Episodes

Dan Ferris: Hello, and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm also the editor of Extreme Value, published by Stansberry Research. Today, we'll talk with my friend and Stansberry colleague and fellow musician, Brett Eversole. In the mailbag today, a light mailbag with just one question from one of our greatest, longtime, most frequent correspondents. And remember, you can call our listener feedback line at 800-381-2357, tell us what's on your mind, and hear your voice on the show.

For my opening rant this week – coffee shops and lipstick. That and more, right now, on the Stansberry Investor Hour.

Coffee shops and lipstick – what in the world could I be talking about? Well, the coffee shop thing relates to an article I read in the Wall Street Journal this morning that said basically restaurants did well in June, but they still lost 3% of their sales – so, not great. But coffee shops, comparatively, did great because their sales increased by 1.9%.

So, it reminds me of something that I may have mentioned on the program before. Real quick, I worked for a place called Lee's Ice Cream Factory based in Baltimore when I was in college and right after college. And Lee Garfield, for whom the business was named, he was a very smart businessman. He was the person who was the – he was basically the first guy who ever taught me anything about business, because before that, I was a guitar player, didn't know anything about business. And one of the reasons he said he went into the ice cream business is that he had very fond memories of a place called Gwynn Oak Park in Baltimore as a child and, you know, getting ice cream and going on rides and things. But as a businessman, he said, "You know, Dan, when people can't afford a vacation or something expensive or expensive Christmas presents or whatever it is, they will still take the family out for a treat and, you know, they'll take the family out to get an ice cream cone, is one of the things they'll do."

So, that's one of the reasons why he thought it would be a great business, because if the economy wasn't doing great, you know, he knew his business would still be OK. And he turned out to be right because I worked there year-round, and I saw that effect. I mean, even in the winter, like, in Baltimore, people were coming in to get – you know, a lot of people came to get coffee, but they also came to get ice cream cones. I mean, it's just, like, insane. [Laughter] But, you know, we did well enough during the winter and we thrived the rest of the time, and it worked.

Now, there's a similar thing with what is called the "lipstick index" or the "lipstick effect," whatever you want to call it, that was thought up by a guy named Leonard Lauder, who is Estée Lauder's son. And he just noticed that lipstick sales did OK during a recession. He actually said they did better, but they did OK, right? They kept up. So, it's the same type of a thing. It's like, a little affordable luxury.

Now, I contend that during inflation, if wages keep up, if wages even approach keeping up with the rest of inflation, the lipstick folks will do OK and, you know, the ice cream folks and the coffee shops and everybody, they'll do OK.

But I think if we really get into a serious recession, and the folks – some folks analyzed Leonard Lauder's lipstick index, and during a recession, like, if it gets bad enough, look, they stop buying everything. They stop buying water. I mean, water consumption goes down during a bad enough recession, OK? So, there's very few, if any – I don't even, I can't name one truly inflation-resistant, I'm sorry, recession-resistant business.

So, I think what we have right now is this conflict of forces, the forces of inflation and the forces of recession. And we'll see how it turns out, but at this point, I think we've seen the inflation and I think we're going to wind up with stagflation. We're still going to have the elevated prices for, you know, gasoline and food and rent and everything else. Your rent's not going down, right? And you're not going to spend less at the grocery store, and it's not going to cost you less to do those basic things that you need to do just to get by every day.

But, on the other hand, I think we'll continue with this real decline or, you know, real sort of suppressed economic activity. And that's why we're in a recession right now because GDP is growing nominally a few percent, but inflation is so bad that it's pushing that down into the negative. So, when they say the definition of a recession is two consecutive quarters of declining real GDP, real means adjusted for inflation, right? So, right now, we're in a recession because we've had that.

And what I'm looking at is, you know, we could stay just in the area of a recession, right? We could stay just under real GDP growth and be just in a slight decline, and it could be a really inflationary environment, right? So, we get those effects more than we get recession. Or we could go the other way and we could get such a level of depressed economic activity that people stop going to the coffee shop, they stop buying lipstick, they use less water, and we're in a real recession, you know? Maybe the Fed pushes interest rates up so high that we really depress economic activity.

And right now, that's kind of the way I'm leaning. Because one of the biggest sort of leading indicators is the housing market. And, you know, we know the housing-related stocks have come down from their peaks and housing prices have come down from their peaks, lumber prices are kind of pointing toward recessionary dynamics, there. So, we'll see. And that's real wealth, right? The equity in people's homes is one of the big sources of real wealth. So, when it's going up and when it's large – and right now, home equity is at a record level, around $27, or I think it's $28 trillion, actually. So, if we see a decline in that, that's a decline in real wealth. Because people tap into that, and they spend it. So, we'll see. We'll see how all this plays out. I think the ultimate prescription is still the same.

One last thing I wanted to mention was this Gallup poll that, they have this thing called the Life Evaluation Index or something. And – yeah, that's what it's called, Life Evaluation Index, and Gallup put out a poll where they said, they interview people and they say, "Are you thriving, are you struggling, or are you suffering?" And people, 5.6% of the respondents said they're suffering. Doesn't sound like a lot, but it's a record high in the data going back to 2008. So, it includes everything that's happened since then – COVID, financial crisis, everything. And people are suffering more at this moment, and I think they're probably suffering because of this combination of inflation and recession, right? Stagflation.

So, with that in mind, it's hard to be an investor. I still think being truly diversified is the answer. The true diversifier is cash, so, you own plenty of cash, own some gold and silver, maybe bitcoin – I'm not doing it right now, but maybe that. And equities in really great businesses that produce high returns on the money they reinvest in their business. And it should be a business that makes enough to reinvest plenty at high returns in itself, right?

So, if you can do that – hold on to your great stocks, have plenty of cash, have some gold and silver, maybe some bitcoin – I think you're basically, truly diversified. I mean, real estate is nice and land is nice, but you know, if we get that recession, it's a highly illiquid asset, and if you want to get rid of it, it's going to be worth a lot less. But if inflation is the sort of dominant force over the next few years, then you will want to own that real estate, because it'll rise in value.

So, it's difficult, but true diversification is all I got. It's all I can think of. And so far, it's not working out too bad, I have to say. [Laughter]

All right, that's where we are. It's a tough moment. I want to leave you on a pleasant thought, but I don't think it's the right thing to do. It's a very difficult moment to be an investor because of the competing forces of inflation and recession. That's where I'll leave you.

And with that, let's talk with my friend and colleague, Brett Eversole. Let's do it right now.

One of the most successful entrepreneurs in America over the past 50 years is going public with his fourth and final prediction about a scenario he calls America's nightmare winter – whoa! You've probably never heard of Bill Bonner, but in addition to owning an interest in businesses all over the globe, he also owns more than 100,000 acres with massive properties in South America, Central America, and the U.S., plus three large properties in Europe. And I've been to one of them – it's gorgeous. Gorgeous chateau. And I've known Bill for many, many years. He hired me into this business. And he says we're about to enter a very strange period in America, which could result in the most difficult times we've seen in many, many years. And he's made three similar predictions in his 50-plus-year career, and each time, it proved to be exactly right, although he was mocked each and every time. And I remember all of them.

This is why I strongly encourage you to read about Bonner's fourth and final prediction, totally free today. It's all spelled out in a free report that we put together called, "America's Nightmare Winter." Get the facts yourself, go to www.nightmarewinterscenario.com to get your free copy of this report. Even if he's only partially right, it'll dramatically affect you and your money. So, again, go to www.nightmarewinterscenario.com for this free report.

Today's guest is Brett Eversole. Brett Eversole joined Stansberry Research in 2010. He worked alongside Steve Sjuggerud to develop True Wealth Systems, and he now works with Steve on True Wealth, True Wealth Systems, True Wealth Opportunities, and True Wealth Real Estate. Sounds like a busy guy. Brett's background is in applied mathematics and statistics. His undergraduate degree is in actuarial science. As an undergraduate, he passed the first three exams for entrance into the Society of Actuaries before focusing on finance at Stansberry Research. His analytical and data knowledge make him the perfect complement to Steve Sjuggerud's financial prowess. He used those skills to help develop True Wealth Systems, one of Stansberry Research's most in-depth, data-driven products.

And with that, Brett, welcome to the show.

Brett Eversole: Thanks for having me, Dan. I'm excited to be here and chat with you. You know, you and I don't get to catch up that often, maybe once or twice a year, but I always enjoy talking with you because you've always got something that's really grinding your gears at the time, so, I always leave those conversations enlightened and entertained – so, glad to be here.

Dan Ferris: Well, you know, as long as I entertain you, Brett, I'm fulfilled in life, I really am. [Laughter]

Brett Eversole: [Laughter]

Dan Ferris: But we're here to talk with you today. Believe me, the listeners have heard sufficient from me, you know, I promise.

Brett Eversole: Yeah.

Dan Ferris: But, you know, I was looking through the archives of InvestorHour.com – I could've sworn you'd been on this show once before, but I couldn't find your name anywhere; you have not.

Brett Eversole: No, I haven't. Nope.

Dan Ferris: OK. Well, that's an oversight, and I'm glad we're taking care of it. So, before we get into what's on your mind, you and I had talked about housing before we hit the Record button, here, and I definitely want to get your views on that. It's a very interesting topic to me and the listeners right now.

But just real quick before we do that, give me the 30-second background on Brett. How did you get here?

Brett Eversole: Well, so, I got a degree in actuarial science, which is kind of like applied mathematics. And while I was going to school, I met a guy named Tom Dyson, and I'm sure you know that name, and longtime Stansberry folks might know that name. And Tom was working down in Florida, I grew up in Indiana and went to school there. Tom was working down in Florida. I got to know him through kind of a friend of a friend, and he actually taught me to surf one summer, the summer of 2009. I graduated the next year, and he gave me a call. I hadn't talked to him in six or eight months. He's like, "I don't know what you're doing after school, but I've got a job for you if you want to come down."

And I took a chance, and the funny thing is, that job he hired me to do, within about six weeks, had completely dissolved and dissipated. [Laughter] And so, I was kind of assuming I would just move back to Indiana and figure things out. But alongside Tom in the office here was Steve Sjuggerud. So, Steve had been meaning to hire a guy with a math background for years, and I kind of landed on his plate. So, kind of the rest is history. I've been here for 12 years since then, so.

Dan Ferris: Yeah, so, working for Steve Sjuggerud on True Wealth and there's a whole bunch of publications you guys do. Can you list them real quick?

Brett Eversole: Yeah, right now, we have True Wealth, True Wealth Systems, and True Wealth Real Estate. We have, in the past, we've had a commodities letter and a China letter and we've since folded those, but those three at the moment.

Dan Ferris: Right. So, that's really cool. That thing where your job kind of dissolves before your very eyes, that's a common occurrence in the newsletter business. [Laughter] But we do hang on to good people, I will say that. I've seen us do this many times over the years. I'm glad we hung on to you.

Brett Eversole: Good people and the two of us, right?

Dan Ferris: Yeah, good people plus you and me, yeah. [Laughter]

Brett Eversole: Yeah, there you go. [Laughter]

Dan Ferris: But one more thing before we get to housing, which I really do want to talk to you about. So, just for our listeners' sake, since we have established that you've never been on this show before – if you and I just met in a bar, you didn't know me, I don't know you, and then we got to talking about finance and stuff, and I said, "What kind of investor are you?" how would you answer?

Brett Eversole: So, I am very much a top-down investor. I definitely – I'd say I take the opposite view of Dan Ferris. I like to think about all of the macro, kind of big, long-term tailwinds at a very high level, and then figure out how they're going to affect sectors as opposed to overall markets, and then find individual companies out of that. So, very much a top-down type of analyst.

Dan Ferris: Right. I've – you know, I have a secret desire to be able to do that, but I've proved kind of bad at it so far. I mean, I can make the call sometimes, but you know, what to do about it, I'm kind of bad at that. But you're pretty good at it, you and Steve and the whole crew down there.

Brett Eversole: Well, I think one of the important, with that style, is you have to be maybe more willing to be wrong more quickly.

Dan Ferris: Mm-hmm, yeah.

Brett Eversole: When you're doing the kind of research you do and you're taking a very long-term view and doing hyperdetailed company analysis, I would say you probably have more skin in the game and understand things better than I do. But what we're good at is finding these big macro tailwinds, and we assume it's going to go a certain way, and if it doesn't, then we'll just cut the cord and move on. Because there's always kind of these big themes going around various places in the world.

So, I think the – a willingness to kind of cut and run quickly is a way to do that right.

Dan Ferris: Right. So, I have to tell you, Brett, I mean, you're a bright guy, you've been around a long time in this business. But that sounds so much like Steve to me, what you just said.

Brett Eversole: Well [Laughter]...

Dan Ferris: I mean, that's like the Steve Sjuggerud way, isn't it?

Brett Eversole: Yeah, yeah.

Dan Ferris: I mean, see which way the winds are blowing, go that way, and if the wind direction changes, you're out.

Brett Eversole: Yep. Well, I mean – you know, Steve mentored me for a decade, here. And when I showed up, I knew numbers, you know, I had a math degree, but I took one finance course, I think, in college. Didn't even learn, you know – I learned nothing, let's be honest. I knew nothing about finance and I understood numbers. So, I've definitely become a clone of Steve over the years, which is – you could do worse.

Dan Ferris: You could do a lot worse. As a matter of fact, you can almost hardly do any better, you know, if we're being really honest.

So, let's talk about, you know, if there's more than one sort of sector that you want to talk about, by all means, but you and I did exchange a few words about housing. And right now, I know some folks are very concerned because they see – you know, they certainly see lumber getting killed, and then they see housing prices starting to come down, you know, in the, like, the indices, like the Case-Shiller and stuff. Or I want to say, like, I saw a report, Mortgage Bankers report, Mortgage Bankers Association, they had reported purchase prices of actual deals coming down 10-or-so percent and then national housing prices have come down, too, by the indexes.

So, but where are you on all this? I mean, that – I just painted a really little picture there out of a few data points that may or may not be worth anything that kind of sounds bearish.

Brett Eversole: Yeah.

Dan Ferris: Where are you on housing?

Brett Eversole: So, I think a lot of times, people end up, you know, kind of fighting the last war, and I think that's what's happening in the housing market right now. The last war being the 2000s bubble and bust. And it's easy to look at what's happened, especially in the last 18 to 24 months, kind of in the pandemic era, of you know, there's a lot of pretty obvious froth that was in the housing market.

But I think the setup that's really happening is that we have a situation where the perception is that we've got a bubble that must lead to a bust, and the reality of the situation is something quite different. What I've found is, you make the most of money in the markets when you can set up – or you can find an opportunity where perception and reality don't meet, and there's a way to take advantage of that. And I really think that's where we are, kind of, in housing right now.

So, like, to the point you said, there's definitely a cooldown that's happening, and we definitely have come out of a very bubble environment. I've got some crazy numbers. Earlier this year, we're in North Florida in Nassau County. There was a time earlier this year where there were 1,100 real estate agents in the county, and 180 homes for sale. So, that's a 6-to-1 ratio of real estate agents to homes. And at that time, for the entire state of Florida, that ratio was 10 to 1. So, obviously, that's not sustainable, and there was some craziness going on. I mean, I think in our area, I saw just dozens of people, mostly in their late 20s, early 30s, go-getter types that just saw housing as just easy money, just free money.

So, everybody was trying to get into real estate and figure out how they could, you know, start selling $400,000 houses in 24 hours and make that fat commission. And the market just got really flooded and got kind of crazy.

So, like, we're definitely due for a slowdown, and we've seen activity slow pretty dramatically. But I think the idea that we're due for a major bust like we saw last time, I think that's where perception and reality get a little off. And, you know, we've already – like I said, that slowdown has happened, and it's mostly been a cause, or it's been caused by mortgage rates. Mortgage rates went from like 3% to about 6% this year, which is a crazy increase. If you do the math on that, that makes a typical payment about 40% higher. So, even in the crazy two years we've had, home prices haven't risen 40%, but in six months of interest rates, the payment just went up that much.

And affordability has just crashed as a result of that. You know, the Affordability Index looks at home prices, mortgage rates, and incomes to figure out kind of what the typical person can afford. A 100 on that index means that the median income can afford the median house. We were at 180 at the start of the year, or last year's high, and now we're at 100. So, we've gone from housing being pretty darn affordable to not at all affordable. And obviously, that's at a nationwide level, you know? Certain markets are not affordable, at all.

But I think – and a lot of times, you know, bad things happen and people extrapolate them out into the future and they assume that what's bad will get worse. So, you see a 6% mortgage rate and you assume, well, 7%'s next, and then 8%, and then 9, and then 10. And while that's possible, it doesn't seem that likely to me. And I think the only way that kind of affordability can get a lot worse is if mortgage rates just continue to soar, which doesn't seem like a likely setup to me.

The thing about this, though is – even if affordability is down, housing is like water. It's literally at the bottom of Maslow's hierarchy of needs, right? You've got food, water, shelter, clothing – shelter. [Laughter]

Dan Ferris: [Laughter] Right.

Brett Eversole: So, you can't just decide housing is too expensive and that you don't want to have a house.

Dan Ferris: Right. And for people who don't know, Brett, the Maslow hierarchy of needs, the bottom is the ones you can't live without, just so we're clear, you know? [Laughter]

Brett Eversole: Yeah, exactly, exactly.

Dan Ferris: That's the foundation.

Brett Eversole: Yeah. So, I think that we have this setup where people are just kind of assuming the next bust is going to come, but the situation today is just very different than it was in 2006, 2007. Homeowners themselves are actually in dramatically better shape from a financial standpoint. I know, like, tappable equity, like, home equity is at the highest level it's ever been.

Dan Ferris: Yeah.

Brett Eversole: I think subprime lending is maybe 5% or 6% of loans, and in 2005, it was at 20% or 25%. So, I think the market generally is just in a much healthier state than it was last time around, and to me, that's kind of an obvious reason why a slowdown doesn't necessarily mean that there's a major crash on the way.

You know, I mean, obviously, we've seen a slowdown in activity. Existing home sales are down like 20% from the high. But that's also from a pandemic-induced mania high. So, if you actually look at that chart over, like, 30 years, today's level is pretty typical with what we saw on average over the last 30 years.

Dan Ferris: Right.

Brett Eversole: And when you look at a lot of these things where we're down a ton off of the high in activity, it's really just, we're down a ton from a crazy level to a normal level. And if that falls another 30% from here, then, that's not a good thing. But it's, again, bad things happen, extrapolating them into the future gets a little dangerous, in my view, at least. And the thing is –

Dan Ferris: Yeah, I tend to agree.

Brett Eversole: Go ahead.

Dan Ferris: I was going to say, I tend to agree. It doesn't – you can get a reset. I mean, we can get a reset and a drop in price and all this stuff without some major crisis happening.

Brett Eversole: Yeah. Yeah, I think that's important. Like, you don't – nobody panic sells their house.

Dan Ferris: Right, right. [Laughter] They panic-borrow against it, maybe, but they don't panic-sell it.

Brett Eversole: Yeah. [Laughter]

Dan Ferris: So, with that in mind – I'm sorry, I did interrupt you. You sounded like you had another stat to throw at me or something.

Brett Eversole: Well, no, it's just like – one more thing, like, about this whole thing.

Dan Ferris: Mm-hmm.

Brett Eversole: We as a nation just faced this massive housing shortage. There just aren't a lot of supply of homes and that's a big reason why we had this manic market for the last two years. I think inventory of existing homes is, like, 50% lower than it was 10 years ago. And the month supply, which is like, how many months it would take to sell all the homes for sale right now at current levels or current rates of sale is at three months, which is – it's typically more in, like, the 4% to 5% range.

So, we're chronically undersupplied with housing. Well, I mean, that's not a tight spread, but like, very, very high would be like six or seven months. So, that's a relatively tight index. But we're just chronically undersupplied with houses. And that's because, you know, coming out of the housing bust, we just didn't build houses nearly fast enough. I ran these numbers earlier this week, and what I looked at was millions of housing starts per year, on average, by decade. And basically, for every decade except the 2000s, since the 1960s, we built about a million and a half houses a year. And last decade, or the 2010s, we built a million houses. So, over a decade, that's 5 million less homes, typically. And also, you know, what's the U.S. population today versus in 1960? It's 50%, 75% higher.

So, we have this massive just housing shortfall. And if there's a lack of supply in the market and there's a lot of demand, how are prices going to crash by, in my – you know, 30% or 40%? Jacksonville, where we're close to, crashed 40% in 2008. To me, there's just such a large macro tailwind behind housing, that that doesn't really seem possible to me.

Dan Ferris: OK, so, what if, you know, all the telegraph signal from the market is that we will see higher interest rates still by the end of the year? Do we think – you know, first of all, let's just say we accept that, OK, for now.

Brett Eversole: Sure.

Dan Ferris: Let's just say that the Fed does go another 75 bps higher and, you know, the spread stays sort of constant, right? So, then we get back around 6% plus for mortgages. The trip to 6% was brutal from 3%, right? [Laughter]

Brett Eversole: Yeah.

Dan Ferris: So, but – you know, just call it 6.5% or something, or even 7%, whatever you want. Seems like it would be less brutal, but it's a much higher number than anybody's used to, that's for sure. How do you feel about the intersection of interest rates and housing in the next, I don't know, six or 12 months, whatever time frame you like as well, you know?

Brett Eversole: Sure. Yeah, well, I mean, I think your point, and prevailing interest rates are, people talk about the CPI and Fed actions – I mean, I think the Fed kind of is it. But prevailing interest rates are kind of the only thing that matter, right? And not just what they are, but their trajectory. Because we saw this massive change in investor sentiment because money's not free anymore. And that's – you know, that's affecting the housing market, that's affecting the stock market, it's affecting everything.

But I do think the way you get there is not as important but certainly an important part. So, a move from 3% to 6% in six months is really brutal, like you said. I think if we have a move from even 6% to 8% in 12 months, that's not fun, but people are able to kind of like, more easily reset expectations along the way. Just that quick move is really, really painful. And it just totally – it forces people to immediately change their thinking.

And also, coming from a lower base is important as well, because when you move from 3% to 6%, money's free at 3%. But at 6%, it's not free, and it's less free at 8%, but the general psychology shift is less, I would say, if that makes sense.

Dan Ferris: Sure. No, I'm glad you brought up the psychology shift. Because we could just generally refer to it as the inflationary mindset, if you don't mind that. It is quite a bit different. I lived it once, but I was like, ages 11 to 19 or so.

So, I didn't know anything, and it didn't really – it didn't sink in firsthand, but I've certainly, you know, looked back at it. And it was a very different mindset, but I noticed, like, it took years, like, the inflation of the '70s actually began in the late '60s from the so-called guns and butter, right? There's always a crisis. Inflation, in my view, only comes from the government, because they're the ones with their hands on the printing press, and it came from the guns and butter, right? We had to have guns for the war in Vietnam and we had to have butter for the growing welfare state, at that time.

So, we got some inflation, and nobody was worried about it, and then all of a sudden, 1971 came along, and Nixon temporarily cut the cord with gold and, you know, then we got the supply shock in oil, and – you know, that decade just got totally out of hand.

But I do have memories of that mindset. I have memories, you know, certainly as a high school student in the mid-late '70s, sitting in line to get gas on the even-numbered days, because our license plate was even-numbered, with my father in the morning before going to high school. And people talked about the cost of everything, all the time.

Like, who I am and my career choice is based very largely in hearing the words during that decade, "We can't afford it." And I just – it burned itself into me. And I tried to be an artist when I was in my 30s, and I was like, "I can't afford anything anymore!" You know what I'm saying? [Laughter]

Brett Eversole: [Laughter]

Dan Ferris: So, that mentality, I mean, it – the point is, that mentality can burrow in and affect a whole generation of people, if you believe inflation is going to continue like, anything like this. What do you think is going to happen?

Brett Eversole: Well, I mean, I probably – maybe I shouldn't admit this, because I haven't actually written this anywhere, but I'll tell on myself.

Dan Ferris: [Laughter] Shh, just stay quiet.

Brett Eversole: You know, if you'd asked me – yeah, there you go. [Laughter] If you'd asked me six or eight months ago, I probably would've been in the transitory team. Just because this does seem like a relatively supply-shock-induced panic, for the most part. Although – and this is another, kind of an aside, but I find it funny as this inflation talk kind of enters the kind of social zeitgeist, so, you have all these people who are talking about finance that don't really understand it. And everybody's mad at the Federal Reserve.

Dan Ferris: [Laughter] I know.

Brett Eversole: Which is fine – which is fine, but the Federal Reserve took interest rates to zero in 2008 –

Dan Ferris: Sure.

Brett Eversole: – and then printed $4 trillion in the interbank system, and we didn't have any inflation. But then the government actually spends, in fiscal policy, $4 trillion, and then we get inflation and people are mad at the Federal Reserve.

Dan Ferris: Yeah!

Brett Eversole: And you don't have to like the Federal Reserve, but do you understand nothing about how this stuff works?

Dan Ferris: Yeah, exactly. I mean, certainly – like, you can blame whatever you want on the Fed that's actually theirs, right?

Brett Eversole: Sure.

Dan Ferris: So, you can say manipulate the bond market, you can say they've made money too easy. But the problem is, you're right. Like, they swap a dollar of their – they print, too, they do it, we know they do it. But they print that dollar and they swap it for treasuries and it just sits in the Fed Reserve account and nobody – you know, the lending activity is not there. There's not a 10X multiplier effect on that money.

You know, the reason why I am saying that inflation is stickier than most people realize is not because of that. We're not going to get what Hugh Hendry – hedge fund manager Hugh Hendry, who we've had on the program a couple times, he calls inflation a social phenomenon for that reason. And he's referring to the animal spirits of bankers to lend and that multiplying effect on those reserves that we don't have.

I'm just talking about the stickiness of $4 or $5 trillion, however you want to measure it, in newly printed dollars that have been spent into existence by the federal government. And, you know, you don't – you can print $4 or $5 trillion, but you can't print $4 or $5 trillion of goods and services like that, right? So, at least a little stickier than – you know, and certainly not transitory, right? I mean, what if we get 3%, 4% for another five years or something, instead of 2%.

Brett Eversole: Yeah, you look at the '70s, too, and that's kind of what happened, right? You had a big spike and then it settled down. But the settle down was at a much higher rate than what happened previously. And then you had another shock to the system, and then you had it way spike up, and then a settle down. But that settle down, that's the thing, if you get a settle down at 4% for five years when the normal settle is 2%, that's a lot of residual increase that you – above the norm, right?

Dan Ferris: Mm-hmm.

Brett Eversole: So, it does seem like – I guess when I say transitory, yeah, I don't think we're going to see 2% inflation any time soon. But if we're still getting prints at 8% plus 12 months from now, I'd be relatively surprised. I don't think it's out of the question whatsoever, but I would be surprised.

Dan Ferris: Yeah.

Brett Eversole: We've had this – I want to ask you a question, Dan. We've had this kind of thought experiment in our office chatting about this, but say you and I are sitting here 50 years from now and we're studying this period. And a year from now, inflation's at 3%. Would we study this and say that it was transitory, after all?

Dan Ferris: Oh, 3%? You know, that's something. If we –

Brett Eversole: The number matters, I realize.

Dan Ferris: – yeah, yeah, it does. So, we settle at 3, you know, we have to believe –

Brett Eversole: It took two and a half years instead of one.

Dan Ferris: – it took two and a half years, right, to settle at 3. So, you know, we'd call it the 2022 to '23 inflation or, you know, whatever, '22 to '24 or whatever it was. You know, we'd call it a two-year inflationary cycle, let's just say. And we'd say, "Huh, OK."

And overall, though – overall, your earlier point is well taken, still, though, isn't it? Because we serve ourselves poorly by extrapolating to a crisis, right? We serve ourselves poorly by saying, "Well, the housing market's going to do the same thing it did, you know, '06 to 2012. Prices falling, you know, by the Case-Shiller Index is falling all that time.

Brett Eversole: Yeah.

Dan Ferris: Probably not, right? Probably not again, right? So, you know, the 1970s – whoa, you know? Really, on average, throughout the decade, double digits, right? Inflation – whoa! Gold from 35 to 850 – you know, the spike up to 850. But hanging around in the several-hundred-an-ounce for a while. You know, probably – you know, maybe not again, right? We're not going to cut the cord between gold and the dollar again, right?

So, the point is well taken about not extrapolating a trend to a crisis point. That said, I mean, who trusts these people? You know what I'm saying? [Laughter]

Brett Eversole: That's fair.

Dan Ferris: Like, does the Fed have your back? Do you really think the Fed has your back? I think that the Fed is in a mode where it used to be cool to ease, and now it's going to be cool – now it's cool to tighten. The language to me seems to have changed. It's like – oh, no, we need, you know, Powell talks about neutral versus restrictive monetary policy, right? And I think he sees restrictive as proving that he's got the cajones to do this, you know what I'm saying?

Brett Eversole: Yeah.

Dan Ferris: But that's just reading, you know, there's nothing technical or – it's a purely anecdotal, Dan's opinion, you know? We'll see.

Brett Eversole: They'll just fire them and hire somebody else.

Dan Ferris: Yeah, that's right. [Laughter] Right, if he tightens, he'll be out, right?

Brett Eversole: I mean, but to your point, one thing I noticed this year that I thought was interesting is how quickly – probably at a more, like, investor class, people thought the Fed put is, like, dead forever. Like, that became a narrative kind of like overnight, maybe, February or March. Like, OK, we have this really bad inflation. The Fed's not going to be able to ease and help the market like it has in the past. And the kind of assumption, again, extrapolated is that, like – OK, well, this isn't, they're never going to do that again. And to me, that was – that's kind of like a silly point, right?

Dan Ferris: Mm-hmm.

Brett Eversole: Inflation might take much longer than a lot of people realize to kind of get under control, and they might have to take the fed-funds rate a lot higher than anyone would prefer. But the idea that we're – I mean, do you think we've seen 0% interest rates for the last time, Dan? I sure know I don't think that.

Dan Ferris: Yeah, I mean – yeah, I wouldn't say that at all. In fact, I know I probably wrote one or two things about this. I thought – I think I wrote a Digest where I said the Fed was turning Japanese at one point in the past few years. Because I thought – well, you know, we're headed for zero and subzero interest rates, here. We're headed the way of Japan and Europe – ultimately not, in this instance.

Brett Eversole: Yeah.

Dan Ferris: But the idea of running that playbook, you know, the Fed has bought bonds, they've bought all manner of bonds at this point, you know, that you could expect them to buy. I mean, I don't expect them to buy, You know, CCC or anything, but they've bought all kinds of bonds and it's just one more step to the next step in the Bank of Japan playbook to buy – I think the Bank of Japan actually bought ETFs, but they're equity ETFs.

Brett Eversole: Yeah.

Dan Ferris: They, you know, they bought a ton of equity.

Brett Eversole: They – that corner of the market, I think at one point, they owned like 40% or 45% of the entire ETF market.

Dan Ferris: [Laughter]

Brett Eversole: Like, it's crazy, yeah.

Dan Ferris: Yeah. Yeah. So, I mean, they don't have a lot of tools, right? They're really – you know, it's a man with a hammer, everything looks like a nail.

Brett Eversole: Yeah.

Dan Ferris: And they've got one tool – really, one small set of tools. And so, you're right. I fully expect, if I live – if my genetic material is as good as I think it is, my father, bless his soul, lived to be 96. So, I don't know, maybe I'll do a little better, maybe I'll hit triple digits, in which case, I've got 40 years. And in the next 40 years, no chance of zero interest rates? Your point is exceedingly well taken on this guy. Yes.

Brett Eversole: Yeah. And I think what we were saying before, like, fiscal versus monetary policy, I think Powell was smart enough not to say in public that inflation isn't his fault. But behind closed doors, he definitely thinks that's the case. I mean, I don't think that they're looking at their actions and saying, "This is what caused this problem." And if they do have that mindset, then the second they can ease, they're going to, right?

Dan Ferris: Yeah.

Brett Eversole: Because they don't see any long-term consequence of that. Whether that's right or not, that's going to be their view.

Dan Ferris: Right, so, you mentioned the narrative around, "We'll never see the Fed put again."

Brett Eversole: Mm-hmm.

Dan Ferris: I have to say, I have picked up a narrative the opposite, I have picked up the "Fed pivot" narrative. Like, at one point, I went to Google Trends for "Fed pivot," and it was like 100. I mean, Fed pivot was on everyone's lips. And I'm on Twitter, like, way more than a normal human being should, so, I saw it there a lot, too. And, you know, my feed – your Twitter feed is self-selected and it still came through, right?

So, I mean, what do you think of that idea? What do you think of the fact, the idea that, you know, they put on another 75 bps or so by the end of the year and they're done and then essentially pivot?

Brett Eversole: I don't see how that's possible, at all. I mean, the market's definitely pricing that in, right? Like, the yield curve is massively inverted right now. But that seems like not possible whatsoever. Like, you talked about the '70s inflation, that didn't get under control until the fed-funds rate was higher than the inflation rate.

Dan Ferris: Mm-hmm.

Brett Eversole: And so, even if we are going to see some deceleration like we saw this month, like, there's no guarantee that happens going forward, but even if we see major deceleration, like, there's a lot of hiking to do to get above 5%, 6% by the end of next year, like, above that level.

Dan Ferris: Right.

Brett Eversole: So, the idea that we're near the terminal level seems insane to me. I just don't see how that's possible.

Dan Ferris: You sound like Druckenmiller, almost.

Brett Eversole: [Laughter]

Dan Ferris: He thinks that historical precedent might not hold this time. He thinks we might not have to see that.

Brett Eversole: Well, again, like what Powell says in public versus behind closed doors, I bet – and they've kind of done this in their language in the last few meetings. They haven't said the word transitory, but they kind of say, like, the market's taking care of this for us.

Dan Ferris: Mm-hmm, right.

Brett Eversole: Like, they've kind of said their side of things. So, my guess is, they're hoping that they can do a few more hikes and we're going to see deceleration because the supply shock problem begins to solve itself, that many trillions of dollars the U.S. printed kind of filters out, and the inflation rate comes down on its own. And let the market do the work for them. That's – if I'm them, that's what I would be hoping, right? Because I don't want to have to be the guy that – you know, everybody hated Volcker. We only love him now. [Laughter] Like, I wasn't alive then, but reading in history, that was not a fun time to be in the financial markets. He was not a popular guy at the time. So, I don't think Powell wants to do that if he doesn't have to.

Dan Ferris: Yeah. I, for one, will never lionize that guy. [Laughter] I'll never lionize him. He – you know, that act of just pushing inflation way, way into double-digit territory, or I'm sorry, pushing interest rates way into double-digit territory, I think it hurt a lot of people. I think it – again, the effects of that, I think, were felt for years and years, you know? Of both sides of that – the inflation that preceded it and the brutal recession that followed.

So, I don't know. I think the problem is that these folks think that they can tweak and manage and control a $24 trillion economy from the top down.

Brett Eversole: [Laughter]

Dan Ferris: And they can't. And they never say, "You know something? We can't do this. The problem is us." [Laughter] They never say, "The problem is us," you know? The problem is always, "Oh, well, we need to tweak more. We need to tweak different. We need to tweak another way. We need to spend more. We don't need to spend less."

So, I don't know. That's what keeps me in, if you must call it, this extrapolation to crisis mode. [Laughter] I'm always on the lookout for – I don't know, I suppose you could call it a tail event or just something really bad happening that nobody anticipated.

Brett Eversole: What do you think that event is today, if you have any thoughts? Because I think we're in that position, like, generally speaking with the market in general.

Dan Ferris: Yeah.

Brett Eversole: Where –

Dan Ferris: Go ahead.

Brett Eversole: – bad stuff is probably going to happen and we might get a recession. But, you know, unless we get – we need a Lehman-type event for this to really get brutally ugly, in my view, and I just don't know what that is. So, I'm curious what your thought is.

Dan Ferris: Yeah, my problem is, I can't claim to know what it is. But I think it – you know, because it's not, it'd be a knock-on effect. It would be a second, third-order effect of something happening. And I can maybe guess about the "something," but not the second or third order effect. So, the something might be a reverse wealth effect, right? Households generally have two big sources of wealth – they've got their 401(k) and they've got their house. And that equity, which has reached, I think it's $28 trillion now, record heights, that's real wealth. People pull that out. They pulled it out, you know, before the big crisis started, you know, in 2008. And they tend to pull that out and use it, and it's real.

So, if it goes away, that's a real source of wealth that evaporates. And here, we've taken a – well, now, we could just call it maybe a 15% or 20%, whatever index you want to use, hit to one side of that. And if we see a big hit to the other side of it, then we could get deep into recession territory. And once we're there – you know, you tell me. Contagion in the bond market? I don't know. I don't know what the second or third order big, scary event that I'm really scared of is. That maybe is one way into it, I don't know.

Brett Eversole: Well, let's just keep our fingers crossed that I'm right about housing, then. [Laughter]

Dan Ferris: That's right. [Laughter] Fingers crossed.

Brett Eversole: It will all be fine. [Laughter]

Dan Ferris: That's right. So – that's right. That's what you've learned here today, ladies and gentlemen. Brett is allaying your fears. Dan is –

Brett Eversole: That's it.

Dan Ferris: – way too afraid and Brett has saved the day.

Brett Eversole: [Laughter] It's good to have optimists and it's good to have pessimists, right? Not that you're a pessimist necessarily, but you learn in that direction.

Dan Ferris: Right. Well, yeah. I mean, I have leaned in that direction lately. I just have this view that, you know, you should be a bottom-up investor most of the time and, you know, it's what feels right to me.

But there are times when the top down gets so extreme. I think at the extremes, one needs to respect cycles, and cycles do occur, right?

Brett Eversole: Yeah.

Dan Ferris: And cycles are brutal, aren't they? Cycles don't care about how wonderful your business is, do they?

Brett Eversole: Not a bit.

Dan Ferris: Right? Like, Dan spends all this time looking at free cash flow and balance sheets and moats and all this crap – cycles don't care about any of that when they really get cooking at the extremes, right?

Brett Eversole: Yeah.

Dan Ferris: I guess – yeah. So, if you subscribe to my newsletter, maybe you should get Brett's, too. [Laughter] Because he's more in tune with the cycles than I am.

Brett Eversole: There you go. [Laughter] So, Dan, I've got a question for you, as well, maybe off the topic of finance.

Dan Ferris: OK.

Brett Eversole: But I know you're a great guitar player and musician. What's got you interested in the music world right now? Are you playing a lot of guitar? What's your rig look like? Tell me something, if anything. I know you were playing a Parker for a while.

Dan Ferris: Yeah, I do still have my Parker electric guitar. I haven't performed with it in public. Actually, I haven't performed with that guitar in public forever – ever.

Brett Eversole: OK.

Dan Ferris: And I haven't played electric guitar in public probably for 15 years. And last time I played classical guitar in public was a few years ago at the Stansberry conference, you know, before – pre-COVID, right?

Brett Eversole: Yeah.

Dan Ferris: And I decided at that point that I don't play noisy rooms anymore, so, I probably won't be back there doing that.

Brett Eversole: [Laughter]

Dan Ferris: But, you know, I'm getting old, Brett, so, I have little aches and pains in my hands. And I am still learning, and in some ways, my technique is actually – in some ways, my technique is better than it's ever been.

Brett Eversole: OK.

Dan Ferris: But, you know, I don't practice a whole lot, and my repertoire has kind of shrunk because of that. But like I say, on the other hand, I'm playing some of the great virtuoso pieces that I've always wanted to play. I'm just not playing, like, 40 of them, you know what I'm saying?

Brett Eversole: OK.

Dan Ferris: I'm playing, like, five or 10 of them.

Brett Eversole: That's fun, though.

Dan Ferris: So, what are you – yeah, you are a musician yourself.

Brett Eversole: Yeah.

Dan Ferris: What are you up to these days?

Brett Eversole: Yeah, I play guitar, as well. I play electric at the church we go to. So, I do that a few times a month, which is fun. And, you know, I grew up addicted to, like, progressive rock and metal. So, I'm always trying to learn things that are way outside of my skill level, but it's a fun challenge.

Dan Ferris: It is, and I've always done that, too. I mean, I was, like, first-year university guitar student, a classical guitar student trying to play J.S. Bach "Lute Suites," the most complicated stuff on the guitar. And it took me years, but I'm finally doing some of it, so.

Brett Eversole: Yeah.

Dan Ferris: But I have found that there is an intersection between music and finance, if only in – you know, in the fact that you had better be constantly learning or you're going to stagnate badly, and you're going to fall way out of step really, really quickly.

Brett Eversole: Yeah, I agree. It seems like it stimulates your brain in a similar way. I don't know how to describe it other than that, but my brain when I'm learning something finance related, I'm never more engaged, mentally, than when I feel like I'm uncovering stones that have never been uncovered. Of course, they have, but I'm learning them for the first time. And I get the same thing with music when I learn new things and pick up new techniques. It very much stimulates my brain the same way.

Dan Ferris: Yeah, yeah. And for me, those – you know, the learning has definitely informed my investing. And you're right, it is hard to articulate it, but I'll give it a crack. I read a book called How We Learn by a guy named Benedict Carey, and it was talking about how you can just, you can learn so much simply by being consistent and by being on a decent schedule. Like, you could learn something brand new on a Monday, you reinforce it on a Tuesday, and the way your brain works, you could wait a week to come back to it. And when you reinforce it after that week, that's as hard as your brain can work at it, basically.

You don't – yeah, in other words, I spent years, 10 hours, 12 hours in a practice room doing the same thing day after day after day to try to beat it into myself. And I read that book a few years ago, and that's when I – and with less practice time than ever in my life, I have picked up a lot of things. And that's filtered into writing for me, because now, I'm much more inclined to do the research and start putting the reports together earlier and more often, but not pulling all-nighters, anymore. I don't have to stay up until midnight, you know, the night before a deadline or the night before a report is due or something.

I can just – the act of going away and coming back is really valuable. Like, I value that cutoff. I get up at, like, 5 a.m., so, my cutoff is 4 p.m., usually. And by 4 or at the most 5 p.m., I'm like, "That's it, I'm done, I'm away from this." Because the stepping away and being away and then coming back is super-duper valuable.

It's like weightlifting for your mind. It really is. You know, because what I've learned about weight -lifting is, you just get the weight that you can control. You don't want to overdo the weight. But it's just slow reps to muscle failure, to momentary muscle failure, MMF. And you do those slow reps, and that's how I built – like, I wasn't doing anything, and I was trying to move all this weight around, I wasn't getting anywhere. But then I just did the right schedule, the minimum weight that I needed to really get some resistance that I could control and do those reps.

And there's an intersection in all of this for me. I'm probably not articulating it great, but there's an intersection here that's something like, you know, be consistent, don't overdo it, do everything often and early and in the right way, with the right rhythm. Not, like – when I was young, and you're younger than me, so, you probably remember, you know, you may still be in this part of your life, where you're just, like, intensely going at everything, all day long. Can't do it. And it turns out, I don't need to, shouldn't – you know, that's not the way it works.

Brett Eversole: I found a similar process to what you described when I write, as well. When I first started, for years after I started, I would kind of write as I researched and try to intermingle the two. Those are very much – like, doing research and writing are very much two different disciplines. And I would try to intermingle the two, and what I would end up with is, it would take a lot longer than it should, and the end product wasn't nearly as good.

And now, I basically make sure all of my – I do all of my research, get everything organized together, and then I'll write kind of like a half a dozen bullets, and I'll figure out how I want to organize those bullets mentally. And then I can come in the next day with everything in front of me and I can write five or six pages in a couple of hours. But it's that – and the product is much better. And to me, it's that organizing – like you say, when you're doing the research, do that task and I'll do it over three or four days. Get everything together, I'll come in overnight, I'll wake up in the morning and take a shower and think about something that I missed and then go and put all those, put all those pieces together, organize all those pieces, and then you can execute the writing really easily.

But I do think you're definitely on to something. Like, don't try too hard. Trying too hard is generally not a good thing. And finance, generally, is a weird thing where learning more and trying harder doesn't make you a better investor. [Laughter] Oftentimes, it makes you a worse investor.

Dan Ferris: Yeah.

Brett Eversole: Which is very – it's a weird thing in life that's like that, but it's very much like that.

Dan Ferris: Yeah, Jeremy Grantham of GMO, who has made a thorough study of 30-odd bubbles and did great in 2008 and during the dot com era, he has a quote that – I could probably Google it, but I don't need to, because I can get the gist of it. The gist of it is, hard work gets in the way of thinking, right? Hard work gets in the way of thinking. That plays right into what we're saying.

And I think this is actually a good place to ask you my final question. We're on a good track, here. So, the final question is the same for every guest, no matter what the topic, even if it's not finance. And it is very simply, if you could leave our listener with one thought today, what would it be?

Brett Eversole: I guess don't try too hard. [Laughter]

Dan Ferris: That's not bad. [Laughter] That is not bad. As final thoughts –

Brett Eversole: That's something that everyone can take away.

Dan Ferris: Yeah. Right. Work consistently, don't try too hard. Yeah.

Brett Eversole: Yeah.

Dan Ferris: I mean, there's context, but just having that on a plaque on your desk is all the reminder that you would need for the entire context. I agree – don't try too hard. It's a big mistake.

Brett Eversole: Yeah, I agree.

Dan Ferris: Well, thank you for that. Thank you for that, and thanks for being here, too, Brett, it was good to – good just to talk to you again. It's been way too long.

Brett Eversole: Yeah, you as well, Dan. Thanks for having me, I appreciate it very much. And yeah, it was a lot of fun catching up.

Dan Ferris: Yep. All right, well, I guess that's bye-bye for now, then.

Once again, I have to say, I hope you enjoyed that as much as I did. But I realize, what I really mean by that is, I hope that was as insightful and fulfilling a conversation for you as it was for me, and I think for Brett, too. It's just so good to interact with somebody who is bright and thoughtful and spends their whole life doing reams of homework on markets and just knows what they're talking about, and is a pretty good guitar player, to boot, I have to tell you. I've seen Brett play. We hung out with him in the offices there in Florida, and the guy can – he's good at teaching himself difficult things.

And as you heard, he's got a head for math and has applied it to markets very well under the tutelage of Steve Sjuggerud over many years, and that's what you come up with. A really bright guy, always learning, great insights on the market, and a very reasonable, sensible view, you know? It's a very reasonable, sensible view that he articulated about housing right now.

And it's not lost on me. When I talk about the extreme sort of risks that I so often are kind of my bailiwick these days, I don't mean to suggest that they're the only outcome. In fact, I believe I've emphasized that you should prepare for a variety of outcomes – that's why I always say prepare, don't predict. But what I'm getting to, here is – guys like Brett tell you what I think is probably more likely to happen, based on current conditions, where I'm telling you about things that are more likely than you suspect, even though they're still highly unlikely. So, you see, it's – you know, I feel like you need to know about both of those things. So, that's why I have reasonable people like Brett on the show to discuss them.

That was a lot of fun. All right, let's try and have some more fun in the mailbag. Let's do it right now.

Look, I think you know by now, I'm always trying to tell you the really hard truths. Even when – especially when – what I have to say is unpopular. Today, the hard truth is that your wealth is in danger. Everything you may have made in the bull market of the last decade could disappear very quickly. Some of it's probably gone already. This process has already started, and even if the financial market somehow avoided devastating crash from here, inflation is still eating 8% of your money every year. I've spent 20 years helping people prepare for extreme market shifts, just like the one we're going through right now in my role at Stansberry Research. I've recommended 24 triple-digit winners, and I called the collapse of Lehman Brothers with near-perfect timing.

Well, today, I'm issuing my biggest warning, ever. If you want to preserve your retirement and your lifestyle in the coming years, you need to act. I recently went on camera to lay out a simple, one-step plan for what to do. You can set yourself up in minutes and likely forget about inflation, rising prices, or the worst effects of a market crash for years to come. This plan does not involve options, shorting, crypto, or anything complicated, and it doesn't require perfect timing. The perfect time to act is right now, and you could see triple-digit upside in the coming years.

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In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Send questions, comments, and politely worded criticisms to [email protected]. I read as many e-mails as time allows, and I respond to as many as possible, or call our listener feedback line at 800-381-2357. Tell us what's on your mind, and hear your voice on the show.

A light mailbag this week. We did get a few crypto questions from our interview with Eric Wade, but I think I'm going to pass those along to him and either get some responses to read, or maybe I can – he's a busy guy, but maybe I can rope him into coming on the show for a few minutes to talk about them.

But this week, very light, I only have one question, and it comes from longtime listener and frequent correspondent Lodewijk H., and he says, "Dan" – actually, he says, "Hi, Dan." Well, hi, Lodewijk. He says, "I was walking and I had an idea. The trade in Russia-issued government bonds is slowly starting up, but Russia can't repay. But it is said to pay off in other things." I think he means other commodities, he's getting to that in a minute. He continues, "With Russia having a bankrupted rating, it would mean the price is somewhere between 5% and 30% of nominal value. Why not buy some government bonds and inform Russia you're OK with no U.S.-dollar payment. Gold is fine. When they repay you, you get 100% in gold. Normally, I'm against investing in government bonds. The Greek default shows investors are not created equal, so, stay away. But this might be an interesting way to acquire gold. Just an interesting idea for consideration," Lodewijk H.

Lodewijk, you know more about this than I do. You know, if you're going to default, if you're a sovereign and you're going to default and you're kind of in a position of some power, at least, as Russia is, with the amount of energy and other things that they supply to the world – eh, do you want to be paying out your gold on your sovereign debt? I'm not sure that you do. I'm not sure that you do. I don't claim to have considered all the dynamics of that or even understand them very well, but it just seems to me like, if you're in default and the bonds are trading between 5% and 30%, anyway – like, why bother? You're there – we're there, they're there. They don't need – you know, I don't think they need to do anything. But I could be wrong.

You're right, it's an interesting idea to consider, and I think somebody who's probably more experienced thinking about these things in terms of game theory, you know, what are their options, what would they most likely be to do might think this through a little better than me. But I'm glad you brought it up. It's an interesting idea.

And that's it for the mailbag this week, and that's it for another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We 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 like this episode and know anybody else who might like it, tell them to check it out on their podcast app, or at InvestorHour.com. And 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 me to interview? Drop us a note at [email protected] or call the listener feedback line at 800-381-2357. Tell us what's on your mind, and hear your voice on the show.

Until next week, I'm Dan Ferris. Thanks for listening.

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