On this week’s episode of the Stansberry Investor Hour, Dan invites arguably the #1 retirement expert in America onto the show…
He began his career as an elite derivatives trader on Wall Street at Goldman Sachs…
He helped pioneer specialized options trading strategies for large banks like Chase Manhattan and Yamaichi, known as the Goldman Sachs of Japan…
But after over a decade on Wall Street, he grew disgusted with the culture of greed and left his Senior Vice President role to pursue a more fulfilling career practicing medicine.
Today, he shares the secrets he learned as an elite trader on Wall Street with thousands of everyday investors like you, through his franchise of retirement newsletters.
Stansberry Research’s own… Dr. David Eifrig.
Or as he’s known around the office, Doc.
During their conversation, Dan and Doc discuss some of the absurd examples of excess in the markets today… the likelihood of inflation in the coming years and how much of an impact it can have on your savings… and Doc’s favorite way to produce safe, reliable income for those already in retirement. He’s even holding his own webinar for those who want to learn more about this unique strategy. You can find more info at www.MessageFromDoc.com
Doc has a way of explaining complex financial instruments in a way that’s easy to understand that you’ve likely never heard before.
Plus, Dan gets Doc to finally open up and shares the story of what happened on Wall Street years ago that ultimately led him to get fed up with the system.
The two have an enlightening conversation with tons of valuable insight for anyone nearing retirement age. If you’ve got any money in the markets and are nearing retirement, you won’t want to miss it.
Listen to Dan’s conversation with Doc, and much more, on this week’s episode.
Dr. David Eifrig
Editor of Retirement Millionaire
Dr. David Eifrig has one of the most remarkable resumes of anyone I know in this industry.
After receiving his BA from the Carleton College in Minnesota, he went on to earn an MBA from Northwestern University's Kellogg School of Management. From there, Dr. Eifrig went to work as an elite derivatives trader at the investment bank Goldman Sachs. He spent a decade on Wall Street with several major institutions, including Chase Manhattan and Yamaichi.
Sick of the greed and hypocrisy of Wall Street... Doc left his senior vice president position to pursue medicine. He graduated from Columbia University's post-baccalaureate pre-medicine program and eventually earned his MD with clinical honors from the University of North Carolina at Chapel Hill. Along the way, he has been published in scientific journals and even helped start a small biotech company, Mirus.
In 2008, he joined Stansberry Research and launched his publication, Retirement Millionaire. He has gone on to launch Income Intelligence and Retirement Trader, which uses options to help people construct safe, reliable income streams.
He also owns and produces his own wine (Eifrig Cellars) in northern Sonoma County, California.
2:54 – More absurd stories of excess in the markets… “An Italian artist sold a sculpture for $18,000, and you’ll say, ‘well Dan, a sculpture for $18,000, that’s no big deal… what was the sculpture?’ well the sculpture is an invisible sculpture!”
6:52 – “It makes sense, doesn’t it? It does to me. When the safest investment in the world gets you zero to negative – between zero and losing money – guaranteed by the United States government, the Swiss government, the Japanese government, guaranteed to make zero to nothing in real inflation-adjusted terms across the board… In that environment it makes all these sense in the world that it costs $18,000 for nothing…”
8:51 – This week’s quote is from Jesse Livermore… “A market does not culminate in one grand blaze of glory, neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break…”
12:20 – This week on the show, we invite Stansberry Research’s top retirement expert, Dr. David Eifrig, or as he’s known around the office, Doc. Doc began his career as an elite derivatives trader at Goldman Sachs. After over a decade on Wall Street, he grew disgusted with the culture of greed and left his Senior Vice President role to practice medicine. Today, he shares the secrets he learned as an elite trader with his readers through his franchise of retirement newsletters.
15:15 – Dan asks Doc what many have wondered over the years… What caused him to finally get fed up with Wall Street and leave a massively successful career behind?
19:56 – “I have to tell you, I discovered a lot of corruption at Goldman, less so at Chase [Manhattan] but bureaucracy there, and corruption at Yamaichi, and so that was very sad and disappointing to me…”
28:38 – Doc shares his top 3 things you can do to improve your health and set yourself up for a great retirement…
33:27 – Doc explains how he uses options to produce safe returns in a simple terms, “There’s a way to let people pay you a premium and let other people make a bet on the underlying… And you get a chance to take an income against that asset, it’s kind of like renting out your real estate, you have this asset, you own it, and you want to rent it away to somebody…”
39:24 – Doc talks about his biggest concern and how he’s fighting that with his newsletters, “We’re also talking about what’s scary right now in my mind, inflation…”
41:45 – Doc leaves the listeners with one final thought as the interview closes… “I would say the most important thing that you can do is go for a walk every day for the rest of your life for 15 minutes at any speed your heart desires… Just do it. Every. Single. Day. 15 minutes…”
43:13 – On the mailbag this week, one listener writes in to ask Dan his thoughts on investing in resources like copper, iron, or steel… And a longtime listener calls in on the listener feedback line to ask Dan if there are any sectors that he would feel comfortable buying and holding for 10+ years… And another listener has some questions about holding cash. Dan answers these questions and more, in this week’s episode…
Announcer: Broadcasting from the Investor Hour Studios and all around the world, you're listening to the Stansberry Investor Hour. [Music plays] Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here's 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'll talk with Stansberry’s own Dr. David Eifrig. Doc and I haven't spoken in a while, so we'll catch up, and I'll try to figure out what makes this brilliant guy tick. This week in the mailbag, listener Brandon R. has a great question about commodities and inflation. And listener Levi N. wants to talk about cash... a lot.
And remember. The mailbag is a conversation, so talk to me. Call me up and leave me a message in our listener feedback line and hear your voice on the show. In the opening rant this week, perhaps the most egregious single instance of financial excess I've ever seen in my life. That and more, right now, on the Stansberry Investor Hour.
Well, back in December 2019, we talked about the banana art. Remember that? The banana duct-taped to the wall was art. And it sold for $120,000.
And I thought it was crazy. I thought it was crazy back in the innocent days... in the pre-COVID days with stocks going up and up and up, they were more expensive than ever and, "Oh, boy. Of course, the art world is going crazy." Right? Then in March of this year, the artist Beeple saw one of his works – an NFT, an electronic token really... nonfungible tokens they call them. But it's almost like a crypto or something. It's like the crypto of art – sold for $69 million in an auction at Christie's auction.
Like the same way, they would sell a Van Gogh or something or a Rembrandt. They sold this kind of crypto art, I’m calling it – NFT – for... actually, I think the real price was $60 or $61 million. The rest of it was commission. But $69 million somebody coughed up for this thing. OK. So those are crazy, right? No, no. They're not crazy. What's crazy is what happened recently, a couple weeks ago. An artist named Salvatore Garau, an Italian artist, sold a sculpture for $18,000.
And you say, ”Well, Dan, a sculpture for $18,000 – that's no big deal. What was the sculpture?" Well, the sculpture is an invisible sculpture. The artist describes it as a vacuum, a space full of energy, and you get this certificate of authenticity and a set of instructions on how to set it up. And it's a 5-by-5-foot space with nothing in it. And he says, "Lighting and climate control optional." I mean, I want to know – first of all – who paid $18,000 for an invisible sculpture... for nothing? For nothing is what they paid for.
You get this certificate of authenticity from the artist to say, "Yes. You've bought nothing." Which is great. I mean, with the banana duct-taped to the wall, at least the certificate says, "Yep. You own this art, and nobody else can say they own it. But you got to the grocery store and get a banana and a piece of duct tape, and you tape it to your wall, and there it is." And it's something at least. This is literally nothing. And as I said in my introduction... unfortunately, this makes all kinds of sense.
Why does it make all kinds of sense? Well, the banana art and the NFT, the invisible art. Well, we live in an era where we are scraping – literally scraping – 5,000-year lows in nominal interest rates and real interest rates, too, of course. Across the board, real interest rates are just about zero to negative. If you call inflation 2%-plus, the 30-year bond – the U.S. 30-year bond – is actually right around that right now... 2%. And it dipped down to like 1.2% a year ago.
So, we live in the age where – I mean, these are investments. Bonds are the safe money, right? And sovereign bonds are supposed to be the safest money. So that's where you put your safe money to get a safe return. And what return do you get for your safe money? If you put it into U.S. bonds, you get negative real return. Or you could call it – I'll even call it zero in the Treasury. Not negative, in the long bond, the 30-year at 2%. OK? And the rest are negative real yields, you know? All the way down to 30-day T-bills.
And in Japanese government bonds, Swiss, various other European bonds, they're negative nominal rates. Which means even in nominal terms – not inflation-adjusted – you buy your bond, hold it to maturity and you got less than you started with. So, you get zero. And you could say, "Well, you don't really get zero, Dan. Because you do get your principal back." Right? Well, yeah. But you buy them for an investment. You buy them to get a positive, at least nominal, return if not positive inflation-adjusted return.
And you're getting zero to negative nominal and negative real across the board in the highest-quality sovereign debt in the world. And that, against that backdrop – an art collector, whatever, some crazy person with $18,000 to light on fire pays $18,000 for a 5-by-5 empty space, right? It's all of a piece, isn't it? It makes sense, doesn't it? It does to me. When the safest investment in the world gets you zero to negative – right?
Between zero and losing money guaranteed by the United States government, the Swiss government or Japanese government, guaranteed to make zero or nothing real inflation-adjusted return across the board... in that environment, it just makes all the sense in the world that you can pay – that it costs $18,000 for nothing. That someone would pay $18,000 for nothing. Ay, ay, ay. That's my rant. That's it. That's all I got today. True, true signs – I'll call it "signs of the top."
But even if it's not a sign of the top, it's a sign of egregious financial excess. There is a – we are living in a broken financial system. And in keeping with this theme of, you know, perhaps a sign of the top, I have to give a shout-out to former podcast guest and future guest – we're going to get him on the schedule soon – an avid podcast listener Kevin Duffy, who sent in the quote of the week, and I couldn’t turn away. He sent this to me, and I kept measuring other quotes and things I was reading against it. And I thought, "No, this is too good. He's right." So it's a quote from Jesse Livermore, the famous trader who went bankrupt four times, and then he... I think it was 1940 that he finally killed himself in a hotel.
And it's funny. Livermore is held up as this great trader, and people follow his advice, and they want to read the book. You know, Lefever wrote about him, and Evan Lefever wrote this famous book. But yes, Jesse Livermore said, "A market does not culminate in one grand blaze of glory, neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break," Jesse Livermore.
That sounds right to me because you'll often hear Wall Street types, market professionals, hedge-fund managers say, "You know, the bottoms are events, and a top is a process. Market top is a process. Market bottom is an event." And that I think sounds about right. Because what I said recently in a recent Stansberry Digest, "When you're in a bull market and you're already down 30 or 40%, you usually" – I'm sorry, when you're in a bear market. "When you're in a bear market, you're down 30 or 40%, that first dropdown that starts the bear market – you don't even know.
You're unaware that you're in a bear market until later when you get the first drop down and then the first recovery, it fails to make a new high and then you're back down below the previous low. And "Oh, boy. It was a bear market after all." Whereas, with bottoms, they come and go pretty quickly. March 2009. Even December 2018 when we had that fall break. And of course, the COVID bear market was – boom, done, quick March 23rd. So, I think this quote is great. I'll just read it one more time.
It's worth reading one more time. "A market does not culminate one grand blaze of glory, neither does it end with a sudden reversal of form. A market can and does often cease to be a bull market long before prices generally begin to break." I would say ceases to be a bull market before anyone realizes there's a bear market happening. OK. Let's talk with Doc Eifrig. This is going to be fun. Haven't talked with him in a while. Let's do it right now. [Music plays and stops]
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Today's guest is going to be a lot of fun. I'm so glad to have him back on the show. Haven't talked to him in a long time or had dinner or anything. Dr. David Eifrig is with us today. Stansberry's own Doc Eifrig. Doc Eifrig has one of the most remarkable resumes of anybody I know in this business. Doc Eifrig went to work as an elite derivatives trader at the investment bank Goldman Sachs. He spent a decade on Wall Street with several major institutions, including Chase Manhattan and Yamaichi. Sick of the greed and hypocrisy of Wall Street then, Doc left his Senior Vice President position to pursue medicine.
He graduated from Columbia University's post-baccalaureate pre-medicine program and eventually earned his MD with clinical honors from the University of North Carolina at Chapel Hill. Along the way, he's been published in scientific journals and even helped start a small biotech company called Mirus. In 2008, he joined Stansberry Research and launched his publication, Retirement Millionaire, and he's gone on to launch Income Intelligence and Retirement Trader which uses options to help people construct safe, reliable income streams. And among other things, he also owns and produces his own brand of wine called Eifrig Cellars from Northern Sonoma County, California. Doc, welcome back to the show.
Dr. David Eifrig: Dan, thanks for having me. And what a great introduction. It's always fun to hear that.
Dan Ferris: To hear how great you are?
Dr. David Eifrig: Yeah. Yeah. No. Exactly. It has been too long, and I haven't seen you forever and ever. And like you said, we haven't broken bread. And I don't even remember the last time. Gosh. A couple years ago now. Too bad. It's a shame.
Dan Ferris: Yeah. It's just the past – what are we calling it now, maybe 14, 15 months or so – have been... it's seminal. You know? Everything that came before is different from everything that has come after. And it's changed everything. And I hope that when you and I get together with all the Stansberry folks in Las Vegas this year that we get some kind of a feeling of returning to normal. Looking forward to seeing you there. So, you know, one thing that I've always been curious about with you was – I know you've talked about it a little bit but this transition from a hell of a career on Wall Street to medicine.
Not a lot of people do this. Not a lot of people leave all that money and, frankly, prestige – whatever that might mean to anyone – and head off into something entirely different. And I always wonder, "What was his life like in the last" – whatever period of time it was, just say the last few years, when you were kind of getting fed up with Wall Street. What was happening? If you don't mind talking about it.
Dr. David Eifrig: No. No. I don't mind at all. I think, you know, it's a great question. And what essentially I ascribe to – and I think I probably picked it up when I got my MBA before going to Goldman – was this idea of sunk cost and this notion that it doesn’t matter how much money you've put into the project... if the project isn't going to work, you stop putting money into the project.
And the truth is, for me to get taken away from Goldman – those people who were trying to start the derivatives desk up in Goldman – was really the second investment bank to have a derivatives bank after Salomon. And we bought some of the Salomon guys. So, some of the people who were in Michael Lewis' book, Liar's Poker, came over from Salomon and were in our group. And then, other banks wanted to do it. So, Chase wanted to do it.
They'd had a commodities and futures group, and they wanted to expand into the financials, which is what Goldman had. And so, they pried me away. And so, they had to pay a big check to do that, and then similarly Yamaichi did the same to pry me away. They tried to get me to go from Goldman to them, but I didn't. Anyway. So, I leveraged that. I leveraged the experience of Goldman knowing that there's very few times you can take advantage of the price in the market when it was high – and to me, it was super high. I had goals that were maybe somewhat naïve. I didn't realize I could make as much money as fast as I did.
And I met those within maybe three years... all the financial goals. Net worth, income, assets. The short version, even though this seems like the long version – but the short version is, a friend gave me a massage with a woman named Lichi, who's now an Episcopalian priest. And she – I don’t know. After about three or four sessions with her, she said, "Hey. You got this tension in your lower back, and that's a sign that you're afraid of stuff. And what do you want to do?" And at that time, I think I'd run my first, or maybe I was on my second marathon. And I think I said, "Oh, I don't really know." But one morning, I did wake up and I'm like, "Gosh. I'm afraid of failing in science and ending up like my dad."
And "like my dad" meant divorced from my mom and four relatively unhappy, disappointed kids because of the fantasy story of a happy family living happily ever after like The Sound of Music, you're kind of like, "Well, I don't want to be like my dad. I don’t want to be like my parents." So, I had rejected him and that path – medicine and all that – really through that point. So I said, "All right. I've got this MBA. I've made my money. What do I do next?" Afraid of science, I just stumbled across – Columbia had this post-baccalaureate pre-med program. And I thought, "Why don't I try the sciences, see if I can pass general chemistry and physics and all that? Why don't I enroll? And see how that goes?"
And gosh, Dan, I was in such a different place, right? When you have money and you're paying for your school and you're not taking loans and... I fell in love with chemistry. I fell in love with the organization and physics and genetics. And the decision – at that time, I was with Yamaichi, going to school essentially at night at Columbia... on the trading desk in the daytime. And I don't want to say I was bored, but I was kind of like, "All right. This is more challenging... the discipline of classroom testing." And I loved how everything fit in its place.
Dan Ferris: Right. So, Doc, it sounds to me like you hit these goals early. And it was almost like boredom as much as anything the way I'm hearing it.
Dr. David Eifrig: Yeah. A very close friend of mine says I get bored about – takes me about eight to 10 years, and then I do something else. And that may be a true pattern. Yeah.
Dan Ferris: OK. Not unusual in intelligent, creative types.
Dr. David Eifrig: Yeah. And let me add this because I want to emphasize it. Bored, but also I've been, much of my life, very altruistic. And I have to tell you that I discovered a lot of corruption [laughs] at Goldman. Less so at Chase but bureaucracy there and corruption at Yamaichi. And so, that was very sad and disappointing to me, right? Because I thought, "Here, Wall Street was meant to allocate capital and help people make money," and da-da-da. And they, like, had no interest in the little guy, let alone the small institutions. They just wanted to make money hand-over-fist any way they could on spreads, having to be a market-maker, bid-ask spreads... you name it, they wanted to make money.
And we've seen stories, and I don't have to go on and on or back any of that up. But that was completely disheartening to me. So, medicine was this also – like, I had this vision of I could be a country doctor and deliver babies and help everyone live happily ever after. And that's kind of what led me that path, right? So again. It was this altruism driving me forward and then disappointment and seeing the – they didn't really care about the individuals.
Dan Ferris: You're right that we know the stories. Don't we? It all kind of sounds familiar. It's funny. I know a doctor right now who can't wait... he's set to retire. He's a radiologist in Colorado. And he's begun managing money a few years ago. And he can't wait to get out of medicine. He says, "What's happened to the medical profession in the last several years is just" –you know, he doesn’t like it at all. I won't get into it unless you want to because I'm not a doctor. But he doesn’t like it at all, and he can't wait to get out. And I think he's like literally days away from his last day.
Dr. David Eifrig: Yeah. I saw that stuff there too. I uncovered cheating on the medical boards in ophthalmology, neurosurgery, orthopedics – you know, it was just shocking to me. Again, altruism. Some of my – I'd say more, I don't know what kind of friends they would be when they laugh at me and go, "You really can't be that naïve." And I guess that I'm that much of a fantasy, wishful – I'm a guy that cries at the end of Lassie or any kind of, you know, I get choked up and I'm like, "Oh my god." People look at me like, "Oh, come on. This is not a real story. This is made-up." And like, "I know, but it's beautiful."
Dan Ferris: Yeah. You sappy, old guy.
Dr. David Eifrig: Exactly. [Laughs]
Dan Ferris: So then, OK, Wall Street – spectacular career, hit your goals early, got bored, and other things... did the medical thing but then made your way to Stansberry back in whatever it was – 2008 or so. Were you just bored again? Did you find more corruption? I mean, you know...
Dr. David Eifrig: Yeah. Yeah. Both of those are true. The honest answer is, it was a little bit earlier than that. It was around '05 when I met Porter. And it was a phone call, and I was impressed with Porter, and Porter was impressed with me and my background at that point. And he wanted someone to be a biotech analyst. So, what I imagined Dave Lashmet is doing for us now. And I just didn't have any interest in that because I was in the middle of my ophthalmology residency.
And so, Porter loved my stories that I had about the health care experience that I had going through medical school and residency at that point. He said, "Why don't you start writing to my Alliance members?" And that's where it began. And Porter paid me every other Sunday for – gosh, a year at least – to write about 1,000 words. Paid me, I think, $1, $1.10, $1.25, somewhere in there. And that went out to you guys' Alliance folks. And I loved that, and I got feedback, and then he invited me to one of the Alliance meetings, and I felt like – and I'm sure you've seen this and felt it. You feel a little bit like a rock star. People come up to you and like, "Doc, I love your writing," da-da-da.
Dan Ferris: Well, people don't say that to me, but I think I can-
Dr. David Eifrig: Ah, they do too. Come on. I've seen the crowds around you as well. So anyway. Yeah. So, Porter in '07, '08 – Porter made me an offer right when I was thinking about where to go and practice in ophthalmology. And he just said, "Why don't you use the power of the pen to come and help people?" Because honestly, I did see some corruption. Like I said, I found cheating on the boards. But meanwhile, I'm having fun writing, and I'm having fun engaging with Porter. And, again, I've still got plenty of money, and I don't really know what I want to do. I thought about going and working for the VA where – I liked, believe it or not, their electronic medical record system was pretty clean and robust.
Dan Ferris: At the VA?
Dr. David Eifrig: Yeah. At the VA, actually. Yeah.
Dan Ferris: Wow.
Dr. David Eifrig: Yeah. I know. [Laughs] Compared to what else was going on. And I could fly from one VA to another VA, and the records are the same. The systems are the same... which is not true you go from one office to another office in the United States, one doctor, a different doctor you've got. Even in a town with three hospitals, they've got probably three different medical records. And finally, when I looked at treatment plans, I'm an evidence-based guy. And so, I would see stuff that people would do things because that's what they had done.
And then for me, it was so easy to start to talk about and write to try to empower individuals to protect themselves. Like make sure that your doctor – if he's a surgeon or she's a surgeon – they keep some kind of record and they can truly tell you, "This is my success rate, and I'm using modern techniques," and all these things which seem so obvious to me. But it's been very clear that people as they go through life don't... and I don't want to say have not been as observant as I have, but like aren't willing to be pissed off about it and probably just ignore it. You know?
Dan Ferris: I probably – since I probably have like half your IQ or whatever, I probably get bored even faster, you know? I get bored even faster. And so, I'm like an ADD patient or something. So, let's talk investing. Let's talk about the stuff that you do for Stansberry readers. So, your main thing is Retirement Millionaire, this publication that is kind of – it encompasses more than just... it's not just stock-picking. It's like all these different kinds of advice. Like, there's health advice in there, right? There's all kinds of advice.
Dr. David Eifrig: Yeah. Health advice and research, science-based, yeah. Exactly. You know, that's what we've done. And that was my first letter to launch, which sort of combined my background in finance and investing and my background in medicine – "science health," if you will. So yeah.
Dan Ferris: But, I mean, if you don't mind digging into it a little bit... every now and then I'll hear the top five things that Doc Eifrig says you should do to maintain your health or whatever. I mean, can you boil down a short list like, "What are the big things" – because I know the way things work in life is, if you figure out a few simple but powerful actions that you can take, it helps you avoid all manner of errors. And that's the learning of life, right? I talk about "via negativa." "The learning of life is about what to avoid." And, you know, certainly, people in the medical field are always talking about what you should avoid, you know, what you shouldn't eat, what you shouldn't do, where you shouldn't go, air you shouldn't breathe, or... what are your top handful of bits of advice for people in that regard?
Dr. David Eifrig: Yeah. Sure. So, in the health space, to me I started in this Retirement Millionaire letter which the first half about it was investing. The second half was about health. In the middle was a mix of these three-sentence – seven of them, six or seven maybe – what I would call life hacks. So, things that – deals we've uncovered or new ideas and thoughts about, say, an influenza virus back 10 years ago when the CDC was claiming the swine flu was rampant. We wrote about that in the middle of our issue and said it was nonsense.
So, you know, I guess to your question – so every year at the first of the year I put together a list of my top 12. Maybe I've occasionally done a baker's dozen. And it's essentially me looking at the research, me looking at the science and getting older and answering the question of, "If you were my age and reading this, what should be the healthiest things you should be doing?" So, things like the most important – top three, four things you can do is have good, clean sort of hygienic, if you will, sleep so that your room is dark.
There's no electronics in your bedroom. There's quiet. You're going to bed either at the same time every night and then getting up when your body's wanting to get up or you're getting up at the same time and going to bed whenever you're tired. And trying to get – we know that most people need between seven hours and nine hours of sleep. We know about the cycles of sleep. We know that deep sleep does certain things for your body that's different than how rem sleep acts. And all these things, we know – for example. The longer you sleep, the more that the stuff that builds up in your brain gets cleaned out.
We also know that you can meditate and mimic part of the wave and patterns in sleep, but actually different. And that, just meditating, can help clean out some of the waste products in your brain. We know that exercise and movement – and when I say exercise and movement, I mean just something as simple as walking 10 to 15 minutes a day. Just being out standing, moving, having your shoulders – these large joints – your shoulders and your hips moving... we know that has benefits.
And when I say this, I mean we know it, scientifically, that people that move and report moving live longer than those who don't. And we've seen this now in prospective studies where you start asking people – there's some old studies now that have been going around for 50, 60 years. And we know people that report getting and walking every day for 15 to 20 minutes – they live longer. So anyway. In my letters, we talk about that and research it, report on what we see.
We give kind of – I give my opinion about this stuff and what I think, where it's going. We've talked about much of last year. My senior analyst and I, we talked about the COVID conversation, we called it, where we talked about COVID every week, every other week, for a while. Yeah. So, I kind of address from a scientific point of view. I'm a true believer in science, but I also understand that there's legacy knowledge in the human race. So, you incorporate those things. So, things just simply like meditation and yoga, which have been going on for a while, and movement as key health things.
Dan Ferris: So that's the health side of things. Another thing I wanted to ask you about that – we talk about... this is a topic I always bring up with you, because it's something I'm not very good at myself, and it's something you're very good at... which is options. And our readers love them. You know? The perception is, of course, that an option is like a lottery ticket with a better expectation. Not really true, but you know how to use them. And I read your introduction, it said you use options to help people construct safe, reliable income streams.
Dr. David Eifrig: Right. Right.
Dan Ferris: And that just sounds hard to me.
Dr. David Eifrig: Yeah. What's interesting, Dan, is my first job at Goldman and role was to spend time with some of the large institutions teaching them about options. And the thing is they're called derivatives because these options are derived from – they're made up, and they're based off of – the underlying security or whatever it is that you want to do an option on. And they're models that figure out where things should be priced. And then, of course, there's a market... if there's a willing buyer and seller, you've got the price.
There's a way to let people pay you the premium, and they can make the bet on the underlying. And if you have the underlying or willing to own it and maybe aren't expected to go up as much as somebody else is, and you get a chance to take an income against that asset. It's kind of like renting out your real estate. You have this asset, you own it and you want to rent it away to somebody. And there are enough of these stocks that you presumably would want to own and be willing to own. So why not own them and rent them out?
And it turns out – there's lots of studies done to look at this – it's a pretty way, a pretty efficient way, to protect capital and generate income from it. It's been a fun way in IRAs that you can self-direct to do that and not have to worry about the tax filing. You know, if you do a taxable account, you got to report stuff. There's short-term gains and long-term gains. It's much more complicated, I would argue. But yeah.
You could take, for example, a stock... you name the stock. Exxon Mobil, 3M... own it. If you have 100 shares of it, you can sell one option against that, and someone will pay you to buy it at whatever price you want to agree to sell it to them at. It could be at the current price, it could be at a price higher. And then, you agree at a time in the future. Two months, one month, six months. It was one of those things that we became experts on it, and I like to imagine I know a few things and a few tricks here and there. And it led to my second service that we launched called Retirement Trader.
And then, we now have a third service called Advanced Options which does a little more complicated option use using two options usually in some sort of spread to really limit risk but also to have returns that get magnified because you are using some of the leverage in options. But again, you know, with very fixed, specifically known risk ahead of time. That's been fun. That's been a great service. Both of those are just like – that's my, I would say, bread and butter. But yeah. I just love it. And I can do I with my eyes closed. So, knock on wood.
Dan Ferris: Knock wood.
Dr. David Eifrig: Yeah.
Dan Ferris: That's right. Yeah. People talk about it. I know how the readers feel about it because I've seen the feedback. And they love it to death. But OK. So yesterday, you did a Webinar. And what did you talk about? What did you tell everybody?
Dr. David Eifrig: Yeah. Sure. And I think the Webinar actually will be on replay, too, so people will still have a chance who are listening to you today... listening to us and me babble. But yeah. I would encourage them to check it out. Essentially what it is, is I have a service called Income Intelligence. And in there, I want something that's a little more in-depth. Almost like Retirement Millionaire had a baby with Barron's or had a baby with the Wall Street Journal. So, a little deeper dive, a little more analytics, a little more – I don't know.
If you were managing money for your family or you were a serious investor, you would love how deep we dove into a particular investment that month. But then also, we followed all of the factors that we think go into investing for income. And that's why we call it Income Intelligence. Because we were monitoring inflation monitors. We were monitoring yield spreads and the corporate market... the corporate bond market, the Treasury, the U.S. government markets. All of these things and elements play into what to invest and when. And so, we look, and we say, "All right, here's a space. You've got stocks that are trading dividends. Are those dividends safe in that industry?"
Well, when we look at the capital and the bonds underlying those industries to decide, "Should you buy that stock, that dividend payer?" And then other dividend-paying industries and companies. We look at that. And from there in the sort of overall macro view, we combine that with our deep dive in the individual stock that we pick. So, Income Intelligence is this letter. And my senior analyst joined me around the time that I launched that. Because we launched – at that point, I had two letters going strong... Retirement Trader and Retirement Millionaire. And I needed another body.
And so, I stumbled across Matt Weinschenk, who's got a master's in econometrics. And it's just a brilliant math guy and statistics guy and fun, nice to work with... great to be around. And he wanted to work with me and join me. So, he came aboard. And when we launched this, we started looking at it and saying, "Could we go back and look at and back-test and do some modeling?" And I don't believe in back-testing, per se. Because you can kind of back-test and prove and show anything. But we questioned this idea of, "What do you do if you're a retiree today?"
And, Dan, you've heard of the 60/40 model where you put in 60% in stocks and 40% in bonds and, as you get older, you go less and less stocks and more and more bonds. Well, what if we just flipped that on its head and we said, "We can go as much or as little as we want in any asset class," and looked at it and went back in time and said, "Knowing what we know about some of the things that we monitor and look at, what would our returns have been? And how would they have been relative to indexes, other markets?"
And we were just blown away. In fact, at first, I didn't believe it. And I'm like, "All right. We got to double-check it. And we got to look at it." And several different times. And it's one thing to come up and say, "Let's have a model that works all the time." Like, we had a model, put it in... like, "Wow. This works." And so, starting in high-inflation times, low-inflation times, high-yield times, low-yield times. So anyway. We've been playing with it, using it. It's added more value to the service for sure. And that's what we're coming out and sharing with people and talking about it.
And we're also talking about... what's scary right now in my mind is inflation for anyone who's on income and trying to support themselves with income. And let's say you're 50% in stocks and 50% in bonds because you're older. Well, if your bonds and stocks are only paying 2%... 1%, and inflation's 2 or 3 or 4, that's a negative real return. And if you're reading my Retirement Millionaire health stuff and living longer, you need this – you need the income and investment results for longer.
So that's kind of where this started. That's what this is about. It's sharing that, announcing it, talking about sort of total returns and stuff. And I don't know. Income Intelligence, our average gain I think for the last eight years is around 11%. The Vanguard Index Fund, their return has been around 19.5%. Ours has been like 22.5%. So, you know, we're beating some indexes that are pretty good. And now, we think we're overlaying an even more appropriate and model and way of looking at the markets and investment choices.
Dan Ferris: And just so everybody knows, you can access all this at messagefromdoc.com. You can see the webinar there – messagefromdoc.com. All right. We've been talking for a while here, and it's been great. But I still have to ask you my final question because I ask every guest the same final question.
Dr. David Eifrig: Cabernet Sauvignon.
Dan Ferris: No. No. No. Well, that could be the answer. When you hear the question, that is one possible answer. But the question is the same. It's, if you could leave our listener with one thought today – besides going to messagefromdoc.com, if you could leave the listener with one thought today, what might it be?
Dr. David Eifrig: Oh, boy. What might it be? I would say the most important thing that you can do is to go for a walk every day for the rest of your life for 15 minutes, at any speed your heart desires. And just do it every single day, 15 minutes. Do it alone, do it with others, do it with music on, do it with a book on tape. Whatever, wherever. Just do it. Sunny, snow, rain, heat, cold – just do it.
Dan Ferris: Sounds good. Straight and to the point. Very simple and powerful. See? That's one of those things. Get up, take a walk for 15 minutes. If you just do that, you avoid all manner of other calamity. Thank you. Thanks for being here. And next time we talk to you can't be soon enough.
Dr. David Eifrig: OK. See you, Dan. Thank you.
Dan Ferris: All right. Always great to talk with Doc. You know, the thing about Doc is, when I get into the familiarity and friendly banter, he always makes his way to some profound point. And he's got all this knowledge about finance and medicine and health and life and stuff. So, I know how the conversation always goes with him. And so, I just let it go, man. And I hope you enjoyed it as much as I did. That was great. All right. Let's take a look at the mailbag. [Music plays and stops]
In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your comments, questions, and politely worded criticisms to [email protected] I read as many e-mails as time allows and I respond to as many as possible. You can also give us a call at our listener feedback line. Call us at 800-381-2357 and tell us what's on your mind to hear your voice on the show. First up this week is Brandon R.
And Brandon R. says, "Hi, Dan. Just wanted to drop a quick note to say thanks for doing such a great job. I look forward to your weekly podcasts and everything that visits my inbox. I have to say I just love the variety of guests and the way you parse the info and ask relevant questions." Well, thank you, Brandon. And Brandon continues. "If I could trouble you for your thoughts on the resource sector, specifically copper, iron ore, and steel – something that is supposed to be a bastion of and gain the benefits of inflation."
"Stocks like BHP, Freeport, U.S. Steel, etc." he names, "have been brutally correcting with moves by China to curb speculation in the Fed's more hawkish talk. Can these two forces keep driving the sector down, or do you believe it's inevitable that these prices will spike back up? Thanks for your time and keep up the great work." Brandon R." Brandon, it's a very good question. I'm very glad you asked it. In general – let's just take a step back here.
Because we're talking about a macro-thesis for a specific stock pick. And it's true. Among other effects, inflation tends to drive the prices of raw materials up. Things like copper and iron ore – specifically, copper and iron ore and steel – is that you named. And many others. And of course, you also point out lately China has been in the headlines, and they're trying to curb speculation. And then, the Fed has been saying, "Maybe we'll raise rates in 2022."
I don't know how hawkish that really is, but I hear you. The problem is, buying a specific stock for a macro reason is really tough, man. Like the most sensitive macro asset class is bonds. Specifically sovereign bonds, right? If the Fed has a particular viewpoint, they change their viewpoint, you'll see it show up in the bonds right away. Whereas, stocks, they're removed. They tend to be more removed from the macro forces. Even though, as we point out, you can definitely expect the prices of raw materials to go up over time as inflation moves up over time.
But they tend to be highly cyclical, short term and long term. Commodity prices are just notoriously volatile. So, you have to be careful about buying BHP, Freeport, U.S. Steel, etc., because you're looking for an inflation play. That's the first thing. The second thing is, it falls very hard upon that initial realization that these are businesses. And they're run by people who are doing very specific things, and they own mines, and they own steel mills. And they have input costs and output.
And the market is in charge of the pricing ultimately. Never forget that. In real terms, over the long-term you should expect commodities to sink in price. Because that's just the way it's gone throughout history. You know? There is no – physical shortage versus economic shortage. They're different things. Scarcity. Physical scarcity versus economic scarcity is something you need to learn about. And as the economist Julian Simon said, the ultimate resource is the human mind. Every human body is born with a human mind that thinks, and we're constantly innovating ways to produce all kinds of things.
And that's why commodities tend to be a really difficult, risky investment and you really got to know what you're doing, and you really got to be a contrarian. You have to be willing to buy them when they get really, really beat up. I'm not going to give you a specific recommendation about buying these things. I just wanted to point those things out to you, Brandon. Good question. I'm glad you asked. Before we get to our final e-mail from Levi N. this week, I want to go to our listener feedback line and listen to avid listener and avid correspondent Ludvik H., who called in and has an excellent question that I really want to get to right now. Let's listen now.
Recorded Voice: Hey, Dan. It's Ludvik. I thought I will simply pronounce my name myself for you, and it's safe to quote me here. I have some questions. First of all, if you would pick any sector to simply buy 20 positions and don't look at it for the next decade, what would you do?
Dan Ferris: OK, Ludvik. One sector and buy 20 stocks and just hang onto it for the long term. That's really tough. The problem isn't the sector, even. It's the 20 stocks. Because I could come up with a couple of them. One is alcoholic beverages. I think you could buy alcoholic beverage stocks and just kind of forget you own them for 20 years. What are people going to do? You know, am I ever going to stop drinking Sam Adams? No. Are loyal – name your beer. Name any beer. Sam Adams, Budweiser, whatever. Whatever you like. Are those loyal drinkers that – are they really that likely to change?
They might try a few other things, but I don't know. I think that's a good one. I think that's a great sector to look at. Another one would be market-dominating – I guess you could even call them FAANG stocks. I think these are a difficult bet right now because they've been going up and up and up and have just produced the most amazing returns in the past 20 years. But am I really – even if I change from a PC to an Apple, a Mac computer, am I ever going to use anything but Microsoft Office? There's more than a billion people using this thing.
And more and more are on subscriptions. And there's no reason to use anything else. This is an annuity. It's an incredible business. And there are other things like it. You know? I mean, no matter what you think of Jeff Bezos or Amazon in general, like I am definitely going to be using Amazon for years to come. So, you know, I have to include those. I think you could buy a stock like Waste Management and forget you own it for a long time, right? Those businesses, they tend to get a monopoly on the waste-hauling in a given region, and it's a great business. Produces plenty of cash, year after year after year.
And they can acquire other small, regional waste haulers and still grow the business. So that's another good one. It's a good question. That's about the best I can do, Ludvik, for an answer. And thank you also for teaching me how to pronounce your name, which I've been mispronouncing all this time. All right. I'm going to finish up with Levi N. now. Levi N. says – he's got a lot to say about cash. Levi N. says, "Dan, hopefully this doesn't fall into the 'give personal financial advice' column." No, it doesn’t, Levi. Don't worry about it. He says, "You always say" – meaning I always tell people – "to hold plenty of cash."
And he has three questions about cash. "No. 1, does SHY, the short-term Treasury ETF – SHY or VTIP Vanguard's inflation-protected short-term Treasury ETF suffice as cash, or would you recommend holding cash as cash or both?" I'll answer each question as I read them, Levi. So first of all, yeah. I think you can put a portion of cash in those. But there is no substitute for the instant liquidity of cash in your account that you can spend today. OK?
That's my answer for that. SHY, that short-term Treasury ETF – SHY has steadily trended down over the past year, really, since March 2020. You know, "It dropped significantly last week," he says. "Do you know why? And despite duration being very short, if rate increases do occur, SHY would likely take a hit. Would that make cash a better option than Treasurys?" Yeah. It potentially could in a short-term move like you describe. And they're really – I don't want to suggest that there is a substitute for holding cash, Levi. There's no substitute. Cash is cash. You know?
You can spend Treasurys if you're making some big transaction with somebody. You could probably even – you could probably find somebody who would accept them as payment for a house or something. But look. Cash is cash. Cash is money. OK? There's no substitute for that. And that's really what I mean when I say, you know, cash is cash." As far as the price coming down over the past year, Levi, we're talking about pennies here from like $86.63 to $86.15. So not a huge move. And as that comes down, of course, the nominal yield goes up.
So, I mean, it's a tiny yield, but it does go up. So, you know, short-term Treasurys are what they are. They're nothing different. You know, there are risks to everything. There are risks to holding regular cash. And the concerns you point out are legitimate. No. 3, your last question. VTIP," that Vanguard inflation-protected fund, "has performed well recently even though performance isn't the objective... insurance is – "as inflation has been a hot topic of late. If the Fed does end up tightening earlier versus later in an effort to control inflation, will inflation-protected short-term Treasurys be hurt? This might be too wordy or even too boring to make the show."
Not at all. Understood it. "So, if that's the case, perhaps you could touch on your thoughts on cash alternatives such as SHY and VTIP. Thanks. As always, Levi N." Levi, you know me. I'm not a prediction kind of a guy. What'll happen to VTIP if the Fed tightens? You know, in general, interest rates across the board will rise and, therefore, bond prices will tend to fall. Of course, if they're tightening in a scenario which the market perceives is an inflationary one, then maybe VTIP will catch a bid and will avoid the drop in price. You see?
But you're not going to catch me trying to predict these little things because – I think that's what diversification was invented for. Real diversification. You know, outside of financial assets. Things like gold and other things that might store value like real estate or whatever you know something about. I've said this before. If you know a whole lot about collectible coins or Ferraris or vintage guitars or something, that might function as a store of value for you. You know?
I'm sorry. I'm not going to make a prediction on this, but you're wise to ask the question, and I think you would be wise to be – as I've counseled again and again and again – truly diversified. And to me, the core tenets of true diversification are your financial assets and nonfinancial. In the financial category, it's cash, stocks, and bonds. And in the nonfinancial, outside the financial system, is precious metals and some bitcoin – even just a little bit – and whatever else you like that you understand. Real estate, collectibles, etc., as a store of value. Hope that works for you, Levi.
Excellent questions. I like questions about cash. They're good questions. That's another mailbag, and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode. To find them, just go to investorhour.com, click on the episode you want, scroll all the way down and click on the word "transcript." If you liked this episode, send someone else a link to the podcast so that we continue to grow. Anybody you know who might also enjoy the show, just tell them to check it out on their podcast app or at investorhour.com.
And do me a favor. Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. You can follow us on Facebook and Instagram our handle is @InvestorHour. Also, follow us on Twitter. Our handle there is @Investor_Hour. Have a guest you want me to interview? Drop me a note at [email protected] or call me at our listener feedback line. 800-381-2357. Tell me what's on your mind and hear your voice on the show. Till next week, I'm Dan Ferris. Thanks for listening.
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