'Don't Let Your Ego Drive You to Make Bad Decisions'

Episode #348 | February 12, 2024

Episode #348 | February 12, 2024

'Don't Let Your Ego Drive You to Make Bad Decisions'

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey welcome Harley Bassman to the show. Harley is the managing partner at Simplify Asset Management, which specializes in making institutional-grade assets available to individual investors.

Dan and Corey kick things off by discussing bitcoin hitting a new multiyear high. They also critique a popular bullish argument for bitcoin, which is based off the U.S. dollar collapsing. After, they talk about the S&P 500 Index surpassing 5,000 for the first time ever and whether this level is sustainable in the long term.

Next, Harley joins the conversation and explains a concept called "convexity." He covers the three kinds of risk in bond investing, why short convexity is always lurking during market downturns, and why negative convexity is so difficult for investors to process. As he says...

People are afraid of sharks, people are afraid of lightning, but they'll get in a car and not wear a seat belt. They can't process in their heads the level of risk involved in things.

Harley also goes into detail on mortgage-backed securities funds. He describes what mortgage bonds are, why they yield more than corporate bonds, and how the Federal Reserve plays a huge role in all of this...

Once the Fed starts cutting and we get an idea of what's going on, you will see implied volatilities drop by a lot because the uncertainty is gone. So that's why you want to buy these mortgage bonds now.

Lastly, Harley talks about Simplify and how it offers a unique service by jamming derivatives of all kinds (futures, options, etc.) into ETFs so civilians can invest in them. He also discusses what it was like working at Merrill Lynch during the great financial crisis, explains what pin risk is, and gives general investing advice...

Don't get hung up on trying to sell the top or buy the bottom... Sizing is more important than entry level. Look at what you're doing. You want to buy big enough so it has impact on your portfolio, but small enough that if you're wrong, it doesn't take you out. If you do that, you're going to be OK. Don't get hung up on trying to time the market. If the idea is good to you, just go and do it.