Episodes

Announcer:                 Broadcasting from Baltimore, Maryland, and all around the world, you're listening to the Stansberry Investor Hour.

[Music plays]

Tune in each Thursday on iTunes for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here is your host, Dan Ferris.

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 are going to talk with Mitchel Krause. We actually prerecorded the interview a while ago. You can hear that in the discussion when we talk about the VIX being elevated and the market being limit down. But I still thought that today is a good day to listen to this because Mitchel has a lot of smart things to say. I'm sure you've never heard of him before. And I want you to know him. And I want you to hear what he has to say.

But first, as usual, I have a few thoughts to share. You may not know – we don't say it often enough – our mission here is to help our listeners become better investors. We do that a number of different ways. We try to talk with a lot of really smart folks who have good investing ideas. And every now and then I might have an idea for you. And I think probably the best way we've helped people become better investors lately is we've talked about the coronavirus every single episode since our January 30^th episode. And we gave you a pretty decent bond trade to do. So, where are we with that?

The stock market dropped 34% like faster than it's ever done before. The global economy is looking at a massive contraction. U.S. economy is suffering. Over 10 million people out of work at this point. And the market has bounced really hard off of the March 23 bottom. It's up about 20% or so here. I don't know exactly what it is but it's about 20%. So what do you do?

Well, I have a couple of ideas about this. One is just the obvious. The obvious is that this is classic bear market behavior. It really is. You get the big down moves obviously and then also the big bounces up in bear markets. This is classic bear market action. So it's just happening on a faster-than-usual time scale. And I think that kind of screws people up a little bit because they – "Well, it happened so fast, it's probably just a big dip." Instead of a 5 or 10 or 20% dip, this one is a 34% dip. And since we hit 34% down, of course there's been quite a bit of buying. There's been a lot of big up days. Like a five or 6% up day is not a big deal [laughing]. And that's classic bear market behavior.

Some people are saying that the bear is over – it was quick and it's over and we're back in a bull market now. I'm not the guy to tell you that. One way or the other. There are other people who study the history of price action so closely and they have very rigid definitions of how you know you're in a bull market and how you know you're in a bear market. I just go with the general: down 20% or more, we're in a bear market. So that's sort of where I am.

And I've seen some interesting thoughts about this. For example, just a little tidbit from Jim Bianco of Bianco Research that I saw on Twitter on Tuesday. And Tuesday was an interesting day. Bianco said the Dow Jones Industrial's average was up over 4% and closed down on the day. He says: since 1925 (95 years), up more than 4% and closing down on the day has happened once. One other time, October 14, 2008. Then Treasury Secretary Hank Paulson forced the banks to take TARP money.

And then he tweeted a second tweet on Tuesday. He said: the S&P 500 was up 3.5% at the high and closed down on the day as well. Then he says: since April 1982, which is when the – he's implying here with a little note that that's when the high-low-close data for the S&P 500 began. He says: since April 1982, that has happened three other times. And guess when they were? October 3, October 14, and October 17, 2008, all three of them October 2008. And he concludes – I don't know if this is true, but he concludes: the market continues to trade like October 2008. And from then it was six months and another 25% down before the ultimate low, he says. It's seductive to take a big, complicated, hairy thing and just boil it all down to one statistic. I don't think you can really do that. But it does reinforce what I've said, doesn't it? It's classic bear market behavior.

And my first thought upon reading that was: what was I doing in October 2008? Oh, right, I was pounding the table to buy Automatic Data Processing because everybody said it's going to be a huge recession and everybody's going to be out of work, and the stock just went straight down. And you can see it. I mean, the chart is like down, down, down, down, down, and then, boom, straight down. And I said, "This is a fantastic business. It's a cash gusher, high returns on equity." Great balance sheet. Little or no debt at that time. And the way this usually goes is all the biggest, best-financed, most financially-secure companies emerge stronger from a crisis than they went into it because some of their competition disappears and a lot of it weakens.

So I was pounding the table to buy that thing and it became – I don't know if it still is. It was the No. 1 performing recommendation in all of Stansberry, open recommendation, for some time. I think Doc Eifrig's Microsoft recommendation might've eclipsed it. But that Microsoft recommendation was actually – I think it was Tom Dyson's when he took over, and then I took over and I kept it up, and then Doc Eifrig took over, he kept it up. So he gets the credit for it now.

But, point is: the initial move – everybody knew we were in hell and stocks had fallen quite a bit, and the only thing to do was look around for great businesses to buy. That's what I was doing when we were about here, according to Bianco, in the 2008 crisis. I was looking around for great businesses to buy. And by then I was already three or four years into my "World Dominator" kick, buying the world dominators, the biggest businesses in a given market. And I defined it kind of loosely because I know you can't be too rigid about that sort of thing. So I called Berkshire Hathaway a world dominator. I think I said it was one of the biggest reinsurance companies in the world. But that wasn't really what it was about. It was just a big, great business with a fantastic balance sheet and a management that knows how to handle the cycles.

And I recommended all kinds of stuff back then: Walmart and Microsoft and ADP and a whole list of them – Johnson & Jonson, Procter & Gamble, and they all did real well. All recommended pretty much around the time of the crisis. Prestige Brands Holdings was a small-cap company that actually dominated niche product markets in little health care over-the-counter products: wart remover and all kinds of stuff like that. It did fantastically well.

So, my point is: look, I was bearish for three years, right? But the time for that is passed. It's not about me calling the bottom. It's about the top being behind us for me. It took me three years to be right so I'm not going to try to get cute here. I said this before... I'll probably repeat it more: It's a mistake for me personally to try to get cute and call the bottom and say, "Oh no, this is a bear market rally – can't buy anything." And I think that's probably true. But I don't know. This could be a bear market rally. 20% with blazing speed right off that March 23 bottom. Could be. Probably. It would make sense historically. I don't know.

I just know that the top is behind us and I was wringing my hands and worried when everybody else was super-duper happy-clappy watching the market go up, telling me I was wrong. Now, I'm looking to see what the great businesses are that are trading at decent prices with everybody wringing their hands in bearish. I did an interview with Jessica Stone recently that's going to be on the Stansberry website at some point here, and she said, "You know, there's a lot of bearish people around here." And I don't know if she meant around Stansberry or where, but I was bearing when nobody was bearing, and now I'm – I don't know if I'm bullish. But the time to worry about the overall stock market is passed for me. So I'm just looking around to see what there is to buy.

And as far as what you should do right now, I'm not saying, "Buy, buy, buy, buy, buy." I sort of am. But let me qualify this. Most people shouldn't be doing anything all along. Most people should just let their 401(k) ride. It takes a hit... it'll come back. They won't even need it for another 10 years let's say. I mean, if you need it in 10 months, you shouldn't've had too much money in stocks anyway. But if you need it in 10 years, hey, cool beans. You're fine. But you're in a tail event. A tail event means something highly unlikely has happened and the market has been hit really fast and really hard. "Oh, what should I do now?" People think they should do something. Well, most people should not do anything. They should just leave their 401(k) alone.

And maybe I think gold is a good thing for the next few years because there's going to be a lot of money printing or something. That worked out OK last time around. Gold was a good buy during the crisis, and it peaked several hundred dollars higher than it was trading – or maybe even over $1,000 higher than it was in the crisis, in the 2008 crisis. So that sort of worked out. But then it crashed of course, right? And it crashed back down to $1,000, from $1,900. So I'm not telling you that gold is going to be the greatest thing in the world. Although it would make a lot of sense to me. It makes sense to me to own some gold here, to own the physical, and even gold stocks too, and just kind of hang onto them. I think they'll do well over several years here.

But I think great businesses will do well too. A really great business that's got a huge competitive advantage, gushing cash, great balance sheet, consistent margins over a long period of time, good returns on equity, and they maybe raise their dividend every year or do something. Or maybe they're good at share repurchases. Almost no company is but maybe they are. Something like that. Those are the five financial clues that we use to identify great businesses in the Extreme Value newsletter: cash flow, balance sheet, margins, dividends, share repurchases, and return on equity. So that's my great business spiel. If you can hold, if you can buy a great business right now and hold it when it's down 20 or 30%, you should, in my opinion. Anything else is really going to be difficult.

I know some guys who are really excited about tanker stocks, and I saw an article in Oil & Gas Journal recently about the CEOs of Frontline and Euronav and one other one that I can't remember. CEO of Euronav says: if things keep up the way they are, he's going to make more money than his market cap this year. And that's Hugo De Stoop from Euronav. That's interesting if it's true. Because, see, the tanker rates, the charter rates are going up because there's a glut of oil and people want tankers for floating storage. So the tanker rates have gone up. So the stocks have – they sold off along with everything else.

I know some people are buying natural gas stocks hand over fist because they've been absolutely obliterated. But, man, that's a risky trade. You're going to wake up one day and you're going to be down 40, 50%along the way here. And they're up 10% a day the past week or so, but that kind of action – you're going to have to have intestinal fortitude to hold that kind of thing.

So, yeah, you can do things like that if you know yourself well enough to be able to do it. But if you can't, you can't, and you just do nothing. I mean, when things are this bad, when the market is down and there's 10 million people out of work, I understand the sense of fear. My sense now is that maybe this thing passes more quickly than I thought it might. I honestly don't know. But I know that stuff is cheap enough, the world's not going to go out of business, and I'm starting to recommend stocks in Extreme Value and getting very excited about some of them.

So, summing all this up then, we're in a tail event. Don't try to trade unless you're a scarred, experienced trader. If you want to do anything at all, stick with the really great businesses. And you know what they are, right? Google is a great business. Amazon is a great business. I'm not saying these are the ones I'm buying right now or recommending in Extreme Value. But just learn to recognize a great business. Don't buy the stuff I just said. Don't buy Google and Amazon. Learn to recognize why it's a great business.

It's only the ability to recognize that enables you to hold, right? You can't just take someone's advice blindly. You can't read a newsletter and say, "Well, Dan says buy this so I'm going to buy this. Oh my God. It's down 30%. Dan, you're an idiot." No, that's not how it works. I got a really thoughtful, thoughtful e-mail from – actually, I got two of them this week from people who thanked me not for making a good pick – the one guy said, "You know, your picks haven't been that great this past year. But you were spot on about worrying about the market being too high, et cetera." And he was really thoughtful. He went on for quite a while. I wish I could read the e-mail but it's so long and I didn't know which parts to pick. But he has another one that was shorter that I'll read later on.

But the point is: I felt like I had a reader there who recognized that you had to do your own work to get enough conviction to act and to maintain discipline and stay the course. I think he said he got out of stocks early on, maybe earlier this year, so he missed all this horrible drawdown that everybody's enduring. And he did it because he said he read some of my stuff and he said he logically deduced that was the only thing to do, even though that's not what I said to do.

So, you have to be very thoughtful. You have to have the skill to recognize the really great businesses. There are businesses I've been holding in Extreme Value for 10 years. Well, one that I've been holding for 10 years, and people say, "The thing's gone sideways for a lot of this time. What are you doing? It's a lousy investment." Maybe so, but it's a fantastic business, and I have absolute rock-bottom conviction on a bunch of things. The assets are going to generate – some of them for centuries – they're going to generate cash. The management is going to handle itself extremely well throughout the cycle. They're going to behave well. That's the key. That's the real linchpin. They're going to manage the balance sheet so they're not going to be getting in big trouble financially. So I have this conviction. And I know it's a great business.

If you told me it was a lousy business, I would filet you. I would filet you and have you for lunch. If you told me it wasn't a good investment because the share price hasn't done great, then we could have a more balanced conversation. I'd have to say, "Well, you're right: it hasn't done great, the share price." But it's a fantastic business and I want to learn to recognize and hold fantastic businesses. And many of them will perform extremely well. And this is one of the themes you'll find throughout not just Extreme Value but Stansberry Research. Porter Stansberry just started a whole new product called Forever Portfolio. In his other newsletters, they've emphasized knowing what a great business is and hanging onto it for a while.

So if you have that knowledge and that experience of knowing what a great business is, that is how you get the conviction to hold it when it's down 20 or 30%. And then go with God and buy great businesses right here right now. With the caveat that we're up 20% off a big, big hairy minus-34% bottom so there's probably a correction around here somewhere. And if we find an ultimate bottom 20% lower than the March 23 bottom, guess what? Wouldn't surprise me a bit. But I'm going to keep hunting for great businesses. Bear markets are the time to do that. OK?

I think I've beat that sufficiently to death, haven't I? OK . Let's move on now. We'll talk with a really thoughtful guy named Mitchel Krause, and I'm really happy to introduce him to the world. Let's do that now.

[Music plays]

Today's guest is Mitchel Krause. Mitchel Krause began his journey in the financial industry with boutique investment firm Ryan Beck & Company, focusing on bank stocks and municipal bonds.  After eight years with Ryan Beck's Private Client Group, having spent quite a bit of time in stock information and conversion centers, he transitioned to a hybrid institutional sales/sales trading position within the firm's Bank Services Group.

And moving on to 2012, he willfully stepped away from his institutional team at Stifel, folding back into Stifel’s Private Client Group, moving his family from the New York City suburbs of New Jersey to Raleigh, North Carolina – we'll talk about that – in an effort to pursue his initial "want" upon entering the business. We'll talk about that too.

In 2016 he began creating and running discretionary portfolios, using capital preservation strategies focused on protecting downside risk. After nearly 22 years with the same firm – name changed through acquisition, but same firm, 22 years. Then, Mitchel quit in February of 2018 and founded Other Side Asset Management, a firm focused on providing investors with true informed consent when it comes to investing.

You've done a lot of stuff, Mitchel. Welcome to the program, sir.

Mitchel Krause:          Thanks, Dan. Given your guest list, I'm humbled to be here. Thank you very much.

Dan Ferris:                 So, I like your bio that you sent us. And I'm intrigued right away by your "initial want." You put in your bio: in an effort to pursue your "initial want" upon entering the business, you moved from the New York City suburbs in New Jersey to Raleigh, North Carolina, stepped away from Stifel's Private Client Group. What was that about? You had me curious.

Mitchel Krause:          So, my initial want when I got into this business many years ago, or what I thought I was going to do was educate investors or help educate investors. I originally wanted to be a teacher. And coming from two teachers, both of them said, "You're not becoming a teacher". So I like helping people. I want to teach people. And upon entering the business, I thought that that was a great thing to do: let's teach people how to invest. And over the years, you learn that this business is a little bit different, and while you think you're teaching, you're really basically selling. And it took me quite a while to understand how the business actually worked.

It took me – the business is very siloed. So, retail stays on retail...  private wealth, whatever you want to call it. Retail is retail. Institutional is institutional. Typically, institutional is institutional sales, institutional sales trading, trading. And the hybrid group that I eventually went to work with – we kept everything pretty much in-house in our own little group. So we did sales – we did sales trading. So, being exposed to a handful of different things within the industry kind of gave me a little bit of a perspective that's different than the average bear I would say. So, in wanting to teach, I've taken my 20-some-odd years of experience throughout the industry, and now I am doing my absolute best to teach people.

The ironic thing about that is: in wanting to teach people and helping teach people, I think I've become a perpetual student. And there's not a day that goes by that I don't learn something from somebody smarter than me.

Dan Ferris:                 Those sound like pretty good days. What Porter Stansberry says – he says there's no teaching, there's only learning. And as you've shown us, that's kind of true. You want to teach and then you just wind up learning, which is great. And wanting to educate investors is really great too.

Mitchel Krause:          So, I'm not a terribly original guy. I was trying to figure out a name for my company and I was talking to a buddy of mine and he said, "What do you do?" and I said, "I want to tell them the other side of the investing story." Because there is a side that the vast majority of people never hear. And that became the origin of Other Side Asset Management. And it's kind of like a salmon swimming upstream because I'm often telling a story that most people find very difficult to believe. And when people have heard something for so long, they have a mantra – they have a narrative in their head for so long that when they hear something that's really quite different from what they're used to hearing, "Is that guy crazy or does he really know what he's talking about?"

And at this point in time, I have stopped worrying about what others think. I never really cared about what others think. But I guess it's more important to me to reach the people that I can reach and educate them. And if others don't want to play along or follow along, as Porter often says, as I've read him for years, "Horse, meet water." Right?

Dan Ferris:                 Yeah. So, what is it you're telling people that you think they might not want to hear?

Mitchel Krause:          Well, I think the vast majority of people are built on a belief – or most investing portfolios are built on a belief that risk mitigation comes through diversification via a set of different ETFs or mutual funds. It's the industry mantra. It's been the industry mantra for decades. We could argue about its origin. I would suggest it dates back all the way to 1975, May Day, when discount brokerage firms were actually able to come about. And most people don't realize, but for the vast majority of history, commissions were fixed on Wall Street and you couldn't offer discount commissions and you couldn't offer discount products or index products. And then Vanguard was formed on that day, and Schwab started introducing discounted commissions, and incentives changed for people.

So, where the incentive used to be trading behind a computer screen, trading stocks back and forth, back in the day, when incentives changed to becoming asset gatherers, people started hiring professional money managers. And I think that the whole incentive structure just changed. It's one of those things where – you've cited it before, I've cited it numerous times: Dalbar studies, QIAB studies. I think I can quote from memory: "Diversification fails investors when needed the most because in times of crisis everything goes down together." Right?

Dan Ferris:                 Yeah.

Mitchel Krause:          So, I think the last 14 days has proven that to people. So what I try to do is educate people that there are different risk strategies that you can utilize to protect your downside in an environment like this. And so far, so good. We're still down a little bit, and I'm kicking myself for being down, as I think I could make some better decisions. But we are doing leaps and bounds better than every indice that's out there right now. So I just try to give people the option to understand that there are other ways to invest while protecting your capital, and the more capital you protect, you don't have to work as hard to make up money when markets do come back.

Dan Ferris:                 That sounds good to me. I know you don't want to give away secret sauce, and I appreciate that. But can you give me an idea how you fulfill that last bit that you said about ways to protect things? Are we talking about – what are we talking about exactly?

Mitchel Krause:          Well, there's no particular secret sauce. I'll sit down with anybody and have lunch with them, and if they want to utilize my services, that's great. If they want to take what I have to say and do it themselves, that's fine too. Again, I do want to try to help people and I do want to teach people. But capital preservation strategy – something as simple as trailing stops, right? As you've preached for quite some time, to hold different assets, to hold some gold, to hold some cash. I've been telling people for years that they should have physical gold, which is something that I don't get paid for, right? It's not about bringing in all assets under management and managing everything to get paid as much as humanly possible. It's about giving people the proper guidance so they can be as diversified and protected as possible.

If you have X millions of dollars, well, the average individual will most likely say, "You can own REITs here. I'll buy REITs for you," right? What about just going out and buying a rental property? That's physical. That's tangible. What about having physical gold? What about having a different asset class that's not correlated to those markets? Most people are trained to do their best to stick with an index. And I think that that gets people in trouble in many cases. Case in point, last year I had a pretty good year. I was up about 18.5%, 18.7% roughly. People were upset because the markets were up more. I did it with X% in cash. I think I had 20-some-odd percent in cash. I had X% in gold. I did it from a risk management perspective where people were not taking on absurd amounts of risk.

And I had plenty of people say to me, "Why aren't we there? Why aren't we getting 28, 30%? Why aren't we getting 23% like the different indices?" And I would point today. Or I would point to the last two to three weeks as to why we weren't there and why we didn't want to be there. The leverage in the system has never been greater. The credit quality in the system has never been worse. I do my best to take a macro approach, a broad, macro approach. And for years I've written about the debt and leverage in the system. For years, I've talked about the auto industry and the manufacturing industry and industrials slowing and slowing.

And I take an approach and I try to educate people from the standpoint of taking what Wall Street says and then breaking it down into something simple that people can understand. So –

Dan Ferris:                 Mitchel, I'm going to interrupt you here.

Mitchel Krause:          Shoot. Go ahead.

Dan Ferris:                 I can't resist telling the listener: if this guy made 18% last year and he was, what, 20-some percent in cash plus holding physical gold, risk-adjusted, that freaking rocks. I mean, you rocked it. I realize your clients would complain because they see the market up or whatever. And people listening might go, "Eh, 18%, eh." But certainly by now, what's happened in the first couple months of the year here, they can appreciate 18%. But, man, I just want to tell you: when I hear you 18% with 20% cash and physical gold holdings and stuff, I'm like, "Woah, that's awesome."

Mitchel Krause:          Yeah. I appreciate that. I want to clarify, I didn't hold physical gold. I told people to hold physical gold. I had gold within the portfolio because I know people aren't going out and buying physical gold, right? So I can have as many conversations as possible. I know very few of them are actually going to go out and buy physical gold. But I did have gold hedges within the portfolio. I had the cash. I had some gold miner stocks, etc. But, yeah, the gold that I held within the portfolios was not physical but it was gold.

Dan Ferris:                 OK. Whatever. Man, if you got 20% or so in cash and you're doing 18%, I just think that's really cool.

Mitchel Krause:          It's one of those things where everybody wants to compare to something else. Everybody wants to compare to an index. If you compare to – everybody was crushing Warren Buffett at the end of the year, right? The articles were: "Why does Warren Buffett have $130 billion in cash?" Why was I holding as much cash as I was holding? Warren Buffett, arguably one of the greatest investors of all time. Does he have his flaws? Absolutely. Can we learn from his flaws? Sure. We can pick apart every move that the man makes. He lives in a bubble and everybody scrutinizes him.

But the reality is: you don't need to write that article in 2020 if you follow what Warren Buffett does. In 2018 – and I know you highlighted it because I heard you on this show highlight it, and I highlighted it in my quarterlies, I want to say Q1 of 2019. I believe the quote from his annual report from 2018 were: prices were sky-high. And if prices were sky-high in 2018, enough as to where he and Mr. Munger were not going to make a big purchase to hold for a lifetime, well, when asset prices got even more sky-high, you've got your answer right there.

And now I would bet that most people appreciate the fact that Warren Buffett has $130 billion or whatever the number is in cash. Because when things go on sale – and I don't know if they're – I'm not convinced that they're not done selling off. But when things go on sale, you want to have cash to buy something. And in the traditional model, the traditional buy-and-hold Wall Street model, how do you buy more if you don't have any cash to buy?

Dan Ferris:                 Yeah, exactly. I mean –

Mitchel Krause:          Go ahead.

Dan Ferris:                 Well, I just wanted to ram that point home. Because if you're a kind of long-term value-oriented investor, you have that Buffett moment and you say, "Prices are sky-high," presumably you have an income so you're building cash some kind of way. And to me, that building of cash – it's just a natural outcome of refusing to pay sky-high prices and recognizing some of the things you've talked about... the leverage in the system and just the risky nature of extremely inflated asset prices. Plus leverage and other problems that are coming out now. Then you should naturally find yourself with plenty of cash when the market is limit down 7% two days in a week or something.

Mitchel Krause:          That's exactly right. So, you guys have preached trailing stops for years. And I also am of the belief that you don't want to panic in scenarios like this. But I believe that you do want to follow your disciplines, right? So, going into limit down, I'm 50% cash, 20% exposed to Treasuries through TLT, ZROZ through the curve. And I have 5% short exposure to the Russell. So it's one of those things where I think – everybody wants to be up when the market's up, right? I think that there are times for people to understand that it's OK to not do what the market's doing on a specific day, right? So I know that today, with certain holdings as they are, I might be down slightly, where the market, so far, has held, right? But we're down as we are and nothing's broken yet. There hasn't been a long-term capital scenario.

We could argue that there's something structurally wrong within the system when the Fed has to bring out $1.5 trillion in Fed repo on a three-day period of time. And by the numbers that are going on right now, nobody's really using it. It's above my pay grade but the reason why nobody's using it – the talk is basically restrictions, based upon Dodd-Frank and Basel III. Nothing's broken to the point where, over the weekend, somebody's getting bailed out. And when you have volatility over 71 – I think it was over 70 today. Or the VIX was over 70. I mean, when you have that type of volatility in the markets, and that type of volatility is even coming to gold, where gold is teetering on the 30 level, that's extreme volatility. That's volatility that we haven't seen in ages.

And we're living in a marketplace where it's unprecedented. I wrote on Twitter the other day: we can liken this to 1929, to '87, to '01, to '08. But the reality is, it's 2020. And no bear market or no crash or no recession or recessionary period has to be the same. There's no rule that says everything has to be the same or it has to be exactly like. But there are different characteristics that kind of label where we are. And we haven't seen a swath of credit downgrades yet from Moody's and S&P, who have said that they've got the energy sector – they're doing a sweeping review of the energy sector.

What happens when those BBB-rated bonds, which are investment grade, are downgraded into junk? You have a market where the BBB credit has exploded to $3.5... $4 trillion of $6.5-trillion investment grade, and you have a junk market that's $1.2 trillion. If you have five companies downgraded that are BBB that add up to $500 billion, how do you put $500 billion of supply onto a market that can't handle it? We haven't had that moment yet. But there's nothing that says, in an environment like this, that it can't happen.

We got off topic a little bit or I got off topic. I apologize. I'm a little verbose. But when you have the Fed come out with a $1.5-trillion bazooka and the market rallies down 2,200 – talking, now, points – I get it. When market rallies to only being down 1,000, and then closes limit down, and you know that they've come out with another trillion for the next three to four weeks or whatever it is, $5.5 trillion of repo that they've lined up, and the market still closes down on the lows of the day, something tells me that I might want to have a little bit more cash than be aggressive in a bounce that we currently have right now.

Dan Ferris:                 Yeah. You know, you make a good point about the credit situation. Because things were weird on – I guess we'll call it Black Thursday, the 12^th. Things were weird on Black Thursday because we saw some money flowing out of investment-grade bonds, and even the longer-dated Treasuries briefly. And then those things kind of came back. But I was all hepped up on this bond trade because I thought, "Well, OK, nobody sees how bad this virus thing is going to damage the global economy. The Fed's reaction function, as Raoul Pal puts it, is to cut, and bonds'll get a nice lift up. But at this point I'm like, sub-1% on a 10-year is the most unattractive thing in the world. And the fact that the Fed might continue cutting – it doesn't really do a lot for me. Their big emergency cut was like "nobody cared." And now we're starting to see the flow out of the IG, the investment-grade stuff. Starting on Black Thursday.

Mitchel Krause:          Sure.

Dan Ferris:                 So you might get your credit event. I think you're going to get it.

Mitchel Krause:          I mean, I don't know factually if a credit event will come. I would think that it will, based upon the amount of leverage that's in the system and what's going on. I would say one thing to the outflows from IG, right? The trade, the short-term trade, it's starting not to work. We're talking about liquidity crunch right now. We're kind of talking about: there's not enough liquidity in the system, for whatever the reason, whether it's the banks don't have the ability to – they don't have the collateral to put back to the Fed, whether it's just dollar shortage liquidity that Raoul has spoken about.

So, at this point in time, people are selling what they can. People are selling what they're kind of up on. And that's the trade that's worked. But because the trade backs up in the short term over the past four or five days, in my opinion doesn't mean that the thesis is gone. If the Fed does cut rates to zero next week, which is anticipated, or whenever this is airing – I don't know if they've done it or haven't done it. But if the Fed does cut rates to zero – and I understand a 1% isn't necessarily attractive. But it's not just about the 1% not being attractive. It's about: am I going to get my money back? Would I rather have 0% – I've wrestled with this too, Dan. But would I rather have 1% or 0% than down 40?

Dan Ferris:                 Well, right? That's the trade. That's what happened in Europe, right? They took interest rates negative and people still bought the stuff. Some people had to because they were running institutions and they had capital requirements and they could only buy certain securities and all that. But there was a genuine fear trade where they're like, "OK, lose me a half a percent over the next five years. I don't care."

Mitchel Krause:          You have that going on here right now. The Fed just brought out $5.5 trillion over five weeks. That's unprecedented. And when you leverage the system like that, nobody knows what's going to happen. I would love to sit here and tell you that I know what's going to happen. But we can't be that absolute. When you live in a world of absolutes, you usually find yourself wrong on one side or the other. So you have to hedge yourself. And I still think that that trade that Raoul spoke about is on. I still think that the 10-year Treasury could go to zero. I think 30 year's come down. But just because it hasn't worked out over the last four or five days – I think that in a market like this where people are looking for liquidity, people are finding liquidity in what they can and finding liquidity in what has been up.

And there comes a point in time where eventually they have to sell the crap. Eventually, whether it's a cascade that I've talked about for a couple years – I've never used the word cascade but I've talked about ratings-based mandates. So in 2018, very early on, I wrote a piece talking about passive ETFs, and my greatest fear being bond ETFs. Because there comes a point in time where investment-grade mandates kick in. And I know that you've had a conversation with the dean of high yield and I know he's said that in a point of time where investment-grade bonds are downgraded into junk, people won't necessarily sell right away. They won't sell at fire-sale prices. And I respect that there's nothing that says that I know more than he does. But I did make calls to –

[Crosstalk]

Dan Ferris:                 _____ Marty Fridson, that's right.

Mitchel Krause:          Yeah. That's exactly right. Marty Fridson, brilliant guy. And I know Marty has talked to Porter. And there are times where he asked when high-yield spreads did blow out. And, well, it happened during a crisis. During a crisis usually all bets are kind of off. But where I'm going with this is – I lost my train of thought. At a point in time, 2018, early on in January, I called a handful of people that I had once spoken to when I was on the institutional side. I called some CFOs of some banks that I used to talk to. I called some attorneys that I used to talk to. I called some money managers, asset managers, and talked about what would happen if they had an investment-grade bond that did fall into junk. And many of them said that they wouldn't wait to see what the price of the bond was, that they would just sell it. Which is counter to what Marty said, right?

And the reason they said that they would just sell it is because their thought process was: if it does get downgraded and he holds onto it. What if it does go bad? What if it doesn't just come back? What if it goes bad because it's not just off price-wise because of forced selling? What if the credit goes bad and then the regulator comes back to him and says, "Why didn't you sell this bond? You have an investment-grade mandate. It went to junk and you didn't sell it." And many of them said, "I don't want to be caught holding the bag."

So if you have five credits, whether it be, I don't know, AT&T, General Motors, Ford, Capital One – whether or not you have a handful of these companies that are super leveraged with a ton of debt downgraded into BBB, there comes a point in time where people are going to need to sell those. And I've talked about ETFs freezing and people look at me like I'm crazy. But you're giving instantaneous liquidity to a product that has collateral, underlying collateral that can freeze. And the reality is: if that does freeze, then people are going to roll over and sell their equities to cover their margin calls or whatever it is they have to cover. And it becomes: a company doesn't even have to go bankrupt in order to trigger that chain of events. It's structural.

And I think that my opinion is: I don't think enough people look at the structural makeup of our markets, of the ETF world, of the incentive system or what we're incentivized to do as brokers. People don't look at the overall structure and how it will affect things moving forward. It takes time for things to play out.

Dan Ferris:                 Yeah, that's right. We had Adam Schwartz from Black Bear Fund on here quite a while ago, and he put out a letter recently, like within the past couple of days here, within a couple days of Black Thursday. And he was saying, "You know, our credit shorts are finally doing their thing." Because he's been onto this, you know, how they make the sausage in the bond ETFs for some time. And same concern, exactly what you're talking about. But I'll tell you, he was hurting I think. He was a year or so ahead of it. But when the stuff arrives, it takes the stairs up and it jumps out the window. Or takes the escalator or elevator down, whatever you want to say. I think it jumps out the window .

Mitchel Krause:          I titled a piece recently, "Escalator Up, Elevator Down." And most people just – it is tough to make the turn. And there are some brilliant people out there, again, much more brilliant than I. The guys at Hedgeye – if you don't follow them or you don't have a subscription to Hedgeye, or anybody out there listening, it is well worth the money to spend to listen to those guys. They are some of the smartest guys, in my opinion, on Wall Street, period. And they break everything down into math. And they're macro guys but they're fractal math. They've called this, and they are killing it.

My disciplines kind of contradict some of the disciplines that I should've moved to. So, following trailing stops, selling it when it hits the trailing stop – I'm going to have to revisit some of my thinking but still stick within a rules-based system. But I've worked on incorporating some of what they've done into what I do. And I'm still doing – while I'm not pleased – well, I am pleased with where I am. I will always be my harshest critic. We're trouncing – we're really outperforming. From the standpoint of markets being down anywhere from 23 to 34%, whether you're talking S&P to Russell, we're down but we're not down nearly that much. So it's about preserving your capital. It's about maintaining that and preserving your capital so I don't have to work as hard on the way up. But also kind of getting ahead of the game.

Again, I'm still learning. Every day I'm learning. But I'm also trying to teach people that it's not about what you hear from the main narrative that's spewed. There're other ways to do it. There's another side of the story. And you don't have to be a victim in a down market like this.

Dan Ferris:                 Yeah. So the main narrative being that whole: you can buy a bunch of mutual funds and you're diversified and you don't need to think about it anymore type of thing.

Mitchel Krause:          Pretty much.

Dan Ferris:                 That's what you're talking about, right?

Mitchel Krause:          Pretty much, yeah.

Dan Ferris:                 Yeah. Genuine diversification is tough. I think you're right. It's this simple topic. It's kind of almost a boring topic. But it's one of those things that's like: "Boring, boring, boring. Oh, holy crap. It's not boring anymore." And then, though, gold has not been what people expected so far. People don't realize that when you're getting margin calls and things, people are liquidating their gold holdings too. And I think you have to look ahead. That's my mantra right now. I think you have to look ahead with gold. Because if you don't, you're going to liquidate and you're going to be caught off guard when it starts doing its thing. Which it eventually always does, right? Because when they do these $1.5-trillion repo things, bailing out giant hedge funds, and the only people who benefit from that stuff, it's the beginning of weakening the currency, right? That's their only out.

Mitchel Krause:          Yeah. Again, it goes back to that Treasury trade and short term versus the long term, and what's going to happen. Clearly I don't know definitively what's going to happen. But if you are printing money and buying coupons and expanding your balance sheet, which we clearly know that they're doing, I can't imagine how that doesn't have a positive effect on gold, which is typically the storage of value. And I don't understand how – or I'll have trouble grasping how rates don't go to zero or even negative.

About eight months ago – time goes by – seven, eight months ago I wrote a piece talking about the United States most likely going zero to negative interest rates, solely based upon how much business we will lose, in terms of capital raises or debt raises, if companies like Ford can go over to the U.K. and borrow in euros at 1.51% I think it was back however long ago, seven, eight  months ago. If they're borrowing at such cheap rates – and didn't Berkshire just borrow at zero for five years? So if they're able to borrow at these rates, and companies are able to do this globally, then in order for us to keep that business here, in order for people to raise this debt in dollars, then they're going to want to be competitive from a rate standpoint side, especially with balance sheets and margins being compressed as they are.

So, it's funny. I cited the Dalbar studies, or talked about the Dalbar studies, and that's what I used to do. But even in following the guys at Hedgeye, you come to the conclusion or realization that when everything goes down, not everything goes down the same. So these guys are so good, in my opinion, they've not only been right with what is working – let's rephrase. In a time where we're in a deflationary environment, at a time where we're in a low to no growth – and we know that we've had that environment for the last six to seven quarters. Whether Wall Street wants to admit it or not, if you look at rate-of-change terms, and if you look at just Q4 alone of 2019, I think the S&P 500 earnings for the entire 4^th quarter of last year were 0.62%. That's all pre-virus.

Things have been coming down flat to negative for quite some time. So this virus just has really kind of pulled things forward and kind of accelerated things but it hasn't changed where we were going with a collision of debt, credit quality, and recessionary times. It just maybe, in my opinion, has taken mild recession into maybe a deeper recession, or quite possibly even the d-word, right? So I don't think any of us have any idea what's going to happen because we don't know what earnings are going to be for Q1. We don't know if Q2 is going to be exponentially worse. Because if we are on a two-week lag from Italy – if, right? If we're on a two-week lag from Italy and we close more down, does Q2 look worse than Q1? And how far does that put us? I don't think we know the answers but I do think that there are better ways to mitigate and manage risk.

Dan Ferris:                 Right. And I just wanted to pipe up too and say: not only were S&P 500 earnings lackluster, but in retrospect, like the Russell 2000 topping out in September of 2018 was kind of – it looks like it was telling us something now, doesn't it? Because that was a heck of a move down and it never came back to a new high.

Mitchel Krause:          Absolutely. The short Russell exposure we've had on for quite some time. And I'll give credit to the Hedgeye guys. It's been a nice hedge that I've had on for quite some time. And I picked that one up based upon their work. So, again, I learn every day. And it's not just a function of following somebody blindly. I don't think you can ever follow somebody blindly. I think you have to learn...  you have to do the work... you have to put the work in yourself. And if somebody arguably knows a little bit more about something than you do, you see where it fits within the scope and parameters of our model that we're managing. And does it fit? Yeah, it fits? All right. I'll roll with it and go from there.

But, yeah, there're some brilliant guys out there who've called this. There're some smart guys who still think that we're not necessarily outta the woods. I happen to agree with them. And, again, it falls back to risk management, and not necessarily just believing that: buy, hold, ETFs, ETF model. Anecdotally, I know a lot of guys who are retail brokers in the industry. It's kind of where I was born, right? I had a stint on the institutional side. But I see this come through my doors as frequently as I sit down with people. Most people show me their statements and I could tell them what's in their account before they even give me their statements.

And it's one of those things where it doesn't matter if it's coming from big firms like Merrill Lynch... it doesn't matter if it's coming from an LPL, Wells Fargo – the vast majority of accounts that I've seen over the last handful of years have all really been the same. Everybody owns the same stuff. And it's because the industry is allowing financial guys to go out and sell a model. And everybody's model is based off the efficient frontier or whatever it is, low-cost ETFs. And when everybody owns the same stuff, it becomes dangerous.

Dan Ferris:                 Well, we've sure seen that in a big way. Everybody owns the same stuff and they ditch the same stuff at the same moment in time. You make a good point there and I'm just glad there are guys like you around that want to educate people so much. And people can go to your Other Side Asset Management website and kind of see what you have to offer, right? And there's a lot of good writing there. There's a lot of good quotes and a lot of good insight and wisdom too I think that back up all the stuff you're telling me.

Mitchel Krause:          Yeah. Thank you very much for that. The website is OtherSideAM.com, Other Side Asset Management, OtherSideAM.com. And I do have an archive, a library where we've put up a lot of our writings. Some of the stuff from '15 and '16 I can't put up based upon being with a previous firm. But there's a lot of writing over the last handful of years. And while I'm never going to be always right, the vast majority has been fairly accurate. If I've failed in any way – well, it's one of those things where I wish I were positioned a little bit more towards what I thought was going to happen, without necessarily worrying about losing clients based upon not being as close to an index as somebody wanted me to be.

Dan Ferris:                 Yeah. We all do that, man. It's impossible. You're dealing with live human beings, right?

Mitchel Krause:          Yeah. As a startup, I'd say much more sensitive to that than not. If I was working with $100 million under management and five guys came to me and said, "Hey, this is what it is," OK. You do your thing, right? In the back of your head, when you're relatively new on your own, there's always something in the back of your head, and I wrestle with that. And I just have to be more staunch in my disciplines. And I'm a pretty disciplined guy. So I know that I'll right that ship.

Dan Ferris:                 Sounds like it. Listen, it's been really good talking with you. I think we're pretty much at the end of our time here. And I always ask folks like you who manage other people's money the same question at the end: if you had – actually, I take that back. I ask everybody, absolutely everybody the same question no matter what they do. So if you could leave our listeners with just one thought right now in these trying times, what would it be?

Mitchel Krause:          I listen to your show fairly religiously and I know that this question was coming up and I've thought about it.

Dan Ferris:                 .

Mitchel Krause:          And then you're put on the spot and you go, "Geez." I think the thing that I would leave people with is understanding that we often live within a belief system. If god forbid your child is sick and you run into a hospital and you see someone wearing a white coat, you'll hand your child to somebody wearing a white coat, and they could be the janitor. They're wearing a white coat... you think it's a doctor... you give your child to them. You don't know where they went to school. You don't know how they graduated. You don't know their history. We live within a belief system.

And the belief system in the financial world is: "My guy's got me. My friend's got me. He drives a nice car. He drives a nice car... he must be successful. He has a big house... he must be successful and good at what he does." Driving a nice car and having a big house or whatever it is doesn't necessarily mean you're successful in this industry. It means that you've raised a lot of assets under management and make a lot of money. And I think that there's a big difference. And just because you golf with somebody every weekend or just because you know somebody or they're a friend, it doesn't necessarily mean they understand how to navigate or manage risk.

And I think if I could leave people with a thought, it's: it's OK to think a little bit outside the box and be a little skeptical, especially when people have gone through '01 and they've gone through '08, and now they're going through 2020. It's one of those things where: do we learn? And it's OK to learn. It's OK to understand that I might be thinking a little bit differently, but thinking a little bit differently is OK than what my traditional belief is. Does that make sense?

Dan Ferris:                 That's a big thought, but yes , it does.

Mitchel Krause:          So I guess that's what I would leave people with.

Dan Ferris:                 Yeah. Thanks a lot. And maybe we'll be talking to you again sometime in the future.

Mitchel Krause:          Dan, I greatly appreciate it. I thank you for you allowing me to talk on this podcast. And maybe I'll see you at an Alliance conference.

Dan Ferris:                 Yeah. I'll be there. Talk to you soon, buddy. Bye-bye.

[Music plays]

1. It's time for the mailbag. The mailbag is where you and I get to have an honest conversation about investing and life and whatever is on your mind. You write in to me at [email protected], I read every word of every listener e-mail, and I will respond to as many as possible. I'm getting a lot of long ones lately. So I can't read the long ones. But I got a few really good ones here today.

First one's from Bruce C. Bruce says, "Dan, I enjoy your podcast every week and like to listen to it while exercising to keep my brain occupied. Always intriguing. I must admit that when Bethany" – that recent guest, Bethany McLean – "I must admit that when Bethany said there was a fine line between visionary and fraudster, I was surprised that the first name out of your mouth was not Elon Musk. Steve Jobs and his altered reality was perhaps his way of pushing outside-the-box thinking. That pales in comparison to the financial funny business and misrepresentations that spew from the great visionary, Elon. My recommendation is that you should spend some time in flyover country where common sense mostly prevails. It seems you have been too long on the West Coast. I'm just trying to give you every benefit of the doubt. I hope you appreciate my sense of humor. Yours truly, Bruce."

OK, Bruce C., I do appreciate your sense of humor very much, and I thank you for it. But you're right: yeah, Elon's a great example of the fine line between visionary and fraudster. I mentioned Aubrey McClendon when I was talking with Bethany McLean because she wrote a little book about – she called it Saudi America, and it was all about the fracking industry, and Aubrey is like the main character of that book. So just talking with Bethany, that's what was on my mind. But you're absolutely spot on. Elon Musk is the – I mean, he's like the poster child for the fine line between visionary and fraudster. Thank you, Bruce. Excellent. Yes. Spot on.

Next we heard from Vaughn M. this week. And Vaughn M. said something that I really want everyone to think about because – I'll just read it. He said, "I first assumed inflation, inflation, inflation, following all this money printing. But I'm going to bet that Dr. Hunt" – Dr. Lacy Hunt is who he's referring to – "thinks deflation, deflation, deflation. Because M2 won't grow because even with the bank reserve rate at zero and interest rates near zero, they're not going to lend. And even if they did another dollar of debt, it isn't productive anymore. And the direct lending and checks being sent in stimulus are just slowing the fall of prices but will not effectively cause inflation. I say this not to be depressing but to try and understand a bull case for precious metals during deflation as well as inflation. I want to think they will go up either way, Vaughn M."

I think they will go up either way, Vaughn. But I think it'll be volatile in the precious metals as the dollar becomes really strong. And you're right: a lot of people talked about this during the great financial crisis, 2008, 2009. And they got it wrong them too, didn't they? They got it wrong. They said, "Inflation, inflation, inflation," and they pushed gold up to $1,900 by, what was it, September 2011 I think? And then of course it crashed because there was no inflation. I mean, there's inflation in the stock market. It depends on where you look for it, right? But wages soaring is the big one that people look for and that didn't happen. But I wanted to put your comments out there, and maybe people will Google "Lacy Hunt" and they'll learn about M2 money supply and they're catch up with what you're telling them there, Vaughn.

Lacy Hunt's a smart guy. He's probably one of the greatest bond investors ever. I've seen him at – where have I seen him? At Grant's Interest Rate Observer conferences. When people used to fly to other cities. There was a time way in the past when you would go to a place called an airport and you'd get in this big metal tube with wings. I know it sounds insane but we did it. And it has padded seats and they bring you a bag of peanuts and a drink and stuff. But we don't do that anymore so I don't want to confuse you.

All right. Next is from J.H. And J.H. says, "Hello, Dan. It was so great hearing a female guest interviewed on your show. I have not listened to every Stansberry Investor Hour podcast, but I listened to quite a few of them, and I have wondered why I've never heard a woman interviewed. I thoroughly enjoyed the interview with Bethany McLean. She is obviously a careful, fact-based researcher and a clear thinker who is very well-informed about many aspects of the financial world and society in general. J.H."

So, J.H., get out your phone and get out your notepad on your phone and take a few notes here. Episode 111, we interviewed Annie Duke. She wrote a really good book called Thinking in Bets. Episode 94, we interviewed Nomi Prins. Also wrote a couple of good books – former banker. Diana Henriques was interviewed in episode 90. And she wrote a really good book called Wizard of Lies, and it was made into not a bad film on HBO. And she was in it playing herself. She played the part of herself interviewing Bernie Madoff in prison. Wizard of Lies is kind of the definitive book about Bernie Madoff. And so there's this scene with Diana and Robert De Niro, who played Madoff in the film. It was kind of cool. But, yeah, we've interviewed some women on the show.

1. The next one is from Dan F. Same as me: Dan F. And Dan F. says, "Congratulations on another show. You are such a pleasure to listen to because you are honest, informed, and genuine. When I say informed, I don't mean that I agree with everything you say. I mean you inform yourself to a degree that allows you to simply weigh facts as they're presented to you and form an opinion based on that rather than some overarching ideological bent. You're informed enough to change your mind if the fact warrants. You're a breath of fresh air in a world of media that I find myself increasingly unable to watch or listen to on both sides of the political spectrum. So thank you for that." He's got some more stuff here.

But I just want to say: Dan, thank you for that. Because I feel the same way. When I'm watching TV news, it's just all so polarized, right and left, Republican, Democrat. You can't get away from it. And I'm trying to be what you're telling me here. I'm trying not to have an overarching ideological bent. So, thank you for that.

I don't want to read all the rest of Dan's e-mail, but he also said, basically, he thinks he got COVID-19. Trouble breathing, fever, felt rundown. He's normally an energetic guy. He spent a week on the couch. And if that was it, he says, "Yeah, you don't want to get it. It's terrible." And I'd said that in a previous episode. Thank you, Dan.

Next comes Terry H. from Australia, from down under. And he says, "Hi, Dan. I've been listening to the podcast since you took over and enjoy the show. I'd be curious to hear your take on Porter's Stansberry Digest article, July 20, 2018, and again late March 2020, on why he lost interest in deep value investing, and the different in your viewpoint on deep value investing. Keep up the good work, Terry H.," down under in Australia.

Terry H., thank you for that. First of all, Porter's ideas are his and mine are mine, and he doesn't – I don't take cues from him. If I did, I think he might fire me . And if I did see an idea of his that I liked, I would just tell you about it. I would say, "Yes, Porter's right about that." As far as deep value investing, we have to really define our terms here. Deep value – for me, it's buying cyclical businesses when they're absolutely dirt-stinking-cheap. At the start of today's show, I mentioned the tanker stocks. I took a foray into these and got killed maybe, what, already two years ago. And now they're cheaper than ever. Good luck. I'm staying away. But as far as that type of thing is concerned, I'll continue to do it. Because if you understand the risk and can manage the risk, you can make a ton of money doing it. I have nothing against deep value at all.

Oddly enough, Extreme Value is mostly not about deep value. It's mostly about buying really good businesses. But we do some cyclicals in there. Some. We try to keep the quality high. We don't do the really beat-up, dirt-cheap, god-awful stuff. I'd like to think we don't anyway .

Our last e-mail this work is from Al M. I alluded to him in my opening spiel today. He wrote me two really thoughtful e-mails and one of them was too long to read. Thank you, Al. I just want you to know I really appreciate it. He's got a shorter version of the same idea here, and it's really complimentary of me, OK? So just know that I'm only human and I love e-mails that are complimentary of me. But I do have a point to make that I believe goes beyond mere ego stroking for Dan.

Al says, "Dan, I wrote another e-mail and hope these two e-mails get to you." Yes, they did, Al. He continues, "I already said in the prior e-mail that I was very pleased with your guidance as this stock collapse" – stock market collapse he means – "was getting ready to commence. But I wanted to re-emphasize that I think your general guidance – in other words, the basic concepts of too much stimulation and the fact that it wasn't working and the business cycle turning down and over-optimism – came through very strongly for me. I do not think any advisor could do a better job of showing that the stock market was about to collapse. So, thank you for an incredibly prescient insight into the stock market and incredible vision as to the complacency of stock market investors. An incredible performance, especially in this complex environment, and with so many of your colleagues getting it exactly wrong." I think he just means in general maybe. Not necessarily at Stansberry.

"Thanks again on an unbelievably superb job of guidance. Although your stock recommendations were not too strong in the last year, the fact is you completely saw what was happening, and I hope that you feel a great sense of satisfaction of making that call and preparing your subscribers for this rather clear now debacle we have been watching. Al M."

Thank you very much, Al. I can't say thank you enough. For a couple things. One of them is just: it's nice to get a compliment. The second is: I hope you're all listening as Al shows you what a thoughtful reader of our research he is. He doesn't just blindly take the stock picks. He admits that the stock picks weren't great, in fact. And he sold out. He made his decision. He gets the credit for doing what he did, not me. I don't get the credit for that. I just get the credit for whatever I did: talking about how stocks were risky and the market was in danger of a drawdown. I certainly did not say we were going to be in a bear market in two weeks [laughs].

But I was bearish for three years. And I talked about COVID-19, coronavirus, since the January 30 episode. So I'll take credit for what I did. But Al gets the credit for what he did, and what he did was be a very thoughtful consumer of Stansberry Research products. And of other people's insight in general. That's really the way to do this. So, right back at you, Al. Right back at you. You did a great job.

1. That's it for this week. It's my privilege to come to you this week and every week. As you know, I'm really grateful for your presence out there. There's a lot going on in the world and I know you probably have other things to think about.

If you want to see a transcript of any episode we've ever done, or listen to every single episode we've ever done, just go to InvestorHour.com. I continue to get e-mails about transcripts. We have a transcript for every single episode we've ever done. Sometimes it takes actually several days, it turns out, to get the most recent episode's transcript up. But it will be there. I guarantee it. May not be there as soon as you want it to but it will be there. And all the other episodes have transcripts. Just click on the episode you want, scroll all the way down, and there it will be.

What you really oughta do is go to iTunes. Subscribe to Stansberry Investor Hour and click like. If you click like, it will push us up in the rankings, and lots more people just like you will tune in and write hopefully lots more thoughtful e-mails like all the ones that we got today and all the ones that we get every week. OK? iTunes, subscribe to Stansberry Investor Hour, click like. And go to InvestorHour.com. That's where every episode and every transcript is.

1. Thanks very much. I really look forward to talking to you next week. Until then, bye-bye for now.

[Music plays]

Announcer:                 Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to InvestorHour.com and enter your e-mail. Have a question for Dan? Send him an e-mail at [email protected].

This broadcast is provided for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

[End of Audio]