Episodes

Dan Ferris: Hello, and welcome to the Stansberry Investor Hour. I'm Dan Ferris. I'm the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin: And I'm Corey McLaughlin, editor of the Stansberry Digest. Today, we're going to talk with the Rebel Capitalist, George Gammon.

Dan Ferris: And Corey and I will talk about the latest personal consumption expenditures report and what it means.

Corey McLaughlin: And remember, if you want to ask us a question or tell us what's on your mind, e-mail us at [email protected]

Dan Ferris: That and more right now on the Stansberry Investor Hour. PCE. PCE, personal consumption expenditures is the Federal Reserves preferred inflation gauge. So it's worth watching.

Corey McLaughlin: Not CPI.

Dan Ferris: Not CPI. Exactly. Thank you. Yes. Not the consumer price index. The personal consumption expenditures index. So CPI peaked in 2022 at 9.1%. PCE was 5.6%. So they're different numbers. They measure slightly different things and it's not worth going into all the details of that. However, the recent PCE report was slightly lower than the previous monthly PCE report. The previous one in February was 2.78%. This one came in at 2.75%. So little bit lower and just a continuing trend of lower numbers and actually CPI and PCE pretty consistently for the past, I don't know, 20 months or something. So inflation's licked, right? Loaded question.

Corey McLaughlin: Yes and no, I guess, depending on what you look at. I like to look at the – so in the monthly number for PCE, which is what I've been paying attention to lately too because at the end of last year the month over month inflation was flat to barely anything. January was 0.4% and then February, the numbers we're talking about, was 0.3%, which is above – simple math – above target for the Fed's so-called 2% inflation target.

So when you hear the Feds say inflation is done, high inflation is done, or they haven't said that, but signaling it that rate cuts are coming. If you look at the last couple months, it doesn't look like that. A lot of it has to do with energy prices, oil prices. There are pockets of deflation in this data too. So I think that's what they're looking at too, the Fed is. When you look at the overall everything is different for every person.

So everybody has a different budget, companies have different costs. It's not – there's not a cut and dry answer for – a single answer for everybody. So depending on what your costs are, you're going to have a different answer. It's not like high inflation is dead forever in my estimate.

Dan Ferris: I would say so too. I would say that we could be on the verge of making a pretty big mistake here. It could be the Arthur Burns moment from the '70s where they thought they were OK and weren't. Inflation was up and to the right, but in a sinusoidal pattern. So it was up and then it was down and then it was up higher and then it was down not quite as low and then it was up way higher. It was really, really difficult.

An issue here cropped up for me recently because one of our former guests on the show, Mike Green from Simplify Asset Management, he's got a little Substack thing that he writes. Little. It's pretty big actually. He packs it with a lot of data. He said something. He said that interest rates are a terrible way to fight inflation. Of course they do make things more – when you raise interest rates, you make housing more expensive, don't you? You make anything credit related more expensive.

So I see where he's coming from. He's got this list in his latest Substack. He says, "We've all been saying that the Fed is going to raise rates until they break something." He said, "Well, they didn't really break anything." He said, "After all, nothing has broken except five major bank failures, commercial real estate collapse, auto sales down, home sales down, marginally unemployed and unemployed up by a million people, full time unemployment, flat for almost two years, native born U.S. employment down $1 million, and for what it's worth, the median stock is down 4%." So the median stock being like maybe the equal weight S&P 500 could be a proxy for that. So nothing is broken except for those eight things. So nothing serious.

Corey McLaughlin: Yeah. The bank failure. Those little bank failures that were bigger nominally than the whole financial crisis, but yeah.

Dan Ferris: And many have pointed to the – including the Fed itself, have pointed to the lagging nature of monetary policy and interest rate policy. So Mike has a point. I feel like too often – and I've had this issue before. I had it during – in March of 2020 during the COVID thing when I said, "This is going to happen. That's going to happen. We're going to get a crash. They're going to shut things down," blah, blah, blah. And people thought I meant that that's what should be done. No. I'm not saying what should be done.

I'm saying what I think will probably happen and I'm trying to get inside the Fed's head to ask what are they thinking because it is thought by many, many people. There is always a reaction to these monetary policy moves. It is thought by many, many people that this is a very consequential thing in the world and that it's worth watching and that it is a way to fight inflation. So it's hard to constantly remind people that you're sussing out the narrative as well as the reality of what's going to happen in the market because of that. So I don't know. I don't know if I've made myself clearer or worse, but that's what it is.

Corey McLaughlin: Yeah. I see his point too. I see Mike's point too because obviously interest rates have the most direct impact on interest rate sensitive areas of the economy. Anything – loans, car loans, real estate, mortgages, but that makes expenses a lot – say a company wants to invest in something, like a piece of machinery or something, it makes it a lot more expensive to do that for that company. Then what are they going to do? They're probably going to have to raise prices especially if they're paying people more because of a tight labor market, which goes back to all the stimulus from the pandemic. So yeah. It's hard to fight trillions of dollars in fiscal stimulus I think with higher interest rates.

Dan Ferris: Right. And certainly an inverted curve suggests what Mike also pointed out, which is an obvious thing. Fooling with the short-term rates doesn't necessarily affect long-term investment decisions. Certainly, mortgage rates have gone up, but anything else that a triple A company pegged on the 10-year, they're not paying a whole lot more necessarily. So it's a good point. He makes a fair point.

We focus on this thing and it looks like, "Well, we buy the narrative. This is the way to do this and this is what's going to happen," but not necessarily. You talked a moment ago about the prospect for raising prices and higher wages and stuff. Indeed, a recent headline at DailyShot.com was after a pullback, more U.S. firms are boosting sales prices. So these increases are still washing through and more U.S. firms are now boosting their prices to adjust for them, the higher wages, higher costs. Could even be lingering supply chain problems, but yeah.

Corey McLaughlin: Yeah. Prices aren't going down. I don't think anybody listening to this will think that.

Dan Ferris: Yeah. That's right. A lower PCE and a lower CPI. As long as it's a positive number, prices are still going up. They're going up by more –

Corey McLaughlin: Right. It's been positive – it's still positive right now. So it's not like prices are going down. It's – I don't know. It's whatever the numbers and the data appear to be good enough for the Fed to justify cutting rates is all it is in my mind. That's really all it is. I'm with you. I think we're on a path of – like we said last week, growth – GDP is picking up.

They're projecting unemployment, the rate to stay about the same and we're cutting rates while inflation numbers are – or they're talking about cutting rates while those monthly inflation numbers have been picking up compared to the end of last year. So I don't know. Maybe they know something we don't.

Dan Ferris: Well, they certainly – yeah.

Corey McLaughlin: There's a lot of questions. I think a lot of people on Main Street will be like, "Inflation is dead. Why am I paying 30% more for whatever or 70" – I've been getting notes for people, 70, 80% more in insurance premiums. Everybody pays insurance. It's just that's one of the things you don't cut from your expenses or you do it last. So yeah. I don't know. There's a lot of questions that are not new when it comes to monetary policy versus what's actually going on with people's lives. After this run of inflation that we've had, it's apparent just once again.

Dan Ferris: It is and you can see it in – you can see it everywhere. Gold is up, dollar up, stock market up, to a certain extent rates down a little bit. So it's the everything – the everything bubble is still here I feel like and they're talking about cutting rates. I'm really curious. Is gold saying, hey, gold hitting new all-time highs, $2,200 an ounce or so. Is gold saying, "Hey, be careful here because they might break something the other direction too," right? You can break things in both directions, right?

Corey McLaughlin: Right. Gold is looking like – the price action is looking like it was in the middle of 2020 when I think people realized that inflation was going to be an issue. People outside of the central bank, at least, were talking about – to me, that's what it looks like. You're right. Gold is up. What was it at? I'm looking at a chart right now. It was at around $2,000 as recently as a month ago. Now it's up above $2,200. So yeah. Not an insignificant move.

Dan Ferris: No. Not an insignificant move at all and I'll point out again that the gold miners have – they've moved, but they're still behind gold substantially. If you look over the past couple of years gold has moved very nicely and gold miners are down, some of them a lot. Last – I put a chart in one of my newsletters, I guess it must have been The Ferris Report that showed the price of gold versus the price of new mining.

Now whatever problems they have as a company aside, down 50% on Newmont versus up, I think it was 11 or 12% in the time period I choose with gold just didn't make a lot of sense. It's with all gold stocks are generally down compared to gold. I don't know. I still think there's an opportunity there and I don't think gold is a bubble at all. I think gold is doing its job because it's not going up. It's not doubling and tripling. It's just moving up by low double digits. Suggesting –

Corey McLaughlin: And it's done its job in the last couple years too.

Dan Ferris: Exactly. Yeah.

Corey McLaughlin: While people are, "Why isn't gold higher? Why isn't gold higher?" Well, it's where it should be. It's not going anywhere. It's doing its job like it's done for centuries. So it's working once again and central banks are buying gold. They're a huge buyer right now. So what does that tell you? It's – yeah.

Dan Ferris: Yeah. Retailers are selling it actually. The retail investors are selling and shares of the publicly traded trusts are being redeemed. So I don't know if you call central banks smart money, but it's certainly big money. It's certainly "move the market" money in gold. So they're the buyers, which is interesting at least.

I don't know how scary it is, but it is interesting that they think gold is worth buying because their resources are usually devoted to buying – the Fed's resources are devoted to buying U.S. securities, right? So if a central bank is buying gold, that's interesting, especially the non-U.S. central banks buying gold instead of dollars maybe. That's very, very interesting to me.

Corey McLaughlin: Yes. Me too. Which is happening a lot. It plays into that whole dollar story. We don't think the dollar is crashing tomorrow, but I think chip away, chip away, chip away. It may be all part of that too, that whole story. If we get another run of inflation again, it's the same – I don't know. It's the same argument that we had two, three years ago from just – I don't know. I see the same thing playing out again. This is not new. It's just expected for – I don't know. We've said this so many times. Just expect for higher than usual inflation to me.

Dan Ferris: Right. Is this a second leg up, in other words?

Corey McLaughlin: Right. Yeah.

Dan Ferris: We all hope not. I'm sure a lot of people with a lot more modest means than us are tired of paying a lot more than they were paying a couple years ago. So fingers crossed. Hope is not a strategy. Fingers crossed, but hope is not a strategy. So you better prepare for it. You better do something. So one thing that I actually – I just got an e-mail from our colleague and recent guest, Dave Lashmet, and we were talking about something that he talked about during his interview. I just wanted to mention it real quick.

We don't have to spend a lot of time on it. He talked about the winter switch, how cold weather burns up calories basically and we're teaching our bodies not to do this by staying warm all the time. We don't live out in the cold like primitive humans did. He pointed to an article about this. I said, "Oh, wow. It sounds like cold exposure is good for you." Dave shot back and he said, "Yep." He said, "We've eliminated climate control as a metabolic need so we don't burn 500, I think that's kilocalories, staying warm every day times 365 days times 25 years or whatever it is."

So we're fatter because we're warmer, which is weird. I thought people moved to warm climates and got fit in their old age. They try to stay fit. They move to a warm climate, but maybe it doesn't work that way.

Corey McLaughlin: Well, not if you sit in the air conditioning all day long and –

Dan Ferris: That's true.

Corey McLaughlin: You're not moving around outside. Yeah. We're talking about the weight loss story, weight loss drug story that Dave has been talking about. Just why the demand for these drugs? Yes. Culturally we've gotten to this point where all of our comforts are making us larger, I think, or at least making it easier to do that.

Dan Ferris: Right. As we sit indoors in front of microphones.

Corey McLaughlin: As I sit.

Dan Ferris: What are we doing here?

Corey McLaughlin: Yeah. Dave wrote – I worked with Dave on another Digest last week about all this and as I was reading it I was like, we literally needed to invent forms of exercise to make up for what he's talking about. If you sat outside on a winter day or summer day or whatever you'd naturally burn calories that you wouldn't otherwise. We have to invent going to the gym or lifting weights or just things that – what was it? The stat was 2% of the American population is now farmers or agricultural work and in the past that had been 95% or something. That's a huge change.

Dan Ferris: Yeah. It is.

Corey McLaughlin: And we wonder why obesity is a problem. When you look at it that way, a hundred years ago we were an agricultural-based economy and now we're this service-based at the top economy. We got to buy gym memberships when we could just throw a log over something or whatever. It is. That story is not going away, the obesity epidemic and weight loss drugs.

Dan Ferris: All right. Just wanted to mention that. I think it's interesting and it will certainly be a topic on the show for some time to come it looks like. Let's talk with today's guest, George Gammon. We've been looking to get him on the show for a little while. We had him scheduled. He had a little hiccup coming back through customs from being out of the country. So we had to reschedule the recording and we finally got him in front of a microphone and finally got him in front of a camera. Very interesting guy, a very top-down, macro-oriented economic thinker with a lot of interesting ideas. So let's talk with him. Let's talk with George Gammon. Let's do it right now.

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I look forward to this event every year. It's great getting the chance to meet our listeners from the show whether it's chatting during the break or grabbing a beer at the end of the day or whatever. So I hope you're planning to join us. It's a great event. Go to VegasEarlyBird.com to get your discounted ticket before prices increase. That's VegasEarlyBird.com. So come on out and find me in Vegas and say hello. George, welcome to the show. Thanks for being here.

George Gammon: Well, thank you for having me. Super excited to dive in.

Dan Ferris: Yeah. I love the prospect of talking to a self-described macro addict at this particular moment in time.

George Gammon: Yeah. Self-described and like to point out that I'm uneducated. I've never taken a business class. I've never taken an econ class, never taken a finance class. I almost flunked out of high school. So if I can do it, anybody can.

Dan Ferris: These days, not being formally educated in a discipline is a serious flex. It used to be that one bragged about one's credentials in that regard, but not so much anymore.

George Gammon: Yeah. I actually do think it was a benefit to start that way just because I started with a clean slate. The only thing that I had at my disposal was just good, old fashion common sense.

Dan Ferris: Well, yeah. Not real common – it seems less common than ever, depending on the topic nowadays. But we'll stay away from the thornier topics like politics and religion and we'll stick with finance. So how did you – since it wasn't the product of formal education, how did you become a self-described macro addict?

George Gammon: Well, I retired in 2012 and when I retired I wasn't a billionaire by any stretch, but I had enough money in the bank to where if I invested it and got maybe a 5 or 6% return, I'd never have to worry about going back to work if I didn't want to. So as an entrepreneur I didn't want to delegate that to a financial planner. I wanted to take the bull by the horns myself. So I started really studying. The more I studied, the more I fell in love with macro and economics, whatever you want to call it.

What really was the catalyst was a trip I took to Singapore. This would have been back at the end of 2012. I was in the Marina Bay Sands. I remember it like it was yesterday. I had about 10 minutes before a dinner date. So I'm like – I'm just scrolling through YouTube really quick, looking at some of the videos and I stumbled upon Milton Friedman's Free to Choose series that he did back in, I believe it was on PBS in late '70s, early '80s. I just went straight down the rabbit hole and everything he was saying made so much sense to me even though I'd never studied it.

At the time I didn't know what the Federal Reserve was. I didn't know what the yield curve was. I knew nothing about this, but based on my experiences an entrepreneur and as an employee my whole life, everything that Milton Friedman was saying made perfect sense. It's like he was able to articulate exactly what had been in my mind for the past, call it, 30 years. From Milton Friedman I went to Thomas Sowell. Still one of my favorite economists.

In fact, I got basic economics right above me there. Then I started to get into the investors like Jim Rogers, Jim Grant, Doug Casey, Rick Rule, Schiff. Fortunately, I've been blessed to now I've been able to meet and hang out with a lot of these guys that I still consider mentors in this space. But that's how it all started. Once I went down that rabbit hole I just became fascinated by it.

I was just trying to understand how it all works. It got to the point where I was just reading books or listening to podcasts eight, 10 hours a day. I learned quite a bit and then just through the exploration process of getting to a point where I didn't understand something and then just stopping, obsessing over it until I figured it out. It's just that iteration process has brought me to where I am today.

Dan Ferris: All right. What did you do before you retired?

George Gammon: I was an entrepreneur for many years. The last business that I had was a convention business that we do two to three times per year. I say convention, but it had about 5,000 people per event. So it was like – logistically it was like a military operation. I do a conference now called Rebel Capitalists Live, but it's 500 people. So doing something like that is child's play compared to what I used to do.

Dan Ferris: Yeah. We do one of those every year and I certainly wouldn't want to be in charge of it. It's too much. So you were also a self-described libertarian. Have you always described yourself that way or is that fairly recent?

George Gammon: That's an interesting question. So politics was never discussed in my family, never, never, never.

Dan Ferris: Wow.

George Gammon: Well, I take that back. It was discussed once for about 30 seconds. My father was very old when I was born. He was 59, believe it or not. He actually flew planes in World War II in the Philippines. Actually, to this day I still wear his dog tags. That's not a replica. That's the actual dog tags that he wore in the 1940s flying planes in the Philippines and being shot down three times, by the way.

Dan Ferris: Wow.

George Gammon: And so he was born in 1914. This was toward the end of his life. He passed away when he was 92. I was sitting with him watching television and we just stumbled across the History Channel or some show on past presidents. So I thought to myself, "Dad has seen a lot of presidents being born in 1914 and a lot of the presidents that are now iconic." So I said, "Dad, who was your favorite president?" And he looked at me and he always called me Georgie Boy. And he says, "Georgie Boy, none of them."

Dan Ferris: Good for him.

George Gammon: And I said, "Come on. Come on, dad. There had to be one president that you liked, for heaven's sakes. FDR, Reagan, somebody." He goes, "No. None of them." I go, "Why?" He looked at me and he just stared right into my eye and he said, "Because they're all crooks." That was the only conversation that I ever had with any of my family members about politics, but what was interesting is after my father passed in 2005, we had a Gammon family reunion. This was in Monterey and it was probably 2007, 2008, something like that.

We had about at least 150 people there, cousins, all of these relatives that I hadn't seen in years or maybe I'd only seen one or two times in my entire life. And we all get together and every once in a while you bring up politics. I'm not kidding you. Every single person there, although we had never discussed it and we weren't born and raised in the same area, often different sides of the country, often in different countries altogether, they were all libertarian, every single one of them. I was absolutely shocked.

Up until that point I had never really thought about politics and no one, I don't think, would ever consider themselves a quote, unquote "libertarian," within my family, but every single one of us disliked the government. We just have this natural inclination. I don't know. It's something genetic maybe where anything centrally planned, a central control, central power, we just try to avoid it like the plague. I thought that was really interesting.

After that there were a couple of events in my life that really opened up my eyes. One of them is I got into a big battle with AG in Connecticut. I won't go into details, but this was back in 2009. Prior to that I thought what happened to me and the way he played the game happened only in China or in Russia or in one of these countries where you've got all this corruption. What I realized is we have just as much corruption in the United States, if not more. It's just instead of the type of corruption where you're paying a cop $20 to get out of a ticket, it's institutionalized corruption that comes to you wearing a Brioni suit.

So that's when I think I started to think about it even more and I came to the conclusion that yes, this is definitely the camp that I fall into. Also, when I started studying economics it was impossible not to get involved with Ron Paul back then. I didn't know him. Fortunately, I know him now and that's been one of the greatest blessings of starting this YouTube channel or creating content. Back then I didn't know him, but I was following the journey and I was – he has taught me just as much as Rick Rule, Doug Casey or anyone else out there.

Dan Ferris: Well, we have a lot of friends in common. I've known Rick for decades. Ron Paul has been on the show and is a friend of the company. We had John Stossel on the show.

George Gammon: I've never met John.

Dan Ferris: He's a very liberty minded fellow, as you know. We've spoken with lots of investors who I think would categorize themselves that way. I've met many people over the years, many of our readers and listeners who do the same. It's always interesting to me when I meet an investor who is pretty good, pretty successful, pretty wealthy who does not categorize themselves that way. I'm thinking to myself, "How did you – what do you think were the conditions that allowed you to prosper? Are you in league with the government somehow? Are you getting your trade ideas from Nancy Pelosi or something? How is it that you don't call yourself a libertarian or aren't at least highly skeptical of the role of a great central power in any economy?" I think as you pointed out, corruption and great central power, they go together, don't they?

George Gammon: Yeah. I don't know that I've ever met an investor that wouldn't fall into the category of libertarian. Not that they call themselves libertarian. Most of them I think would consider themselves completely atypical because they're just going to do whatever is best for the bottom line. They don't care about anything other than number go up or just their monthly PNL.

I'm thinking through all the hedge fund managers that I've met through my good friend Hugh Hendry and Saint Barts and by speaking at different conferences and being all over the world. I've been fortunate to meet a lot of those guys that are maybe billionaires or at the very least have managed billions of dollars. And every single one of them pretty much politically falls within a range of middle right to libertarian and some of them, I would even consider, end caps.

Dan Ferris: Yeah. I won't name any names, but I know hedge fund managers who have made tons of money, are very wealthy who I would probably call socialists. They live in the United States.

George Gammon: Really?

Dan Ferris: Oh, yeah. Live in the United States, have an extraordinarily high standard of living, benefited from capitalism, etc., etc., and they think we need a lot more government, not a lot less. But let's not get into that. So we agree that it makes all kinds of sense anyway to be an investor, especially living in the United States calling oneself a libertarian.

Does that – so as a macro addict, self-described libertarian, how much – being a macro addict of course you're telling me something about your investment style. Are you telling me more about your investment style by being a libertarian? Does that really inform the investment choices or do you try to stay as agnostic about politics as possible when you're allocating capital?

George Gammon: It depends. Overall I don't think it matters, but in some areas it does. As an example, when I look at commodities, likely being in a long-term supercycle, one of the catalysts to that is the stupidity of government. So as my good friend, Cuppie, says, you've got to go long political stupidity. So I might not have – I might not be as confident in that position if I wasn't so – if my default wasn't government bad or government is always going to do the wrong thing or there's always going to be these unintended consequences in whatever they do.

There's most likely it's going to be a negative. Especially with the narrative they're trying to push right now, that negative is likely going to impact the long-term supply of the commodities that have very inelastic demand. So that would be an example of how it might have shaped my views from a macro or investing standpoint. Then when I look at something like Nvidia or when I look something like Tesla – I've been on a trip where I discussed – this was several pretty high profile investors over the last few weeks. This is a recurring theme.

One of the guys I was talking to specifically, he was mentioning short Tesla, long auto manufacturers just to take out the market risk there. What we were talking about specifically when he was using that as an example is narrative and how important story is to investing, especially if you're trend following. So trend following is another thing I've been thinking about a lot lately versus value investing and asking the question at the end of the day, "Is there a difference and if so, what?" So those types of decisions, I don't think being a libertarian impacts them at all. Again, in some areas it does.

Dan Ferris: Right. So let's get into this trend following versus value investing thing because I listened to a little bit of – actually, I think you recorded it live. You were live on Twitter, but I listened to a little bit of the recording where you were talking about a particular trader that you had a conversation with, I believe in Dubai.

George Gammon: Yeah. We won't mention – I don't want to mention any of the people.

Dan Ferris: No names. Yeah.

George Gammon: But yeah. I'm happy to talk about the strategy.

Dan Ferris: Yeah, but I found it interesting this guy absolutely flat out said, "Yeah. It's nice that you have a value orientation, but it doesn't work. I've done all the back testing," which I thought was hilarious because there are more than one data set out there that show that value has done great over the long term. We could even forget about that. I'm just interested in this intersection that you find between what is normally called trend following and we've had Market Wizards and Jack Schwager himself on the show. By the way, we've also had –

George Gammon: Man, my favorite books. I've got those right over here too.

Dan Ferris: They're excellent. By the way, just quickly, we've also had Kupperman on the show twice, Harris Kupperman and Hugh Hendry a couple of times too. So we have lots of friends in common.

Corey McLaughlin: A lot of common friends here.

Dan Ferris: Yeah. So let's talk about this because I was fascinated when you started talking about the similarities between trend following and value investing. I wonder if you could just expound on that a little bit for our listener.

George Gammon: Yeah. It's something I've given a lot of thought and I found the conversations that I was having over the last couple of weeks absolutely fascinating. Like you said, one of them was with a guy that had been trend following commodities since the late 1990s. He actually knew Dennis and he knew Eckhardt as well, not very well. I think he had met them before. Anyway –

Dan Ferris: George, just for our listeners. William Eckhardt and Richard Dennis, the original, so called, turtle trader, trend following traders –

George Gammon: There you go.

Dan Ferris: – who taught a whole generation of traders to do that.

George Gammon: That's correct.

Dan Ferris: A lot of which wound up in the Market Wizards books, but please continue.

George Gammon: Yeah. And so to your point, we're having this discussion on buying low and selling high. We were specifically talking about Jim Rogers. I said, "Well, what Jim Rogers has done works." Intuitively I always say buy things when they're cheap and sell them when they're expensive. That makes a lot of sense, but obviously his point is, "OK. Well, you could have been in uranium for 10 years and it's the exact same argument and doesn't move." Or silver, I think you could probably say the same thing about silver over the last five years. I don't know the chart, but I'm sure you guys know it pretty darn well, especially when you adjust for inflation.

So the key there with Jim Rogers, if you read his books or his interview with Jack Schwager and the original Market Wizards, he doesn't just say buy things when they're cheap and sell them when they're expensive. He always looks for a catalyst, always. There has to be a catalyst. So the conclusion that I came to with this gentleman is at the end of the day, everyone is a trend follower, everybody.

Jim Rogers is a trend follower. It's just what he is doing is trying to pick up at a trend at the very beginning stages by first and foremost looking for value, but then looking for that catalyst. I would argue what differentiates the successful value investors from the ones that have poor performance is the successful value investor doesn't just look for half a cigarette butt or cigar butt to go back to Benjamin Graham. They don't really look at something that just because it has a four P/E I'm going to go out and buy it or even because if there's a fundamental story I'm going to go ahead and buy it.

They always look for a catalyst in addition to the value being there. Effectively, what they're doing is they're trying to just catch a trend at its very beginning stages where the stereotypical trend follower might just be happy to catch the middle portion of the trend where a guy like Rogers is going to pick up the whole thing. But with his investment style, he's going to have to use money management and risk management in a much different way to be successful over the long run and have a mathematical edge.

Dan Ferris: Right. If I wanted to, I could take issue with this at length, but I don't think I want to right now. I would just say something like all the value investors I know who are really hardcore value investors, they don't care about price trends at all. They just buy what is attractively valued and they research the asset or company or whatever it is from the bottom up. They hold on for a while and they make decisions. If they're down after a while, maybe they made a mistake. I would rather focus on this – go ahead.

George Gammon: Yeah, but also you can look at that because a value investor is going to look at from the short side as well. You look at guys like Einhorn, who has done better recently, but just got crushed in the mid-2000s – call it 2012 or whatever – to 2019. You got a guy like Chanos, one of the most brilliant investors of our day, in my opinion. He had to shut down his funds because basically Tesla, among other things, put him out of business. Why? Because he was sitting there shorting Tesla based on the evaluation instead of waiting for a catalyst.

Same thing with Einhorn. During that time frame from 2012 to 2019 he specifically focusing on P/E ratios, value, and just waiting for the market to see what he sees. It got to the point where it wasn't working well. Another thing, I think it depends on the individual's priorities and what your objectives are. So if you're someone that's got $20 million in the bank and your main concern is just keeping your purchasing power and maybe very low draw downs, value investing makes a lot of sense. If you're a fund manager that has to worry about your monthly PNL, you can't go five years waiting for uranium to turn the corner. You're going to lose all your investors in your AUM.

Dan Ferris: Sure. And we know that value had a terrible run against technology and other things throughout the recent extraordinarily long record bull market. I'm more interested in the confluence of the two because a colleague and an affiliate of ours is Marc Chaikin. He's got this thing he calls the Power Gauge, which I thought I took for granted before I found out what it was, that it was some sort of a momentum trading tool.

He said, "No, Dan, 85% of it is fundamental indicators." So I thought, "Well, that's very interesting." It reminded me of Walter Schloss, one of the Ben Graham students who just bought statistical value for years and years and years and held on for two or three years and sold and made plenty of money and other folks did that too. Then after a while that became more difficult of course. The idea of the two of them being so similar is just fascinating to me.

George Gammon: Yeah, but even though it's value investors, at the end of the day they're trend following because what they're looking for is to cut their losers and ride their winners, which that's a trend.

Dan Ferris: Sure. Yeah. In a way it is. Of course the trend followers though, the real ones, the ones in Schwager's book, they were traditionally – I don't know what they might be doing now, but traditionally though, they're only trading price and they never cared about fundamentals. They only focused on price movements and they waited until – in the beginning with Dennis and Eckhardt, I think they were trading 21-day break outs or something among other things. They did various strategies whereas your value guy, he doesn't even know there's a break. He doesn't even care.

The stock could be down 50%. He's thinking, "Oh, OK. This is a great idea," and it could fall another 20% and he's saying, "Oh, it's even better." So the idea that the two have any kind of a crossover has become much more interesting to me over the past few years just because I've seen people use and I've always been skeptical. If you're good at one thing, you're going to be good at the other. The more I hear people talk about the confluence of the two, the more interested I get. I think you've talked about them being sort of the same thing though, which I find really interesting because I know personally I don't care about the chart. I just care about the business mostly.

George Gammon: The best hedge fund managers I know, and there's one in particular that I spend a lot of time with when I'm in Saint Barts and in fact, I was just with him over the weekend and we spent a lot of time dissecting this on Monday actually. What they do is they start with a macro view and then they'll look at the fundamentals. Then if they get interested – by the way, one of the main drivers of – I don't know if you want to call it the fundamentals, but their decision making is narrative if the story changes around something.

As an example, why did – when Chanos was sitting there shorting Tesla, he was doing it based on valuation and he was exactly right. He was right, but the only thing that changed – it's not like the valuation now is any worse and that's why Tesla has gone down. If anything, the valuation is better, but now the stock is going down. Why? Because the narrative and the actual story changed.

So anyway, getting back to this one gentleman in particular. He'll start with a macro view. Then he'll go down with a fundamental approach, as an example, commodities. If he thinks that long term let's just assume that the 2020's are going to be inflationary and he holds the same view that I do about the central planners. Not that he does. Let's just assume that he does. He'd start with that premise and then he'd go down and say, "Fundamentally, what commodities do I want to own right now?"

And then he'd set up long-term positions and then he trades around those long-term positions. Then what he does, to go into the timing of it, that's when he looks at the charts. So then he'll look at, as an example, back a few months ago we were there and he was trying to analyze the TLT. So he wasn't just, "Oh, hey. I think the Fed is going to drop rates and I think we're going into a recession and therefore I'm going to buy the TLT."

He was like, "No. First of all, let's look at a chart. Let's see how the price action is moving." Then it's not just long TLT. Then he's trying to figure out how he wants to place the bet in the way that maximizes asymmetry. This is another thing that the retail investor just doesn't do that this gentleman in particular does. I would say if he's allocating 100% of his mental bandwidth to a specific trade, 10% of it is what to buy or sell. The other 90% is how to position himself and how to put on the bet.

So it's how to use options as an example, just one of the strategies that he uses, to make sure that he's limiting his downside and maximizing his upside. He's deciding in advance where he's going to get out and take a breather and reassess his fundamental view. This is – most retail investors, I would argue, spend 99% of their time trying to figure out what to buy or what not to buy and they spend 1% of their time on the portfolio management, the money management, or the risk management.

From what I can tell, the pros do the exact opposite. In fact, I'd like to get your guy's opinion on this. One of the conclusions that I've come to reading the Market Wizards books, as many times as I have, especially the originals, is what made these guys great had nothing to do with their ability to determine what was going to happen in the future, whether it was with a stock, whether it was with a macro event, commodity prices, the British pound, you name it. It was all about them figuring out the risk management component of it and the money management component and the portfolio construction.

So what that boils down to is cutting your losses and riding your winners. I got to the point or where I am now and my opinion could evolve in the future, but I'll bet you if they would have just had a coin toss, they would have had the exact same outcome, if not maybe even a better outcome. The only thing their strategy did, I'm talking specifically about their strategy in picking stocks or picking what to buy or sell. The only thing that did is just give them an excuse to pull the trigger and then apply the money management and the risk management that was what was actually making them money.

The reason I say that is because obviously now we've got a lot more data to analyze what they were seeing back in the late '80s and the early '90s when these books were written. I sit there and listen to what they water saying and what drove a lot of their decision making and it was nonsense. It was nonsense. It had nothing to do with what they thought it had to do with, but yet they were still producing 20% returns per year.

I remember specifically – I don't want to knock Druckenmiller obviously is a genius, but specifically his interview and some of the things he was talking about. We know now today that those things really didn't impact the dollar. Actually, I should take that back because I don't know if it was Druckenmiller or someone else.

But as an example, they were talking about the twin deficits. They were talking about how the twin deficits with the United States and a lot of the things that they talk about today with the deficits and not just the deficits – excuse me – but the government debt and whatnot and how this is completely unsustainable and how that was going to be negative for the dollar. We know back then that that really didn't impact the dollar too much, but yet they're making all these decisions as though it did. Even though mechanically it didn't, they still came out smelling like roses. How was that if the basing of their strategy was incorrect? It's because all these other things that the retail investor doesn't pay any attention to.

Dan Ferris: Yeah. Right. We always wind up here when the subject is trading.

Corey McLaughlin: Yeah. Dan, I know you're thinking the same – I'm thinking the same thing you are. Every good investor who comes on here, which is all of them, but explains the risk management piece of it, eventually gets to the risk management piece, weighing the reward versus the risk. You're right. It's a lot – nobody and most of the retail investors never get to that point.

Dan Ferris: The funny thing is –

George Gammon: They try to decide if the price is going up or down. I want to make one more or reemphasize one more point because I think it's so important for your listeners is even if you come to the conclusion and you do your risk management, your money management, whatnot. Even if you come to the conclusion that you should go long, whatever, uranium, let's say. The pros don't just go long uranium. They take it another step where they say, "How should I go long uranium?" Not just buying the Sprott trust. Not that they wouldn't just buy the Sprott trust, but I'm just using that as an example.

They would sit there and say, "That's one option, but does that give me the most asymmetry?" Maybe it does. Maybe it doesn't. Then they'll sit there and look at maybe with some other examples. They might look at futures. They might look at options. With options they'll look at 50 different of these crazy strategies going all over the place, things that I had never heard of or never even thought of to express that bet. So that also is one of the things that differentiates the pros from the amateurs.

Dan Ferris: It's funny. Not only do we always wind up here at risk management and portfolio management, but it's funny how many times we get to this point and the guests will say, in a very offhand way, "And that's more important than anything." Maybe we should just start there every time because they always wind up saying, "Yeah. That's more important than anything."

Corey McLaughlin: We need to start with the [inaudible] one of these days.

[Crosstalk]

George Gammon: It's not sexy. It's not sexy.

Dan Ferris: No. It's not.

George Gammon: That's why – that's the boring part. That's why the retail investor struggles with that so much. One thing that I would – another epiphany I've had is what these pros do essentially is they try to create blackjack. So what I mean by that is if you've counted cards – and that's one of the reasons why I've got Beat the Dealer up here behind me. What you see is that there's, what we call, basic strategy.

So basic strategy is just if the dealer is showing this and I've got this, this is the correct play based on the probabilities. Now you might lose. You might win. It doesn't really matter as long as you're playing correctly based on the probabilities. That gives you basically a 50/50, maybe a slight disadvantage to the dealer. When you combine that with actually counting cards and all that is is just seeing if the deck is in your favor or if the deck is against you. Then you fluctuate your bets.

and every bet you're betting $10 or whatever. So the maximum you can lose is $10. But what's interesting is you can hit a blackjack and you can make a lot more than your $10 back. So there's asymmetry.

When I'm sitting there, watching these hedge fund managers put on all their trades, all I'm thinking to myself – because it's absolutely true – is they're just trying to take the trading game and turn it into blackjack as much as they can. The more they can turn it into blackjack, the higher the mathematical edge is and therefore it's the large numbers. The more you trade, the higher your probability that you're going to win. Basically you're just turning yourself into the house and a casino.

Dan Ferris: Right. Yeah. We talk to Market Wizards and other traders that say, "Well, I make money on less than half my trades." Most people shake their heads at that and go, "How in the world do you do that?" Obviously, the

So if the deck is in your favor, you're still playing basic strategy. You're going to bet more. If the deck is against you based on the count, then you're going to bet less. What happens is your downside in blackjack is defined. Each

reason that you just said.

George Gammon: Asymmetry.

Dan Ferris: You make more – yep. That asymmetry. You lose less and make a lot more when you make money.

George Gammon: In other words, blackjack.

Dan Ferris: Yep. That's a good way to put it. We've never had anybody put it in exactly that way.

Corey McLaughlin: Yeah. Haven't heard the blackjack reference yet. So that's good.

George Gammon: Yeah. I think I've got – why that's my default is because that's where I started. Back in, this would have been 2000, when I was getting going as an entrepreneur, I don't even know how, but I stumbled across Beat the Dealer. I was fascinated. I didn't really want to play blackjack or anything, but I was going through how he laid out the probabilities and basic strategy and all these things. I'm like, "That's really interesting that you can beat the game by just doing these things that takes the mathematical edge away from the casino and puts it in favor of the player."

So what I did is on the weekend, whenever I got any time, I would go to the local casino and this was, at the time, I was in San Francisco. So it was just one of these Indian casinos up north. I would literally sit there for eight hours straight, but I wouldn't fluctuate my bet because I didn't want them to kick me out. So I'd just sit there and practice basic strategy for hours on end, to the point where the pit bosses would come up to me and say, "I have never in my life seen anyone stay at a table for eight hours straight and not fluctuate their bet, not do anything."

They probably knew I was practicing, but they didn't care if I wasn't fluctuating my bet because you don't really have an edge. The reason I was doing that is to train my brain to think in terms of probabilities. I always credit my success as an entrepreneur to blackjack and to Beat the Dealer and that experience because at the time I was a fledgling entrepreneur. Didn't make any money. Then when I started to make money, I looked at sales and marketing the same way.

So I thought to myself, "I've just got to turn this into a game of probabilities." So if I can set up a closing ratio at X and maintain that, and then I can do all of these other things that turn these other variables into predictable metrics, then all I have to do is focus exclusively on lead generation and then it's just a numbers game." The more people that I bring in through the front door, the higher the gross revenue is going to be.

If the majority of my costs are fixed, then that's going to increase my margins. Then all I have to do is just spend more and more and more money on marketing and refine that process. The rest is just going to take care of itself. That's when I went from just struggling to making quite a bit of money to the point where I was able to retire at 38 in 2012.

Dan Ferris: Nice. That's great.

Corey McLaughlin: George, I just want to go back a second to the macro view of government's equal bed. I've heard you say you dislike all governments equally and you're basically for the people.

George Gammon: That's right.

Corey McLaughlin: What are the essentials that the people may not understand about this financial system, this global financial system that we're in that you, when you went down the rabbit hole, started to understand, "Woah, this is – we're being affected here by things that most of us aren't aware of"?

George Gammon: The No. 1 thing people don't understand is money. They don't understand how it's created. They don't understand how it's destroyed. They don't understand who controls it. There's a total and complete disconnect. It's understandable because the way the monetary system works is incredibly counterintuitive, to the point where I would argue 99.9% of the experts that I talk to don't understand it.

The problem that most people have is they think that banks lend money. If that's your starting point, you're going to get the whole thing wrong. There's no way you can get it right. So what you have to do is your starting point can't be the banks lend money. It has to be the banks create money when they lend. If you can just get that down, although that doesn't explain everything, that gives you the key to unlock the doors to where if you go down that path for, let's say, a year or two, you're going to have a better understanding of the monetary system than 99% of the experts that you would see on YouTube or maybe even a podcast.

Dan Ferris: Well put. So George, we are – it's time for our final question. I'm really –

George Gammon: Oh my gosh. That went fast.

Dan Ferris: I'm very happy. It did go fast. It often does. When the conversation is this good it always whips by. Our final question is the same for every guest, no matter what the topic, even if it's a nonfinancial topic and exact same question. If you have already said the answer to the question, by all means, feel free to repeat it. The question is simply, if you could leave our listener with a single thought today, what would you like that to be?

George Gammon: That you have the power. You have the power. I'm talking to every one of your listeners. The only thing that prevents you and your fellow citizens from winning against the central planners and the authoritarians is you guys just coming together as a community. That's it. That's it. Because at the end of the day there's far more of us than there is of them. I always use the story of Romania when communism was falling in the 1990s. At the time they had a dictator, I believe his name was Ceaușescu, if I'm pronouncing that correctly.

Dan Ferris: Yep.

George Gammon: And he had ruled the country with an iron hand for decades. He controlled everything. He controlled the military. He controlled the police. He controlled the media. He controlled all the wealth, absolutely everything. What happened is a few people got fed up. They saw what was happening around them in other countries and they started going out to the streets. It is true, they were risking being shot or risking going to jail or any of these things, but it got to a point where they didn't care.

Once a few people went out, then other people saw what they were doing and more people joined them to the point where there were so many people that the police really couldn't do anything about it. I don't know what the population was of Romania at the time. I do know that it only took about 500,000 people, roughly, pushing back because it got to a point where all these, let's call them, protesters – like the truckers in Canada. Exact same thing.

I would actually compare Trudeau to Ceaușescu at the end of the day. It just was a matter of all these people coming together, which was a small percentage of the overall population. It's not like it was 95% of the people. They came together because they had enough and they decided that they were going to push back against the oppressors. They were going to push back against the central planners and the authoritarians. They weren't going to take it anymore.

So they went out to the square and Ceaușescu came out and tried to settle them down by raising his hand like he had always done in the past. They basically got even louder. Then he did it again and they got even louder. He knew right then and there that he was done.

Dan Ferris: It was over.

George Gammon: He was done. Nine days later, roughly, they basically took him out back and shot him. I'm not condoning violence in any way, shape, or form, but I'm just using that as a story to prove to people that at the end of the day you have the power. Klaus doesn't. The World Economic Forum, they don't. The UN, the EU, the Biden administration, the Canadian government, at the end of the day if you don't want them to have power, you have the ability to take that away from them as long as you come together with your fellow citizens and stand up for freedom, liberty, and free market capitalism.

Dan Ferris: Well put and what a great message. Very empowering message on a topic where people don't feel especially empowered, I think. George, thanks a lot for being here, man. I really, really enjoyed it.

George Gammon: Thanks for having me, guys. It's always fun to talk.

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If you know your history, you know there will be winners and losers and now is when you decide which one you'll be. I've spelled it all out in an urgent new report. Go to BankRun2024.com to get your free copy. I'll also show you how to get my complete playbook for navigating this crisis, including the three critical steps to take immediately. Again, that's BankRun2024.com for your free copy of my new report.

Hey, that was interesting. I've never heard anybody say that trend following and value investing are the same thing, ever.

Corey McLaughlin: Yeah. I know what he – I know you thought a little differently of that and I get what he's saying though as far as it's part of, I guess. They can comingle, I guess. So I understand that part of it. It's just nice to hear. That was a different conversation than we've had recently and just George, the thing – I watched his videos on Rebel Capitalist and he's just able to explain and articulate things going on in the global financial system in a way that I haven't heard other people, in a way I wish I could be able to explain it.

It was interesting to hear him at the beginning explain that he knew nothing at one point and his path into it and that was the same as me. I'm still learning a lot. The point being that you can figure this stuff out. Don't really trust everything that you hear out there. You got to do the work yourself and figure it out.

Dan Ferris: Also, another thing I think I want to emphasize for listeners. George has that dogged determinism of an entrepreneur. The thought of him sitting at a blackjack table for eight hours never changing his bet, I'm like, yeah. I feel like I know this guy. Good investors are the same way. They'll fly across the world to do basic research on an investment opportunity. It's the same kind of mentality. Just dig in up to your eyeballs. Let's get it done. Get your hands dirty. It bears fruit. It's the only way to really succeed in life is to just take it on and do whatever needs to be done. I love that. I love the idea of him sitting at that table for eight hours never changing his bet.

Corey McLaughlin: Just to figure out the risk reward, which again, that point that came up and something different that he said was when reading through the Market Wizards books, it didn't really matter what the thesis was that all these guys were talking about as long as they manage the risk correctly. So it's like what does that tell you? It tells you a lot about what the most important piece is practically. It makes sense. We're talking about numbers and making money and trading. In the end, it comes down to the prices and the numbers. You got a lot of. You can find the right opportunities in different ways and then manage it accordingly.

Dan Ferris: Yeah. That there is a systematic approach, I think, probably wouldn't – probably doesn't surprise anyone. Like you said, most investors, they try to be systematic about the wrong end of the trade. They're systematically or otherwise maybe not so systematically trying to figure out what to buy instead of how to buy it and how to manage the position, which is what every great investor on this show has basically emphasized. There's a system, but it's not the one that you think. It's this boring system of basically letting winners run and cutting losers in some particular fashion.

George even said, I don't know if I've said it. I hope I've said it, but I've definitely thought it that it seems like you could almost flip a coin and trade anything at any moment and as long as you have this good system for cutting your losers and letting your winners run, you're probably going to do OK. He said you may even do better than the Market Wizards, which I thought that's funny. It could be true. Who knows? That was a lot of fun. We're definitely going to have George back.

Corey McLaughlin: Yeah. We should definitely have him back.

Dan Ferris: Yeah. All right. Well, that's another interview and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as we did.

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