recently. I said something like it's like eating your own arm and thinking it has nutritional value, >> which it does. >> You know what I mean? After a while, that's not going to work out so well. >> Yeah. So I don't know what your your stance is on that but that's something that's it's interesting what's going on in the world and that probably would have been identified under um one of your criteria it should be when it comes to quality of earnings right >> yeah exactly that that's where I would say that there's no substitute to understanding the business model and and there are those that go super deep on each company and and sometimes they can kind of pat themselves on the back for that but then there's all the companies they didn't look at. So that it's either quality or quantity or some combination of the two. I preferred a slightly shallower deep dive than some of my real deep diving peers so that I could look at more companies and try and triangulate the truth. >> Um so that's the quality is really a neverending thing. But just on your point with Japan, >> I think because of because of politicians not wanting to lose elections, there is a real aversion to recessions. But recessions do play a role. They they they clear out the dead uh the inefficient companies and then the the fresher companies that that are more resilient, more useful thrive and and come through. And if we are not going to if we're going to just prevent winter from ever coming and and just keep pumping all this money, we we'll eventually reach some intractable problems. The thing I worry about long term is actually when the commodity leg of the inflation stool does really start booming and we've seen gold and silver pointing to to that maybe happening. But at some point I I predict oil and gas will be at least double maybe triple what it is now in ter you So, if it's 65 now, I could see it well over $150 a barrel because not not immediately and I wouldn't I wouldn't wouldn't be surprised if it went lower first, but at some point we are you know there is a finite supply of oil and gas and as much as we wish we were moving away from it, we don't really have substitutes for things like air travel or or plastics from um you know not not cost efficiently. So that's when the Bank of Japan, like the the central banks in Japan and the rest of the world, they may want to raise interest rates. They may want us to do more quantitive tightening, but I I don't see a way for them to long term, which makes me very bearish on bond on government bonds long term and more more bullish on things like gold and silver. >> Yeah, good stuff. Well, all the way from Hawaii, Robbie Miles from Live and Let Live. I like to say mahalo. Robbie. >> Mahalo. >> Are you living there now, by the way? No, I'm living in PaloAlto. >> Oh, all right. Just a stone throw away, but coming to us today from Hawaii. That's great. That's good stuff. You know, we'll have all the information on live and let live uh over on the the the episode uh for this episode over on the discipline.com. Robbie, thanks for coming aboard. Appreciate it. >> Thanks so much, Andrew. Always a pleasure. >> Thanks. >> That was that was that was present. I mean, that was that was some great stuff right there talking about um not only the markets, but again going back and looking at the ESG and all that. Uh thanks for joining me this week. Uh, next week is going to be, I think, the uh the last episode of 2025. The last episode of 2025. So, that's something that we need to look uh at and say, wow, it's been an unbelievable year of great guests and great discussions. So, we are going to end it. And I'm going to tease you a little bit with the one of the greats. One of the greats coming on next week talking about the world of investing that also analyzes the greats on his own. Some of the the most famous people uh he's been involved. So we're going to tee it up for next week. Thanks for joining me this weekend and every week and I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits and Company Inc. an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horo is a company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products or services, is provided for informationational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial advisor before making any investment decisions. Please visit our website for additional information disclosures as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates department. Heat.
TDI Podcast: Live and Let Live (#952)
Summary
Transcript
This episode is sponsored by Interactive Brokers. And are you looking to trade gold or silver, maybe platinum or palladium with low costs and global access? With Interactive Brokers, you can trade spot metals, futures, and options on major exchanges, all from one powerful platform. Get efficient pricing, deep liquidity, and institutional grade tools right at your fingertips. Whether you're hedging or investing or diversifying, Interactive Brokers puts the world of metals in your hands. Member SIPC futures not suitable for all investors. US gold trading is available only to legal residents of the United States, excluding residents of Arizona, Montana, New Hampshire, and Rhode Island. The best informed investors. Choose IBKR. Ready to get started? Visit interactivebrokers.com/metals and start trading smarter. The Disciplined Investor is all about you, your money, and the markets. Sit back and get ready for this edition of the Disciplined Investor podcast. This episode of The Disciplined Investor is sponsored by Horowits & Company. If you're looking for a portfolio manager, look no further. Horowits & Company. From seed through harvest, cultivating financial success. The walls are coming down. The house of cards exposed. We have economic data, by the way. Late, but we got it. And that concludes the last full week of trading for 2025. And our guest today is Robbie Miles, CEO of Live and Let Live. He's back. All this and much more on episode number 952 of the Disciplined Investor podcast. Wishing you and everyone you know a wonderful holiday. No matter what you celebrate or not. Maybe you do, maybe you don't. Basically, this is a time in the holiday season that we spend time with friends and family and we uh have those arguments and that fun. We talk about things like what's going on in the world and of course we talk about money and some of the things we're going to talk about today as well. Some of the things that happened over the last week and some of the things we think are going to be seen in the future. And we do have something to talk about because last week we did see that inflation is well less than anticipated. Magically, magically. It's a Christmas miracle. I tell you, they did some fancy averaging over the September to November period. And out came miraculously a November uh in November the um October CPI which is missing and the the the November core which is 2% on a month-over-month basis that's annualized at 2.4 still above the level that was concern of 2% and then the November core CPI on a year-over-year basis was 2.6% and that was versus an estimated 3.0%. So markets after a day on Wednesday, which we'll get to in a second, imploded on a lot of news that was very concerning. And when those people that are fundamentally driven look at the numbers, what we saw in the news on Wednesday, they say, "Wait a second." You know, earnings are the mother's milk of the markets. But yet on Thursday, we have all sorts of excitement and a rebound. basically recapturing most if not all of the losses from Wednesday due to the fact that we had a rather benign inflation number. So you have the economists the top down that are freaking out for a while there. Now they're coming back and saying well things are okay. We had the bottoms up that had a little bit of pain after a long time of saying things are really good. the fundamental side of things is actually confused. Not to mention that technically charts are still looking okay. We saw a little bit of a reaction to the downside inside of a longerterm bull market which keeps and holds the thesis that we are in an uptrend. So technically we're in an uptrend with a little bit of a dipsy doodle as my friend John C. D'vorak would say fundamentally two sides of that from a top- down approach. We have some things that are concerning. We have the employment situation, the slowdown in manufacturing and services. We have the concern about what's happening um with the sticky elevated inflation numbers. But on a bottoms up, all of a sudden we were really pretty satisfied with the earnings beats that we saw. We saw that Faxet came out with what 78% of earnings uh were ahead of for the S&P 500 ahead of analyst expectations for last quarter. We're seeing double digit year-over-year gains in in growth. So things are pretty good. And then all of a sudden we have a lot of this coming out that's pretty outstanding with capex expenditures. And we're going to talk about that and what the real story was. What happened on Wednesday, we've got to get to House of Cards. We called it maybe. Well, if you've been listening, I've been moaning. I I've been I've been groaning about this whole Oracle situation, which seems to be like forever. It's probably been the last four or five months. Definitely the last four months. They have definitely pumped up and now dumped the AI trade. Now, not in all areas, but pretty much the most speculative side of the entire AI trade was really put to rest recently as some of the new and improved numbers and realities came out from many companies and in particular the OpenAI commitments and Oracle with their loans, etc. But new out this week was some really concerning information about the postconference call, the post earnings call and um management had a lot to talk about. But after that, a day after there was a debt and financial commitments uh note put out, levels that were not even on the balance sheet as of the last update. And the question then was, wait, what are they trying to hide? Why is it that we have this enormous number of lease payments, this enormous number of um debt that was after the earnings announcement and after the conference call trying to put that out of the hands of investors and analysts and things got a little bit uh chunky right there. So the question is again, what are they trying to hide? And now that some of the financing is in question for Oracle's Michigan data center, there was a natural fallout. Now, fast forward a day after all that information came out about Blue Owl, which is a very, let's say, concerning lender, private debt type of company. Many are saying that well the markets misinterpreted that. That wasn't like a last minute thing at 3:45 p.m. on on Wednesday. This is an early day look at what is going on and the commitments that uh Blue Owl is possibly pulling out of this particular financing and Oracle will have to go somewhere else to get the financing and okay, Oracle has plenty of places to get it. But the question then remained again, why is this happening? Now, maybe it's because Blue Owl has her own trouble as we saw, but something is definitely a little bit off. And what that really is doing is evaporating the credibility of the entire money spend with AI, artificial intelligence, and the buildout of the data centers via capex that has been underpinning the AI trade and the tech trade for however long it's been. So where do we go from here? So some of the errors come out of the markets and in general we look at the S&P 500 with 38% of the S&P 500 being the you know the top 10 stocks and I don't know 65% of the NASDAQ 100 and that's why that got hurt on that Wednesday with again to come back at the end of the week to a degree. So, I think that we have a little bit of concern that's probably going to be in a lot of people's minds. Many don't want to sell by the end of the year because they'll have the capital gains on the growth that they had, which was been extraordinary on many of these names, maybe waiting into January. Something to think about. But this is still a long way to go with this technology and we still don't know the true potential of how it will be actually monetized. I think we're entering the next phase of this trade. And that goes from enthusiasm and excitement and just unrestrained and unbridled uh bullishness to a dose of reality. So I think that's a major part of where we are right now is that we're in an inflection point of people trying to understand where all this money is going to and do they want to continue chasing this particular trade if in fact there are some holes in the in in in the in the dam. And is is Oracle a canary in the coal mine, a one off, or is it the entirety of what's going on? And that's something that investors are going to have to deal with moving forward. Now, next up, before we dive into a discussion today uh any further, I want to take a moment to to zoom out a little bit. I wanted to think about decades and bubbles and crashes and recoveries and everything else in between because one thing has remained constant through all this. It it's the wisdom of those who've studied money and looked at behavior, behavioral finance and have been kneede in the markets long before any of us. and and I wanted to I pulled out a bunch of I would call them what timeless financial quotes and and and and sage advice on investing. They're short, but I thought it was ending towards the end of we're getting towards the end of the year here and through the holiday season. It would be good to go through these because these aren't just clever lines. What these are are battle tested principles that are forged through the experience and success and a lot of mistakes that go into this. So, let's kick things off with a few of these quotes, the kind that remind me of why we stay disciplined and thoughtful and informed and why that always pays dividends. So, uh, first up, you got to talk about, uh, what would Warren Buffett say, right? I want to talk about this one. He says, "Be fearful when others are greedy and greedy when others are fearful." That's kind of the blood in the streets discussion, right? Buy when there's blood in the streets, which he's done over the years. Remember during the financial crisis when Goldman Sachs was going under and he and he and he issued a $5 billion note bailout basically to them at some at that time exorbitant rate. Everybody's like, "What? How is that going to happen? And he made his money back and did really well with it. Now, that item there that buy when there's blood in the streets or be greedy when others are fearful, that's always a question, right? Because markets can extend a lot longer. Markets can move a lot lower for a period of time and it can move a lot higher for a period of time. So if you're fearful when others are greedy, maybe you get out too soon. When you're greedy when others are fearful, maybe you get in too soon. And that brings us to what John Mayor Keys would say, KEES would say, the market can stay irrational longer than you can stay stay solvent. If in fact we are in a situation where markets are seemingly, you know, up up up and you decide you want to short that market and all of a sudden it continues up another 20 30%. That's not going to look good on paper, is it? And you may in fact get blown out of a position, forced to cover, and that is going to uh maybe uh take its toll on your portfolio. And going back, there's a few of these from there's like two or three of these that I picked up from Warren Buffett. Risk comes from not knowing what you're doing. Not knowing that in fact things can go against you in the wrong way is a risky proposition. If you know what your limits are, what your ranges are, if you know in fact where your risk tolerance lies and what your greatest out-of- pocket loss may be, risk could be averted to a degree or at least lessened. Then we got Benjamin Graham saying buy not on optimism but on arithmetic talking about in a way of course the greatest value investor of all time right wrote the book on it value investing understanding the fundamentals and not necessarily the momo. Now we would have some kickback on this from our momentum traders right we have plenty of those that have been on the show over the years. the idea that you want to, you know, get on that train and ride it for as long as you can. Get off when things aren't looking good. Plenty of people I've talked to over the years that have this advice for you. But what we're talking about here is looking at the arithmetic, looking at the underlying, picking up the hood, checking out the engine, seeing if that car is sound, and then making a decision to buy it. Not just seeing it in the street that it's all pretty, looking good, and everybody's swarming around it. Maybe the engine is dead. And by the way, that comment that I made about the time to buy is when there's blood in the streets is actually been associated with Baron Rothschild. Now, there's another one. Formal education will make you a a living, but self-education will make you a fortune. Jim Ran. Self-education. That's what we're doing here. That's what we're doing on this podcast each and every week. We're getting disciplined. We're learning. We're learning from the best investors that are out there. We're talking it through. We're understanding it. We're making commitments. We're then acting upon them and then staying in the course. Keep educating yourself at all times. Sometimes the best is a self-education and a self-education sometimes making may may mean making mistakes. Sometimes the best education is a mistake that you won't do again. Something to think about and I think something to live by. So, what else do we got here? Um, Phil Fischer, the stock market is filled with individuals who know the price of everything but the value of nothing. Think about that. They know the price of everything but the value of nothing. Back to what we'd say that we'd have some of the greatest value players out there, right? some of the players that look at that like a Benjamin Graham looking at understanding what the value actually is and then you have things like what what what the great van great late John Bogle from Vanguard would talk about time is your friend impulse is your enemy so this is there's a lot of themes that are building upon each other here the idea that impulse or the shiny car the new shiny penny the momentum play you know what's what's what's happening here and now versus time in the market, not timing the market. Underlying fundamentals matter. The economic backdrop matters. Not always. There are times it doesn't. And it seems like over the last number of years with the Fed intervening on a regular basis and stimulus coming out of every single area of the government that it doesn't really matter as much when capex from these companies is so exorbitant that nobody cares about any of the other things that are going on. But you know what you talk about understanding what you have and understanding what you want and what understanding the stock that's out there. Peter Lynch would say behind every stock is a company and find out what it's doing. These are the people who talked about, you know, buy what you know. Think about all the things that you know. And sometimes, take a moment. I'll give you a little advice here. Something I want you to think about. Sometimes you don't think about what you know that could be a really great opportunity. If you loved early days Starbucks or you say maybe you were the first with an Apple iPhone or maybe you think about, well, you know what? uh I'm changing over to uh you know Direct TV from Comcast or yeah whatever's going on and think about the things that maybe aren't so obvious as opportunities. There's something think about how maybe you know you prefer Uber over Lyft and maybe a lot of people are talking about that. So there's a lot of different ways to get to the same place and sometimes in investing what is comfortable is rarely profitable Rob or not. He talked about that Robert Oda he said you know maybe it's not the most comfortable being in something but it is going to be possibly uh the opposite would be uh more more profitable and that really deals with a risk and stand deviation and risk return profile. But these are the things um that we look at when we talk about our money because money is a terrible master but an excellent servant. PT Barnum. And uh I think when we sum all this up, it's all about risk. Warren Buffett talks about that. Warren Buffett talks about the stock market as a device for transferring money from the impatient to the patient. Again, time in like we talked about John Bogle, time is your friend. talk about the the idea of you maybe uh self-educating and also at the same time uh looking at the the value of something or looking at what the company does like Peter Lynch find out what the stock is doing or Warren Buffett you know risk comes from not knowing what you're doing but understanding what more about what there is so all these things I think come together in a really nice tidy type of way of thinking of things by the greats. And I think these are things that we could really utilize uh in our best efforts to make sure that we are doing what we can to become and stay disciplined investors. Now, before we get to our guest, Robbie Miles, this is an interview, by the way, that we did about I guess about a month and a half ago, and it's been something that we've been trying to get on because we've had so many guests and we were backed up and we had some that were scheduled. And this is really interesting. You're going to love it because some of the things he talked about are actually coming uh not only true, but I mean, wait till you hear some of the things he's talked about. Pretty cool. And the rationale of where it's going. So, I'm going to I'm going to keep you in suspense of that. I think it's going to be really interesting. But I want to talk about interactive brokers because investing is seeing the bigger picture. But sometimes the connections between all aren't so obvious. We talked about that a minute ago. That's why Interactive Brokers created connections. With connections, you could explore related stocks and ETFs, futures, options, and even forecast contracts all in one place. Discover trends, compare companies, and uncover the opportunities that are there across 160 global markets. You know, the best informed investors choose Interactive Brokers. Interactive Brokers is a member of SIPC. The risk of loss in online trading of stock, options, and futures can be substantial. Learn more about all of this at ibkr.com/connections. Now, going to tee this up a little bit. Robbie Miles, he was a portfolio manager for many years. um he's now the CEO of Live and Let Live. We'll talk about that and have him explain about that because it's it's about uh a big picture, but also we get into a discussion um and I ask a lot of questions and I have a lot of things on the docket to talk about with regard to um where things are going whe whether it's about technology, whether it's about bonds, whether it's about uh more broadly and and and and I have to ask about the whole sustainable issue the ESG because that's something that he was very much involved with for a while. So, let's get right to it. And our guest today is Robbie Miles. And uh well, instead of me doing the introduction today, I thought I would let him do it since he's at a new position. Robbie, how are you all the way from Hawaii? >> Hey. Hey, Andre. Yeah, I don't sound like it, but I am in Hawaii. >> Yeah. >> Yeah. It's great to be on again. >> We could have the uh Tiny Bubbles music uh Don Ho play in the background. Tell me now, I know you have left your position. You used to be with Alons and you were in charge of the um the the sustainable portfolios there. Uh you're now a CEO at a nonprofit called Live and Let Live. Tell me about that. >> Yeah, Live and Let is a reconciliatory force in the world. I was invited to run it by the guy who founded it, Mark Victor, and it was the biggest compliment anyone's ever paid me. I so believe in this mission to reconcile the differences of a very polarized society around one thing. Well, I guess two things. One thing being don't aggress. No one wants to be a victim of a crime, so let's agree on that. And then the other is let's treat each other well, but not because we're forced to, but because it's the right thing to do. And that is a a universal philosophy that's been in that's featured in every religion. It's the golden rule. And we've codified that first part don't aggress quite carefully to to say which bits are clearly an aggression and which bits are clearly unclear. Um you know many many issues in the law are continuum problems. So we shouldn't fight about an absolute right answer. But just recognize that reasonable minds disagree. That's the that's that's the path to peace. Uh we need to tolerate differences if we're going to co-inhabit a peaceful world. And I think we need to co-inhabit a peaceful world because the world is getting more complex. Um it's it's the complexity is stacking on it on itself and there are some big um kind of scary challenges. I'm I'm generally an optimist. I think we'll face these challenges well. But we can't ignore that there is a global aspect to our community. Now someone can cause a risk in a farway country that affects us even if we have a totally different set of rules over here. Um, so, so we need to think about reconciling globally around something that is universally simple like don't aggress. >> Okay, I got that. That's a big that's big. That's that that's that's all-encompassing. What are the crimes? What are the things? What are the areas that you're would be focus Give me an example of something. >> Yeah. Yeah. So, a good example of something, if I was to smoke a joint, um, put, you know, some some marijuana in my body, that might be bad for me. We might even agree that's immoral. It might be a bad use of my brain, but there's no victim. I I'm doing that to myself. So, to lock me in jail for that would be an initiation of aggression. So, it's the people that that lock up people for victimless crimes that are initiating the aggression. So, we need to stop uh doing that. We need to stop punishing people where there are no victims. And there are there are hundreds of these examples. Another good example might be if if um if Bob and Bill want to contract to work for each other and Bob offers Bill $10 an hour and Bill's happy to pay that, but that $10 an hour is below the minimum wage threshold. Who who if you're going to come if a third party comes in to punish those people, it's the third party that's aggressing, not Bob and Bill. Um >> so both these both these by the way sound like less government to me. Those those two examples. >> Yeah. So this is where um a lot of us did did have some sort of a libertarian background, but we're really different to libertarians in in a few ways. One of them is that libertarians are orientated to freedom and we're orientated to peace. So the freedom part is the don't aggress. We voluntarily add be an excellent human or kind of be decent to each other because it's really important if we're going to get rid of the social welfare system because it's based on coercion. What are we going to replace it with? Are we going to replace it with independent people silos with, you know, armed fences saying don't tread on me or are we going to replace it with voluntary kindness? We're we're pretty clear that it has to be the latter if if this is ever going to be appealing to people. Um, so in some ways what what our main focus is is creating a community of people that are demonstrating this voluntary kindness, elevating each other, enjoying each other's friendship. >> And again, this is this is big. This is a big it seems almost too large for me to consume right now. So I'm I'm going to try to continue breaking this down a little bit. Um, it doesn't necessarily revolve around a particular item social social or or country. uh or social e socioeconomic. I it's it's it's um it sounds like it's item for item, you know, what things can we do to make I mean the old world a better place obviously that's that's something big, you know. Uh but but is there a particular is there something that you pick up on that you are currently working on? Uh and then who does the financing? This is a charitable organization. I'm assuming you have a portfolio that you run there too to keep the charitable fun uh funds active so there's more in the future right so uh let's start with the first question is what what particular item are you focused in on now and then we can talk about um you know areas that you know how the operation works >> you're definitely right to identify that this is a huge mission our our motto is aim high fall short do well so the the goal is is world peace and we'll fall short of that. But if we can move the world to a more free, prosperous, and peaceful place, then we've done our job, even if it's slightly incremental. Our our focus at the moment is f is identifying those areas that reasonable minds disagree on. And those are going to be topics that we're not going to concede that our position is is wrong. You know, there there are many many hot hot button issues in the US right now. Um, for example, I'm kind of hesitant to talk about it because it's so divisive, but abortion that there are extremely strong views on either side about the the right of choice for the mother and the protection of the life of the baby. And it's it's going to be pretty unlikely that either side ever reaches agreement with the other person. the the person who is pro-life is never going to be pro-choice. The question is, can we tolerate each other's views? Because if we can't tolerate each other's views, then we have what we have today, which is an endless cycle of lawfare where the red party comes in, imposes their morality on the blue party, who then come in and do the same. And we're stuck in this cycle forever, and the law gets ever more complex. >> But aren't we aren't we aren't we stuck in a cycle? And it's it's, you know, you would have to break the back of religion. I'm not talking about just abortion because my god is better than your god has been a a a a a fighting point since since when since ever, right? Isn't that always been the case? You know, my team's better than your team. Uh we we we we we gather around and that has to do with the same thing with with all sorts of things. Doesn't have to be just religion, right? It can be a lot of different fundamental values and people get uh like they feel good holding on to certain things and threatened by people that want that have an opposing view. >> Totally. Yeah. And so we need to recognize that that threat that threat um can be solved by by letting local communities decide. So if if one is again if one is pro-life, one can live in a pro-life community and and everyone around that community can agree that that pro-life is the right answer. They don't have to even um concede that they they might be wrong on that, but they have to tolerate they have to recognize that other people do disagree and and tolerate that tolerate their views if we're going to stop the end of cycle of warfare. And I reckon I I take that as a good trade because if we don't do that, it's not like everyone's going to be pro-life anyway. You know, it's not like it's not like you're by by kind of entrenching ourselves in our righteous positions, we're going to actually solve anything. But we can continue chipping away and trying to change minds. But on the religion thing, the I think at the heart of every religion is love. And it's um in in Christianity, it's love thy neighbor as thyself. But but that kind of golden rule does feature in all the major religions. So if we can recognize that common thread of religion, then we don't have to decide which one is right. Again, we can I can I could be a seek and be devout seek um and and never be convinced by um daoism, but but and same same with the dowist can be all in on Daoism, but as long as we can agree not to aggress against each other, then we can co-inhabit the world peacefully. And that's really the key. And there are nine forms of aggressing um which we we probably is too much detail but um if anyone's interested uh www.3l.org has a bit more information. And then on on the investing side luckily we've got a very generous founder Mark Victor who's currently donating enough for me to work full-time on it. Um, and I'm trying to avoid the temptation of getting too sucked into markets because I'm totally addicted to looking at markets and I love it. But, um, as you say, it's a big project I'm working on now and I'm I'm trying to focus on the big project. >> So, you but you get So, so are you managing the portfolio for the charity at all or or uh just your own stuff these days? >> Just my own stuff. And what I'm trying to do is demonstrate these community values by basically just sharing my trades on a on our membership platform for free. So that it's it's basically like, you know, many many people offer a newsletter. I'm just offering mine for free. >> All right. So, but you're but you're still in the thick of things there. you're still you're still I mean you're working like everybody else does but you're still in things with um you know producing information and doing the research in the areas that you need to to make appropriate decision making on uh a trade or not a trade or sector you're following things closely. Yeah, I mean I was I was very I was all in. I mean I had a huge imposter syndrome as a portfolio manager. So I worked extremely hard and that only finished in June. And so naturally there's a an afterglow of um insight that that's that I'm making the most of. But I would guess that that slightly dims over time as I as I focus more on um on the project of of telling the story of why I live and let live. And then you hire people like me to manage your money. So anyway, but let's talk about uh let's talk about some of the things that you did observe recently with regard to the markets because you wrote me an an email. We talked about a variety of things and um you you you have been a reluctant bull which I by by the way I don't think you're alone there. I think that most people out there are I don't care if you're professional or you're an amateur or you're just following along. people have the sense that you know um I'll go along with this because you can't uh go against this trend is so strong but at the same time I may not like it. We've seen this before in many different areas. The most hated bull market in the world was like back in 200 uh was called 10 2011. I mean it was like no this can't be the case. It can't be coming back. Same thing with with with the postcoavid but what did you see differently this time? >> I I always break it down into different fractal layers and the biggest fractal layer the kind of long the mega history is always one of improvement. So to be bearish is really to not to be bearish permanently is to not understand the trajectory of history. things things do seem to get better. And then this the one level down from that is almost like I would call it like the tide. Which way is the tide going? And and there I'm a bit more cautious. The tide seems to be indicating that we have some structural problems, some some structural addiction to money printing. And right now that addiction is is kind of helping risk assets as liquidity improves. um the US dollar has been weak helping liquidity and interest rates have not been so high that they are debilitating. So it's in some ways a bit of a Goldilocks period now where um it's the Austrian economists see it as a crackup boom. But I would say that right now some of the indicators point more towards a disinflation rather than um inflation increasing or even staying stable at these higher levels. >> May may I interrupt? Is that focused on the US or is it the world? Where are we talking? I'm usually focused on the US, okay, but um I think that they kind of lead the world. So >> in the US, the housing market seems like it might be showing some signs of stagnation. And then wages, particularly in service areas, have been increasing but but at a decreasing rate. And then the third pillar of of what causes inflation would be the underlying commodities. And the oil price at $64 is not it's not particularly inflationary. That's a decline year-over-year. So, I would say that all of that's pointing towards a slowing down of inflation, which could give way to disinflation. Deflation is a big a big word, so I'm not going to go that far. But generally, I would say that I observe this kind of reflation narrative to be very strong right now. And I think that's also underpinned by huge optimism in AI and I share the u belief in some of those long-term promises of what AI might might bring to the world. But I then layer on this uh basically behavioral analysis. And to me it seems that the bullishness is a little bit over its skis and and if we do start to see this disinflation then I think um actually bonds would be a more attractive place to be than equities. Even though long term I think there could be some irony in calling it the risk-free rate and treasuries. You know I could yeah >> let let's I'm going to switch this up for a second. I'm going to do a hard right turn here. I am going to do a uh from where we are and and and where the markets look right now because I want to come back to that in a minute, but I want to do a post-mortem of you running money at a major firm. Can we do that for a second? >> I'd love to. Yeah. >> So, you were running I when we first met you were running well first it was my concept was ESGish, right? that conceptually of ESG based analysis research uh pool of assets but you're al so it was more sustainability right which I don't know if there's a difference in that much but um can we take me back to some of the research you were doing back then because that was very hot for a while because people were like well okay this is a great little tool to use and by the way the way I got to you let me just give you this one more point I attended years and years and years ago, I think I don't even know it was it was it was years before it became popular, a a luncheon that I was invited to because I was kind of intrigued with this whole ESG thing like what is this about? I let me I need to understand it better and was invited to this uh portfolio managers and I had lunch uh and we talked about um you know the idea of using a an ESGbased process because the research has shown that ESG companies that do environment and social and governance and all this other stuff they have better ways of they're better better run company essentially right they have better values the whole and in the the mark the stocks do better. That that was the concept initially and I was like okay. But then I found out that a lot of these companies were developing these ESG indices and then selling them and then it was kind of being fed on by the people that were reinvesting in the ETFs, the indices, uh the passive investors. Uh but but and then it kind of blew up a little bit with like is this really this is just crap. I mean that's what a lot of people ended up saying about a lot of this. All right, I'm going to throw it all back to you. give me some thoughts on all that. >> Yeah, Andrew, I I feel so grateful for the last 11 years of of working in investment management because to me it's like being in the crow's nest of the global economy and you're looking out o over all the things that matter to people's lives uh and they just show up as numbers on a screen. to try and form internal imagery that that brings together all those numbers and paints a scene of where we're are where we're at and how to allocate capital accordingly has been such a a joy. But I would say that the the sustainable investing story or theme has been um bumpy. I when I first started out, I was very much bought into this idea that if you increase your awareness of pretty much any topic, you're likely to have more useful in inputs that improve your ability to respond appropriately. And sustainable investing really means looking at issues that don't show up so clearly on a profit and loss or a balance sheet. Things like um employee satisfaction. I I find things like glass door reviews really useful both as a stock picker and as a a consumer of products in the market if there's a company with miserable employees. I'm I'm kind of minded to expect a miserable service. Um and and similarly a miserable stock price. Um there's a company called EquaBridge which is looking at the reputation of the of businesses in the minds of the customers that use them. And I think those kind of data points again they don't show up on a profit and loss but that's that's extremely valuable. Um so I always like those alternative uh inputs to broaden out a holistic investment case. But I think where sustainable investing's gone wrong is the myth that morality shapes your stock price performance. It's it's somewhat true sometimes, but if I say that I don't like fossil fuels and therefore I exclude them from my portfolio and I think my portfolio is going to go up, there's some there's some um errors there in the logical thinking because just because you don't like fossil fuels doesn't mean people aren't going to use them. I mean, the UK at the moment isn't isn't using any of its own fossil fuels or very little and it's importing fossil fuels from basically enemies. I mean, it's it's totally ridiculous. And it's all stemming from the this idea that fossil fuels are evil, but somehow if we if we just ignore them or get them from other people and rather them get them ourselves, that should solve the problem. And it it's kind of like a child putting their hands in front of their face and and now assuming that no one can see them. >> Yeah. hand in their ears and saying la I don't hear anything. Right? So, right, >> but the thing that's the funniest part of it is that the manipulation of the process. So, therefore, you have these certain uh scores, let's call it, that went into the input to figure out if this company gets a nine ESG score, right? You follow me? And so, what do you do? Well, we're polluters. We're ter but we're buying carbon credits, so we net that out. I was like, "Wait, wait, but you're still polluting, right? This whole idea of of of I guess it's called greenwashing. That's what they called it in the end." Because I questioned this from the beginning. I'm like, I don't understand. You have all these things going on in the in the company. They know what it takes to get into that index. They're smarter than all these other people. They'll figure out a way to financially engineer, buy carbon credits, do something to offset somehow to make it look like so they can fit themselves in in order to get themsel in there so they can ride the wave. That's what happened in the end, didn't it? >> Yeah. And and also I think this is a great allegory in general of why regulations tend to bolt the gate after the horse has has left um shut the gate after the horse has bolted because early on again we had this recognition that more awareness of more inputs should eventually with with passed through should lead to better results but of course then other copycats jumped on the bandwagon and said oh we're sustainable too just like you know I'm Brian too from life of Brian every everyone was sustainable suddenly they >> and and actually of course they weren't they were just chasing the gravy and and so the regulator then comes in and says okay there's clearly people who are being disingenuous with this stuff so we're going to mandate what it means to be sustainable investing and and of course like they've just they've just been focusing on some other random policy in healthcare or education and suddenly they suddenly they're now all all knowledgeable on sustainable investing except of course they're not and now the whole industry the innovators and the lagger guards are all required to focus on the regulators way of doing sustainable investing. And that's where it got really ridiculous. Like you know, we found one of the most sustainable turbine companies in the world. People are going to use turbines even if you don't like fossil fuels. And we weren't allowed to invest in them. Uh even though that was directly channeling capital to companies that were really pushing forward human efficiency. Uh and there were many examples of really great sustainable sustainable companies that we could no longer invest in because of very arbitrary broadbrush policies uh that we had to comply with to basically stay out of being fined or you know worse. Uh and that's where the the industry got very unappealing. >> Not to mention what it actually cost companies. I have people that I know that are are in management of publicly and private but publicly traded companies and private. They have put had to put in so many strange uh human relations, HR, people uh people related oversight and certain people of various backgrounds into the firm whether they liked it or not. certain amount of women, certain amount of men, certain amount of people of color, certain people, it it was absurd. And the management of that because those people who came to the firm as a required part of the inclusion into the various sustainability indices uh they knew it and basically took advantage of it while so I think actually in the end crazy this is my thought. Uh, you may disagree. I'm not saying it was a good thing. This is not a good thing. So, so just bear with me. I think it actually cost companies more money than it was really thought to in the beginning because companies ended up backing into it rather than just getting what it was in order to as we said and um, you know, in the end I think that everybody realized this and I don't know where that is and there's probably people look there's there's no vice funds out there. There are funds that say, you know what, you can't have uh Rick's cabaret. You can't have uh um alcohol, tobacco, marijuana stocks. There's funds that do that and maybe they're successful, right? It's possible. I'm not saying they're not. But as an investor, Robbie, do you think now that we should limit Would you limit yourself today? Today, would you limit yourself to buy not buying that turbine company? >> Absolutely not. No, I never wanted to limit myself. I I was always spending I mean even myself as an investor I felt a real obligation to my clients to deliver great performance. You know these were pension funds people that really depended on that money for a good retirement. I took it very seriously and to not be able to buy companies that I thought were going to go up and then watch them go up. Um, that would have been like, you know, some of these companies, my process was always trying to buy companies that were great for the investor and great for society. And the great for society one was just a very simple investment thesis that if it is great for society, people are going to demand it more. >> Well, of course. Right. Right. And so you have this um positive positive feedback loop. Um but in general the big problem with all of this stuff is trying to solve morality via the stock market. It doesn't work like that. If if something is >> backwards. >> Yeah. If something is again if something is aggressing we need to stop it via the law. And this is where you know allocating capital in the stock market is not going to stop pollution but laws that stop pollution would. So that's why I think sustainable investing has become worse than useless because it gives a false sense of security that these problems are being solved where they're absolutely not. Right? And >> it was bastard. It was bastardized in the name of making money. That's what it was in the end. It was all about making money like these companies are better because you'll make more money with them. It wasn't because oh you want to be with these companies because they're actually good companies because >> they're charitably inclined. They're good to their employees. you know, this whole laundry list of of real real things that may have been the things that were the original thesis behind all that. So, all right, we beat that to death, but I'm glad we we talked about that. Talk about the process. How do you find a company that is good for society? >> I had a Yeah, I had a framework that I was really proud of that basically saw energy as the foundation of all economic activity. So everything in this in in the economy is energy transformed. So that that process is three parts. You take the energy from from the environment in some way could be solar panels, wind turbines, nuclear, whatever. And then you convert the energy into some sort of a a useful thing via basically industrials and all those kind of companies. And then you have all the consumerf facing companies that is using that converted energy into some product that people want. It could be health care, could be, you know, food, water, that kind of stuff. So, seeing it as a as this life cycle, um, I then found 40 themes that that matched onto those three general areas and and tried to think about what what was enhancing the energy efficiency, like the the least amount of energy wasted between the harnessing and the use of that energy um, and maximize the benefit to the to the end consumer. And that that was really helpful in identifying what was uh what what which companies were were creating positive change. >> So I want to I want to talk about some of the things you sent me and in particular you you you said this. I'm going to quote you. It says investing is properly about fundamentals. Investing without fundamental analysis like getting Jack GBT to write your essay for you. It's possible but there's no substitute long-term for understanding how businesses work within their ecosystems. So, uh, let's break that down. Okay. Fundamentals, one of the most important parts in your opinion of finding a company that will have long-term profitability. Is that is that a true statement? >> Yeah. So, generally, I I was an investor that didn't like to identify as one particular type. So, just I'll definitely answer your question, but in some ways, this this focus on fundamentals is is like the Ben Graham approach. Um, it's a com combination of the Ben Graham approach and the Silicon Valley approach. which is like the value and the growth investor. Uh and then and then trying to find companies that that meet that what I synthesized it as and many people do quality growth at reasonable price was always what I was trying to find but >> Garp. >> Yeah. So I'll go into that. So quality it does include things like the governance you know is the is the agency risk between the management and the shareholders well checked by a chairman and a board who are actively trying to get the most out of that management team. But it also includes things like the historic returns, the margins. Again, I talked about equibage, the the employee and customer satisfaction and the overall competitive competitive advantage, the poris by forces, all that stuff. And then the the growth is this the second component of the fundamentals. And then it's basically an extrapolation of historic trends and um and and again whether it solves society's problems which is why I had that 40 themed thematic lens. And then the the final bit the the reasonable price. This is much more art than science. And this is where I think you have to have a macro framework. A lot of the a lot of the people I used to work with didn't like thinking about macro cuz it's very difficult and they thought it was a waste of time. But from my perspective, it's it's really important, even if you get it wrong, to try and figure out the macro backdrop because otherwise, what context is there for the valuations you're paying? You know, is is 30 times PE for Nvidia expensive or cheap? Well, it kind of sounds expensive, but then you compare it to everything else and the time we're in and you know, and if you have that >> and their growth and their growth potential. >> Exactly. Yeah. So looking context to the to the growth the PEG. >> Let me let me bring you back peg I love a PEG ratio by the way people if you haven't looked at PEG ratio as a tool because on TV on the radio everywhere you hear about well it has a 30 PE ratio which is a little bit higher than his peers which by the way means at Robbie back me on this means nothing >> true >> zero. >> Yeah. >> Uh you know you talk about somebody talks about a bank oh the bank's got an eight. I'm like we don't look at banks with PE ratios. uh we look maybe price to books or something of that nature but there's other things anyway the PEG ratio which is price earnings to growth if if if if actually uh Nvidia just has a number doesn't matter the number uh as an example 30 times forward PE but yet it has a 40 uh% growth rate over the next 5 years that's the estimate and actually is below one when you do the division growth versus the the um the PE and and actually makes it's cheap so anything under one is quote unqualor and overvalued is over one. >> Yeah. The third thing you have to factor in is the quality. So something like Costco always looks ridiculous on a peg. It's got like a peg of six or something. A peg of six you would just not touch with a barge pole. But then again, you would have historically been wrong to not touch it because people just love Costco and they're they're very willing to keep coming back to that company. and it's a safe haven in a recession. Um, so, so sometimes people I mean I'm not willing to pay six peg for Costco, but some people are and you know they've probably got it more right than me. But I would generally say a peg below two is interesting. A peg below one is compelling. Um, and and then the quality has to be layered on on top. >> Let's go back to this governance issue. So, you mentioned something that was really interesting and just flashed, not only flashed, it like it it it was a bang right to my head. You talked about, you know, is the chairman and the CEO, are they aligned? Are they doing the right thing for the company? So, back when we're looking at things like that as a top level, one of the uh one of the areas that we look at for uh sustainable investing, good investment opportunities, long-term, good for society, Tesla, uh they can't pass that. Yeah, Tesla's one of those things. So, there's annoyingly with with fundamentals, there's usually a rule to to prove the rule is not valid and it will all there's usually an exception to every rule. The Silicon Valley approach to stewardship, the Stanford University approach to stewardship is much more about empowering the CEO and I I sympathize with that. If you if you have a visionary CEO, you don't really want checks and balances to slow them down. You want them to be visionary and act on it. And and Tesla is one of those companies with in terrible corporate governance. But it's one of those companies that's going to work until it doesn't. And and when it doesn't, you look into the share pledging that Elon Musk has done, which can be very recursive on the way down into, you know, if the share price goes down such that Elon Musk has to sell his shares that he's collateral for loans, then that would put exacerbated pressure on the downward selling. and and that hasn't really we haven't seen that play out. >> Well, he doesn't let that happen. He makes sure that shares are propped up all the time somehow, >> right? Yeah. So, you know, we we never invested in Tesla, but I always respected the company and, you know, clearly was wrong not to invest. It was one of the best companies. We we got some other good ones. we we played in video better, but um the corporate governance was basically the reason that I did find it a bit difficult because he he just has so many friends on the board and and that's nice again and it's great. >> You're putting that very politely. Friends, yes, >> his brother. >> His brother. He's got a brother and everybody else who will do what he wants. Why not? They get make plenty of money by doing so. I wonder what actually a I got to look this up. what a Tesla uh board member makes per year. I mean, is it is it 500? You think? Yeah. Look that up. >> I've got no idea. >> It's got to be a lot of money and something you don't want to give up. Um let's kind of just sache over to um the area of macro. So one of the things about macro is for a long time many years ago many many years ago I was under the impression assumption belief that macroled macroled the economic conditions were such that uh we have to really put them into my calculus when it comes to do I want to buy the stock or stocks or the market or whatever this is how I'm going to create my portfolios my asset allocation my you know positioning in in equities, bonds, real estate, whatever. Uh lately, since when I say lately, since 2010, there seems to be less of a reason to do so because the amount of money that's being pumped into not only the United States, but countries around the world is such that it's it's it's masked the problems with with macro. How do we reconcile that today and utilize it or should we just throw it away and not even deal with it anymore? when it comes to our thinking >> I think we have to incorporate that pumping that liquidity pumping into the macro as as probably the most important macro component. Um, so I agree with you that macro leads. I would say if anything what leads macro is sentiment and and that's you know we we are a herd animal and and this is where I find technical iss if you look in the wild a herd of gazelle the time when they're most relaxed is when the lion is in the grass eyes fixed on the weakling and and ready to pounce and they just haven't seen it. That's then their peak relaxed. The time when they're most stressed out is actually when the lion is least dangerous. The the teeth are already into the weakling and uh they're not chasing anyone else, but the rest of the herd is still terrified. Um if you can start to be able to predict whether the herd, the human herd is generally complacent or fearful, that I think is the most important um thing to to get a sense of, which is why I like Elliot waves. And you can I I don't know whether there's any science to this, but I see Elliot waves in in macro indicators. Uh I see it in in even like liquidity charts, like global liquidity. Um so that's that's like an open-minded approach that may be completely debunkable, but um that that's that's the way I I looked at macros, just synthesizing all these things. Again, more is more was was my approach rather than kind of less is more. >> Yeah. I mean because there seems no end in sight by the way and the the idea of having debt I remember when we had uh Greece and the pigs right with uh what was it one point o over over 100% of GDP to debt debt to GDP I should say and it was like look at those guys they suck I've never invested money over there and now where are we right here in the United States and around the world it's interesting because Japan has now started to back off they actually talked about increasing interest rates once again and The Bank of Japan just just not too long ago talked about how they're going to stop or not stop not stopping uh the slowing the purchase of ETFs and reach in the market. So that's something of interest there. But the world has become addicted and and on this idea of uh of excessive amount of stimulus. In fact, company upon company upon company are doing it on their own these days. the the concept of circular and uh vendor financing. So, how great would it be, Robbie, if you and I you're in business and I give Well, we are, right? So, I give money to live and and let live and you give it back to me in the form of payment for advertising, let's just say, or whatever. Okay? No, better yet, I give you a million dollars. Okay? You give me back $250,000 a year for the next four years and I take the money off of my books and I put it as income. It looks good for the the world and then my stock price goes up. Not a bad deal, right? >> It's a good deal. Reminds me a bit of Nvidia and Open AI. >> Yeah. Microsoft and all the other companies that they put on to go onto the Azour and then uh Microsoft and and I mean Google and companies out there too. This is kind of what's going on. It's like I I explained it on a show recently. I said something like it's like eating your own arm and thinking it has nutritional value, >> which it does. >> You know what I mean? After a while, that's not going to work out so well. >> Yeah. So I don't know what your your stance is on that but that's something that's it's interesting what's going on in the world and that probably would have been identified under um one of your criteria it should be when it comes to quality of earnings right >> yeah exactly that that's where I would say that there's no substitute to understanding the business model and and there are those that go super deep on each company and and sometimes they can kind of pat themselves on the back for that but then there's all the companies they didn't look at. So that it's either quality or quantity or some combination of the two. I preferred a slightly shallower deep dive than some of my real deep diving peers so that I could look at more companies and try and triangulate the truth. >> Um so that's the quality is really a neverending thing. But just on your point with Japan, >> I think because of because of politicians not wanting to lose elections, there is a real aversion to recessions. But recessions do play a role. They they they clear out the dead uh the inefficient companies and then the the fresher companies that that are more resilient, more useful thrive and and come through. And if we are not going to if we're going to just prevent winter from ever coming and and just keep pumping all this money, we we'll eventually reach some intractable problems. The thing I worry about long term is actually when the commodity leg of the inflation stool does really start booming and we've seen gold and silver pointing to to that maybe happening. But at some point I I predict oil and gas will be at least double maybe triple what it is now in ter you So, if it's 65 now, I could see it well over $150 a barrel because not not immediately and I wouldn't I wouldn't wouldn't be surprised if it went lower first, but at some point we are you know there is a finite supply of oil and gas and as much as we wish we were moving away from it, we don't really have substitutes for things like air travel or or plastics from um you know not not cost efficiently. So that's when the Bank of Japan, like the the central banks in Japan and the rest of the world, they may want to raise interest rates. They may want us to do more quantitive tightening, but I I don't see a way for them to long term, which makes me very bearish on bond on government bonds long term and more more bullish on things like gold and silver. >> Yeah, good stuff. Well, all the way from Hawaii, Robbie Miles from Live and Let Live. I like to say mahalo. Robbie. >> Mahalo. >> Are you living there now, by the way? No, I'm living in PaloAlto. >> Oh, all right. Just a stone throw away, but coming to us today from Hawaii. That's great. That's good stuff. You know, we'll have all the information on live and let live uh over on the the the episode uh for this episode over on the discipline.com. Robbie, thanks for coming aboard. Appreciate it. >> Thanks so much, Andrew. Always a pleasure. >> Thanks. >> That was that was that was present. I mean, that was that was some great stuff right there talking about um not only the markets, but again going back and looking at the ESG and all that. Uh thanks for joining me this week. Uh, next week is going to be, I think, the uh the last episode of 2025. The last episode of 2025. So, that's something that we need to look uh at and say, wow, it's been an unbelievable year of great guests and great discussions. So, we are going to end it. And I'm going to tease you a little bit with the one of the greats. One of the greats coming on next week talking about the world of investing that also analyzes the greats on his own. Some of the the most famous people uh he's been involved. So we're going to tee it up for next week. Thanks for joining me this weekend and every week and I'll see you again real soon. This podcast is intended forformational purposes only and does not constitute personalized investment advice. Investing involves risk including the possible loss of principle and past performance is not indicative of future results. The views and opinions expressed are those of the host and any guests and may not necessarily reflect those of Horowits and Company Inc. an investment adviser registered with the US Securities and Exchange Commission. Registration with the SEC does not imply a certain level of training or skill. Advisory services are only offered to a client or prospective clients where Horo is a company is properly registered or is excluded from registration requirements. Any mention of thirdparty companies, products or services, is provided for informationational purposes only and does not constitute an endorsement. Hypothetical scenarios or forward-looking statements are for illustrated purposes and should not be viewed as guarantees. Content is intended for US residents only and may not be applicable in other jurisdictions. Listeners should consult a qualified financial advisor before making any investment decisions. Please visit our website for additional information disclosures as well as a copy of our form CS. Advertisements are not related to the host or affiliates and are not considered recommendations by the host of the show or any affiliates department. Heat.