Episodes

Announcer:                 Broadcasting from the Investor Hour studios and all around the world, you're listening to the Stansberry Investor Hour. [Interlude 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 my friend Daniela Cambone, Stansberry's media anchor. She has a really unique perspective on things. I want you to hear it. In the mailbag today, questions about preparing versus predicting, Microsoft, and value versus growth. And remember, you can call our listener feedback line. 800-381-2357.

Tell us what's on your mind and hear your voice on the show. For my opening rant, let's do it, let's talk about inflation one more time [laughs]. That and more right now on the Stansberry Investor Hour. Yeah. Let's talk about inflation one more time because it is probably the biggest risk out there right now. It's even worse than a potential bear market, you understand. Because ultimately, a bear market is a great buying opportunity. But inflation, it just chips away and chips away and chips away.

And what if it's 7% a year for another few years? In four years, that eats up like a quarter of your money. It can be really bad, so you need to prepare for it. Also, let's face it. The stock market hates higher inflation. The one period when we had high inflation in this country in the last – what – 50 years or whatever, the 1970s, the multiples in the stock market just plummeted. So yeah. If you've got 50 years to invest, maybe you want to be buying when those multiples are low.

But you better be able to ride out that decade [laughs] because it's going to be rough. So what do you do? Do you do anything different? Well, yeah, I think you do. I think you do things a little bit different. Certainly, the one thing you don't do different is – you don't sell great businesses that earn high returns on capital and don't require a lot of capital. That will always be the greatest investment that is available to – how does one say it – regular folks who don't want to be entrepreneurs. You're not the next Jeff Bezos, you don't even want to start your own business. You have a job. It could be a very good one.

But for you – for that person – I think owning great businesses through the stock market is going to be your best investment. And the secret, of course, is to hold them and hold them and hold them for decades and decades. You'll beat inflation, you'll beat any other kind of asset you could've owned. It'll be great. So do that. That's No. 1. But if you really want to sort of juice your portfolio and prepare for what is really setting up to be higher-than-average inflation for the next several years here, I believe you need to do something else.

And you need to hold some gold, I think, and some silver. And I think bitcoin will probably treat you well in that too. I think you should also hold certain equities. And we have created – in Extreme Value, Extreme Value readers have access to a report right now. It's called "The 10-Stock Inflation Protection Portfolio." And I think there's bear market protection in that, and I think there's inflation protection, and I think there are incredible ways to exploit the inflection points in value versus growth, commodities versus stocks, and emerging markets versus U.S. stocks as well.

There's a lot happening right now in the world and there's a lot packed into those 10 stocks in that report. But basically, it has the best gold business on Earth. I can't tell you what it is because obviously Extreme Value readers [laughs] pay me a lot to know that information, so I can't give it away. But there's great gold-oriented businesses in there. There's ways to hold gold and silver that are really easy. Fantastic commodity businesses and royalty plays.

And you can probably find those pretty easily for yourself. I don't know if you could find the best gold business on Earth that I've found, but you can find a pretty good portfolio of ways to hold gold and silver, gold mining companies, etc., that will probably do you pretty well over the next – say five to 10 years if inflation stays higher. What else should you do? Well, there are other types of businesses that are less traditional as inflation fighters.

And I've mentioned it before, but it bears repeating. And I will probably repeat it frequently over the next year or so for as long as I feel like inflation has become a worse problem and will stay a worse problem. And that business that I'm thinking of is insurance. And insurance is a good inflation fighter because – especially like a company that insures businesses. Because those businesses own assets. And as inflation continues at higher levels, those assets become more expensive to replace.

Therefore, you have to pay more to insure them. And the liabilities with owning property become more expensive, because all the things that you have to do when somebody hurts themselves on your property, everything that you might have to do for them gets more expensive. So the assets are more and the liabilities are more. Therefore, the insurance premiums are more. And, yes, of course in Extreme Value I've found what I think is the greatest way to do this.

It's not an actual insurance company, but it's like a royalty on insurance companies that doesn’t take underwriting risk. It's awesome. But if you own a great insurance company – and I'm going to recommend one of those, probably the greatest insurance company in the world, in the February issue of Extreme Value that comes out this Friday. If you own a great insurance company, you're going to get consistently profitable underwriting plus really great investing plus – good underwriting plus higher premiums on good underwriting over time.

You see, there are two things going on there. Because underwriting at many companies is mediocre to lousy, and all they're doing is trying to collect more assets so they can increase their float. So they can get whatever little yield or something they're getting off of investing their float. Insurance companies collect premiums, and it's basically other people's money that they have to hang onto in case they have to pay it out as claims for losses. And that float is really – it can be a wonderful thing in the hands of a great investor.

So some companies kind of say, "Well, we're never going to be the greatest underwriters in the world, but we'll be good enough and we can keep collecting lots of float." But, man, I'm telling you there are few companies out there that are great investors and great underwriters. So the float goes up, the returns on the float are great, and over time they'll get the boost from higher premiums due to inflation. So it's like this wonderful triple-whammy inflation fighter – wonderful business in the hands of the right management team. Insurance.

If you don't know about insurance, you should look into it. You should learn more about it. And you can just study the annual reports of the big insurance companies. And a company like Markel is a really good one. W.R. Berkeley is another good one. Start with those. Berkshire Hathaway, of course everyone knows that one. And you start with those, read their annual reports, see how they invest their money, see how they approach underwriting, then you can learn a lot about it.

So we got great ways to buy gold – gold, gold miners, gold royalties, and other royalties... base metal royalties. We have insurance...is a great thing. And of course, as I started talking in the beginning here, I mentioned great businesses that earn high returns on capital and are just going to be great businesses for a long time. I've mentioned before that we recommended Costco in Extreme Value.

I think that's going to be – their recent quarterly reports and quarterly conference calls have provided lots of evidence that they are going to be able to handle inflation as well as any business in the world. And it's already a wonderful business anyway. So that'd be an example of a wonderful business that should sail right through a period of, say, mid-single-digit to higher-single-digit inflation and continue to produce excellent margins, excellent free cash flow, excellent returns for investors.

Great businesses, gold and silver however you want to own it, and insurance. Those are the three I think that you really need to focus on if you are worried about inflation and want to fight it. That's all I have to say about that. Let's talk with our guest, Daniela Cambone. Let's do that right now. [Music plays and stops] Folks, did you see that inflation came in at 7% in December? That's the highest in over 40 years.

Meanwhile, speculative bubbles are popping all across the markets. Marijuana stocks, SPACs, almost the entire so-called growth sector. The market is giving you a huge warning. I hope you are paying attention. Because what happens next is going to be an absolute disaster if you're not prepared. That's why I just gave the most important interview of my life on camera with journalist and gold expert Daniela Cambone.

We talked about a very specific plan for what to do right now today to protect your hard-earned savings – including a gold stock that I think could return you more than 10 times your money if you get in right away. It's simple to get started, and I expect this hard asset plan to absolutely crush the overall market over the next five to 10 years.

Trust me, you don't want to miss this. Go to www.danupdate.com for the full story. And just for tuning in, I'll even give you a free gold stock recommendation. This is my favorite way to hold gold in the publicly traded markets. Name and ticker symbol totally free of charge. Again, that's www.danupdate.com. Check it out as soon as possible [music plays and stops]

All right. It's time for our interview. Today's guest is Daniela Cambone. Daniela is an editor at large for Stansberry Research and serves as the firm's lead media anchor. You can see her at stansberryinvestor.com or on the Stansberry Research YouTube channel. Daniela is a veteran journalist, having covered financial markets for well over a decade. Before joining Stansberry Research, she was the editor-in-chief and lead anchor for Kitco News, covering global markets, economic news, and commodities.

Her work was simultaneously featured and covered on Jim Cramer's TheStreet.com, Forbes, Yahoo Finance, and MSNBC. A trained broadcast journalist, Daniela has interviewed high-profile figures including Congressman Ron Paul, Congressman Newt Gingrich, Senator Rand Paul, and investors Mark Cuban, Kevin O'Leary, and Steve Forbes. Daniela is originally from Montreal but now lives in New York City with her husband and twin boys. Daniela, welcome to the show.

 

Daniela Cambone:     [Laughs] I was going to say, "Dan, you forgot to include to my list the great Dan Ferris," of people I've interviewed.

 

Dan Ferris:                 Oh, there you go [laughs]. Yeah. "Great investors and Dan Ferris." So I just thought it would be – we thought it would be really cool to have you on, partially because you have talked to so many people. We had Grant Williams on a while back and it's the same thing. He's talked to so many investors that it's this unique point of view that we kind of like to hear every now and then.

 

Daniela Cambone:     That's true.

 

Dan Ferris:                 In that regard, Daniela, at the risk of being way too general here, you've interviewed countless leading financial minds, all those billionaires and stuff. You're interviewing experts and investors every week on the YouTube show, got half a million subscribers... I mean, if I asked you just generally, "What are folks saying these days about inflation, hard assets, the stock market," is there a theme or themes that you've noticed that just recur again and again?

 

Daniela Cambone:     Excellent question, Dan. I would say there are a few themes with the odd interview that takes a different point of view. And I'll tell you what I mean by that. On the topic of inflation, most experts I've been speaking to are pretty much on par by saying, "This train is not going to stop anytime soon. We're running red-hot inflation and the Fed's going to just try and bring it down just a bit." But they're really in a pickle and going to try this balancing act where they want to calm inflation but, at the same time, they don't want to blow up the stock market.

So Biden obviously doesn’t want this to go down in history as the man behind this [laughs] red-hot inflation and blowing up the stock market, and Powell's going to do all necessary to avoid that as well. So I think most of the guests that are coming on now are saying, "We should expect to see some sort of midway point there of maybe getting a 20, 30% correction which will calm the inflationary scenario right now just enough."

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     So that's pretty much the consensus. I do want to add, though, Jim Rickards – when he came on my Outlook, I kind of was surprised with what he said. Because he was like, "No. We've seen peak inflation." So he was kind of like the only one that came out and said, "We saw the worst of it and we won't see it anymore." And we'll see how that plays out. But that's pretty much the consensus that I've been hearing. And I think – well, you see a bigger correction coming but...

 

Dan Ferris:                 Yeah. I won't claim to know whether or not it's begun.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 I think it may have. But yeah. It's just, maybe I – I don't know. Maybe I lean too much on history. But I feel like when you're looking to the future, if history doesn’t inform you, what does? Nothing.

 

Daniela Cambone:     Right.

 

Dan Ferris:                 So, markets go in cycles, man. I mean, bull markets are followed by bear markets. And bear markets and like, really bad, sideways ratcheting for several years, sometimes you can see. But that's really what I think we're looking at here.

 

Daniela Cambone:     Dan, you actually see – I know from the campaign we just filmed with you, I learned that you actually see a 60 to 70% correction coming.

 

Dan Ferris:                 Right. So historically speaking – I lean heavy on history, I guess. Historically speaking, when... well, historically speaking, we've never been here before [laughs]. That's part of the problem in the stock market – is that the S&P 500 has never been this expensive ever. So the worst bear markets in U.S. equities were like – in the '30s they were down 80, 90%, and stuff.

So if that happened – put it this way. Nothing would surprise me at this point. And the potential range of outcomes is extremely wide. And that, as I've often discussed here on the podcast and other places, is really the definition of risk. If you buy a Treasury bill, you think the range of outcomes is really slender. You're going to make a little bit of money, probably not much else [laughs]. You know?

 

Daniela Cambone:     Right.

 

Dan Ferris:                 But when you buy a mining stock, you could lose 100% or make 1,000%.

 

Daniela Cambone:     That's right.

 

Dan Ferris:                 And I think we're like [laughs] in mining stock territory, right? For the stock market.

 

Daniela Cambone:     Well, yeah. I think, Dan, that's a perfect summary, is that it's unprecedented times, and we have no idea how this is going to play out. The only thing we can look and decide is, "OK. Where's the best bet for our money now? Is it in equities? Is it in hard assets? Is it in real assets? Is it in gold? Is it in bitcoin?" I think I know where you stand a little bit.

 

Dan Ferris:                 Yeah. I've preached the same kind of diversification strategy for quite some time, and I'm sticking with that. Gold, silver, bitcoin are all a part of that. And now, of course, I'm adding certain types of equities to the – just I think will also achieve the same ends of beating inflation, taking advantage of the secular trend that you get sometimes at the end of a bull market [laughs]. So yeah. Yeah. You do know where I stand as well as anybody, don't you? I mean, you've gotten the full monty recently.

 

Daniela Cambone:     I know. I know. I know. But you did give me a preview. I know there's one royalty play.

 

Dan Ferris:                 It is sort of. It is royalty-like, isn't it? But technically speaking, not a royalty. But yeah. That's my big No. 1 gold play that I've been recommending for like – God – four years now. And it's already doubled, and I think it's got a – I think through a full gold cycle. I mean, you know how it gets at the end, right? You know gold as well as anyone I know. And at the end of the cycle, things can get really crazy, and I think this thing could go 10-bagger.

 

Daniela Cambone:     Yeah. Yeah. Well, growth plays are interesting. And I know it's not Franco-Nevada [laughs], so...

 

Dan Ferris:                 Right. Yeah. So, it's not – royalty is a very specific thing. And we do have some of those too. They're wonderful, aren't they? You don't have any of the capex of the mine. You don't have any of the operating expenses of the mine. It's a play on the real estate. No matter who owns the mine, you get something off the top. It's great, isn't it?

 

Daniela Cambone:     Yeah. I think it's a great – I like it as a play in mining. I mean, definitely takes away a lot of the risk. But a lot of people don't understand royalties. So that's just one thing I'd probably add, is just educate yourself on what it is, how it works, how it's structured. Because it is completely different than buying a Barrick or a Newmont or whatever.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     So that'd be my only caveat. But yeah. It's a great foray and play if you want to – especially if you want to start in mining, I think.

 

Dan Ferris:                 Yes. I would totally agree. I think anybody who is interested in gold and wanted to sort of juice the portfolio by holding an equity rather than just physical metal, you'd want to start in royalties. Wouldn't you? You wouldn't want to start with like X, Y, Z moose-pasture mining exploration stock [laughs] that could –

 

Daniela Cambone:     Exactly. Exactly.

 

Dan Ferris:                 Right. So that's actually an excellent – I've never heard anyone say, "In gold equities, start with royalties." I think you're right about that.

 

Daniela Cambone:     Thank you [laughs].

 

Dan Ferris:                 I just thought about that.

 

Daniela Cambone:     I mean, I don't give – I don't give financial advice, Dan. But if I were – when people do ask me and say, "How do I start," that's kind of one way I often suggest. "Start by looking at the royalty plays where you don’t have to break your head and understand fully the project of this person mining in northern Alaska and drill results and whatnot. Because you do have to do your homework with the gold mining stocks.

Like, people I think don't do enough of that homework, really understand the management, the project, how many ounces of gold or silver they're sitting on. There's so many things to factor in. So when people are like, "What's the next hot gold stock," it's like, "How do you answer that question?" I always say, "Maybe start looking at the royalty companies," and it kind of takes away 70% of the legwork.

 

Dan Ferris:                 That's right. And you, Daniela, you probably have a better perspective on this than anybody. Because as anybody with any experience in gold stocks would tell you, you better know who's – especially if you're buying a smaller company, you better know who's running it and what they're up to. And you've talked to a lot of those people, haven’t you?

 

Daniela Cambone:     I have spoken to probably – I don't want to say every... I mean, every major, major mining gold seat on the planet, definitely – mid-tier, I would say 90%, juniors, I'd say [laughs] 70%. So I've spoken to a lot of the companies, the management. And of course, there is some management that, for me, are just starters.

And without revealing any names. But it doesn’t take rocket science to figure out. But just look at the track record and you'll notice that they've done multiple successful gigs. So it's like, "Follow the money. Follow them" – because they have a proven track record. And it's not saying things can't go wrong, but management is a crucial part of selecting the winners here.

 

Dan Ferris:                 It's interesting, isn't it? It's the opposite of like, Peter Lynch buying Coca-Cola in the '80s or something, saying, "Any idiot can run the company because it's such a great brand."

 

Daniela Cambone:     No. Not when it comes to – yeah.

 

Dan Ferris:                 He says they're like that.

 

Daniela Cambone:     Yeah. There are the leaders. There are the leaders of the pack. And no pun intended, but what they touch turns to gold. But they just have the knowledge, the know-how and there's so much legislation with gold mining and risk and corporate governance and politics. So you need someone that really – I mean, you're mining in Colombia, you're mining in Mexico, you're mining in these high-risk jurisdictions. So you need someone who also understands how to navigate those waters. So multiple talent traits needed [laughs] I think to be a leading – I mean, look. If you look at the majors, look up Mark Bristow. Like, what an incredible CEO at the helm of Barrick now. But look at what he did at Randgold.

 

Dan Ferris:                 Yep.

 

Daniela Cambone:     Just natural born leader. Right?

 

Dan Ferris:                 Yep. Two of the all-time great gold majors.

 

Daniela Cambone:     Exactly.

 

Dan Ferris:                 Randgold and Barrick. Yep. Yeah. Good point. Good name too. So wow. I feel – now that you said that [laughs] I feel like we should – I wish I had a card catalog of like every gold company so you could say, "What about this one and what about this one and what about this one?" Do any –

 

Daniela Cambone:     Well, yeah. I know you have your favorites, right?

 

Dan Ferris:                 Sure. Sure. Well, let's see. I can't mention my big favorites because that's for subscribers only. And we've owned Osisko, actually – we've recommended Osisko before – Osisko Royalties – in Extreme Value before.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 I don't think we own it now, but you've interviewed Shawn, haven't you?

 

Daniela Cambone:     Yes. Yes.

 

Dan Ferris:                 From Osisko.

 

Daniela Cambone:     On multiple occasions.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     Great CEO. Risk-taker – knows the business. So there are a lot of good apples. But as you know, it's a business that has a lot of bad apples [laughs]. So when they say, "Just do your homework," it helps if you can go to the shows and meet the CEOs or the management. I know a lot of folks don't have that capability.

But from my experience – I don’t know how many gold shows I've covered now, but that's definitely a great way to educate yourself or try and take part in their presentations. Or just try and get to know the management as much as you can and that will reveal a big part of the story. And then look at jurisdiction, look at where they're mining, look to see if you like the jurisdiction, if – but I think, huge opportunities now on the gold/silver space. Platinum, palladium. So yeah.

 

Dan Ferris:                 Yeah. Yeah. I agree. I think especially lately silver has struck me as a much more interesting...

 

Daniela Cambone:     Yeah. You know what? I saw CNBC interview a good friend of our show, Keith Neumeyer, CEO of First Majestic. and I said, "Oh, boy. Keith's on CNBC. Now I'm out."

 

Dan Ferris:                 I know. I know.

 

Daniela Cambone:     I was like, "CNBC's covering silver? We've made mainstream?" You know? So it's interesting times. I think that silver might really be a breakout star here this year. Finally, I hope for the silver folks who've been waiting so long.

 

Dan Ferris:                 So I won't ask you to name any names, but I'm just curious on a personal level. Having interviewed all of these people in this industry that is full of intrigue, to say the least – and in some cases, outright fraud and sort of semi-shady and shady stuff – did anybody ever come to you and say, "I want you to – I want you to do something for me," and then you realized, "This is just not on the level"?

 

Daniela Cambone:     Oh yeah.

 

Dan Ferris:                 Yeah?

 

Daniela Cambone:     Oh yeah. [Laughs].

 

Dan Ferris:                 "Oh yeah." It's like not even a question, right? Like, "Oh, yeah. Of course."

 

Daniela Cambone:     I could share something with you. Should I?

 

Dan Ferris:                 We're not naming any names, right?

 

Daniela Cambone:     Like, a lot of times – and I was always like, "I don’t want the IR guy or girl coming on. Like, I only interview the CEO or CFO." I was always like – even when I was starting Kitco News, and we were like a no-name news organization at the time covering precious metals, I was always adamant like, "It'd have to be the CEO. I do not want promotional. You can't just come on and talk about rah-rah your project. Like, this is not a promotional platform."

And still to this day, that is like my mantra. Like, I won't back away from that. I only interview people that I think have an interesting story that are legit. So I try and weed out those people for the public. But I've had so many shady characters approach me, saying, "Can you – I pitched every day. Cover this. Cover that." And it's like, "No. No. No." But one time, we had – this is when I was working with Kitco and not Stansberry. But there was this one company that was actually smearing results.

 

Dan Ferris:                 Whoa.

 

Daniela Cambone:     And I interviewed a geologist on, "How to detect if they're smearing results." But you couldn’t know the company, like the whole company's name – like, you wouldn’t be able to know the company. It would've been impossible. He was just using as an example like, "Things to avoid when you're looking at like, drill results," or whatnot. How to read them, how to interpret them. But then, I had the CEO of this company [laughs] reach out to me like basically – it was almost like a major threat.

"If I didn't take down that piece of information" – like, the video or whatever... it was actually a presentation that they had taped and he wanted it taken down, and he was adamant. But he was like threatening about it. So that was really shady, and I just refused to take it down. I was like, "No. And we don't name your company, and you're lucky I don't go public with this information right now."

But yeah. It was not fun [laughs]. But, just – I guess what I want to tell the folks is like, it does happen. Like you said, there's shadiness, there's bad apples. But there's a lot of great, incredible people in the mining business. So I think it gets a bad rap, and that's unfortunate because there are – I’m friends with a lot of them. I've been to a lot of the projects. There's a lot of legitimate, good stories.

And mining gets a bad rap, but in terms of like the environment and, "Do they give back to the community," I've actually seen a lot of examples where these companies do a lot of good for the community or they empower some places that would've never had work or whatnot. So there is good that comes out of mining. It's just a lot of times we just hear about the bad stuff. You know?

 

Dan Ferris:                 Yeah. We're not saying it's an entirely undeserved reputation, though. Right?

 

Daniela Cambone:     No. No. No. No. Absolutely. Look.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     It is the dirty business. But I think they have made great strides and they are working on becoming more sustainable and whatnot.

 

Dan Ferris:                 Mm-hmm.

 

Daniela Cambone:     So work in progress. But yeah. Lot of work still yet to be done, for sure.

 

Dan Ferris:                 Yep. Yeah. I mean, look. Anybody who's flown a helicopter over Fort McMurray or something – or any place like that – you look down and you go, "Ooh." It looks kind of like a huge mess. And you start wondering, "Well, these extractive industries, maybe these environmental people do have a point." And of course they have a point. I mean, it's [laughs] a filthy, dirty business and you leave big holes in the ground. And it'd be really nice if people would kind of clean up after themselves. Right?

 

Daniela Cambone:     And some companies do.

 

Dan Ferris:                 Yeah. They do.

 

Daniela Cambone:     Some companies do. Like, again, not naming any. But there was one mining project that I had visited in Mexico and – when I was speaking to the people, they were really happy about the work that it had brought. But of course, there's environmental damage. Like you say. But at this company, for example, I made sure that they then create that mine into a park or they reuse it or try and make it green for the community to enjoy.

 

Dan Ferris:                 Yep.

 

Daniela Cambone:     And I think that the mining industry is more focused on this now, on trying to be greener. And like I said. I think they're headed in the right direction, but things unfortunately won't happen overnight.

 

Dan Ferris:                 Right. Politically, it's a matter of survival. I mean, they have to.

 

Daniela Cambone:     Right.

 

Dan Ferris:                 So yep. But the truth is, though – and one of the reasons why I think these cycles happen – we can't live without them. I mean, underinvestment for a decade or more at a time, like we're seeing in fossil fuels, the level of capex is like way down. I mean, way down below 2014 levels is one thing, because that was crazy. But way down below any reasonable level is another thing.

So every now and then we're going to reach these points where people are negative on the industry, maybe it hasn't generated the greatest returns for the last [laughs] 10 years or something. Maybe it's generated no free cash flow for decades like the gold mining industry and people are going to say, "It's basically a dead idea." But it's not.

 

Daniela Cambone:     How many times have we heard that? "It's a pet rock. It's dying." That's what the bitcoin folks – they love coming at me with that.

 

Dan Ferris:                 Yeah. Well, I saw where Mark Cuban told you it was like both gold and bitcoin are completely useless.

 

Daniela Cambone:     That's right.

 

Dan Ferris:                 Right?

 

Daniela Cambone:     That was great when he told me that. Yeah. He called gold a pet rock. He sees no value, zero value. And I always say, "Dan, I'm not here" – I've covered the gold industry now for, what, 15 years? And I'm not here to convert anyone. I’m not here to change anyone's mind on it. I feel very comfortable with gold [laughs] but I can't force it on others.

But I like bitcoin too. That's what people don't... seem to forget – that it's not like I've closed the door to bitcoin. It's just I've said it before, that I am one with gold. I fully understand it. I get it. So the ebbs and flows don't freak me out, but I also don't expect to get rich with gold overnight, which I think a lot of people expect that from gold. Like, that's not why I own or hold gold. So yeah.

 

Dan Ferris:                 So in other words, what I'm hearing is you are a long-term holder of things like physical gold and gold equities or whatever.

 

Daniela Cambone:     Yes. Yes. Physical gold for sure. I think I've said it in other interviews that – and for my kids even though there could definitely be higher risk, I've put them in physical gold right now and silver – but mostly gold – just long term. Again, for me, it's a hedge. It's an alternative to being in the banking system. And I sleep wonderfully at night.

So I always say [laughs] – again. But I'm one of the people that's probably closest to the subject matter of gold on the planet. So, again, I feel extremely comfortable with gold. I'm OK with it. I don’t need it to do miracles overnight for me. I just need it to preserve our wealth right now and the wealth of my kids that I'm trying to accumulate for them. So it's a misunderstood asset. You know?

 

Dan Ferris:                 Misunderstood asset. Yeah. Perennially. Perennially misunderstood.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 Right? Yeah.

 

Daniela Cambone:     And people are so passionate – it's incredible how passionate people are with this gold versus bitcoin debate. And I own both. I'm happy with both. They serve different means for me. And again. I'm not here to change your point of view, so when the cyber hornet is coming at me, like, "Why don't you – why are you still in gold?" – they're angry.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     They're so angry that [laughs] – I'm like, "Guys, why wouldn't I be – it's a subject matter that I know. You know, that I fully understand. So don't worry about me. I'm good. I'm good." You know?

 

Dan Ferris:                 That's right. And not to mention the fact that 5,000 years this stuff has done what we wanted it to do just fine and all-of-a-sudden in 10 years we're going to get rid of it? I don’t think that's how it works.

 

Daniela Cambone:     Right. Right. Right. You know? But I digress.

 

Dan Ferris:                 Sure.

 

Daniela Cambone:     I get very passionate when I talk about gold. And silver.

 

Dan Ferris:                 Well, that's OK. I like hearing you talk about gold. I want to hear – look. I want to hear from people who love something because people who love something know it better than, generally speaking, people who don't.

 

Daniela Cambone:     It's just something – you can't... look. I'm sure, Dan – have you ever been in a vault surrounded by gold?

 

Dan Ferris:                 No, I don't think I have.

 

Daniela Cambone:     OK [laughs].

 

Dan Ferris:                 No.

 

Daniela Cambone:     Well, I'm lucky that I had that opportunity a few times. So I have clearance [laughs] to enter these vaults. And there's just something magical. And I know I sound like Robert Kiyosaki, but there's just something magical about gold that I just can't explain. But when you're holding that – whatever ounce size, you want to say, of gold – there's just something purely magical when you're surrounded by all this beautiful, yellow metal.

 

Dan Ferris:                 Mm-hmm.

 

Daniela Cambone:     I just can't explain it. You know?

 

Dan Ferris:                 Right.

 

Daniela Cambone:     I can't explain it. And I get people's cold wallets do that for them, but yeah.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     I think I was born to be in gold. I don't know.

 

Dan Ferris:                 Yep. No. I'm glad you brought that up. I've actually written about this very thing – that fact that gold is this sort of beautiful, shiny object with which humanity has been endlessly fascinated for eons. I think people don't understand how much that – how far that goes toward creating its value to us. And the fact that it has physical principles make it ideal. Because it doesn’t change over time.

 

Daniela Cambone:     It's so true.

 

Dan Ferris:                 It's perfect in that way. I guess that's just you and I. It's a mutual admiration society –

 

Daniela Cambone:     We're the fringe minority. You know?

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     We're geeking out talking about gold. But like I said. When the cyber hornets come, and they've invited me on these podcasts and trying to change my mind, and I'm like, "You guys do realize that – realize who you're talking to about trying to get out of gold? OK."

 

Dan Ferris:                 That's right [laughs]. Yeah. It's like, "Do you know who I am?"

 

Daniela Cambone:     Yeah. But not in a – yeah. I didn't mean it in that way, but it's kind of like – I don't know, trying to convince Michael Saylor to step away from bitcoin.

 

Dan Ferris:                 Yeah. Yeah, that's right. Exactly right. Daniela, there's something I wanted to ask you about that I don't want to forget. It's in the same vein as the other questions. You know, just that you've spoken with so many people and so many investors. And I'm curious, I'm sure the topic of value investing comes up now and then. But how about the idea of investing in emerging markets? Has that come up much?

 

Daniela Cambone:     Yeah. Yeah. Actually, I just spoke to someone today – that video's coming out. Lyn Alden spoke about it. Jim Rickards speaks about it. Jim Rogers – who I believe you've interviewed also, Dan. One of the greatest investors of all time – is a huge advocate of... I just think that's a different beast in itself. Wouldn’t you say?

 

Dan Ferris:                 It is.

 

Daniela Cambone:     Because first, I think most people don't know how to gain exposure to emerging markets. I almost think that has to be demystified. And actually, maybe that’s' a segment I should do, so you're actually giving me some ideas here.

 

Dan Ferris:                 There you go.

 

Daniela Cambone:     I think people don't know how to approach or how to get into emerging markets. But they're almost like, "I have enough to take care of at home and figure out here. How could I expose myself to anything outside of U.S. equities?" But I think there's tremendous potential. What are you hearing there, or what are your thoughts, actually?

 

Dan Ferris:                 Well, I think this is another one of these massive cycles that looks like it's near an inflection point. It's like it's the thing that – at least as far as big institutions and other... even folks in my business of writing newsletters and other analysts. It's this thing that kind of no one really talks about. I feel like nobody talks about it until after the folks that you're talking to have talked about it for five years or something. You know?

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 Then everybody wants in. But it seems like this back-burnered... similar to value investing. It's like this back-burnered thing that doesn’t work anymore, is the impression I get.

 

Daniela Cambone:     Yeah. I'd have to agree with you. I think it's just because – like you said – people are just not educated enough on it, maybe.

 

Dan Ferris:                 Mm-hmm.

 

Daniela Cambone:     And look. We don't talk enough about it.

 

Dan Ferris:                 Right. And there are different – also, we have to acknowledge what I'm sure some listener is thinking. Like, "Commodities, gold, value versus growth, emerging markets – these are very broad – we're giving very broad strokes here." Emerging markets could mean buying Vietnam for one reason or buying Brazil for another reason or something. And I get that. But it's just another thing that's fallen off the radar that I think its time has come again. You know?

 

Daniela Cambone:     Yeah. I guess the first step is like – you mentioned Brazil, and Lyn Alden is bullish Brazil right now. But it's like, "How do you get in? How do you expose yourself? How" – it just seems so foreign as an investing idea, I think, to a lot of folks out there.

 

Dan Ferris:                 Right.

 

Daniela Cambone:     But huge potential, for sure.

 

Dan Ferris:                 Yep. And you can make anything as complicated as you want to. You can make it as simple as you want to.

 

Daniela Cambone:     Yeah, you're right.

 

Dan Ferris:                 You can probably – if you were... would you get hurt too bad by throwing a Brazil ETF into your portfolio and hanging onto it for five years? I don't know that you would be starting right now. You don't have to be.

 

Daniela Cambone:     It's like a royalty play. So if you take the ETF for exposure to the emerging markets, maybe it will...

 

Dan Ferris:                 Yeah. It's got that – especially since there tends to be plenty of financials in the country ETFs. So, if you're doing Brazil and Chile, Marko Papic recently mentioned those two – and if you like them for the commodities, well, [laughs] you and I know how commodity firms are run, so all the money's going to wind up in the bank anyway. Right?

 

Daniela Cambone:     Right.

 

Dan Ferris:                 So, it's OK to sort of, "Take a shotgun approach like that and just buy an ETF." You don't have to be an expert on Brazil and which Brazilian-traded company to buy.

 

Daniela Cambone:     Right. Exactly. Exactly.

 

Dan Ferris:                 Yeah. Yep. You can do it. You can also do like – I mean, I have to assert myself here or else my publisher will hate me forever. You can also subscribe to Extreme Value – I’m serious.

 

Daniela Cambone:     There you go. There you go.

 

Dan Ferris:                 And we've got all of these things covered. Inflation, the value growth – well, we're a value publication. Inflation, value, commodities... God. I think we are brilliantly covered there. And emerging is sort of – it's not as well covered, but it's sort of in there on the fringes. But overall, those big trends – inflation, commodities, mining...

 

Daniela Cambone:     Well, let me ask you that because you started by asking me about inflation and what the folks are telling me. But where do you think we're at with inflation?

 

Dan Ferris:                 I think we're at the beginning of a more extended bout of higher inflation. I don't know that we go double digits. You know, I think the last time we were double digits was at maybe 1980 or 1979 or something. But if all we have to do is stay at 5 or 6 or 7% and we're in a different world than we've been for 20 years... right?

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     But don't you think we're running way higher than 7% in what they're telling us?

 

Dan Ferris:                 Yeah. I don't worry as much about that as everyone else but, yeah, I do. Talk to somebody who's paying rent or buying food or any of the necessary things that you have to do. They're like, "7%? What the hell are you talking about?'

 

Daniela Cambone:     That's how I feel. That's why I'm like, "What are you guys" – yeah.

 

 

Dan Ferris:                 Or are trying to buy a house for the first time. I'm sorry. You were saying that's how you feel?

 

Daniela Cambone:     No, that's me, what you just said. [Laughs] I was like, "I am yelling at the television thinking, "No. I don't buy the 7% narrative at all." But interesting that you think we still have more pain ahead. But at one point – don't you think at one point the Fed's going to really have to act more aggressively?

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     They don't want the bees to get out of hand here.

 

Dan Ferris:                 They don't. The thing is – see, Daniela, this is where I’m going to go off in Dan-land, because I've never heard anybody else –

 

Daniela Cambone:     No, go for it. I love it. I love it. Please do.

 

Dan Ferris:                 [Laughs] OK. So I think this ongoing belief in the omnipotent, omniscient central bank, the myths of the infallible central bank, one of our previous podcast guests – I wish I could remember who it was... the myth of the infallible central bank is going to get busted at some point. To believe that these bureaucrats with this very simple... their only tool is printing money and buying securities. That's it. That's all they got. And establishing new credit facilities. That's all they've got.

And to believe that these 400 PhD economists with this guy at the top and the open market committee and all – can, from the top-down, manage a multitrillion-dollar economy with this simple... cudgel. It's a cudgel of a tool. It's not sophisticated at all – is beyond me. I don't believe it's true at all, and I think one day we're going to reach a point where we all realize that the Fed isn't in control of jackshit. They don't control anything. They're reacting, they have minimal tools and it's going to get away from them. When that happens, I don't know.

 

Daniela Cambone:     So wait. I love this. So wait. So there's a few scenarios that could happen. A, do they get more tools? Like, I don't know, a Fed dollar.

 

Dan Ferris:                 Yeah.

 

Daniela Cambone:     I don't know. Over other tools. Two, do they cease to exist? Is it replaced by a bigger system like this crypto takeover at one point?

 

Dan Ferris:                 Well, politically speaking, you're not going to get – I don’t think you're going to get rid of central banks anytime soon. It's just not going to happen. Governments like the idea too much of having their hand on that lever. Even if it doesn't appear to be working.

 

Daniela Cambone:     They're independent, Dan. They're an independent –

 

Dan Ferris:                 Oh, sure [laughs]. Oh, sure. Yeah. Yeah. They're independent, all right. Wait till they start – wait till they're in full Bank of Japan mode and basically printing money and buying equities. Then we'll see if anybody thinks they're independent. They will be – at that point it's clear that they're actively propping markets up because it's really bad for political leaders –

 

Daniela Cambone:     Well, step one – step one.

 

Dan Ferris:                 Otherwise...

 

Daniela Cambone:     No, sorry to interrupt, because we mentioned the independence thing, which is a farse. And two, they shouldn't be allowed to own stocks. Yes or no?

 

Dan Ferris:                 Well, yeah. They shouldn’t be allowed to own stocks but – or maybe they should, and they should have some kind of reporting requirements or something like the CEO of a company or something. I don't know. But to me, that's like – that is classic rearranging deck chairs on Titanic stuff. It doesn't matter. I’m like James Graham. If somebody gave me the job of Fed chairman, the only thing to do would be to resign. Because you can't do it, I don't think. I don't think – I think markets are natural phenomena. And I think humans are in them the way fish are in water. And fish don't control water [laughs]. Fish don't control the tides of the waves and the temperature of the water. We humans think we have control of it, but that's even more dangerous. You know?

 

Daniela Cambone:     Yep.

 

Dan Ferris:                 I think there's a bad, bad, bad outcome at the end of all this. When, how bad, exactly how it plays out, you'll never catch me trying to guess at that. But I just don't believe that things work this way. Yeah. Well, I don't know. I feel like you and I with our various backgrounds can, like – we can go on for hours.

 

Daniela Cambone:     I know [laughs]. I'm just digesting everything you're saying. I was just thinking I'd love to just be a fly on the wall at those Fed meetings and just... when the experts I interview will come on. I think when Powell came on with transitory inflation – did he really not know at the time? Were they lying to us? I don't know where the truth is. I don't know if you have any insights. Do they really not know? Then you're like, "How can't they know?"

 

Dan Ferris:                 OK. I think it's a... yeah. It's impossible to run a big institution of any kind without being a liar. I mean, come on. You're telling a story. You got to keep your story straight. Anybody who has to keep their story straight to keep their job or to –

 

Daniela Cambone:     Yeah. So they want to keep the story straight to keep their job or not to incite like public revolt or panic.

 

Dan Ferris:                 Yeah. So they think they're in control of things to that degree, and they probably think that. They're probably, "Well, we have to keep our story straight or the market will panic." And I'm not even saying that's untrue. But [laughs] I'm just saying you and I agree that they have to keep the story straight. Right? That means that, at some point –

 

Daniela Cambone:     Yeah. I would love to sit down like an ex-Fed Bernanke or Mellon or whoever and just – like really understand the belly, the underlying dynamics. Like the stories they could tell us.

 

Dan Ferris:                 Yeah. I'd like one of those people to really explain the mechanics of how they think – how all of this really does work.

 

Daniela Cambone:     Wait, Dan. This is what I'd love to know from you.

 

Dan Ferris:                 OK.

 

Daniela Cambone:     Was there a Fed chair that you thought did a good job that you respected, that you were like, "OK. They get it. And even though they can't have full control, but they're at least trying"?

 

Dan Ferris:                 Not during my lifetime.

 

Daniela Cambone:     Wow.

 

Dan Ferris:                 You know, yeah.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 I mean, I don't know that for sure. I'm not saying that I've studied the activities of all the Fed chairs. But – I don't know. I've been an investor during the '90s and I haven't been impressed [laughs] with anything that's happened since then.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 Just leave it at that. And even the Volcker thing.

 

Daniela Cambone:     Right.

 

Dan Ferris:                 They sort of knew what was going to happen. They knew that there was going to be a recession and that was the pain. And they said so at the time. "It's going to be painful."

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 I'm like, "Well, I don't know. Would it be less painful if you just didn't exist?" Maybe [laughs] we should try that.

 

Daniela Cambone:     Right. Right. So you're more of the Dr. Ron Paul within the Fed camp?

 

Dan Ferris:                 Yeah. I tend to not want to mess with the status quo too much. But in this one case... I don't know. They've had over a century to sort of prove their worth. And they've over – they claim to be in control of things that they're not in control of. Because if they were, we wouldn’t have had the various crises that we've had.

 

Daniela Cambone:     That's right. That's right.

 

Dan Ferris:                 Most people want to say, "Well, yeah. But it would've been worse." I don't know about that.

 

Daniela Cambone:     I just feel like it's Groundhog Day most of the time with every Fed meeting and every – and we in the media are culprits of it as well. It's just, "What really changes?" You know, from Powell...

 

Dan Ferris:                 Yeah. Well, certainly –

 

Daniela Cambone:     From Powell...

 

Dan Ferris:                 Yeah. Yeah. Yellen, Powell.

 

Daniela Cambone:     Bernanke.

 

Dan Ferris:                 I mean, all of them.

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 It's the era of the hyper-accommodative Fed. For over more than two decades. And they brought us the – if the Great Depression is the worst, then we saw the second-worst financial crisis in our history. And before the Fed existed, we didn't have anything really like that. We had these small events, a few banks failed. A few dozen banks failed. And things got put back together, and the market took care of it.

 

Daniela Cambone:     Yeah. And that's why I wish the gold and the crypto folks would kind of unite on that front. Because if that's one thing you have in common, I feel like by investing in those assets you can almost take some control back. At least that's how I feel. Yeah, you're still part of the system but it's out of fiat currency, it's out of the banking system and it just feels like you can be a little bit more in control and in power.

 

Dan Ferris:                 It does feel that way to an extent. For me, it's more of a – it's more about diversification. It's more about, "I don't know how the future looks and I don't know what's going to happen, so I better had be covered. Because these particular assets tend to perform well when things are really, really bad in certain ways."

 

Daniela Cambone:     Mm-hmm.

 

Dan Ferris:                 And they've been around for 5,000 years like we were saying too. And bitcoin has not been around that long. But it's got some decent underlying fundamental characteristics about it, and it deserves a chance. But as far as getting outside of the system, I just – you're always in the tax regime. You're always in the political regime. So, you're never really outside of it. I mean, [laughs] it's just –

 

Daniela Cambone:     Maybe it's a fake feeling of liberty. But you're right. To that extent, you are still part of the system.

 

Dan Ferris:                 Yeah. So I don't know.

 

Daniela Cambone:     I'm just a rebel at heart. See, Dan?

 

Dan Ferris:                 I know [laughs]. I'm getting that. I'm picking up on that. I don’t know. We've been talking for a long time, and I feel like I want to ask you my big final question that I ask every guest on the show. OK?

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 It's the same question – I don't know the podcast. Do you know what the question is? You don't know this, do you?

 

Daniela Cambone:     Oh, now you caught me. I didn't watch to the end.

 

Dan Ferris:                 It's OK. It's OK.

 

Daniela Cambone:     Of course, I know the podcast, but now I wish I had known the question.

 

Dan Ferris:                 No. The question is – I'm glad you don't know it because the first time you hear it, it should be a really genuine answer. You know?

 

Daniela Cambone:     OK.

 

Dan Ferris:                 I don't want you to – I'm glad that you were unable to prepare for it, in other words. So the question is identical no matter what the topic, no matter who the guest. And it is simply: If you could leave our listeners today with a single thought, what would it be?

 

Daniela Cambone:     Oh [laughs].

 

Dan Ferris:                 Everybody says that the first time. "Oh."

 

Daniela Cambone:     Well, because it's such a great question and you want to lead with something poignant and remarkable and some advice that people could change their lives with. So I wish I had that [laughs]. I think that we are in unprecedented times, and now more than ever you have to educate yourself. And this is not a plug for shows like mine or Dan's.

But you're only getting 1% of the story by watching mainstream media, and I think that's why shows like ours have blown up. Because we're showing a completely different alternative to thinking about your financial freedom and different assets. Because as you know, gold and fringe assets are not loved by mainstream media. They love U.S. equities and that's the narrative you're going to get. So I'm happy that shows like yours, Dan – alternative ways of investing.

And I think now more than ever, you have to educate yourself. Whether it comes to gold mining stocks or crypto or whatever, just read. Take this time, educate yourself. And it's liberating to take control of your money. Just don't count on the banking system. Just don't count on whatever your neighbor's doing. Do it for yourself. Do it for your family. Do it for your legacy. It's just the greatest feeling of empowerment once you get into it and once you start educating yourself.

 

Dan Ferris:                 Great. That's a great answer. I love that. Yeah.

 

Daniela Cambone:     Yay. No. But I mean it. And I think really, like, channels like Stansberry and others – though ours is the best, Dan. We do such a great job of just providing information that should be on mainstream media, but they don’t want to cover it because they have their own agendas. So we don't have an agenda. We just want to –

 

Dan Ferris:                 Their loss is our gain, huh?

 

Daniela Cambone:     Exactly. Exactly. And I'm telling you. Like, especially during – and I don't know if you noticed this. At least, I noticed it from my show, the audience, how much it blew up during the pandemic. Because I think people had a lot more time at home, were really thinking about their money and putting it to work and kind of more distress of the financial and banking system. I mean, you could argue it started in '08, of course.

But I think the pandemic added to it and people were looking for alternatives. And that's why crypto's blown up, right? People want that freedom. They don't want to have to depend on an employer anymore to bring home the check. Of course, everybody wants to get rich quick. But as you know, that doesn't really happen [laughs]. So, educate yourself, put your money to work, be smart about it and don't just watch one financial channel and think you're getting the whole story.

 

Dan Ferris:                 Well said. Thank you for that.

 

Daniela Cambone:     Amen.

 

Dan Ferris:                 Like I said, Daniela, I feel like you and I could – we're like two peas in a pod. We could talk forever. But I don’t think anybody could listen forever –

 

Daniela Cambone:     I'd love that. Could you imagine our spouses like kicking us? Like, "OK, guys. Time to wrap. It's dinner time."

 

Dan Ferris:                 Yeah [laughs].

 

Daniela Cambone:     Yeah.

 

Dan Ferris:                 But thanks for being here and –

 

Daniela Cambone:     No, Dan. It was a pleasure. And I loved filming that campaign with you. I wish you luck with it. I think it was great. I urge everyone to check it out because you have a huge call in it. Like, you blew my mind, so I hope everyone checks it out.

 

Dan Ferris:                 All right. I blew your mind. That's good.

 

Daniela Cambone:     You did. I was like, "Wow."

 

Dan Ferris:                 It's good to blow someone's mind. Yeah. All right [laughs]. Well, you heard her. And I'll give everybody a URL in a second, but for now I just want to say thanks and I hope we talk to you again soon.

 

Daniela Cambone:     All right. Thank you, Dan.

 

Dan Ferris:                 [Music plays and stops] Wow. It's always great to talk with Daniela, as I've done a few times in the past year or so. I really love to listen to people like her who have spoken with so many CEO – like her. She's spoken with like almost every CEO that you'd ever want to talk to and then some [laughs] in the gold mining industry. And you learn things like that. You get a perspective on life.

Even if you – even if she didn't give us a lot of details about things, all that knowledge does something to you, and it gives you a particular insight that she has. Which I really wanted her to come and share with us today. Another reason is because – like I said – I think we're at a major inflection point here. Inflation, growth versus value, commodities versus stocks, emerging markets versus U.S. stocks.

There's a lot happening at this moment in history and finance and in history otherwise. So we did a presentation. Daniela and I got together, and she interviewed me, and we talked about a lot of this stuff, and I shared what I thought was what everyone ought to do about it. And you can find out more about that by going to www.danupdate.com. You'll see the full presentation there. Daniela asked me some great questions as she always does. She's a great interviewer.

And I’m just completely putting it on the record and not holding anything back. And at the end of it, we share a way to exploit all of this inflection point that I think – I think everybody should do it. I'm biased, of course, because I’m the one creating this method and creating – I've actually created a portfolio of 10 stocks. So I've created that, so I'm biased in thinking that everyone should do it.

But everyone should do it. It's got awesome businesses. Even if things don't play out as horrendously bad as I think, these 10 businesses should thrive over the next decade or more. And you can find out more about that at www.danupdate.com. Watch the whole presentation on danupdate.com. Check it out. All right. Let's take a look at the mailbag. Let's do it right now. [Music plays and stops] Matt McCall has been on this show more than once, and now he's stepping forward with a prediction for 2022.

If you have any money in the U.S. stock market, you will want to hear what he says could happen next. Because it could impact the way you live in a big way. For the first time ever, he's going public with his prediction about a new technology that could lead to a Rust Belt revival in Middle America. He says, "Several cities are already quietly being transformed: Flint, Detroit and Grand Rapids, Michigan... Buffalo and Rochester, New York... his hometown in Bethlehem... as well as Erie, Pittsburgh, and McKeesport, Pennsylvania."

And the list goes on and on. More importantly, he believes it could make early investors massive gains if they act on it today. He's excited because he's uncovered a 100% American-made technology that he believes will go through a massive nationwide rollout beginning right now. Matt is a legendary stock picker, and he calls this new technology one of the greatest places to put your money right now. To learn more about Matt's 2022 prediction, simply go online to mattbroadcast.com. Once again, that's mattbroadcast.com. [Music plays and stops]

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

First up this week is Adam K. Adam, I just want [laughs] you to know I’m glad you asked this. It's one of my favorite topics. Adam says, "I've been listening to your show for a while now and you consistently say, 'Prepare, don't predict.' But when I think about how to implement that mindset into my portfolio I can't distinguish between, 'Prepare for the future,' and 'Predict the future.' Can you elaborate on what you mean by 'Prepare, don't predict'? P.S. I very well may have missed you explaining this on an earlier episode, so sorry if that's the case. Adam K."

No. Adam K., no apology necessary. I love talking about this. Ask as often as you like. Here's what I mean by, "Prepare, don't predict." You don't predict, for example, that inflation is going to be 10% next year and pour your whole portfolio into hard assets and mining companies. However, you recognize that you can't predict whether or not that's going to happen but, given this type of system we live in, it's highly likely that – there has always been inflation. Even when it's been low, it's always there.

That's what you get in a fiat currency system. It just feels generally good if there's always a little bit of inflation. Doesn’t feel generally good after 10 or 12 years or 20 years of it, but the consensus among powerful people who can affect these changes is that a little bit of inflation is a good thing. So it's always going to be there.

And every now and then, you need to be really careful, because they will get carried away and will have too much inflation, and I think we're there right now. So the way you prepare without predicting is to hold an asset, for example, like gold. That's not a – you just hold 5 or 10% of your portfolio in gold and never sell it. That way you're always prepared for inflation, but it doesn’t depend on your predicting it.

It's a long-term wealth preservation tool. I mentioned in my rant today holding really great businesses as a way to prepare for inflation. Well, you should be doing that anyway. So in that way, you are prepared for inflation. You see? You bake it into your overall strategy without making it only about that. And really, the No. 1 way to do that – to bake it in without having to do something, especially for inflation – is to own great businesses and own great insurance companies and you're there. OK?

That's preparing for inflation. But you're doing other things, too, because those businesses aren't just inflation hedges... they're great investments. So you want to own them anyway, plus you're prepared for inflation. You see? I hope that goes far enough toward explaining it. If it doesn't, by all means write in again and I'll try to clarify anything. That's Adam K. Thank you very much. Great topic. OK. Next, Ted A. writes in. And I'm glad he did.

Ted says, "Dan, I hope you and the team are doing great in the New Year. I've been listening to your podcast for almost three years now and have loved every minute." Every minute, he says. Awesome. He says, "I am also an Extreme Value subscriber, my favorite Stansberry subscription currently. However, in your recent episode with Matt McCall – of whom I am also a subscriber – you were a pretty harsh critic of Microsoft's lack of innovation and I'm here to set you straight. As an ex-employee of Microsoft currently on sabbatical, I can tell you that there is no lack of industry-leading vision and innovation across a multitude of technology areas."

And then, he gives me a bunch of examples, OK, that I won't read. And then, Ted A. says, "Additionally, you should not discount the cultural innovation that Satya" – Satya Nadella, the CEO – "and his SLT have driven for almost the last decade. If there were a quadrant for executive leadership, Microsoft would certainly be leading there as well. That intangible value alone given the size of the company and advanced reach of its services couple with it being one of the most well-run companies – thank you, Amy Hood" – he says. I assume Amy's still the CFO. I haven't looked at Microsoft in a little while.

And then, he continues, "Makes it one of the best long-term value and probably growth plays. You guys talk about moats? Well, their moats are only growing, my friends. On top of Microsoft corporate mission, we always said that Microsoft is in the business of making others look cool, not necessarily looking cool itself. Successfully enabling innovation is at the core of their mission, so maybe in the end we just need to reconsider the many facets of what innovation really is in today's world. Anyway, thanks for reading and keep up the great work. Your dedication to keeping us all educated is much appreciated. Ted A."

Ted, thank you. I'm going to let your comments stand on your own. I'm glad you wrote in. Finally this week, we have Tom S. And first, he says, "Love the show. Learn something every week. An alliance member." Then he says, "Two questions. One. In the last few weeks, I've been reading about value investing and in growth investing."

"Some authors claim that in the long term, growth stocks do better, and others claim value investing is better in the long term. All claim to have researched data on their side. In your opinion, who is correct? No. 2, in my reading about value investing, there seems to be many, many criteria for a valued stock such as price-to-earnings, price-to-book, EV-to-EBITDA, PEG" – which is piece-over-earnings growth – "free cash flow, free-cash-flow yield, dividends, etc.

"What are the six or seven main criteria you believe are most important? Is there one place online or a book that would help? Thanks in advance, Tom S." So, Tom, the first question about, "Which is better, value or growth" – the answer is yes [laughs]. And that just means that, when you are investing in the equity of a business's growth prospects, you can't extract them from the value of the business. You can't separate the two.

Now, what do I mean when I make my distinction between value and growth? I'm talking about the cycles that seem to run pretty regularly – certainly in the era of the hyper-accommodative central bank of the last – just call it 30 – years where value stocks outperform growth stocks and then growth stocks seem to outperform value. So maybe you want to tilt one way every 10 years and then tilt the other way for the next 10 and just include something in your portfolio that tilts in that direction depending on where you think we are.

But it's not even necessary to do that. If you own great business and insurance companies, inflation hedges, all that stuff, you don't really need to try to exploit the value-growth cycle, but I want to do it. I think it's worth doing. Value stocks are the ones that are cheapest by those traditional metrics you mentioned in your second question. Price-to-earnings, price-to-book, etc. Growth stocks are those that are growing their revenues and earnings – those that have earnings – the fastest in the market.

So, you find them in value indexes and growth indexes, and then there are ETFs that you can buy that buy the Russell 3000 Growth or the Russell 3000 Value Index and you can play it that way if you want. Now, for your second question you want to know, "What are the criteria for a value stock" – you said valued stock... I don't know if you did a typo there and you meant value stock or if you're talking about valuing a business. And they're both important.

And you said, "What are the six or seven main criteria you believe are more important?" Well, I have five metrics that I like to call the five essential financial clues. They often – I find most of them or all of them are often present when I've found what I believe is a really great business with excellent growth prospects ahead of it. Whether or not it's at a good price is another thing. So those five are in the order I tend to think of them.

First one is gushing free cash flow. A business that generates lots of cash in excess of all taxes, expenses and capital spending requirements is what I'm looking for there. That's where assets get their intrinsic value from. That excess cash flow is, essentially, the intrinsic value of the business over the long term, so you want to find cash gushers. Free-cash-flow gushers. And just an example. Apple is the most free-cash-flow-gushing business on the planet. I think free cash flow's actually $100 billion now. It's just amazing.

There are a handful of large Chinese banks that come up on the free-cash-flow screens. But free cash flow is a sucky metric for banks, so I don't count them. Next is margins. Generally speaking, consistent margins over time – consistent gross margins, operating, pretax, after-tax free-cash-flow margins... you just look at the last five or 10 years and, if it's really consistent, it could be an indication that the company is consistently doing something that its customers place a high value on.

The next one is the balance sheet. There are two kinds of good balance sheets. One is where a company has more cash than debt. Who wouldn’t like that, right? Imagine having more cash on hand than your mortgage ad credit cards and everything you own. That'd be a great feeling, wouldn’t it? And the other type is a company that has more debt than cash, but it makes so much money that it's just pounding out money year after year after year, so it has no problem paying its debts whatsoever and covers the interest payments many times over.

Next is what I call shareholder rewards, dividends, and share repurchases. It's not necessary that you pay a dividend, but it can be nice. And it tends to be a pretty good clue. If a company raised its dividend every year for decades, it tends to be a clue that it's a really good business. Or if the dividend growth has been really good in the past few years and you have suspicion to suspect that it will be good for several more years, that can be a good hint too.

As far as share repurchases go, most companies screw the pooch and just make this – they make a disaster of it. They buy overwhelmingly more shares when they're super expensive and few or none when the stock is cheap and should be scooped up with abandon. So, you've got to do your research and find out if a company is a really good share repurchaser.

But I have noticed that a really great business can be a mediocre or even lousy share repurchaser, and they'll just kind of grow out of that mistake over time. Finally, return on equity or some other metric that tells you about the type of returns the business itself achieves on the investments it makes in its own business. Return on invested capital is one, return on equity is one, return on assets is another one.

And it depends on what industry you're in as to which one might work better, and it depends on what kind of balance sheet they have as to which one might work better. And in the – in some industries, you want to not even worry about them and look at other things. But generally speaking, that category for me is return on equity. If return on equity like – how do I say it? Yeah. If a business were a bank account, return on equity is like the yield you would get on all the money you left in it.

And of course, a business with a 30 or 40% return on equity is usually going to trade at a high multiple, so it'll take time for that effect to accumulate, but it will accumulate the longer you hold it and it'll be a wonderful thing. So those are the five that I look at. And of course, whether or not a stock is cheap enough is a totally separate proposition.

And in my newsletter, Extreme Value, my partner there – Mike Barrett – is the keeper of our price-implied-expectations model, which is basically a discounted cash flow model that kind of flips the script and, instead of trying to guess at the numbers that we plug in in the future to guess at the current intrinsic value, we take the current stock price and plug in whatever number is equal to the current stock price so we can gauge what expectations are baked into the stock price. Wow. So that's it, Tom S [laughs]. That's my answer to your question.

"Is there one place online or a book that would help?" Well, you should read Extreme Value for doggone sure [laughs] That's a place online at stansberryresearch.com, or www.danupdate.com is a great place to start learning about that. And you could read the Berkshire Hathaway annual reports. I would definitely read a book called The Little Book That Beats the Market by Joel Greenblatt. Actually, just read that. Read the Warren Buffett annual reports – yes, all of them – and read The Little Book That Beats the Market. I think he did a new version that's called The Little Book That Still Beats the Market.

And learn – start there and then you'll get your own ideas of where to proceed. Finally this week for the mailbag, I do want to acknowledge Sonny who called in and left us a nice message. And he was just confirming what I had said previously, but he also gave me the name of this thing called the Flexner Report, which is the report that John D. Rockefeller funded which was then used to discredit all of the sort of home remedies and home therapies that people had been used to using.

And the goal, of course, was to discredit them and use petroleum products – petrochemical products – and work with the pharmaceutical industry to make a lot of money, selling drugs and to make people believe that their health depended on taking drugs. So, Sonny, thanks for mentioning the Flexner Report and thanks for calling in. One more thing this week.

One more thing. Starting next week, the Stansberry Investor Hour is going to be available starting on Monday each week. So it'll be a way to start off your week. Look for us in your e-mail, in your inbox, on Mondays. And if you haven't signed up to get that e-mail, go to www.investorhour.com and enter your e-mail, and we'll e-mail you every Monday starting next week when a new episode comes out. OK? Stansberry Investor Hour on Mondays. Be there or be square. All right?

Well, that's another mailbag and that's another episode of the Stansberry Investor Hour. Hope you enjoyed it as much as I did. We provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, scroll all the way down, click on the word "transcript" and enjoy. If you liked this episode and know anybody else who might enjoy listening to it, tell them to check it out on their podcast app or at investorhour.com. And do me a favor. Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts.

And while you're there, help us grow with a rate and a review. Follow us on Facebook and Instagram. Our handle is @InvestorHour. On Twitter, our handle is @Investor_Hour. Have a guest you want me to interview? Drop me a note: [email protected] or give me a call. Our listener feedback line is 800-381-2357. Tell us 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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