Episodes

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

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Male:                          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 podcast. I’m your host Dan Ferris. I’m also the editor of Extreme Value, a value investing newsletter published by Stansberry Research. All right, let’s do it, time for the weekly rant. OK, now this week I want to talk a little bit about Father’s Day, which is coming up, not the day really, just the man. My father, Martin Ferris the Third, was born in 1925 in Baltimore and he’s still going strong; he’ll be 94 in October. And I saw my folks this last weekend, I went up to the Split Rock Resort in the Poconos in Pennsylvania to celebrate my parents’ 70th wedding anniversary, 70th. They honeymooned up there in Split Rock in 1949. The old Split Rock isn’t what she used to be; that’s off topic, we’ll talk about that some other time maybe. But it was really great to see them, and I just felt like relating a quick anecdote or two about dad because I know I was impressed by the anecdote I’m about to relate.

So my father is a lawyer and the last couple decades of his career he served as a hearing officer, also referred to as an administrative judge for unemployment cases in the state of Maryland, and I was born and raised in Maryland and my father was born and raised there, still lives there. So, many years ago, when I was much younger than today, I was waiting tables and I was living with my folks which I did three or four times off and on in my twenties. And I lived with my folks at that time, so my father was kind enough to shuttle me back and forth a few times to work whenever it was too inconvenient to borrow the car. And one night he’s driving me home and we got to talking about the family lawyer whose name I cannot recall, just say his name is Bob, and yeah Bob is a good guy. He’s competent, does a good job, he doesn’t charge a fortune but he’s no Clarence Darrow. And you know I was just kind of picking up the conversation and I said, “Well, you know who is like Clarence Darrow nowadays?”

And without skipping a beat or changing his tone of voice or anything, my father said, “The last person around here like that was me.” And I was blown away because this guy my whole life for whatever it was, 25 or 30 years of life at that time, he never talked about himself as being great at anything, although he did talk about himself being  a good lawyer occasionally but it wasn’t like he was a bragger or anything at all. So he took me back a little bit and he continued and on occasion when he was a federal prosecutor early in his career maybe in the 1950s, would’ve had to have been in the 1950s or ‘60s, and at that point he was really good and he threw bank robbers in jail and they were screaming at him and telling him they were going to kill him when they got out and all that kind of stuff. He was so good in court that people would set their lunch hour by when they knew he was going to be arguing in court.

And he said on one or two occasions, and I haven’t established if it’s one or two, I don’t think he can remember after all this time, the judges had their arguments printed up and bound up like a little book and handed them out to their friends as gifts.

And I know what you’re thinking, I’ve asked about getting a hold of one of these and they’re gone. [Laughs] We’re not going to ever see them. And I thought “Wow, that was really cool.” And he told me a little bit about his career. They sold them at $7,000.00 a year and he said he really liked the job. I think that’s when he was a prosecutor and he said, “I was good at it.” But then somebody offered him $14,000.00 a year, I think it was, to go work for Senator Glenn Bell Senior, who served as a senator in congress, Republican senator for Maryland I want to say mid ‘50s through early ‘60s. I didn’t look any of this up, just doing it by memory.

Just wanted to say a few words about old dad, because I like to read, I talk about books a lot. And reading and writing and speaking is how I make my living, and that’s how he made his living. And he always had a lot of books around the house and I’ve got about 25 of them just sitting on my desk, and I’m in a room of about 1,000 of them here in my office. [Laughs] And he was an artist too; he’s still an artist. He’s painted some stuff recently, although he’s slowed way down.

Starting around age 50 when I was maybe 14 and I was playing tennis fairly regularly and competing a little bit. He picked the game back up having played as a younger man back in college. (He was a big athlete in college at the University of Maryland as a football player.)

But he also played tennis back in those days and he picked it up at age 50 and played every single day until about age 91. I think he played five, six days a week. He’d come home from work, go right up to the high school and pick up a game with his regular group of guys down there.

Then my parents moved to the beach and he did the same thing. And only recently has he had to slow down a bit.

And he never took any medication. I think he takes one little medication for A-fib or something at the age of 93, and my mother just turned 92. They’re still going strong, married 70 years. I mean he fought in World War II and they had seven kids and never complained a whole lot about their lot in life. But they were never rich, and they still really aren’t. I have a lot of admiration and gratitude for the way I was raised.

                                    So, with that said, happy Father’s Day to all the fathers out there and to my father. I want to get on to the real rant, which it’s less of a rant. And I realize “rant” isn’t always the best description of what I do because rant, as Gene Hass, one of our regular listeners, wrote in and said rant has a negative connotation. Every now and then I will truly rant about something, but I call it a rant because I’m usually imploring you and begging you to not do something foolish or to do something which I believe is wise. And today we fall into the latter camp. And very often since I write this newsletter called Extreme Value, we get this question, how do you value a business, how do I learn to do this? And there are a couple little things here that are really super important, and they’re kind of technical. I’m taking a big chance here that I’m going to put you to sleep but just hang with me because it’s important and I’m trying hard to simplify something that’s super important that most people don’t get. And if you don’t get this and you’re holding onto stocks for a long period of time, this is something you need to understand.

So first of all, let’s do some negative definitions of what valuing a business is not, OK. It’s not about the PE ratio or the dividend yield or the price to book value or EBITDA or any of these metrics. None of those numbers tell you, you can’t gauge what the business is worth by those numbers. They’re a kind of shorthand attempt at gauging the relative maybe attractiveness or unattractiveness of the valuation in any given moment. I’ll throw those kinds of numbers out myself every now and then; it’s too sloppy and easy to do. And the thing that you really have to do to value a business is more complicated. The hardest thing for people to understand about valuing a business, there’s actually two of them, OK, that are intimately related. One is called the time value of money, and the other one is the technique called discounted cash flow. They’re actually both fairly simple.

I’m not going to get deep in the weeds here, don’t worry, but I do want to talk about the time value of money because it’s really important, and I’m going to try to explain this complicated, boring thing. I think I’ve got it; I think I can do it. It’s really simple. If I give you $1today, what’s that worth? It’s worth a dollar, right, to receive a dollar today. If you are buying a business that paid you $1and that’s all it was ever going to pay you for the rest of your life, the most you would pay for that business would be $1. And you’re going to receive your dollar today, right now.

1. What if I said, “I’m going to pay you a dollar one year from today,” right, because when you buy a business you receive the benefit in the future and they’re going to earn all the money that causes that benefit in the future. So, you have to know what you need to pay today for the future earnings of the business, and this is how you figure that out; this is the basic mechanics of it, OK. So, what is $1received one year from now worth today? You think it’s worth a dollar, right, but that’s not true because by the time one year passes, let’s just say hypothetically I could’ve taken that dollar and earned 3% without taking any risk. Let’s just use 3%, OK. Now so I invest a dollar today, I’m going to have $1.03 a year from today. No, the dollar is not worth $1.03. What you really have to ask is how much do I have to invest today earning 3% to receive a dollar one year from now? You see how that worked? And the answer is slightly more than 97 cents; it’s like a huge long decimal place. But just call it 97 cents.

So, if you multiply 97 cents approximately, OK, by $1.03, which is adding 3% to it, you’re going to get $1. So, a dollar received one year from today is worth 97 cents right now using that 3 % rate. And you can use any rate you want to figure that out. That’s another choice that business valuation people have to make, what is that rate I’m going to have to use. It’s called the discount rate, and 3% is way too low, OK. Most people start at about 6% and go up from there. And we’ve used 5% and 6%  rates, really depends on how much the company pays to borrow money and other things. Like I said, it gets complicated quick; this is the simple version.

2. So, what about $1received. I’m going to pay you a dollar. A year from today you know that’s worth 97 cents today, and I’m going to pay you another dollar two years from today. What’s that? You just have to do the same math on 97 cents that you did on a dollar, and that number is approximately 94 cents. So, if you add those two things up you are, what, six and three is nine cents shy of $2.00, so it’s worth $1.91 to receive a dollar one year from today plus a dollar two years from today. And you can keep going with this math, right. One year from today, five, 10, 20, years, however long you want to go out with it, and there’s a number for each of those years based on that 3% rate. And you add all that up and that is what they call the present value. So, 97 cents is the present value of $1at a 3% discount rate. That’s it. That’s like the entire enchilada right there. That’s the basic idea.

When Warren Buffett sits on TV with Becky Quick and says, “The value of the business is the present value of the cash you’re going to get out of it the whole time you own it.” That’s what he’s talking about; that’s it. And the process I described where you do that for one, two, three, four, five, 10, 20, 30 years out, every year you think you're going to own the business, that process is call discounted cash flow because you’re discounting by 3% for all the cash flow you’re going to receive for the business.

                                    So how do they do this discounted cash flow? Well, as you probably may have already figured out, you’re doing a lot of predicting, aren’t you, because it’s all in the future. So you’re saying, “Well I think the company is going to grow revenue at 3% or 4% or 10” or whatever you think it is, and I think the margins are going to be X, Y, Z, however they’re going to behave over time, and I think you know you have to make all these assumptions and plug in all these estimates. You're making guesses about the future; that’s what it is. I have a problem with that. My problem is I don’t know the future.

So, all this stuff is based on your ability to guess about the future, so we do something different and it’s outlined in a book by a guy I’m trying to get on the podcast. It’s by Alfred Rappaport and the guy I’m trying to get on the podcast is Michael Mauboussin. And Michael Mauboussin has written a few other good books and he reads a lot of good books too and recommends them from time to time; you can see him on Twitter and other places.

So Mauboussin and Rappaport have this booked called Expectations Investing. And the idea is: instead of trying to predict the future and plug in what you think the numbers are going to be in the future, you plug in whatever future numbers you have to in order to equal today’s share price. Then you look at everything you plugged in and say, “Did I have to plug in 30%  revenue growth to get today’s share price? Maybe I think that’s a little too optimistic and I don’t want to buy this thing.” It’s too expensive, in other words. And maybe you look at the revenue growth and say, like we did this with Starbucks last year, and I forget the exact numbers. But we did something like we looked at it and said, “Hmm, Starbucks is priced not to grow at all for the next few years and then to grow very little after that.” And we thought, “We think it’s going to do a lot better than that, so it was too pessimistic” and we thought the stock was a buy.

And we didn’t care what the P/E ratio was. People write in all the time and say, “Hey, what about the P/E ratio?” Don’t care, doesn’t mean anything, totally meaningless. You got to build some kind of model that accounts for the cash you’re going to get out of this business. Somehow, some way you have to do that, OK.

                                    That’s the rant for today. I’m going to keep it real simple and keep it limited to that much, and I’m sure I’ll probably get a million questions that I can’t answer. Every time I talk about this stuff I do. Let’s find out what’s new and then we got a really great guest that we’re going to get to in about five or 10 minutes here.

                                    First thing I have to talk about is this stock Beyond Meat. It’s up like almost 700%. It had a crazy start to the week, and we record the podcast earlier, then we put it out and we have to do some things. So, I don't know how it’s behaved in the last day or so, but it was way the heck up on Monday and then it was down at the open on Tuesday, so who knows?

But the IPO price was $25.00 and the last time I looked at it, it was 170 or I think it was $169 or $170, just crazy stuff, and it was trading somewhere in the ballpark of 75 or 80 times revenues; I mean that’s insane. Imagine what that says. That says if you buy this business at this price and they have no expenses and no taxes and pay no salaries and have no capital-expenditure requirements of any kind for the next just say 70 years and they can pay out 100% of their revenues in dividends, you'll break even. It’s a little crazy.

And of course, in a previous podcast we pointed out Nestle is already coming out with a competing product, made of the same stuff. Beyond Meat makes this vegetable base, it’s based on pea protein, you know peas in a pod, and Nestle is making the same thing. They’re going to come out with a pea protein meat imitation, I don't know what they call it, imitation fake meat product that they’re going to introduce in the United States.

And who do you think is better suited and financed to distribute absolutely any food product? Beyond Meat, brand-new IPO has two products to their name, really one; it’s all the same thing. It’s all imitation meat, imitation chicken, pork, beef, whatever. Or do you think Nestle maybe is a little bit better financed and more competent? I’m going to go with Nestle; I’m going to say that they’ll do better than Beyond Meat. They might buy Beyond Meat, I don't know. Doesn’t sound like they need to though, does it, which calls into question what kind of intellectual property Beyond Meat owns that’s worth anything.

I want to point out quickly Apollo, the private equity firm, is buying Shutterfly, the online photograph management service. And since I’m pointing out Beyond Meat is egregiously priced somewhere in the neighborhood of 75- or 80-times revenues, I have to point out that Apollo is buying Shutterfly for less than one-times sales, so it’s not all insane and I don’t mean to paint an imbalanced picture. I don’t want to be that guy who’s always saying it’s all going to fall apart. I just believe that we’re late in the cycle and a lot of stuff is overvalued.

Now there was a stupid article in Bloomberg that I have to point out. They were saying that the fear gauge is sounding an alarm even as U.S. stocks rise. And they were saying that the fear gapes, the VIX, right, the volatility index, was like 16 and it went up a few days in a row when the market was going up. And the VIX usually goes up when the market goes down.

A couple of things here. First of all, at 16, the VIX is not expressing a great deal of alarm or worry, so that’s the first stupid thing. Second stupid thing is as the folks at the Chicago Board Options Exchange told me and will tell you if you call them up and ask them, the VIX and S&P 500 are negatively correlated about 80% of the time. So, 20% of the time they go in the same direction. Kind of a dumb article, just wanted to point that out.

OK, rate cuts. Everybody is talking about rate cuts. Will the Federal Reserve cut rates? What does it mean? And you see regularly in the financial TV news and so forth you’ll see people talking about the market rallying recently and that means that everybody thinks the Fed is going to cut interest rates, and why do it now. That’s a good question. There is no reason, and it really – this is so utterly silly and meaningless.

They fell something like 6% in May; it was the worst May in decades and decades. And now it’s like the market is saying we think the market is going to go up 20% or something in June. I think the best month the market has ever had in history is like, I don't know, 15% or 16%. So, it’s just a little bit silly about these gyrations in the market, pricing in rate cuts.

I don’t even care if they cut or not. If they cut, the thing I want to own more of in stocks is gold, because all this cutting and low interest rates causes equities to become much less attractive. People say they’re more attractive because if interest rates stay low then equities will be more attractive relative to bonds. Yeah, yeah. If interest rates stay really, really low forever, that’s true. I’m going to call BS on the forever assumption, OK? All right.

Have to point out one little item here. Apparently like outer space is open for business. NASA announced plans to open the International Space Station to private people, private business, by allowing private astronauts to travel to space. So, you can be a private astronaut.

Space tourists will have to spend $58 million for a ticket to the International Space Station. Boy, they always get you on the airfare, don’t they? Yeah. And then another $35,000 per night to stay there. That’s not bad, hey. Some of these islands that you can rent with a butler and maid are 35 grand a night. So hey, not too shabby, right, on the per night, but they really stick it to you on the airfare. NASA doesn’t only want to – what they’re doing is they’re kind of competing with let’s just say starry-eyed startups and other cosmos-craving companies. Interesting. I’m dying to find out who the first guy or gal is that’s going to pay $58 million airfare to go to space.

One more thing. Barnes & Noble, can’t help talking about this. Hedge fund Elliott Management run by Paul Singer, pretty smart guy, but they’ve acquired Barnes & Noble for $476 million, right. So, Barnes & Noble started out in Manhattan with one store and they became this huge bookstore chain, and they became known for cutting prices and kind of pushing out the mom-and-pop bookstores across the country.

And low and behold, of course Amazon came along and lowered prices even more and pushed Barnes & Noble out. Barnes & Noble has closed 150 or more than 150 stores. I don't know what Elliott Management thinks they’re going to do with it. Amazon doesn’t want to buy it. They don’t need to; they already have every title Barnes & Noble sells that they can offer for less anyway. So, I really have no idea what they’re thinking. Good luck to them. I used to love hanging out at Barnes & Noble stores, but now I just get it all delivered to the house.

All right, it’s time for our interview. Really looking forward to this one. Today’s interview guest is Frank Byrd. Frank is the founder and CEO of Fielder Capital Group, LLC, a New York-based investment adviser that manages money for families and institutions. Frank has 25 years experience in the investment business, including 15 years in the hedge fund industry working as a research analyst and portfolio manager. Frank is a chartered financial analyst, charter holder, and has an MBA from Columbia Business School. Welcome to the program, Frank; thanks for being here.

Frank Byrd:                Great. Thanks, Dan.

Dan Ferris:                 So, Frank, we did talk a little bit yesterday, but I didn’t ask you the one question that I like to start out with, especially for folks in your business who are in the business of managing other people’s money. And that question is simply you know it seems there’s a whole continuum. Some people started, like Warren Buffett, buying their first stock at 10 years old or whatever it was, and then some people kind of found their way into it gradually over the years. When did you know that you were going to have a career in finance?

Frank Byrd:                [Laughs] Wow, that’s a great question. It really goes back to my childhood. I hate that this is a not-glamorous story, but I was always enamored with the friends of my parents that were in the investment business. And my mother had this mistaken perception that anyone in the investment business was by nature an inventoried gambler. And she absolutely forbade me to go into this business, and so naturally I made up my mind I was going to be a stockbroker.

So, I started out of college with Merrill Lynch. I was with Merrill Lynch for seven years, six of which were as a financial adviser or less glamorously a retail stockbroker. And later when I went to business school, I worked for a year in their equity-research department. But really the six years as an investment broker were deeply formative because I spent those six years hauling on rich people.

And I grew up in Memphis, Tennessee, so the rich people in Memphis, Tennessee, these were the millionaires next door, so to speak. And it was a huge education to me because having not grown up with money I had this mistaken notion that people who had a million dollars had Mercedes and huge houses and very quickly learned that oftentimes the millionaire next door is someone that drives a very simple car and has everything paid for, often married to the same person their whole life.

And as I got to know these people, I would ask the same question over and over again, you know how did you accumulate such a big portfolio? And very consistently what I saw was that they had done it buying and holding a reasonably-diversified collection of companies that they believed in, and they held them for decades. So, in my young twenties I realized, OK, buying and holding companies for a very long time accumulates a lot of wealth. And oddly as I was avidly studying to be a good investor and reading everything I could get my hands on in the business press or the brokerage research, it seemed contrary to what I was seeing on the frontlines, so to speak. And then accidentally, truly serendipitously, I stumbled across an annual report from Berkshire Hathaway. And –

Dan Ferris:                 Actually, Frank?

Frank Byrd:                Yes.

Dan Ferris:                 So I just want to make clear for listeners, when you say it was contrary to what you were seeing on the frontlines, you’re basically referring to all the account churning that a lot of brokers do so they can generate commissions, right?

Frank Byrd:                Yeah, that’s a part of it. The brokerage business has evolved, and today the great sense as I see it is not the blatant buying and selling and huge commissions. Instead, it is herding people into packaged products that at worst have a not-clear disclosure as to what the true costs are, all in, to the investor. And at best are just very broadly-diversified, and diversified not in a way that we believe accrues to the long-term wealth of the investor.

What do I mean by that? Namely market-cap-weighted index funds even we feel are contrary to optimal wealth growth. So, in the case of my being on the frontline, it was just talking to real people that had done it themselves, and naturally they had help from advisers, many of them. But it was a very long-term approach, and most importantly people felt connected to what they owned, right? And this sounds a little corny, but they felt like they owned a piece of America. They may have owned shares in the blue chips of the day, Coca-Cola and Procter & Gamble and IBM and so forth.

And by the way, I should emphasize any company that I mention in this podcast: We are not making investment recommendation. None of this is investment advice, because any company or even the strategy I recognize may not be suitable for every listener, and we’re going to get into a discussion of founder-led stocks. I just want to emphasize that this group of stocks and certainly any individual stock typically is going to be a lot more volatile than the market, and just because they’ve outperformed in the past doesn’t mean they may in the future.

But in the types of companies I was seeing people buy and hold, there was clearly a connection to what they owned, and they put them in their lockbox, and they forgot about it. And as you’ve probably seen from many of the studies, for example Dalbar I believe publishes an annual study that essentially shows the biggest enemy for investors is often not the strategy itself was as bad strategy, but the people didn’t stick with it.

So, at a young age I became deeply convinced that the buy-and-hold strategy is important but equally is that you have to be comfortable with what you own because without that you’re not going to stick with it. So, look, reading the Warren Buffett annual report convinced me that this was – I had seen it work, what he was talking about doing. And that’s why I quit a very successful practice at Merrill Lynch to go to business school, and he had gone to Columbia and somehow, I talked the admissions people at Columbia to let me in. [Laughs] And I went off to try to learn how to do what he did.

Dan Ferris:                 Nice. So, I assume, have you heard of Robert Kirby, the coffee can portfolio guy? That’s what you're describing with this decades-long holdings to me. Have you heard of him?

Frank Byrd:                I have not, which of course means nothing. But I like the sound of the high level as you described it.

Dan Ferris:                 Yeah. So, the coffee can guy has a great story. Kirby was a broker and adviser, and he would pass along his firm’s advice, buy-and-sell advice, to clients. And he had these two clients who were husband and wife with separate accounts, and the husband died so the wife called up and said, “Let me put my account in with my husband’s.” And Kirby saw that the guy’s account like he had made tons more money than the wife, and the only difference was he ignored the firm’s sell advice and just held everything. [Laughs] And one of his holdings was worth one more than her whole account, and he had lots of other holdings, so.

Frank Byrd:                This gentleman and I would get along splendidly. [Laughs] Absolutely, 100%. In fact, what we’ve tried to craft for our clients is an investment strategy that combines two powerful forces. One is to invest in a universe that we believe has higher odds of success, and that universe, not the only universe we invest in but one of our core universes, not for every client but for clients where this is suitable is a founder-led portfolio, meaning companies that are being led by one of the founders of the company. And research, a growing body of academic literature, is showing that the founder-led companies have outperformed non-founder-led companies over various periods of time.

And by the way, even if you adjust for company size or industry, the fame and French factors so to speak, even if you adjust for those, the founder-led companies historically have outperformed. And I’ll give you a – you can go to our website in fact. I’ve created a list of links to what we have found is the best research in this area among founder-led businesses. Our website, by the way, if your listeners want to visit, is fieldercapital.com. That’s fielder like in outfielder, fieldercapital.com.

Dan Ferris:                 Yeah, and I would encourage people to go there too; I enjoyed it.

Frank Byrd:                Thank you.

Dan Ferris:                 Go ahead, Frank.

Frank Byrd:                So, number one is the hunt on the right universe, but number two is you need to hold your winners. So, we have designed a portfolio strategy that allows returns to be amplified by letting winners run and thereby exposing yourself to serendipity.

And what we have found is that unfortunately this ability to let your winners ride, this maximizing your exposure to serendipity, is curtailed by traditional packaged Wall Street products, right. So if you look at a typical mutual fund, if the fund had been smart enough to buy an Apple or one of the historically-amazing founder-led companies 20 years ago, and for the record Apple is no longer run by a founder so this is not a recommendation for Apple, but the fund would have been selling that winner along the way. And you never would’ve gotten the impact that you alluded to earlier with the husband who had simply held on and one of his best positions ended up being a very big part of the portfolio. And that’s what I saw oftentimes. Sometimes up to 50% of the portfolio was in one stock.

Now that’s not to say every individual client is going to hold every name to be that big, but we do believe that it’s a very individualized decision. You, for example, may be totally comfortable with a big winner at 20% of your portfolio. Maybe your next-door neighbor is only comfortable at 10%. Maybe your spouse is comfortable at 50%.

So, it varies by individual, and what we try to do is craft a portfolio structure that allows for that individual decision so that the portfolio can be tailored to their own risk tolerance, so to speak.

So, we think by combining both the universe of founder-led companies with an investment strategy or structure that allows your runners to run long term in a very tax-efficient way, by the way, because you have tax-deferred growth on your capital gains. And if you pass them in your state, at least under present law, it passes tax free to your heirs. So, if you combine those two, we believe it substantially improves your odds of long-term success.

Dan Ferris:                 So, when you’re looking for founder-led companies – there’s a Fidelity mutual fund, for example, that’s founder led, and I downloaded the holdings list. And it must have been 200 companies in there, there’s a bunch of them, and then I found another list that was like mid-cap names that were founder led and that was like another 300 names.

So obviously, you’re not putting 500 companies in these portfolios; I assume you’re being much more selective than that. What separates the really better founder-led companies from the rest?

Frank Byrd:                So, it’s a delicate balance. So, one approach of course is to literally own all of them. One of the problems, and there’s a few packaged products out there that attempt to employ this strategy, and we would love to see more of them because right now we haven’t found one that kind of fits everything that we’re looking for. We’re an independent family adviser, so I have no ax to grind here.

If I can find a good manager out there doing this in a really thoughtful way, we’re happy to hire that money manager. So far what we’ve found is that the portfolio structure either retards that long-term growth – part of this is by law, right. A mutual fund has certain diversification requirements, so they basically have to sell your big winners as they go up. There are also, depending on the product, we’ve seen some where the weightings don’t make sense to us. For example, if you're market cap weighting without limit, then you can end up with a portfolio that’s tech heavy.

And one of the things you had to be very careful of is that not all founders are created equally. For example, there’s some recent research out from Schroder’s for the time period that they analyzed that found that, believe it or not, founder-led Internet and software companies actually underperformed the market. And it’s the more mundane industries that actually had great success. And this is a good point to emphasize. Typically, when we think of founder-led companies, our minds immediately jump to the unicorns and the high-profile tech companies. But I want to remind people that there are a lot of great companies that are not technology, that are run by founders. For example, Red was one recently acquired. Apple is of course the one we all think of that’s technology.

Dan Ferris:                 Right.

Frank Byrd:                And DreamWorks is I guess part tech. But if you look at companies like – and these are companies that used to have their founders running them until recently, so once again these are not recommendations for any of these stocks. We don’t own these stocks; we don’t recommend them necessarily.

Home Depot and actually four founders all together, three active in the business until not too long ago. Phil Knight who wrote probably the best book I’ve read in the last 10 years. John Mackey, Whole Foods. T. Boone Pickens and energy. Howard Schultz, coffee.

I just think about that, two of the worst businesses you could probably imagine. If you had come to me and said, “Hey, I’ve got this business idea, I’m going to sell $4.00 coffee, right, I can get a cup of coffee around the corner for 50 cents and we’re going to put leather seats in and we’re going to let anybody come and sit and just sit around all day,” none of us would’ve funded that business. And of course, Howard Schultz is Howard Schultz.

Dan Ferris:                 [Laughs] That’s right.

Frank Byrd:                Same thing with John Mackey. The grocery business in particular is a notoriously awful business, and he literally changed the dynamics of that business model with what he did.

So, this is not just all about high-tech companies. So, I think you want to be very careful with the portfolio structure that you don’t end up too tilted in an industry, especially like tech.

And secondly, in those roughly 500 companies you alluded to, you’re going to find that a good number of them are run by very, very old people. And I mean people in their 70s and 80s. And look, Sumner Redstone, I want Sumner Redstone at 40 or 50 or 60. I don’t want him in his 90s necessarily. So, we think age matters. And without kind of revealing the secret sauce, we do believe there are certain financial metrics that indicate health and vitality and sustainability that matters, and we employ as a screening mechanism. So how do we get to our group? We screen out a few things.

Dan Ferris:                 So, Frank, I have to ask, how do you feel about Buffett and Munger? They’re getting long in the tooth, aren’t they?

Frank Byrd:                [Laughs] Listen, I know I’m not alone in saying you know both of them actually have been role models for me and just about every friend that I have that’s a serious investor both professionally and not professionally. I think we’re all surprised, including Buffett and Munger, that they’ve had the energy and longevity to continue doing what they’re doing. And so, I don’t have anything profound to offer beyond that, unfortunately.

Dan Ferris:                 OK. Listen, Frank, we didn’t talk about this yesterday when we spoke. But I wonder how much – I actually got to know your former partner, Keyon Gozey, through his presentations at the old Value Investor Congress, and he really blew me away; I thought he was very good. And one of the things that he sort of specialized in was scuttlebutt research, and so I assume you’re as good at that as he probably is. I wonder how much of that kind of filters into your current process?

Frank Byrd:                So that is a sensitive subject, and I’ll tell you where I came out on it. So yes, Keyon, and I worked together in the hedge fund that we ran for seven years. And a very, very big focus of what we did was primary research. Calling customers, calling competitors, calling ex-employees and in an ethical and compliant way asking for their perspectives on what they saw on the frontline.

And we were schooled in this from some of the greats in business and most of whom kind of came out of the Tiger Management lineage. So, we didn’t invent the strategy, and Julian and his team took it from you know Phil Fisher. And Warren Buffett says, “I’m 85% Memgram, 15% Phil Fisher.” So, you know when you are in the individual stock-picking business – and I think so many business school students that have aspired to be great investors miss this – it is not about your smart investment thesis that you write up front. And I know, because I have literally analyzed every trade I've done. Or rather, I did this analysis back in 2012. I analyzed every single trade that I made over a 10-year period between 2002 and 2012.

And what I learned, is that that first kind of smart scrub of a business,– what is the cash flow like? How big is the growth opportunity? What are the returns on capital; any of the metrics you think matter that kind of thing first, I call it the business school scrub. I literally, when I look at that first impression, I did not create any alpha. Meaning, my hit rate was about 50% and my payoff ratio or slutter ratio was about even, meaning I was just matching the market. And that was humbling. And what I did find though is after I did the deep, deep dive, after I called the customers, called the competitors, spent time going out to see the business, I did learn that I had much, much greater conviction because, inevitably, bad luck happens. Your favorite idea gets cut in half. And go look at the price charts of any great stock and there are dramatic declines in the stock price, some of which last for a very long time.

And it is so important that you have the conviction to stick with what you own, know what you own and why you own it. And so, to me, it was those calls, those customer calls, that gave me the courage to hold my position because I knew the business. I knew what I owned. And fast forward to today, do I still do that? I don't. I made a philosophical and business model decision that I can get better returns for myself, my own capital, and for my clients, by buying and holding a collection of what we think are special businesses run by special people. Namely, this is the founder-led universe.

And within this, so the question is, am I calling customers and competitors in these founder-led businesses? We're not. And the reason we're not is that first off, this is not a very big universe of companies. So, yes, you mentioned 500. But once you skim off the ones that we believe you don't want to own, but just pure metrics, right? Meaning limiting the sector concentration. Cutting out the ones that you think are run by people that are not really in their vigor period of life and some other filters we use. You don't end up with a whole lot of companies. And so, we believe that you want to maximize your exposure to serendipity. And I believe, what I have done, is effectively, in holding this group of companies, outsourced the money management to the CEOs of these companies.

Will Thorndike in his book The Outsiders, it really revolutionized the way so many of us actually thought of the CEO. Heretofore, we thought of the CEO as an operator. But the CEO drives capital allocation. And how a CEO allocates capital, meaning do they build a plant, or do they buy a competitor or do they just buy back their stock because it’s cheap? These decisions have a profound impact on the stock performance over a decade and beyond. And so, to me, what’s most important is that I have my personal money and my clients’ money, managed by people that, number one, have a documented track record of success. And if  you're a founder running a business that’s publicly traded, to me, that’s a track record of success.

Number two, I have to trust you. I have to believe. And how do you do that? How do you get trust? Well, as good as you can get it, I have to believe that our financial incentives are aligned.

So, when we look at founder CEOs, one of the things we also look at is how much stock do they own? Do they own a lot of stock or do they not?

Once again, I repeat, not all founders are created equally. And I think a very hazardous strategy is to go out and cherry-pick founders and buy a dozen of these because it’s very hard to identify just a dozen out of what we believe is a larger group, where you're going to get the real serendipity.

Once again, I never would have imagined that it would have been a coffee company that would have been a great performer, right? So, think of the founder-led businesses. People doubted them up front. By the way, if you want to know why founder CEOs are different than the business school CEOs – and by the way, I can pick on business school CEOs because I went to business school. But read books by people that founded and built great businesses, and many of them are publicly traded, right?

Dan Ferris:                 Yeah.

Frank Byrd:                So, John Mackey, Whole Foods, has written a book. Phil Knight, I mentioned, Nike. Phil has written probably the best book I’ve read in a decade. Bernie Marcus and Art Blank, Home Depot. Amazing book. Howard Schultz wrote a book, Starbucks. T. Boone Pickens has written a couple of books. Ray Kroc. I highly recommend that book, founder of McDonald’s. Different story, by the way– it’s nice to hear it from his point of view versus the movie rendition of his story. Peter Thiel wrote Zero to One.

Dan Ferris:                 Yeah, great book.

Frank Byrd:                I think if you had a kid that’s anywhere near 21, 22, it should be required reading. He’s PayPal, former CEO. Sam Walton, one of the best books I've ever read, right?

So, when you read these books you realize, man, these people are different. They are different. They come in. They think differently. They're driven by different things. And so, what I want to do is outsource the capital allocation to a group like this. And many are doing things that are counterintuitive to what we think. And I think this is one of the dangers of making a lot of calls to customers and competitors. You make all these calls and then you think that I’m rewarded because of all this work I did.

And unfortunately, in the investment business, it’s really unfair. It’s a very unfair business. One of my former partners in the hedge fund said to me one day, his father was a neurosurgeon. He said, “The thing that’s tough about this business is no matter how smart you are, no matter how hard you work, you're not guaranteed success.”

In everything else, medicine, law you work really, really hard and you're really, really smart, you're virtually guaranteed to be successful. So, we, on this strategy, are trying to design a structure where I can maximize my lifetime exposure to serendipity. So, I have outsourced that capital allocation function to a diversified collection of money managers. And these are people that founded the business, that have skin in the game and soul in the game.

Dan Ferris:                 Oh, I like that, soul in the game.

Frank Byrd:                Look, I believe people have souls and if you believe that, then by extension a company, which is merely a collection of people, companies have souls. And I know this is kind of goofy or corny and you can’t put this on a spreadsheet. But I believe companies have souls. So, I want to have my personal money invested in people that have a track record of success, and I believe have incentives aligned with me. They have skin in the game. Not just skin in the game, but soul in the game.

And by the way, here’s the bonus. Let’s say this doesn’t work. And I want to emphasize this disclaimer, founder-led companies are more volatile as a group. They tend to be growthier. They tend to be smaller. They will be more volatile. They may not outperform in the future like, again, you can go to our website and read the research and each study is kind of a different period and takes a different angle. But the website is fieldercapital.com.

Dan Ferris:                 Great website.

Frank Byrd:                If you read the research, you’ll be intellectually convinced, I believe. The problem is, you've then got to stick with it. And what I know is that even if this strategy, it may beat the market. It may not. If it doesn’t, I know that this strategy fits with my values. Intellectually, yes, I buy into it. Philosophically, yes, I buy into it. But most importantly, for me, it also fits with my values.

I want to be allocating my hard-earned capital to people that are running companies dedicated to innovation. And to be clear, innovation isn’t just software. It’s figuring out how to create a Starbucks-type experience. So I want to allocate to people that are helping make our lives more efficient, easier, more pleasurable, safer – making the world better.

Dan Ferris:                 But, Frank, if I could interrupt for one second. It sounds like what you're telling me, also, is not only are they providing real value in, as you say, making our lives better. But even if they don’t, let’s say, outperform the S&P 500, it sounds like you trust them to allocate capital. You trust them with your money, basically, so you don't expect a blowup. You think that’s a very low probability, I’m going to guess. And you’ll probably get a decent return if you don't get an absolutely stellar one. And like you say, serendipity is a great word. I call these good surprises, and I love that idea. I've recommended a few stocks in my newsletter like that.

Frank Byrd:                And the same, Taleb in either Black Swan or Fooled by Randomness, really make this point. And people perceive him as more of a – the negative side of serendipity, right? The outlier bad events.

Dan Ferris:                 Right.

Frank Byrd:                But this is just the flip of that. This is the outlier good events. And I do owe great credit to Nassim for this concept that I read in his books and I’m like, I have not maximized my personal exposure to serendipity. And so, we feel that as long as you own enough of them, and it’s not just enough of them to get the diversification. It’s enough of them so that you're lucky enough to catch the who’d-have-thunk kind of company.  And look, I’d rather allocate my money to these “money managers,” meaning the CEO’s money manager.

Dan Ferris:                 Yeah.

Frank Byrd:                Because look, the data by now is clear. If you look at the performance of active managers, not on a year-to-year basis, which is the number people often quote; it’s like two-thirds typically underperform the index. But if you look over a 15-year period, and account for survivorship bias, over 90% of active managers don't match an unmanaged index.

Dan Ferris:                 Whoa.

Frank Byrd:                And that’s not because these are dumb people. I mean I know these people. They're friends that trust me; they're brilliant. But this is a really hard business. And I know, because I've done it. I mean I was a professional stock picker for 15 years. And what I realized was look, if I do really, really, really deep work and buy companies that I’m going to turn around and sell in a year or two, which is the typical turnover of a fund, that’s a very, very inefficient way to live your life because the market is so efficient, more efficient than most of us want to realize, that if you truly track your results, and if you're honest with yourself, the market is a lot more efficient than most of us believe.

So therefore, at the very least, and this is why Buffett recommends index funds. At the very least, you buy and hold something that’s low fee and you get tax-deferred growth on it. He doesn’t emphasize the tax aspect, but I think he’s just trying to keep it simple. The indexing is really good, so passive. So, this is why I do passive. There are dumb ways to do passive and there are smart ways to do passive. And according to academic research that we've reviewed, market cap weighted indexing is not a smart way to do passive.

Dan Ferris:                 Well, yeah, you wind up pouring money into the biggest company. It’s –

Frank Byrd:                Totally, 100%. And so, what do you want to do? You want to own a diversified collection of companies. We believe that how you weight them is important. We believe limiting overexposure to certain sectors is important. But then, most important is letting your winners ride.

Dan Ferris:                 Yeah, that’s something that we have preached around Stansberry quite a bit. I've made a couple mistakes in my life, but one of them is not letting the really best winners just ride and ride and ride.

Frank Byrd:                100%.

Dan Ferris:                 Frank, we're out of time, but I want to see if I can ask you to kind of leave our listeners with one final thought. If you could just encapsulate for them. It’s sort of a game, I realize, because nobody can encapsulate their whole philosophy. But if I told you, you weren't going to get to talk to them again and you could just encapsulate your wisdom and your philosophy into a single thought, what would it be?

Frank Byrd:                Other than hiring me as their investment adviser, what would it be?

Dan Ferris:                 Yeah.

Frank Byrd:                In all seriousness, literally, two words. Whatever you do in life – and this goes beyond investing – make sure that incentives are aligned as best as they can be. It’s never going to be perfect. But number one, I want my incentives aligned with whoever I am trusting to do something important for me. Whether it’s manage my money, take care of my boy, my kid. Right?

Secondly, it’s got to fit with my values because sometimes life is really hard.         And I promise you, any strategy can underperform. And you just want to make sure that that’s OK, as long as your capital is allocated to something that’s consistent with your values. And I dare say, really clever strategies that are momentum-based or factor rotation, blah, blah, blah, blah, blah. You know what? That stuff looks great and it back tests great, and you know what people do when the market goes down a lot or it underperforms? They bail. So, find something that you think your incentives have aligned and that fits with your values and you think you'll stick with regardless.

Dan Ferris:                 Oh, that’s brilliant. So, of much what you said, I feel like I got Charlie Munger in the house.

Frank Byrd:                [Laughs] That is literally the nicest thing anyone’s said to me in a long time. Maybe ever.

Dan Ferris:                 Yeah. Alright, Frank. Thanks for being here and I hope that we can speak with you again sometime and catch up in the future. I hope you’ll come back and talk to us.

Frank Byrd:                Hey, Dan, a lot of fun. A lot of fun. Thank you so much.

Dan Ferris:                 You bet. We’ll talk to you soon. Bye, bye.

[Music]

Dan Ferris:                 All right. That was really cool. Frank is a very – as you can tell, he’s a very thoughtful guy and considers his words carefully, and I think we benefit from that. And I do recommend going to the website. I spent a little time there. He’s got videos and some written pieces and things. And he’s got a little podcast that he does. It’s really cool. I really – I enjoyed his videos. They were very educational. And he’s even got one that shows an easy card trick to learn to impress your friends. It’s pretty cool. So, great. Great interview.

Dan Ferris:                 Time for the mailbag. Let’s see what we've got here.

[Music]

Dan Ferris:                 This is an important part of the show because look, this is where you and I have a conversation. And that’s what I hope the podcast really winds up being is an ongoing conversation over a long period of time between you and I about investing and investing strategies and companies and people. People like Frank and other good money managers with lots of good ideas. Whatever is on your mind. So, write to us at [email protected], with whatever’s on your mind. I read every single e-mail. I really do. If we get too big and there’s too many e-mails, I won’t always be able to do that so it’s really cool that I can still do it now.

Got a lot of mail. I’m not going to lie, it was hard to pick, so I actually picked out five of them. But I’m not going to read every word of all of them. All right. So, we won’t be spending a half hour on mail. All right. So, the first one of these, I will read the whole thing. This is Joe L. And Joe L. says, “Hi Dan. Joe L. here. Alliance-plus member. Invest mostly from Extreme Value.” Joe, you're a smart guy already, I can tell.

He continues. “Podcasts are the best. Thank you, Joe. You encapsulate nicely what I've learned the hard way, which brings me to this point. Clearly, I am not competent in this investing discipline, but getting there, I guess. What does it mean to be competent? And as it relates to specific companies, how can I ever be a competent investor in a company like Altius? Lots of moving parts. Specialized knowledge, etc. The best I can do is co-op your expertise to find such a company and co-op Altius management regarding executing their business model. I've owned Altius since 2009.” Wow, cool. “So, my question is, what exactly is my competence regarding Altius? Is being competent following its activities closely, following the market system it’s in, attending earnings calls, asking questions, etc., etc.”

Yes, all that and more. I tried to think of a way to encapsulate this and it’s really hard. It just means knowing the business well. For me, it’s come more and more to mean can I trust these people with my money? Can my readers trust these people with their money? Can I really recommend this thing and is it a good business model? What can I expect from this business model? And one question that I think would go a long way toward getting a company within your circle of competence, is thinking about how it can go wrong. How can it go wrong? Well, with Altius, they own all these fantastic royalties, just pounding out money. They could, for some reason, something could happen where the mines shut down or the production is lower or something. And that would affect them.

Or just their payments depend on the price of the commodity, right? So, copper prices go down, as they have a little bit here. And they make less on their copper royalty. So, I would say that’s one thing that will get a company inside your circle of competence, is thinking about the risks. Understanding, recognizing, the risk. And great question. How do you know? And really, the ultimate answer to this, Joe, is not anything that you're going to want to hear because this is a decision only you can make, ultimately. Only you can tell yourself one way or the other, yes this is in my circle of competence. You're never omnipotent or omniscient, right?

You're never all-powerful and all-knowing about any business. You can’t make things happen. You're not all-powerful. You can’t make things happen in that business. You can’t really make anything happen except buying and selling the stock.

And you're not omniscient. You can’t know everything that’s going to happen. That’s my answer. I hope that does you some good.

The next e-mail is from Paul W. and I’m not going to read one word of it, because basically what Paul is saying, and other people have said this too, so I just want to get it out of the way. He says, "Hey, I do short-term trading of stocks and options." And you can do this. And he says, "I think you omitted one important advantage to being small, which is precisely the ability to move in and out of markets without causing prices to move."

Yes, yes. That and other things too. So, look, I don't mean to say that these things can’t be done. He also talks about technical analysis in his e-mail, Paul W. does. I don't mean to say that all technical analysis is stupid. Specifically, what I’m trying to do is – and this is a guess on my part. I hope it’s an educated guess from being in the newsletter business for 21-plus years now. And I've just seen a lot of e-mails and things from a lot of readers and spoke with them at conferences and things. I’m just a little bit worried that too many people are doing stuff that’s riskier than they understand. That’s it. That’s the whole thing. We have people who do options trading and technical analysis and everything. They're real things, if you do them right. But good question.

Number three, I’m not going to read the whole thing again here. This is by Peter C. And he’s talking about crowdfunding and he wants me to get a crowdfunding expert on the program. But he says, “I believe that the top two risks of crowdfunding investing are paying too much up front for an overvalued company, and worse yet, having the company go out of business and seeing the investment go to zero.”

Well, Peter C., I think you're spot on there. And look, my view on this may even be worthless, frankly, because I don't really know a whole lot about crowdfunding. But just look at the name of it, will you? Crowdfunding. I mean imagine you could stick your head out your window and ask the entire world what they're doing with their money in private investments. Would you want to do what they're all doing or would you want to avoid what they're all doing? It’s called crowdfunding. I mean maybe I’m way off base here. I can be wrong about anything and this is probably just like the stupidest oversimplified view of crowdfunding. But because careful. Just be real careful.

I’ll read another quick paragraph from this e-mail about crowdfunding. Peter C. says, "The idea is that you have four to eight losers out of every 10 where you will merely only get your money back or see it go to zero. But that your one to two winners out of 10, you should be going to 10x or 1,000% return on your money. That should more than make up for your losers. And if you get a moonshot, that’s icing on the cake."

Generally speaking, this idea is true, but I think you need to go one more – you need to add a zero to all of this, right? So, I think 95% to 99% to – 95% to 100% of them will be losers. And if you get a winner, maybe you’ll get lucky and get a winner sufficient to amortize all your losses and leave you with a profit. I think it’s a super, duper long-shot type of a thing, but a good question. OK?

Now this next e-mail, I’m going to read every word of it and as you will hear, it’s a bit self-serving of me to read every word of it because he’s very complimentary about a guest we had on the show recently. And this is by Steve T.

Stevie T. writes, “Hey Dan, love the podcast. Been listening for a while now. Thank you for bringing Ken Lewis on your show. I feel an ethical obligation to defend the man. If APMEX sold baby wipes and face wash, I’d never use Amazon again.” So, he’s really into APMEX and he really likes the company.

And he continues. “I’ve become accustomed to things from APMEX showing up higher quality than I expected. They always give you the better end of the deal. These are good people, Dan. I’ve had a gold money account for about a year and got on One Gold a couple months ago. I've been using them both equally because their vibes are different.

Goldmoney is cool. You can trade platinum and palladium as well as a basket of FX, bitcoin and ether, especially cool if you're into newsletters about Austrian economics. The account was hard to fund and lots of paperwork. LOTS in all caps. One Gold’s beauty is in its simplicity. One Gold was super easy and reminds me of Coinbase in its layout. They need to rethink the website design.

Even as a Dodgers fan, I can’t handle that much blue and white. Being able to connect a debit card to an account physically and digitally tied to gold is, in fact, the Holy Grail of finance. It’s better than bitcoin because instead of being “digital gold” it is literally digital gold. Thanks, Dan, Stevie T.” I’m going to let that one stand all on its own. I haven't signed up on One Gold. I plan to do so. I plan to get on there and put some money in and just buy a little gold and silver and stuff and see how it is and talk about it to you.

Last one here. Gene S. She’s a real good correspondent. She’s written in a few times. Jean says, “Hi Dan. Just got around to listening to this episode. Your guest was excellent.” I think she’s talking about Mark Yusko because she mentions him in a minute. She goes, “Your guest was excellent.” She continues a side note, “Rant might not be the best word to describe your openings. To me, a rant has a negative connotation but you're just trying to open our minds and make us think about what’s really going on. You're being provocative, which is why we tune in. At least, that’s why I do. Mark Yusko explained blockchain in a way that made sense. Then he tied in the bitcoin which is starting to make sense. I do have a question. When he talked about the safety of blockchain technology, I raised my hand every once in a while. Zero Hedge posted a story about someone having their bitcoin stolen from their digital wallet. How is this happening? Jean S.”

Jean S., I don't know specifically about how it happened in either case. But I think, when people get it stolen, they've allowed their cryptographic, personal, individual unique key to be stolen. So maybe they had it on their phone, which I once had a couple of passwords on my phone. And I realized that was so stupid just to have them sitting there in a little note on my phone. So, I deleted them all off because it’s an easy thing to hack. So, I think that’s what’s going on there. And we heard Mark Yusko talk about how bitcoin gets lost because people lose their key, so no key. No bitcoin. And that’s it. But good question.

As far as the rant thing goes, you know, it’s funny. I went back to the home office recently in Baltimore last week. And they said, “You know I wish your rants were a little more rantish.” And I think a lot of people think of me as a curmudgeon for some reason. And I don't quite get it but hey, everybody’s entitled to their opinion. I’m not trying to rant and be like everything sucks and the world’s falling apart, and you don't want to do – and this is bad and that’s bad. I don't want to be Mr. Negative, I guess. I don't want to be a ranting fool because that doesn’t represent reality. Right?

This thing you have between your ears carries a kind of model of reality, whether you like it or not. And I don't want my model of reality to be a surfeit of pessimism. I think that’s a bad idea in life. Period. However, what I think is good is to share, well today I shared a personal anecdote about my dad because it’s Father’s Day. I talked about the time value of money and tried to make that very easy. The rant on that, of course, is you've got to know this. That’s my thing. I feel like people tend to be a little too complacent. They overhear things at a party, or they think that trading options or whatever, all these things that I say are risky and dangerous. They think that these things are much more doable because it’s so easy to get online and fund an account and do it. But that is deceptive.

You heard our guest today, Frank Byrd, say it’s really hard. This is a really hard thing to do. So that’s why I keep calling it a rant because I’m going to rant and rave until I can’t speak anymore trying to get people to understand the risk they're taking and not be too complacent with the money that they've worked hard for. All right. That’s another episode of the Stansberry Investor Hour. And I hope you will come back. It’s my privilege to talk to you every week and I look forward to talking to you next week.

[Music]

Male:                          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 mailto:[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.

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