Episodes

Dan Ferris:                 Hello and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin:    And I'm Corey McLaughlin, editor of the Stansberry Daily Digest. Today, we interview David Tice, partner of Moran Tice Capital Management.

Dan Ferris:                 David is actually an old friend. He's been around for many years and he is known more as a short seller than anything else. He started up the Prudent Bear Fund many years ago and just crushed it during the dot-com bust and in the years following and in the financial crisis. And now he has another short fund that he is associated with. It's run by some friends of his and we'll talk about that. And we also talk about his budding career as a film producer. And I saw the film. It's very good. I definitely highly recommend it. It addresses a very important topic. I won't give it away yet. You can listen to the interview. And he also runs a gold stock hedge fund. So, he's a very busy guy, very knowledgeable. And I just – I thought it was a great conversation. It was – I thought it was excellent.

Corey McLaughlin:    It was great. Yeah. Covered a lot. Very fun, given, given the subject matter. And he's a listener and viewer of the podcast. So, that was nice to find out too. He was ready for your final question.

Dan Ferris:                 Yeah. All right. Well then, let's get to it. Let's talk with David Tice. Let's do it right now.

                                    David, welcome to the show. Glad you could be here.

David Tice:                 So glad to be with you, Dan and Corey. Followed you guys for a long time. You're doing an outstanding service for your viewers and listeners.

Dan Ferris:                 Well, thank you.

Corey McLaughlin:    Thank you. Happy to have you.

Dan Ferris:                 I don't know what to say. I'm humbled. So, mostly, I want you to know, David, I know you reached out to us and I want you to know 95-or-more percent of the people who reach out to us, I say no because all they want to do is promote some little mining stock or something. And I just – that's my knee jerk reaction. I just take one look at them, I think about it for five seconds, and I say no. But when Porter forwarded me an e-mail and he said, "David Tice is looking for you" I thought "Oh, well, I want to talk to him. We know him. He's been around for quite a while." So, I guess the best place to start is what are you up to these days?

David Tice:                 So, I'm up to quite a lot, Dan, and I should say I've been a longtime Stansberry subscriber, lifetime, whatever it is that's called. Dan, I've followed your work for ages. I just love the fact you're a value investor who understands the way the world works and you guys tend to be somewhat bearishly inclined, especially lately.

                                    So, I'm really in my third career now. I have a couple side things in it. I am helping manage a bearish mutual fund, actually a bear ETF called Ranger Equity Bear. The symbol is HDGE. I'm also helping co-manage a gold equity hedge fund. But the biggest thing I've been doing is I started a film company called Paul Revere Films, and I've produced and directed an award winning documentary that has Dennis Quaid narrating it, talking about the vulnerability of our power grid. And I believe as a geopolitical student that our bad guys are out to potentially take down our critical civilian infrastructure and I'm very, very, very worried about that. And I'm converting this movie into a movement. And it's free on YouTube. It's called Grid Down, Power Up.

Dan Ferris:                 Yeah, I actually had a chance to look at it. And it's – I mean, it does what you intended to do, which is to kind of scare the crap out of the audience into wondering if they're ever going to be – I think at one point somebody mentioned 18 months without power or three months without power or something like that. So, you achieved your goal there. But it seems like the goal is really to inspire all kinds of folks. There was a lot toward the end of the film... there were a lot of – there were a few government folks in it. And the idea was contact your legislator and make them do something about this.

                                    I have to say I'm uncomfortable knowing that this is a problem that we think the government can fix because they're really bad at fixing things like that. But they built the highway system and other things, so I guess it is what it is. And the threat is to – is pretty massive. At one point, you said – I think it was nine, if nine substations go out, the whole grid can – or half the grid or something could be taken out. There are 55,000 substations. Nine of them go down... the whole thing goes down. That was pretty scary. I mean, you have to know which nine though, right? It's not any nine, right?

David Tice:                 Yeah, exactly. So, that's the good thing. So, that was actually a quote from a 60 Minutes story that appeared about two years ago. And the source of that was FERC, Federal Energy Regulatory Commission. And in fact, the FERC administrator got in trouble for pointing that out. And this was –

Dan Ferris:                 I bet.

David Tice:                 – in the aftermath of a substation attack that happened in Metcalf, California back in 2013, that fortunately we dodged a bullet. But there was – and frankly, that attack was covered up because they didn't want the American people to know about it.

Dan Ferris:                 OK. Was that the sniper attack or no?

David Tice:                 Yes. This was a – actually, it was a close range attack with AR-15s by seven or eight guys outside Silicon Valley.

Dan Ferris:                 Wow. Yeah. And I think – am I right? I just – I whipped through the film and I was doing other things, but am I right? You had – they had Navy SEALs and other people come in after the fact and said, "Yeah, it was a terrorist attack."

David Tice:                 Exactly.

Dan Ferris:                 I mean, whether it was a foreign government or – we have no idea, but it was – some group decided to take out that part of the grid or something for whatever reason.

David Tice:                 Exactly.

Dan Ferris:                 Near Silicon Valley. Yeah. Which is a fairly important spot in the United States.

David Tice:                 So, to your point, Dan, about – I agree, getting government to fix things is not the best answer and we need free enterprise solutions. Frankly, the utilities ought to be doing more but there needs to be some regulatory pressure such that the utilities are confident that they get full reimbursement, such that they can spend money. And the utilities suffer from this pressure from consumer groups to try to keep rates down. But this is money that we have to spend. And frankly, to protect the grid, as an example, against E3 current, not to get too far into the weeds, but it would only cost about $4 billion nationally.

Dan Ferris:                 $4 billion nationally doesn't sound like a lot of money.

Corey McLaughlin:    No. Yeah, that was one of the things that struck me that – when you're talking about the cost of potential solutions there, given the amount of money we're already spending, it doesn't seem like it's – it would be money well spent to actually – to do this. And I want to thank you for putting out that movie too. I watched it too. And actually a couple of days – I told Dan before we started here a couple of days ago, I actually bought a mobile power station myself that can connect to solar because I have two kids now, little kids. And I'm like "If the grid goes out or power goes out for any extended period of time," which you point out, it can happen in several different ways, "we're in trouble."

David Tice:                 We're not only in trouble, the most number of people, most number of American lives that we've lost in U.S. history was about 12,000 in Galveston, a hurricane. And we lost 2000 in 9/11. And those are considered massive, massive tragedies. We're talking about potentially losing 250 million people. And this is not hyperbole. This came from the congressionally mandated EMP commission.

                                    And so, just think about it. If the power grid goes out for an extended period of time, you don't have Texas able to help out Louisiana, as an example, if it's nationwide. We'd have to count on France. And frankly, we have – we would have tens of millions of people dying from starvation and water deprivation. The human being needs water every three days. And if our municipal water systems are out and you don't have a barrel of rainwater in your backyard, I mean, you're looking at dying fairly quickly.

Dan Ferris:                 Yeah, I don't want to die fairly quickly. When I got to the end of this film, I thought "This is a tough problem" because you mentioned free enterprise, and the utility industry is not exactly a bastion of free enterprise and ratepayers, consumers like it that way. If they really had to pay for the real cost of all these upgrades that need to happen, they wouldn't like it at all. They'd be paying more.

                                    And so, I think that's how we wind up here is that the typical thing is you give a utility company a monopoly in a particular area, and then the government says, "You're limited to a 12% rate of return and that's it. And you have to get all your rate increases approved." And so, they can't really price to the market... they have to price to this construct. And I think this vulnerability that you describe in the film, I think it's part of that. And the general state of infrastructure in the United States, which we know that the Engineer Society is always telling us we're a D. The grade is A, B, C, D, E, F, and they're always telling us we're a D. And so, this has come home to roost, I believe. I believe that's a big part of the problem. So, not an easy solution because nobody wants to change that setup.

David Tice:                 That's exactly right, Dan. And just to give your viewers a real quick couple of data points to show this isn't science fiction, we have a four-star general, General John Hyten, who is the prior Vice Chairman of the Joint Chiefs of Staff. One of the threats in the film we talk about is an electromagnetic pulse attack, an EMP. And he said, "This is the real deal. It would shut out lights and infrastructure across the country. And we in the Defense Department are prepared against this because we protect our command control centers and our missile systems, but critical civilian infrastructure, –

Dan Ferris:                 And satellites.

David Tice:                 – not so much."

                                    And then the other data point is Senator Angus King and also current Secretary of Energy Jennifer Granholm both said our adversaries are currently already in the grid from a cyber-attack standpoint with malware or Trojan horse software. And Jennifer Granholm said our adversaries could shut down our grid.

Dan Ferris:                 Yeah, I remember that moment. That was – that's a scary moment. The other thing that freaked me out was when you described in the film the potential detonation of a nuclear device way high up in the atmosphere. You might not even know it went off, but then it would send a pulse straight down that would shut down basically everything electric. That freaked me out a little bit, the thought of a nuclear device being detonated in the upper atmosphere. Let's hope nobody is really thinking about doing any of this. I have to believe if they really wanted to do something, they would go through the cyber route because it's not hot warfare, right? You just basically press a button and you shut down Texas or whatever.

David Tice:                 Our film talks about four threats and you mentioned a couple of them. One is cyber-attack. We mentioned physical attack. Third is an electromagnetic disturbance or an EMP. And then, the fourth is actually coming from Mother Nature, a solar storm or a geomagnetic disturbance. All those could knock out the grid potentially nationwide. And in terms of – this is all fixable too, and therefore that's why we need – every listener to your program, if they would go to YouTube, watch the movie for free. It's won awards. We have Dennis Quaid narrating it. We actually end with a happy ending, but we need to get off our keister and do something about it to provide that happy ending. Then tell your friends about it. But we need to fix this.

Dan Ferris:                 Yeah. There is – I take a little bit of hope maybe – it might be misplaced, but of course power generation stocks have been screaming and the narrative is AI, and that's what the power generation companies are telling us, so we don't have any reason to believe otherwise. It hasn't filtered as much through to the utilities but you can see some of the action there too. So, if they really are making more money, maybe, maybe there's a chance that they'll invest some of it in keeping their – keeping the infrastructure safe and protecting against – especially EMP. That's the scary one, right? That's the one that just seems to come from out of nowhere. And as you mentioned, it could also come from Mother Nature herself as happened in, what was it, 1859 or something? The so-called Carrington Event, which is mentioned in the film, which took out – at the time we didn't have much infrastructure in this way, but it took out the telegraph system, didn't it? Just zapped it. So, those things are real too. It's not just human actors... Mother Nature could do some serious damage as we know.

David Tice:                 So, I listened –

Dan Ferris:                 It's a big, serious thing. A lot of moving parts.

David Tice:                 I listened to your great interview with Dave Collum, who's a friend of mine, and he mentioned the fact about a geomagnetic disturbance and the fact that the poles are shifting. And I hadn't even realized that. I mean, Dave's a lot smarter science guy than I am. And how our magnetic sphere had essentially protected us some from solar but not completely. But that was going away over time with this pole shifting. So fascinating. And to put a – dash your hopes a little bit, I don't think we can count on utilities without, one, regulatory pressure or a Mothers Against Drunk Drivers-scale movement from your listeners, because your listeners are about the smartest out there, just creating holy hell on their voice-mails and e-mails by reaching out to them.

Dan Ferris:                 All right, folks, you heard it. The call to action.

Corey McLaughlin:    Right. As you point out in the – I don't want to give away the whole movie, but I mean, you talk about how it's a bipartisan issue too. This is actually something that everybody should be able to agree on and can agree on. It's just – I feel like it's not on – for some reason, human nature, whatever it is, it's not on the forefront of people's minds. They just can't think about it. I mean, they just can't imagine it. But when you hear about it and think about it, like the EMP, you realize we're not that far away from just – you had that George Carlin quote at the beginning from barbaric times. It's – it is scary to think about. But I am interested in solutions too, which could be good for everybody. So…

Dan Ferris:                 All right. So, I started out saying what are you up to these days? Maybe I should have told our listener all I know about our guest today is he's that guy who always ran short funds. And now what is he up to? So, but you're still running a short fund, HDGE. And of course, we need to talk about this because I am – I'm short right now, select names. I'm not – of course, I'm not net short and we're not net short in our Extreme Value newsletters, but we are starting to pick shorts again and finding pretty good ones, I think. So, that's – it makes sense to short. But short funds are tough, Dave. I mean, all you have to do is go into Bloomberg, enter the ticker symbol of any short fund, levered or not, and look at the max since inception and they're all down 90%, every single one of them. So, you got to have good timing with these things, don't you? It's a tough sell now, but it's a tough sell, period, isn't it? A short fund?

David Tice:                 So, it is. So, I've made a boatload of money between beginning in '99 to '08, when I sold my Prudent Bear Fund. And to some of your listeners that aren't aware of my background – so, I founded and managed a fund called the Prudent Bear Fund. And we actually had some gold stocks in that fund besides being 80% short. And we actually beat the inverse of the market by about 700 basis points a year by those – in those 10 years. But I'm not running this HDGE right now. I've delegated those in-the-trench duties to a couple of guys, one of whom used to work with me that I have a great deal of confidence in, Brad Lamensdorf and John Del Vecchio. And these guys work their butts off every day to find the best stocks to be short. And you're exactly right on the performance side: It is so hard to be short because a lot of times the bad companies go up just as much as the good companies.

                                    Now, just in the last year, Jeremy Grantham pointed out that about 40% of the high flyer bad companies in the last year are down 50%. So, what's happening in these market dynamics is the S&P keeps making all-time highs because of six or seven stocks. But at the margin, some of these zombie companies, these companies with a lot of debt that are ridiculously priced are starting to underperform. And so, HDGE, I don't want to go into specifics, but it has actually done very well in the last year because a lot of these bad companies that were short are going down now. And even though the S&P is up, we're actually up for the year right now.

Dan Ferris:                 Oh, you're up year to date on that fund?

David Tice:                 Yes.

Dan Ferris:                 Wow.

David Tice:                 Almost double digits even. And so, there's some of these –

Dan Ferris:                 That's really cool.

David Tice:                 – some of these competitors out there that are – just short the S&P and they're down the inverse of the S&P. So, they're down double digits and we're almost up double digits. And so, these bad companies are starting to do badly in the market. And we couldn't be more excited about our individual positioning in some of these companies where – I know you're a deep, fundamental analyst. I've admired your work for a long, long time. And now we're seeing these commercial real estate companies starting to decline and we have a significant percentage short there that we think are going to be home runs for us.

Dan Ferris:                 Yeah, that's – that trade is starting to heat up. I notice now there's a bunch of frauds. I think there was an article in The Wall Street Journal just within the last couple of days here that said – I think it's five or six – I think it was multifamily management companies or managers pleaded guilty to fraud. And that's what happens. It – they took interest rates down to zero. Everybody went nuts. They paid too much. They levered up too much. And those circumstances, those really loose financial conditions basically invite the fraudsters in. And here we are. Here we are. The frauds are starting to come out of the woodwork. So, yeah, I think you're going to do pretty well in that trade. People think it's long in the tooth, but it's not. I disagree with that.

David Tice:                 So, you look at the market levels right now, I mean, we're selling it 29 times, trailing 12. And looking back, just to refresh my memory – back – people look at the '00 to '02 crash and how bad that was, and actually, the market got to 33 times, trailing 12 in about July 1999, but in early 2000 it was at 29 times. And here we are at 29 times. And you look at – rates are going – we – again, going back to Dave Collum, he talks about the end of the 40-year credit cycle. And rates generally are going to go up over time, in my opinion, rather than going down. And you look at this $34 trillion dollars of debt we have and you look at so many excesses and therefore we're set up for a big decline. And I know a lot of your viewers and listeners are wealthy, so you only have to get rich once. So, you'd better protect yourself from a big decline rather than trying to eke out another 3 or 4%.

Dan Ferris:                 Yeah, well, you know – I guess you already know I agree with you there.

David Tice:                 Yes.

Dan Ferris:                 There are very few times when you should worry much about the action of the overall market. I think when basically seven or even top 10 S&P 500 is almost 40% of the index. It's, like, 37, 38% now, I think 37 something. So, highly concentrated in a few names. CAPE ratio, which has done a pretty good job of calling these huge peaks – 1929, 1999, 2022 – is up in that territory, that mega bubble, hyperinflated territory, 30s, mid-30s, 34ish, 35. So, we don't predict, but we've got to prepare. The point is not that the market's going to fall in the next 10 minutes. It's just that you know that historically it's priced for garbage returns from this level.

                                    And John Hussman from Hussman Funds, he'll tell you from this level that returns are crap for the next 10 years, likely, or – versus T-bills or just flat out by themselves. So, yeah, it's a rough moment. Now, to be fair, guys like us say this a lot.

David Tice:                 Yeah.

Dan Ferris:                 And then the market keeps going up. So, got to be fair with that. I've been saying it – I said it from like 2017 to 2022 and it finally came true. And 2020 as well. I'll take a little bit of credit there because we got really – it got really bearish in like January, February. And here we are again, man. It's – and the interesting thing about this one is the fastest hiking cycle probably ever and certainly in terms of basis points, I mean, just – percentage, I mean, percentage, not basis points – fastest hiking cycle ever. And yet, we're still climbing upstairs, still hitting these exorbitant valuations. The market still gets more concentrated. And where I'm going with this is I just sort of had this in my head. I wanted to talk to you about it. I think one of the things that makes it really tough for guys like us to be short now is passive. It's – the bid is like – it – you can't – you just can't beat it down. And my one little thought is that, well, Vanguard said 1% of their clients abandoned equities in March 2020 during the COVID crash. And I thought "What if it's 2% next time? What the hell does that look like?" Because that was down 34% in a month. So, there is a mechanism, I think, for this thing to turn around. But until it does, the bid just seems unstoppable. I mean, it's so hard to be sure.

David Tice:                 Well, let's talk about that a little bit. So, we bears – and I've been bearish even longer than you and probably more often than you, Dan. And so –

Dan Ferris:                 Probably, yeah.

David Tice:                 But I joke that I predicted nine out of the last four bear markets. And who knows, maybe it's 13. But I –

Corey McLaughlin:    Well, at least at least you admit that. That's good.

Dan Ferris:                 That's right. You're not a talking head who conveniently forgets it all.

David Tice:                 But we were right in '08. I mean, we ended up calling Lehman and the GSEs. And so, we made money for clients then. And then in – we were short between '96 to '99 when the market was up four straight years. But from '00 to '02, I mean, that was utter carnage. And we know Cisco didn't get back to its all-time high. I'm not even sure if it's there yet 15, 20 years later. And the thing is, the financial system has always been able to come back from it because we have this propensity to print more and more money and take on more and more debt. But now what we have is we have some vigilantes trying to call our case for the world's reserve currency and what's going on with the BRICS and 30 more countries joining. And they feel like we've incorporated the dollar's role as the world's reserve currency to essentially impoverish other nations around the globe and we've just continued to live this super elevated lifestyle for our citizens.

                                    But what happens if the powers that be can't bring it back this next time? And so, I think we are at great risk. And you look at what's going on the geopolitical front with two theaters of war currently, and then potential for China and Taiwan. I'm looking at this BRICS meeting coming up where they're coming up with a competing currency payment system. It certainly won't be a world's reserve currency, but it's going to compete against the dollar. And I think that is disturbing for U.S. hegemony.

Dan Ferris:                 Yeah. I don't worry about the dollar as much as everybody else does, because I know dollar and gold can rise together for very similar reasons because people get terrified. And it's hard to imagine much happening to the dollar as long as like the Eurodollar system is in place. People don't realize how huge that is. It's bigger than in the United States. So – and I think the Bank of International Settlements has ex-U.S. dollar denominated debt, I wanted to say at $12 trillion the last time I looked at it, which was probably a year ago or something. So, there's demand, there's going to be demand for dollars. And I think when financial assets fall, you'll see the demand for dollars and we'll get – probably get a spike. We could get a spike in dollar and gold, in Dixie and gold. At least that's what I think is – the way the system is set up now. I think that's likely. So, I worry less about that.

                                    But we've all got tens and tens and tens and globally a hundred trillion or whatever in – well, tens and tens of trillions anyway in these financial assets. And we know the confidence can be shaken like that. And we know the volume has been falling for years and the liquidity, as often measured, is not what it used to be. So, it's passive, I think, is the force that's doing it. It's just squeezing us and squeezing us and squeezing us. And then, when do we get this moment and what sets it off when that passive algo, which is just "receive a dollar of capital, buy a dollar of equity" – it's totally mindless. There's no fundamental whatsoever. "Get the dollar, spend the dollar in equity." When does that reverse? And if it reverses, as I believe it did in March 2020, as evidenced by the Vanguard report, what the hell does that look like? Because, man, that's like you yelled "Fire!" in a crowded theater. There's 500 people headed for one doorway that's this wide. I just – that's the thing that makes me cringe. That's the thing that has me recommending all kinds of stuff from T-bills to gold to managed futures, anything that I think will perform when equities get absolutely crushed. So far, I look stupid, but I don't know.

David Tice:                 No, your listeners and readers are lucky to have you because you're going to be right. And it – I get your point about gold and dollar going up at the same time, because it is hard to choose the Japanese yen and the euro –

Dan Ferris:                 Yeah, the yen.

David Tice:                 – over the dollar these days. And certainly I do believe gold, I mean, having broken through $2,400 it's going to be off to the races again. And therefore, that's why I think precious metals mining companies are set up because they're at very, very low price levels compared to the bullion price.

                                    And I also worry about, frankly, the banks. You look at – if you look at the chart of unrealized losses inside the banks going back 35 years and the fact that we have $517 billion dollars of unrealized losses inside bank portfolios – and you mentioned our past rate increase cycle. That's what knocked out Silicon Valley Bank. And we have a lot of banks that have underwater loans and securities that they just have not come to Jesus with. And then, you combine our commercial real estate woes coming. There's these stories about $100 million dollar commercial real estate towers, one in Fort Worth, one in St. Louis that are selling for $5 million dollars, $10 million dollars and they used to be valued at $100 million dollars and $200 million dollars. These losses are coming at banks.

Dan Ferris:                 Yeah.

Corey McLaughlin:    Yeah, I was commercial real estate. I was just – I heard here in Baltimore a couple of days ago there's about now 30% of the office space is empty in downtown Baltimore. And all these deals are just starting to – these valuations are starting to come out now when deals are starting to be made a little bit more and the haircuts to all these values. But I wanted to ask you about that. Broadly speaking, when you're looking for shorts or equities to short, how – in general, what are you looking for? Because I was looking at HDGE, I looked at some of the holdings – I'm not going to say them all, but one of them is Diageo, which is the maker of Guinness, which I am Irish. It pains me a little bit that you're short Diageo and Guinness but I have no idea about the business. I haven't done any work on it. So – but – so, how do you identify shorts in – generally? What are maybe a couple of things you're looking for?

David Tice:                 OK. So, my team, Del Vecchio and Lamensdorf, have been doing this for a long time as well. And I cannot recite the bear case for Guinness, although I found that for me to drink Guinness, I have to be like a girl and drink it with Chambord. So, it's a little bit too strong for me. Yeah, so –

Corey McLaughlin:    Yeah, I can't drink too many of them.

David Tice:                 We're looking at companies with a lot of debt. We are looking at companies at stratospheric price-to-sales. About a third of our portfolio is involved in commercial real estate right now. So, we have a big bet there where we have some screens looking at from a quality of earnings standpoint where the companies are benefiting from cutting back on expenses like R&D and marketing expense in order to meet their earnings per share targets.

                                    So, that's some work that Del Vecchio and I have done a lot of work on in the past where – fundamentally based, but deterioration in the quality of earnings. And we're looking at – we tend not to short fraud stocks, but we short companies where new competition is coming in. And we are looking technically at deterioration as well. That plays a role in our selection.

Dan Ferris:                 David, we tend not to short fraud stocks. Is that a very specific choice or does your process just tend not to find them?

David Tice:                 It's really a choice. You can make a lot of money in fraud stocks, but I've managed the short side since – going back 30 years. And frankly, there's a lot of people that do very, very well in short – in fraud stocks. But when you incorporate short squeezes and you look at the rebates that you have to pay and you look at how long fraud stocks can continue, we just feel like it's a bad bet.

Dan Ferris:                 Sure, yeah. I mean, I get it. There were folks who were short Enron on the way up too, so… So, we're – being fundamentally – I like the idea of being short fundamentally based on deterioration of the business. I also am really glad you mentioned the price-to-sales metric. Just for our listeners benefit, I like this for screening shorts because you don't have nearly the accounting noise at the top line as you do at the bottom.

                                    Now, my one caveat to that is Howard Schiller, who wrote a really good book about accounting shenanigans, financial shenanigans. And he says most of the fraud occurs at the top line. So, I'm thinking, man, if you can get a really good short, huge price-to-sales ratio, and it turns out to be a fraud too, wow. So, I just – I do like that metric a lot. I'm glad that's the one that you pointed out. Good screen there.

                                    So, I also wanted to point out something, David. I went back and I got the sort of since-the-inception chart on the Ranger Fund, and I noticed in 2011, that little break there in 2011, I think the market was down just about exactly 20%, and I noticed Ranger got a 31% hit out of that. And I – and that – as soon as I saw that, I thought "Oh, I like that. I like that you can get me better – you're sort of beating the –" it's the opposite of beating the market because you're beating – it's 50 basis points. If the market's 20 down, you're 30 up. But you're really sort of – there's that – I don't know if there's a metric for this because I don't know these things. I don't worry about them. But it's like the negative beta would have been minus 20%. But you guys did 50% better than that. And I looked at that and thought, "OK, there's potentially real juice in here." And now you're up year to date, like 9.2%, it looks like, here on Bloomberg just using closing prices. And I'm thinking "Yeah." Because you're basically – you're not picking the Magnificent Seven. You're shorting all the other stuff, which is – the earnings have been crap for the other 493 of the S&P 500. So, I have to say your fund's too small. I can't ever cover it in any publication. But it's – you're on my radar screen here. And I want to look into it more because it's got some interesting performance characteristics. And it sounds like the guys that you put in charge are doing a good job to me.

Dan Ferris:                 Yeah, actually, they founded it and they found me from my past. So, I have to give them credit for founding it. But to your point about these bad companies and these high flyers with high price-to-sales, they definitely outperform the inverse when there's a decline. And if you look historically at most of the bear funds and especially the ones that are individually selecting equities, they go up a lot more because these – the bad companies –what's frustrating in this kind of fund is a lot of the time, as I mentioned earlier, the bad companies go up as much as the good companies. But when the ship starts to hit the sand, as I say, these bad companies do much, much worse. And so, we can outperform significantly.

Dan Ferris:                 Right. And I have to say you made a good point there because not only can the bad companies do just as well, they can soar because since there's often no earnings and sometimes no sales, it's all just a story. I mean, it's a story that – and –

Corey McLaughlin:    It's people who like Guiness, yeah.

Dan Ferris:                 – market structure sent the meme stocks just major, major, huge multibagger within a matter of days. And of course, the businesses are very obviously not worth tens of billions of dollars. So, you'd have to – it would have to be a good story. And then when they fall apart, man, it's – when some – when those crappy companies go ballistic, when they fall apart, ooh, man. It's an excellent point. When you get the bad businesses that are going up as much as the good ones, it hurts to be short. But then on the other side of it, that's where you get that amazing better-than-inverse performance that you guys have enjoyed at least more than once, it looks like here. So, yeah.

David Tice:                 As Buffett says, when the tide goes out, we find out who's swimming naked.

Dan Ferris:                 Yeah, you're looking for the naked swimmers. I think that's the way to do it. But I did notice on the website, on the adviser shares page for you guys, there was – there is a technical input to it.

David Tice:                 Yes.

Dan Ferris:                 It's not all fundamental. Do you – I know you've outsourced the management of this thing, but can you speak to that a little bit at all? Or –?

David Tice:                 Yes. So, we've got a very sophisticated, quantitative screen that we've worked on for a number of years. And we're definitely looking for starting some underperformance of these equities. So, we don't want to short the antithesis of the falling safe or the rocket ship on the way up. We want to see some kind of breakdown first. And there's a number of other components to that.

Dan Ferris:                 OK, got you. The current – hey, do you know Scott Fearon?

David Tice:                 I do. It's been a number of years, but I remember him briefly. I should get back in touch.

Dan Ferris:                 Yeah, I want to get back in touch too because my partner in crime, Mike Barrett, and I in the Extreme Value newsletter have kind of adopted Dead Companies Walking, his excellent must-read book on short selling. If you're into shorting, or even if you're not, if you just want to know what a guy who's good at spotting bad companies thinks like, and you should, you should read that book, Dead Companies Walking. But he's like "I don't even want to short until the thing is down 50%. That's when you see investors are abandoning. And then you look at all the fundamentals that are deteriorating. And a lot of the times, those are the ones where it's like 'How's this thing ever going to turn around?'" I just – I don't know, I just wanted to call that to the listener's attention because you kind of – you reminded me of it. So –

Corey McLaughlin:    That's interesting, Dan. That reminds me of – remember Hari Krishnan that we had on, who wrote the book –

Dan Ferris:                 Yeah.

Corey McLaughlin:    – on The Second Leg Down. That was more broad marketplace –

Dan Ferris:                 No, yeah.

Corey McLaughlin:    – but I guess the same idea could be applied to individual stocks there.

Dan Ferris:                 Absolutely. Same – similar idea there, right? You've seen the leg down, you've gotten the recovery, and now wham, let's hit him with the second one. So – but David, though, we need to cover the third thing you mentioned, was a gold stock hedge fund, when I asked you what you're up to nowadays.

David Tice:                 Yes. So, we're really excited about mining companies. And with gold and silver, I like silver even more than gold. And I have a partner that's been managing day-to-day equities on the gold stock side for a couple of decades with really great performance. And we believe that these mid-cap producers are still selling extraordinarily cheaply today. And a number of companies selling at soon to be single digit PEs. And I believe the price of gold is going to go up a lot.

                                    In fact, I'm a believer that there's been some gold suppression in the past, keeping gold below $2,000 for a long period of time. We ended up breaking through that, breaking through $2,400 People like Jim Rickards have price targets as high as $2,400 or so for the gold price. We don't have to get to anywhere near that. If we break through even $2,800, these mining companies are going to be printing money in terms of profitability.

                                    And then what happens – big fan of Rick Rule, who has his conference going on right now in Boca Raton about how when gold price goes up, then with operating leverage their earnings go up dramatically, and then exposure to those gold stocks by institutions and individuals goes through the roof. And that creates really a decade of gold stock outperformance. And so, we saw that in the '30s, the '70s, the '00s. And we feel like in this mid-'20s period, we're likely to see between 500 and 1,500% returns, which has been typical. And it could be even greater than that in terms of with gold price going up above $3,000.

                                    And you look at the fact that we have the BRICS making – increasing in size by 20 to 40 countries, and then suddenly they're not going to have to be trading in dollars all the time. And I think there will be some kind of gold backing for some kind of currency system. And like you say, the dollar is not going to go away, but gold's going to do well. And you look at the geopolitical pressures in terms of – I'm nervous as hell about where we are with NATO seems to be baiting the bear a bit with Russia. And you look at this Hamas/Hezbollah/Iran situation. And I think we're as close to World War III as we've been in a long time. I mean, you look at the Cuban Missile Crisis and it looks a lot scarier than that. And therefore, gold's going to do very, very well.

Dan Ferris:                 Yeah. Yeah. Boy, we got into – well, we don't want to get into that NATO situation because it really pisses me off because nobody really understands what's happening over there. But maybe we'll have you back and talk about that another time. But for now, I just wanted to ask you – I'm going to be at Rick's event. I'm leaving tomorrow. Or – well, I may as well tell folks, we're doing this interview on the 9th and I'm – I'll be there the 10th and the 11th at Rick's event. And so, I'm going to talk with Benoit La Salle. I'm going to be on stage a couple times. And one time I'll be talking with him from Aya Gold and Silver. You guys don't have to own Aya, do you?

David Tice:                 I do not.

Dan Ferris:                 OK. Just taking a shot in the dark there. Rick has apparently invested with him for like 20 years or whatever. But getting – now that we've gotten out of the way, is there a name that you feel like you can talk about? I know you don't want to give away your secret sauce. You're running a fund. It's for your clients. But is there a name that you would feel comfortable talking about or no? If it's no, it's cool. It's fine.

David Tice:                 We actually like Liberty Gold.

Dan Ferris:                 Liberty Gold.

David Tice:                 And we still like Newmont a lot, even though it's the big boy relative to – and we tend to shy away from the biggest companies, but we feel like Newmont is incredibly cheap today. And we know once gold gets started, the big boys are going to go for the big boys.

Dan Ferris:                 Right. And Liberty Gold, what's that, like a small cap?

David Tice:                 It's a smaller cap. It's run by a good friend of mine with a great amount of expertise in the business. Can't recite any more details than that but we feel like it's extraordinarily undervalued.

Dan Ferris:                 Oh, OK. All right. Yeah, let's see here. I've got about a $96 million U.S. market cap. So, I mean, not tiny actually on small cap gold standards. Not tiny. Some of them are single digits, $10 million, $20 million, whatever. So – and there's for a little gold stock, there's a decent amount of liquidity to it. So, I won't be recommending it anytime soon, but certainly could be interesting.

David Tice:                 Yeah.

Corey McLaughlin:    All right. So, David, just one thing I want to make sure I ask you before we wrap up. So, given the geopolitical concerns, the susceptibility of the power grid, where stocks are valued today, how are you – you've been in finance your whole adult life. How are you protecting yourself, your family, your wealth right now? What's your blueprint?

David Tice:                 So, I own gold stocks. I'm actually a buyer of out-of-the-money gold stock options expiring in early '25. I feel like there's a great opportunity there for doubling of gold stocks fairly quickly. So, I think that's a great risk-reward bet.

                                    I'm a believer in longer-term Treasuries because I think that we could get into a deflationary scare. You know, I'm definitely nervous about inflation, but I feel like owning some longer-term Treasuries as part of a barbell approach makes some sense.

                                    I'm a believer in – I'm worried about the banks, frankly, and I'm worried about this situation with the FTIC has about a hundred billion dollars in reserve. That's 0.6% of all deposits. But what we have is this massive commercial real estate debacle coming. We have $500 billion dollars of unrealized losses on bank balance sheets, which is – the biggest number going back 40 years has been, I think, $10 billion dollars. I mean, we've never seen anything like that. And therefore, I think it makes sense. Then you throw in the potential for bail-ins. So, I'd say your viewers ought to go to YouTube and listen to some other people out there about what Dodd-Frank did in terms of bailouts and even this recent Supreme Court ruling for Chevron that essentially makes it tougher for there to be bailouts. And therefore, you ought to be concerned about the potential for bail-ins. And therefore, I'm a believer in having some money directly with gold that you can potentially spend. And there's vehicles out there that will allow you to do that.

Dan Ferris:                 All right. So, David, I'm going to ask you to – that was a nice summing up and I'm going to ask you to concentrate your summation one level deeper by asking my final question, which is the same final question for every guest, no matter what the topic, financial, nonfinancial. Same question. And it's very simply – also, if you've already said the answer, by all means, feel free to repeat it. If you need a second, we can edit, so don't worry about taking your time to answer. It's a simple question, though. If you could leave our listeners with a single thought today, what would you like it to be?

David Tice:                 All right. I've been ready for this because I listened to your past programs. And so, I say people do consider me David Dyer at times because I tend, as I say, to have predicted nine out of the last four bear markets. But I really, truly believe this is an extraordinary moment in time. And in terms of where we are with massive debts, you look at who we have in office in terms of Biden was likely to happen in front of this election. You look at the fact that we have the potential for bail-ins. You look at the fact that we're in two theaters of war that I mentioned before and the potential for China and Taiwan. I think this is a time to be scared. And so, I listened to Dave Collum and he said, "If you're younger, you can't really think too much about it, but I think now's the time to be nervous." And I'd say get out of the market, at least to a bigger degree. Have some gold. Think about personal safety. Have some extra food in your pantry. And think about a bug-out location if the ship really hits the sand, because population density is not your friend if it gets really bad. And you throw in the fact that we have tens of thousands of sleeper cells in our country right now from our porous borders. It's time to be nervous.

Dan Ferris:                 OK. A dire warning from David Dyer. Of course, how dire can a guy be with four granddaughters, right? I mean, come on.

David Tice:                 I'm so happy about that and I'm truly blessed.

Dan Ferris:                 Yeah. Listen, David, I knew it would be a pleasure to talk with you again. It's been way too long. Let's not wait so long next time. All right?

David Tice:                 I look forward to it, Dan. Keep up the great work. Your readers and viewers and listeners are truly blessed.

Dan Ferris:                 Oh, thank you.

Corey McLaughlin:    Great having you on.

David Tice:                 Good to be with you too, Corey.

Corey McLaughlin:    Gold has been on a tear recently, hitting new all-time highs, and everyone seems to want in. Wholesale store Costco is selling out of its gold bars. Central banks are buying gold in record numbers, stacking it in their vaults on pallets. It's even hitting overseas as China's gold trading volume just hit a record 400%. You may be wondering if you've missed the window. Is it too late to get in on the gains? My colleague and friend, Dr. David "Doc" Eifrig says no. This gold mania is actually just getting started. But he cautions you don't want to run out and buy gold coins or mining stocks like everyone else. Instead, he's found a much better way. You can get all the details at goldmaniareport.com. That site will take you to Doc's new free report that spells it all out for you. Get the facts for yourself. Go to goldmaniareport.com to read Doc's free report and find out how to get his four simple steps you could take today for the best way to get in on this gold mania.

Dan Ferris:                 Well, I'll tell you, it's been a long, long time since I've spoken with David Tice. I can't remember the last time – years and years ago – but obviously a very interesting guy. And I'm not just saying that because he loves the show and my newsletter.

Corey McLaughlin:    Yeah, he's a fan and a viewer and listener. So, that was fun to hear. And he was ready for that – your final question there. So – and he was ready for a lot of – he's ready for a lot of things. Obviously concerned about geopolitics, energy grid, which I don't think can be – I think that message, while scary, I think people need to wake up to it. And so, you should check out that movie that he's put together. It's free on YouTube, which is great, and start thinking about how to protect yourself, your family from these possibilities of a massive power grid outage. I know I am. I'm not kidding. I bought this power station that connects to a solar panel that will keep – you can run appliances on it. You can run a fridge. You can run an air conditioner, enough things to keep you going for a while, hopefully, until you don't need it anymore, hopefully. But you never know these days. There's so much going on geopolitical-wise. I'm thinking right now that – I don't know, I never thought I'd be preparing the way I am now, but I am.

Dan Ferris:                 Yeah, I never – my wife started doing some of this stuff and stocking up on food that keeps for a long time. And she bought these backpacks that are loaded with first aid supplies and little MREs and all kinds of stuff, like flashlights and fire starters and all kinds of stuff. So – and I never really – when she first started buying this stuff, I was like "Oh, OK, that's fine." But then one day I was like "God, I'm glad she's doing this. I'm glad somebody around here is paranoid," because I tend to be one of those people – I'm not a – I'm less preemptive about these things, oddly enough, because I'm sure scared about them in financial markets.

Corey McLaughlin:    Yeah, right. I was just going to say, yeah.

Dan Ferris:                 Yeah. So, it's time I aligned my protection of my home and so forth with my market views, I guess. But –

Corey McLaughlin:    Yeah, my wife was thankful when I said I was buying this because, I mean, she hates if the power goes out for five minutes anyway. So, it's helpful for that. But yeah. And I think David, just also talking about how he goes about, I guess I would say, hedging with the shorts of the bad companies, that was interesting for me to hear too. And you and him talk about that.

Dan Ferris:                 Yep. That's been his claim to fame. And I pointed out and I'll point out again that the Ranger Fund outperformed the inverse of the S&P 500 during the little drop there in – the little 20% drop in 2011, which impresses me because it's – shorting is hard and running a short fund, as we talked about in the interview, is hard. Selling a short fund ever and – besides selling one right now, it's a hard sell because over time the performance – over the long term, the performance is always going to be down because the market's generally up over the long term. But man, I'll tell you what, there are times when if you don't have it, you will wish that you did.

                                    And I'm not saying – I can't recommend this fund because it's really small, but I'm interested in learning more about it because of the way it performed at various episodes. And it's up year to date, 9%. I mean, the market's not – the indexes aren't down 9%. So, that's pretty cool, too. So, here you've got something where if you got your S&P 500 fund, the top 10 components are sending that thing through the roof but the rest of it is reporting crappy earnings and underperforming. The Russell 2000 is underperforming. It's the first time you got this far into the year with S&P 500 up and Russell 2000 down. First time it's ever happened. So, all those other companies are apparently the stuff that his fund is shorting. So, talk about adding some alpha. Wow. That's really amazing.

Corey McLaughlin:    Yeah. Small caps just can't get going. And since our last episode with Whitney Tilson, who talked about that study – or, that research from the professor at Arizona State, Hank – I'm drawing a blank on his last name, though – but I went to our website. I was looking up – I said, "We have to have written about this before." It turns out you and Mike did in Extreme Value and in the Digest, which I probably should have known.

Dan Ferris:                 Right. If anybody, yeah.

Corey McLaughlin:    I bring this up because if we're talking about the concentration of the market right now with those – the mega caps, again, leading to most of the – anyway, the point of the research was that a small number of companies generate a disproportionate amount of gains in the stock market, essentially, on an index level. And so, that's happening but yet most stocks actually lose money if you're hedging by betting against these terrible companies, which stand to lose money. And as you just said, if they go – they're already down 20%, 50% have more to go. I think that's a – that makes a lot of sense to me right now – or at any time, really, I guess. If you go through history and you look and you see that, what that research shows, that – I think it's something like 4% of stocks were responsible for 25% of wealth creation in the last I'll call it five decades or so or something like that – I may not have the time frame right. But yeah, that comes to mind, too, when I'm hearing about David's fund that he's part of and those companies – unfortunately, the maker of Guinness is one of the shorts in there. But…

Dan Ferris:                 Yeah. Yeah. Right. Not a statement about the beer, folks.

Corey McLaughlin:    Yeah.

Dan Ferris:                 Yeah. And I just feel like I'm obliged to remind the listener shorting is hard. It's really hard. Just look at any short fund. Like I said, look at ticker SH or PSQ and just get a max chart in Yahoo Finance and it's like down 90-some percent.

Corey McLaughlin:    Right. You're going to – yeah, you're going to – you've got to know you're going to be losing along the way.

Dan Ferris:                 Yeah. It's mostly a losing proposition. But there are times when you should be concerned. And I think now is one of them, as we said during the interview. So, think about it. It's not for everybody. And you can do fine just by choosing to hold more cash. You don't have to short stocks. Just instead of buying them, you could hold more cash. That's another way to do it that's pretty safe. So, yeah, good talk. Really good talk. I enjoyed the wide-ranging gold stocks and shorts and the power grid and everything. It was cool.

Corey McLaughlin:    Yeah. Me too.

Dan Ferris:                 All right. Well, that's another interview. And that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we did. We do provide a transcript for every episode. Just go to www.investorhour.com. Click on the episode you want. Scroll all the way down. Click on the word "transcript" and enjoy. If you liked this episode and know anybody else who might like it, tell them to check it out on their podcast app or at investorhour.com, please. And also do me a favor. Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts, and while you're there help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @investorhour. On Twitter our handle is @investor_hour.

                                    Have a guest you want us to interview? Drop us a note at [email protected] or call our listener feedback line, 800-381-2357. Tell us what's on your mind and hear your voice on the show. For my co-host, Corey McLaughlin, until next week, I'm Dan Ferris. Thanks for listening.

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