On the opening rant this week, Dan gives the listeners something special that he typically only reserves for his newsletters subscribers.
Dan reveals the full details on a trade that he’s liked off and on for many years now…
Not only that, but he walks you through the trade step by step…
And he explains why there’s never been a better time in history to put this trade into action…
Then, on this week’s interview, Dan invites Danton Goei of Davis Advisors onto the show. Danton joined Davis Advisors in 1998, and now works as portfolio manager for the Davis Large Cap, Global, and International portfolios.
During his conversation with Dan, Danton takes the listeners behind the curtain, explaining many of the ins and outs of portfolio management that he’s learned over decades experience managing multiple funds…
Plus, during their conversation Danton shares the names of two stocks that he absolutely loves right now.
One is a fairly popular name that has been shunned in the media as of late… but the other pick is one you’ve likely never heard before with massive upside…
If you’re looking to personally mange your own investment portfolio, Dan and Danton cover a ton of valuable material you won’t hear anywhere else.
Listen to Dan’s conversation with Danton, and much more, on this week’s episode.
Danton G. Goei
portfolio manager for the Davis Large Cap, Global, and International Portfolios
Danton G. Goei is a portfolio manager for the Davis Select US Equity ETF, Select International ETF and Select Worldwide ETF. Mr. Goei joined Davis Advisors in 1998. He speaks multiple languages and has lived in Europe, Asia and currently resides in New York City.
1:40 – Dan shares the details on a trade he loves right now… He says this trade is “more attractive, right at this moment, than it has ever been in history…”
6:47 – “I think this is a dip in the long value trade, right now, as we speak in late June, early July of 2021… And so, I’m kind of calling it here, I think this is another opportunity to enter this trade…”
9:52 – This week’s quote comes from Louis H. Laney… “To forego a fair, normal, current return for the sake of hoped-for enhancement of principal is speculation, pure and simple. It is not investment, for it takes a chance at the future at the expense of safety in the present…”
14:09 – Our guest this week is Danton Goei. Danton joined Davis Advisors in 1998. He is a portfolio manager for the Davis Large Cap, Global, and International Portfolios, but helps on the research team for many of Davis’ portfolios. Danton has also previously worked at Bain & Company, Morgan Stanley Asia Ltd., and Citicorp.
18:00 – Danton talks about how speaking multiple languages helped him during his time at Wharton. “From a business and investment point of view… I think it’s opened a lot of doors professionally…”
23:56 – When it comes to investment philosophy, Danton says he tries to avoid a short-term mindset, “I take it as a big compliment that you think I’m a long-term investor.”
29:10 – Danton discusses the benefits of meeting with company management… “We usually don’t have better insights than management on the way to run their company, but we might provide insights on things like capital allocation, repurchasing shares vs paying out dividends, vs making acquisitions…”
35:41 – Danton talks about how his team of analysts create an investment summary, which is typically a 6-page document that decides whether an investment is worth pursuing…
41:10 – Dan asks Danton to describe what one of his high-conviction ideas would look like… “It’s a combination of their historical track record, have they been able to generate returns that would indicate a competitive advantage?”
43:26 – “Is there something there that is really hard to compete with? Whether it’s a market position, or a technology or a brand… That’s what we’re really looking for.”
50:37 – Danton keeps an open mind while Dan makes a pitch for gold miners, “Dan, just talking to you makes me want to take a glance at them. You know, I don’t want to be dogmatic about anything, really… You don’t want to be set in your ways. You want to be evolving and adapting…”
53:18 – Danton talks about specific stocks he’s excited about right now… “I think Alibaba looks interesting… The other company maybe I’ll bring up, is the Developing Bank of Singapore…”
59:25 – Danton leaves the listeners with one final thought as the interview closes… “It really is about taking advantage every day and learning. That is sort of the key to becoming a great investor. You have to improve over time, you have to be able to adapt…”
1:05:13 – On the mailbag this week, Dan reaches out to Eric Wade to help answer a listener question about stablecoins… Another listener asks about calculating the market cap of companies listed on multiple exchanges… And another listener asks Dan about getting Harris Kupperman back on the show. Dan answers these questions and more, in this week’s episode…
Announcer: Broadcasting from the Investor Hour Studios and all around the world, you're listening to the Stansberry Investor Hour. [Music plays] Tune in each Thursday on iTunes, Google Play, and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here's your host, Dan Ferris.
Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I’m your host, Dan Ferris. I’m also the editor of Extreme Value published by Stansberry Research. Today, we'll talk with Danton Goei. Danton is one of the top portfolio managers at Davis Advisors. This week in the mailbag, lots of feedback, including listener Dean who called in our special call-in line just to gush about the podcast and my Extreme Value newsletter. Also, questions about the short S&P 500 fund, ADR valuations, and a special feedback answer from Stansberry's own in-house crypto guru.
And remember, the mailbag is a conversation. So do what Dean did and talk to me. Call up and leave a message on our listener feedback line. 800-381-2357 and hear your voice on the show. In my opening rant this week, I'll talk about a trade that I've liked off and on for the last couple of years but is more attractive right now than it's ever been in history. That and more right on the Stansberry Investor Hour.
So what is this trade I'm talking about? This trade that I've liked off and on for the last couple of years, which is more attractive right at this moment than it has ever been in history. Well, it's the value-growth trade, right? If you take a look at value and growth indexes – and you can do this easily because they're ETFs, value, and growth ETFs. So you just look at... you can go on Yahoo and just find a couple of pairs of value and growth ETFs.
What I do is I look at the Russell 3000 Growth Index and the Russell 3000 Value Index. And I compare them. And you can see, over time, if you just go back about 20 years or so... and you can go back farther than that. But just even the last 20 years is enough, right? From 2002, of course, into the dot-com bubble it was all growth, growth, growth. That's all anybody wanted. They didn't want the home builders or the banks or the mining companies or any of that stuff. So growth crashed. Then value took over at the bottom in 2002 and did great.
And it did great up to the top of the financial bubble... the great financial crisis bubble, the housing bubble – whatever you want to call it – at the top in 2007. That all crashed, bottomed out in 2009, and actually, the value continued to perform well into like 2010 or so. But then, we all know what happened, right? Since about 2010, 2011, the growth indexes took over and just took off like a rocket ship – and really took off like a rocket ship started around 2015, 2016. And did really great. And then, even more ballistic out of the bottom of the COVID bear market in March of last year.
So that's just a quick history. It's a tick-tock effect through history. So growth takes over for a while. Then it crashes. Then value takes over. Then you get a crash. Then growth takes over again. Then you get a crash. Then value takes over. And since about October of last year, value has been doing really well. So recently, very recently, just the beginning of this month and the beginning of June, they crisscrossed again. And in the month of June, the growth index has been outperforming – the value index is down about 1.5% and growth is up about 6% since early June. But I found something.
You know, I quote our good friend Jason Goepfert over at SentimentTrader a lot. And recently, he just published a blog post – his free blog, sentimenttrader.com/blog – and he said the correlation between growth and value stocks has plunged to the lowest since 1928. So 1928 is not all of history but, hey, it's good enough, man. It's almost 100 years. So that's why I'm saying this trade is more attractive than it's ever been in history. OK? So ever in history back to 1928. You know, sue me if you think I'm being too over-the-top by saying ever in history.
So what's the trade, then? How do you play this thing? What is the trade that I like so much? Well, simply buying a value index is all I've personally done. And that's all probably the vast majority of anybody who wants to imitate this trade should ever do. You could be more aggressive. You could say, "OK. Well, I’m really going to go for it. I'm going to buy the value and short the growth component." Right? "So I'm going to buy the value ETF and short an equal dollar amount of the growth ETF" – or some amount. You know? You don't have to go equal dollar amount. You can go 50% of the amount that you're long or some amount less.
You can temper your risk that way. I'm not recommending either one. I'm just telling you that I've done it. I've actually been in a value ETF in my 401(k) for a couple of years now because I started to see the – this thing had little fits and starts. Like, the growth started to outperform value – or I’m sorry, value started to outperform growth, and then it went back. And then it started again, and then it went back. But it's been pretty consistent since October. And then, we just got this dip in the trade where growth is up, value is down in the past month. And I'm thinking, "OK." You know I’m looking at what my friend Jason is showing the world here.
And he's saying, "Hey, the correlation is like the lowest since 1928," meaning value more attractive relative to growth than any time since 1928. So, wow. And I think this is actually – people have been buying the dip. They've been buying the dip in growth, in FAANG stocks, for 10 years. So I think this is a dip in the long value trade right now, as we speak, in late June, early July of 2021. And so, I'm kind of calling it here. I think this is another opportunity to enter this trade. And who knows how long it goes on for? And it could be over. I could be wrong.
Look. That's what's happened every other time for the past two, three years here when I've said, "Hey, this is it. You know, this happens at the end of a long bull market," where these two indexes swap places. Whether it's before or after a crash doesn't even matter to me. Predicting crashes is like somebody else's business. That's not mine. I'm just identifying risk, and I'm identifying opportunity. And I think the opportunity is here for value stocks to outperform growth stocks over the next little while here… several years, several months, I don’t know.
But it's been several months already. So that's it. That's the trade I like. I'm personally just – I'm not shorting growth. Actually, I take it back. I do have... what I have is puts on the Nasdaq ETF. So that's sort of like a short growth component you could say. But really, I’m not doing it for that reason. To me, it's a totally separate trade. and it's really insurance. It's not even a big component for me. So technically speaking, though, I am doing that. But I'm also short like – in the same way, I have puts on S&P 500, Dow Jones, Russell 2000. Just the regular Russell 2000. And Nasdaq Composite. Just all in the big ETFs that cover those things.
And I'm ready for those puts to go to zero. I've talked about this before, right? I'm bearish. I feel like I need insurance. And, you know, every now and then I just think it's a good idea to own puts. And I've never done this before September of 2018 in my life. But September 2018 just scared the crap out of me. And for the first time ever in public, I said, "You know something? I think you should own some puts." And of course, that was – I couldn't have timed it better. It was a great moment. The market was down 20 by Christmas Eve.
And I did it one other time, and it was kind of wrong. And I'm doing it again and could be kind of wrong again. When I buy these things, it's insurance. It's a small position ready to go to zero. But that's a totally separate thing. This is different. This is simply a recognition that cycles happen, cycles matter and people get excited about growth stocks for a long time, and they leave value stocks – then they get excited about value stocks and they leave – you know, they switch places. It's a tick-tock of history. First, it's growth. Then it's value. Then it's growth. Then it's value. And I think we're in a value time again. All right. So I think it's time to buy the value ETF. Boom. Done. That's all I have to say about that.
Now, my quote of the week actually came sort of indirectly from a reader Al M. Al M., I love you, man. You write in all the time, and I always love your e-mails. Even if I don't talk about them in the mailbag. And thank you so much. Al M. is reading or has recently read Devil Take the Hindmost by Edward Chancellor – what I have called the best book on financial speculation ever written. I was reading the cover here, and the New York Times book read actually got it right. "Entertaining, useful, admirable scholarship. Chancellor seems to have read everything." And that encapsulates it very well.
So the quote is – it's sort of a quote within a quote. The author, Edward Chancellor, is quoting a fellow named Lewis Haney in the North American Review in August of 1929. And here's what Haney wrote. "To forego a fair, normal, current return for the sake of hoped-for enhancement of principle," wrote Lewis H. Haney in the North American Review, August 1929, "is speculation, pure and simple. It is not investment, for it takes a chance on the future at the expense and safety in the present."
It's the difference between speculation and investment, which I think becomes – the more speculative the market becomes, the more important it is to know the difference. I'll read it one more time. I won't read the quote as it is in the book. I'll just read the part that Haney said. "To forego a fair, normal, current return for the sake of hoped-for enhancement of principle is speculation, pure and simple. It is not investment, for it takes a chance on the future at the expense of safety in the present." End quote. Lewis H. Haney. North American Review, August 1929.
And what a well-timed quote it was because the market started cracking a month later or so. Really, really perfect quote for this moment. People are buying call options like crazy. Those volumes are hitting records. People are buying these meme stocks, which are absolutely insane speculations at these valuations. And it's just a time to really step back and, I would say, buy value, sell growth maybe – but at least buy value – and be careful and know the difference between speculation and investment. And let's talk to a real, honest-to-goodness investor now. this guy's not a speculator. He's a real investor.
And his name is Danton Goei from Davis Advisors. Let's talk to him right now.
[Music plays and stops]
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Our guest is Danton Goei. Dan Goei joined Davis Advisors in 1998. He's a portfolio manager for the Davis large-cap, global, and international portfolios, and a member of the research team for other portfolios. Mr. Goei received his BA from Georgetown University and his MBA from the Wharton School. He is previously employed at Bain & Company, Morgan Stanley, Asia Ltd., and Citicorp. Mr. Stanley speaks multiple languages and has lived in Europe, Asia, and currently resides in New York City. Danton, welcome to the show, sir.
Danton Goei: Dan, thanks so much for having me.
Dan Ferris: So we talked with Chris Davis on the program a while back. I mean, he... I have to ask you, just for sheer, starstruck-ness because I was really – I really had a great time talking with him. What's it like to work with one of the living legends of Wall Street?
Danton Goei: Oh, you know, that's one of the big reasons I came to Davis in the first place, was the opportunity to work with Chris. One of the things – well, he's experienced obviously. He's been doing this, I guess you could argue, sort of arguably since he learned how to talk. And given that he's a third-generation investor. But also very farsighted in that he set up the research group here on a global basis back in the 1990's. Which was a very rare thing to have every industry analyst be a global industry analyst. And then, like you heard on the call, he's just a terrific person to be around. Just a kind, thoughtful, smart... so love having him as a partner here. It makes every day a lot of fun.
Dan Ferris: Yeah. Yeah, you're right. He was just really kind of a great guy to talk to, period. You definitely would want to have a beer with Chris Davis. But I think I'd probably want to have one with you too because I'm fascinated – first of all – by anybody who speaks a lot of languages. What languages do you speak?
Danton Goei: Well, I speak English. I grew up in France. So I speak French. Went to high school there. You know, lived there basically from five to 18 years old and then came to the United States. I speak Mandarin as well and then some rudimentary Dutch. I'm actually a Dutch national as well as a U.S. national. And my mother is Dutch. So a little bit of Dutch. But really, English, French, and Mandarin.
Dan Ferris: I have actually met some people in my life who speak two, three, four, five languages, whatever. And I always ask them, "How has that been for you? What has it contributed to your life?" And much to my surprise, the reviews have been mixed. A couple of them said, "Well, not much." You know? And then, a couple of them said, "Oh, it's so different. It's such a different experience of the world." And I thought, "Well, maybe with those people there's as much in the telling as the actual speaking." The telling of the story. But what's your take on that?
Danton Goei: I love that question. I don't think anybody's ever asked me that before. And it's a good question. I mean, I think it's had a really big impact. I mean, a lot of it is not my doing. You know, just growing up abroad. You just learn the language. So not like you made a big effort there. Though Mandarin is something that I didn't grow up speaking, so I started learning it in college, and I have been learning it ever since. And even at Wharton, I did a dual-MBA masters in international studies with a Chinese focus at the Lauder Institute over there.
Again, have an opportunity to speak Mandarin. I love foreign languages. I love speaking French. I love speaking Mandarin. It's really sort of a joy. I sometimes think that if I was doing a totally different career, it would be something involved with linguistics or languages. So there is just an inherent love of finding different ways of saying things, of the access to the culture. I feel like it's really opened up a lot of opportunities. You know, friendships of course. You get to meet a lot of different people.
But then professionally, I really think – I look back at the decision when I went to Georgetown, and I went to school in the '80s. And everyone at that time was learning Japanese. If you were interested in business, you were learning Japanese back then. That was the big rage and for understandable reasons given the assessment of the Japanese companies back then. But I had this idea that long term, China would be a really big deal economically... even if in the '80s it wasn't.
So I think that was actually a big decision that, when I look back, opened a lot of doors. Because today, China is obviously one of the second-largest economy – probably soon to become the largest. And so, from a business and investment point-of-view... and it grows in importance every year. So I think it's opened a lot of doors professionally, personally, made a lot of friendships. And then just the joy of speaking lots of different languages. It's just a fun thing.
Dan Ferris: So good call on Chinese versus Japanese, [laughs] first of all. And thank you for the insight, second of all. So, Danton, I've done probably 150 of these interviews now. And I'm a slow learner, but eventually I catch on. And I've learned to ask this very simple question. If I just met you and didn't know – I had no idea that you worked for Davis or anything like that and I said, " what kind of an investor are you," what would your answer be to that?
Danton Goei: Yeah. I mean, I think it's sort of evolved over time like a lot of investors. You know, you start with sort of what you know. Which in the beginning are the numbers. And that's the contribution that you bring often as a junior analyst... is the facility with numbers, ability to break them down. And so, of course you leverage that. Over time, you become more aware that the management and just the quality of the business and then the trends that the business benefits from, or the headwinds that... play a huge deal. So it's not just the historical numbers which you started with. Which those are very important and give you an indication of the future.
But, you know, the future's going to depend on a lot of other things. So I'm really thinking about companies that are going to do great in five years' time, in 10 years' time. And so, it is a very different approach than thinking about what is going to do well sort of this year or next year based on the numbers that I'm looking at on a quarterly or recent annual basis. You know, increasingly we look at sort of 15 years of data, 20 years of data to get an idea.
And then, the last I would say decade has been this idea of like, "What is the world going to look like in five or 10 years? And how do we position ourselves in the portfolio?" Whether it's companies or geographies. A little bit like my thinking when I first went to Georgetown of, "China's small now. You can't really invest there. But down the line, you can see a lot of indications why it would be big." Same idea with these companies is that idea too, that you can see these trends.
And that takes just a lot of, I guess, experience and talking to a lot of different people around that idea of what the future might look like. So it's a combination of based on the numbers, we're very valuation sensitive… but also, "where is the world going?" So I don’t know. That's kind of vague, but it's really kind of both. It's the sort of growth aspect of what a company might look like in five years' time married with the kind of value aspect of what it is now and what could it be worth based on the earnings and cash that it generates. So it's really kind of the marriage of those two things.
Dan Ferris: So between issuing Japanese for Chinese a long time ago in 1980 and what you just told me, you're a long-term thinker... which is great because it's – to me, being a long-term thinker is like the low-hanging fruit in investment management. Because holding periods are so short. And in the newsletter that I write, we wind up with a holding period that averages somewhere around three years. But that's because we've gotten rid of ideas that didn't work out, and the ones that did work out – some of them... I think the oldest one is back to 2009. Do you wind up with a similar sort of dynamic in the funds that you manage?
Danton Goei: Yeah. It sounds very familiar. And I take it as a big compliment that you think that I am a long-term investor. Because that is how I try to think. I feel like a lot of the near-term is heavily discounted, and everyone's focused on it. And you're right. It seems like increasingly investment periods are shortening. You know, kind of reflective of the news cycle, which is also – that's what we've seen over the last sort of 10, 20 years. It keeps on shortening. So there's a sort of manic running really fast to stay in the same spot, focus on short-term results.
And so, we do think that our focus on long term is a real competitive advantage. And we know when we talk to management teams that they are really appreciative of the kind of conversations that we have. Because they're very different than most of the conversations we have with investors… just this focus on the long term, on the trends, on the long-term competitive pressures they're facing, where competition might come from, even if it's not present today in the next three to five years. Those are all the strategic things that they're wrestling on a long-term basis.
And so, we know that management teams really appreciate those conversations. And it creates a great, I want to say, connection with these teams over time. And the fact that we can maintain these relationships and keep on talking to them for decades over time is something that I like a lot about the job, too. You know, these long-term relationships we build up with management teams.
Dan Ferris: You've broached an interesting topic there because people tend to come out – this tends to be a binary thing, doesn’t it? You either say people... investors say, "Well, we never talk to management. We never talk to management. We're long term. We're value. We're" – whatever. "But we never talk to management." And then on the other side of it are folks like yourself that say, "We have great relationships that last for years."
And the other camp, they're always saying, "You know, we're afraid of them influencing us." I've never been afraid of that myself, and I've only... I tend to, in my position – since we're not allocating big amounts of money... I don't get access to the management of Costco, even if I recommend the stock, which we did recently. But I do get access to like smaller-cap companies. And I love those relationships, and I don't feel like it hampers me at all. I feel like it helps me. And it sounds like you're the same way.
Danton Goei: We're definitely in the same camp there. I mean, I totally understand the concern about being influenced, maybe even an extreme sort of hoodwinked by these very charismatic CEOs that became CEOs because of their charisma and ability to influence people around them. So you have to – but then you're giving up the... think of what you're giving up. You're giving up a lot of knowledge and insights, obviously. Right? These people are experienced, top of their fields.
And, you know, you want to also talk to not just the CEO of the companies you're interested in investing but of course their competitors and customers and suppliers and things like that. So you get a much deeper picture of the environment. Also since we know that close to 100% of the value of the investment are going to be the earnings generated in the future – right, not in the past – that you have, I think, a better idea of what that future might look like. And you just have to be experienced enough to sort of balance that with the risk of being influenced.
And just say, "OK. Of course, I'm taking everything with a grain of salt. I'm back-checking, fact-checking everything, reconfirming it with different sources. You know, you never want to of course just rely on one conversation with one person. So there's that aspect. But you are giving up way too much, I think, especially if you're a long-term investor, by avoiding talking to management. I mean, to be fair I think probably people maybe – when they give that argument say that they just read, maybe, what management says as opposed to converse with them, and maybe they feel like they can be less influenced that way.
But in a conversation, you can go much deeper on areas that you think are important. And it can be sort of a give-and-take. So yeah. I mean, there's the sort of personal enjoyment side of things that you brought up that you would love these relationships. But there's really also a lot of knowledge gained from investment point-of-view for long-term investors by these conversations and these relationships that you maintain over long periods of time.
Dan Ferris: Totally agree. And isn't it a – it's a great way if you pick a really great company in a particular industry, there's hardly a better way to get deeper insight into that industry than somebody who's been in it for a decade or more. It's just there's no substitute for that. This is a great thing. Yeah.
Danton Goei: And, you know, there's a real reward, too, when sometimes you can influence to the benefit of the company management teams. We often – we usually don't have, I would say, better insights than management on the way to run their company. But we might provide insights on things like capital allocation. Repurchasing shares versus paying out dividends versus making acquisitions or just sort of letting the cash pile on the balance sheet. That type of capital allocation – where to use the cash the company generated – I think we can actually provide a lot of insight.
And we have had a number of instances over time where we've been able to influence companies where it's generated, actually a lot, a lot, of value for the company over time. And so, those are really rewarding experiences when you end up as an investor adding to the value of your investment through your sort of experience and advice that you can provide there. So there's also the part where you can actually improve your investment by improving sort of capital allocation decisions.
Dan Ferris: Yeah. And it's a big ego stroke, too, isn't it? Like, the first time a CEO called me on the phone and said, "Hey, we're thinking about getting into X, Y, Z business" – what do you think about that? Does that sound like a good idea to you? I was blown away, first of all. Who cares what some newsletter writer thinks? And second of all, they're in that business and they're one of the best in the world at it. So yeah. That is – it's the most rewarding sense of interplay. You're learning and learning and learning, and then you got a little input too to offer.
So it's one of the great things about being in our position. So I'd like to talk about these portfolios because I'm always curious about how a fund company is – how things really sort of work… how the sausage is made, I guess. So you're the portfolio manager for Davis large-cap, global and international. Now, Danton, my friend, that sounds like you're way too busy to me. You must have a lot of people helping you do this. That sounds like a lot, a lot, of stuff to do. And first of all, how much AUM is that?
Danton Goei: We manage about $23, $24 billion of equities.
Dan Ferris: OK.
Danton Goei: So, you know, it's a fair – in the scheme of things, I would say just sort of medium-sized. I mean, there's obviously investment companies that are many, many multiples of our size. And then, there's a lot of smaller investment managers. So we're sort of-
Dan Ferris: A lot of smaller ones.
Danton Goei: Yeah. But, you know, you're right. It is a lot of responsibility. But there's a number of key factors that make it very, very manageable. One, like you said, we have a tremendous team of investment professionals, of analysts that are very experienced. I mean, in fact the core of our team here has been here probably like 16, 17 years on average just at Davis and then even longer, obviously, in the industry. So very experienced group of individuals that focus on their industry specialization. So they're really experts. They've been doing – researching their industries for well over a decade. So they provide a lot of insight. They provide a lot of the ideas. And so, it's a real kind of partnership and give-and-take with the team members. I definitely could not do it without them. I mean, the team is so important to what we do.
Dan Ferris: OK. So-
Danton Goei: Yeah.
Dan Ferris: I'm sorry to interrupt. So then, OK. You got this great team, and the ideas come from them. Walk me through, like, is there a typical – there has to be a typical procedure from like idea to, you know, X% allocation in the fund. What does that – what are the... What's the outline there? What are the main points along the way?
Danton Goei: Yeah. So the idea generation goes both ways. It'll be idea generated by the analyst, or it'll be ideas that the portfolio manager wants the team to kind of track down. Then a lot of the work, we'll do sort of together. The analyst will definitely do the upfront, difficult part about learning of the company, putting the historical numbers together, kind of breaking them down, trying to figure out exactly how the company makes money, where they've run into problems in the past. And then, we'll sit down and kind of go through it together. So it is often a sort of team effort.
And then, we'll go to management and start having conversations. And then, we'll sort of iterate there with – we might start talking with the investor relations person and then have a lot of our questions answered and then iterate, do more analysis, and talk to more people in the industry. And eventually, we'll go to the CEO, the CFO – you know, the top executive team – with our analysis and questions. And then, we'll sort of iterate off of that too... and we'll get a gauge, also, of our thoughts of the quality of the management, their ability to answer some of our more difficult questions.
A lot of it – in terms of whether we... and internally, what we do is we upfront have what we call a scoping note. So this is a two-page document that decides whether we want to do more work on something or not. And usually, the analyst... and the analyst will put that together, and we'll decide... the PM will decide sort of whether we should go ahead with that. And then once we kind of go ahead with it, we put a lot of resources, time... That's basically our more precious resource – is time.
So we'll put that in and spend time on it. And then, we'll eventually wrote an investment summary. This is a six-page document. They used to be – a long time ago – these sort of tomes, 20-plus, 30 pages. And of course, there is a lot of information. You can easily write a 30-page report on a given company. But it's not always that useful. In the vein of Amazon, what Bezos has done... really try to kind of streamline it to, "What is really essential in the decision?"
So we've streamlined that down to a six-page document that we'll keep on iterating that's not a static document. We'll keep on updating and changing it, to come across new information. Ultimately, the decision about whether to buy or sell is the PM's. And whether – how big it is, is really related to a couple of things. One is the risk-reward around it, right? Like, "How attractive is it, and how risky is it?" How attractive, of course, is based on sort of the opportunity and the price. Risky would be sort of the range of outcomes. And so, you would probably not want to put a name that you feel is especially risky as a large position, even if it has a decent amount of upside.
And then, the other – so that's sort of the risk-reward. The other thing that we look at is just our conviction level in our work. We have to be realistic. We don't know everything. We're making a lot of assumptions. Obviously, we're forecasting a lot. How confident are we in our knowledge, in our ability to forecast here? How – from an unbiased point of view – how knowledgeable are we? We're trying to be in general sort of top quartile, top decile of knowledge on any given company. Where would we rate ourselves in that?
And so, we want to invest a large position in companies where we would rate ourselves very highly on that and then maybe make a smaller position on one that hopefully over time will get there, where maybe today it's more a newer type of investment, newer type of company. And so, we're not as confident in our own analysis and ability to kind of forecast the future. So it's a mix of those things in terms of the waiting, but it's a very iterative priceless.
It's a very team-focused process and collaborative process that really works because we run a focused portfolio. Our portfolios are 30 to 40 names on average. And hold them for a long period of time. So if we had to make a new decision every week, make 50 decisions a year, then this format probably would not work. But if you only have to make a few decisions a year because you have low turnover in a concentrated portfolio, then it does work, right? Then you only have to kind of focus on a few kinds of what you'd identify as great companies.
And there are whole sectors where we're not really spending a lot of time on. We've kind of made a high-priority, upfront decision that long term, these sectors are low-return sectors. So we won't spend our resources or time on that, and we're going to focus on these few sectors and then identify the great companies and spend a lot of time on that and then be patient on the valuation. So a lot of it is just sort of doing a lot of research and then just sort of watching the company and waiting for our chance.
Dan Ferris: So I'm very glad that you brought up the topic of conviction. I think this is a topic near and dear to our listener's hearts. And when they hear the word "conviction," it kind of pricks their ears up because who wants your low conviction idea? Right? So what I'm most curious about, first of all, is when you get that two-page scoping document, is there something that kind of leaps off the page? You know, we hear Warren Buffett say that – that one company. I forget. I think Issachar, maybe?
Danton Goei: Yep.
Dan Ferris: They got a one-page fax, and he said, "It leaped off the page." And what I wonder is, What leaps off the page from the scoping document that says, "Yes. Proceed. Let's look further into this."
Danton Goei: So, the key thing that we're looking for is a company with a competitive advantage. Just this idea that capitalism is brutal, that a good return to track competition. So that's the kind of key thing that we're looking for… identifying whether a company really has competitive advantage or not. And that's what the scoping note is really focused on, is trying to identify from a different – lots of different point-of-views whether it has a competitive advantage. And so, if we can identify that and feel like it'll generate good returns for a long period of time, that's when we'll proceed with a lot more work on the company.
Dan Ferris: OK. And so then, if I go sort of to the other end of the process and you're ready and you really have high conviction, what does that look like? How do you get real – is there some general situation, or is there anything you can tell me? Put it that way. Is there anything you can tell me about what it looks like – what a company and an opportunity looks like when you have your highest conviction?
Danton Goei: You know, it's a combination of their historical track record – so how they've been able to generate the returns that would indicate competitive advantage. Above-average returns on invested capital is a big – would be a strong indicator. You know, above-average margins, strong growth. So those things would be obviously good indications. But then, it's really understanding the business itself. And how this company sort of has a competitive advantage. I mean, a good example I guess would be Google. You know, we missed it at the IPO. We were just sort of asking I think the wrong questions in 2004. But we watched it closely in the two or three years afterward. And we did a lot of work on the company.
And eventually in 2007 got the conviction that there was a real competitive advantage. So, yeah, there's lots of search engines out there. Yeah, we don't know anybody who clicks on these ads because we don’t. Which was part of our holdup, I think, in the initial IPO and just the idea that there's so many other competitors out there. But we could see the competitive advantage building there. This increased data that they were getting and this real value that they were creating for their advertisers. And then, the more and more advertisers we spoke to, we got a better, better idea of the returns that these ads were generating.
And that gave us a better indication that there's future pricing power there when these future keywords get auctioned. That kind of flywheel – eventually you get a lot of conviction that there's something real there that is going to be harder and harder over time to compete because it's sort of self-reinforcing. So that's sort of obvious I guess now in retrospect, now, in 2021. But less so probably in 2004, 2007. So it's that idea of, "Is there something there that is really hard to compete with?" Whether it's a market position or a technology or a brand. That's what we're really looking for.
Dan Ferris: Right. And that example, of course, of Google underscores another aspect. Which is what we around here like to call capital efficiency and just the ability to not spend a whole lot of money. They're not digging copper mines and building giga-factories to build automobiles or anything. [Laughs] They're writing software, and that doesn’t really take anything more than people sitting in the offices with computers and telephones. It's cool.
Danton Goei: Yeah. Absolutely. Capital efficiency – one of the metrics we think a lot of is, "How much investment is required to be able to sell one more dollar of the product?" And so, companies like a Google or like a See's Candies at Berkshire obviously have very high returns of invested capital where the marginal sale requires very little investment. And then, other companies – a lot of these companies we were talking about before – meaning the companies that we sort of avoid spending a lot of time on – are extremely capital-intensive. And that already kind of sets you up for a very difficult way to generate above-average returns.
There are just some businesses – whether it's their utilities or energy or airlines – that are just very, very, very difficult. Or like you were saying, copper mines, where you have to spend all that money upfront before you even make a dollar of revenue. And then, a lot of these companies are selling a commodity product where it's very difficult to differentiate yourself from your competitors. That's a whole host. And it doesn’t mean that those CEOs are necessarily worse than the CEOs of the Googles of the world. It's just that they have a really, really hard-to-handle play. And so, we're looking for easy things to play.
Dan Ferris: So where do you come down on an industry like railroads? Because railroads were very interesting. They were difficult. There were a gazillion of them for a long time, and then they consolidated and they actually woke up one day and started getting some discipline about how to deploy capital and how not to shoot themselves in the foot and stuff. And it became far more interesting, and they performed pretty well. And there was a window there to buy them when you could make several times your money.
Danton Goei: That's a great – that's a great example. You brought up a great example in the sense that that is one area where our approach maybe can miss things. Because like you said, I mean, for decades the railroads were poor investments. But then, something changed. And so, it was really mostly around the consolidation like you mentioned, some regulatory things. Maybe the price of oil for – made it more attractive on a competitive basis versus trucking. So that is something that actually was a learning moment for us.
So the other thing that – you know, we talked about working with Chris Davis. I mean, Chris is great at creating an environment that is a learning environment. So we're always trying to get better. I mean, we're all getting older. We're getting more experienced. But you want to really learn along the way, make sure that you kind of maximize the opportunity to learn along the way. And so, that was a great learning opportunity. Because we really kind of more or less missed the – we did some work on them.
But we didn't realize the kind of change that was happening. And so, that result for us is implementing an additional way to generate ideas in addition to our base way. It's becoming experts in our fields, understanding where value is created in the same way that the great management teams are where the real competitive advantage is within an industry are, understand that you're looking at the aerospace industry, you kind of decide, "OK. These areas are less interesting. We want to be invested in the jet engine space. We feel like that is one that's where they have a real competitive advantage and is a good business."
Well, that's the main way we look at and generate ideas. But we also started now running some rudimentary screens on all the companies – the publicly traded companies out there, to make sure that we're not missing some good investments. So it'll generate, at least, a lot of U.S. airlines or things like that that might not be, over time, a great investment because they can be quite risky. But then, it'll also surface things like the railroads where you say, "Oh. I didn't realize that things were actually, over the last two or three things, improving. Whereas the last 30 years have been terrible."
So we've also implemented that where, on a quarterly basis now, we'll look at some very simple sort of low P/E, high ROIC – you know, high-return-invested-capital-type of companies and other kinds of metrics like that to avoid us that get blindsided by these areas that we maybe are not focused as much just because historically they've been bad investments. But things might change. Especially, I think like you mentioned, industry consolidation is something that can really change.
A good example might be maybe like telecom. Telecom has been a tough area. It's a high-capital-intensity business, very sort of regulated. Kind of a commodity today. What carrier you have of course matters. But it's not that huge of a deal. If someone gives you a much better price, you're going to possibly move. That is an industry that maybe could change if there are one or two consolidations and mergers that happen. That could change things. So those are the kinds of things that we're on the lookout for with this additional sourcing process that we have on a quarterly basis.
Dan Ferris: Right. And similar examples for me, just over the past few years, I think airlines went through a period of that. And I think they got some more discipline about arranging their offerings and pricing and things. And lately, gold mining. They generated zero free cash flow for over something like a 20-plus-year period. It was a total dud. But then lately, they've decided to – they really got wiped out in that last gold bear market. And they appear as a group to have gotten some discipline as well. But I'm guessing you would never – you wouldn’t touch them with a 10-foot pole. Am I right? I haven't peeked at the portfolios.
Danton Goei: Dan, just talking to you actually kind of makes me want to just take a glance at them. I don't want to be dogmatic about anything, really. That's one thing you learn over time, is that you don't want to be set in your ways. You want to be evolving and adapting. And what you thought was true might no longer be true. So you have to keep on testing your hypotheses. So just talking to you right now makes me want to just spend a little time and look at them and see what has changed.
I mean, I think we have a difficulty with high-capital-intensity commodity producers and gold in particular or this idea that the end product is of uncertain value. I mean, you know, people might say that it's cheap at $1,500, or it's expensive at $2,000 an ounce. I mean, it's hard to say, right? This is not an asset that's generating really any income. So it's hard to say what it really is worth. So I think you're right. I might have some difficulty there. But I want to be looking at anything. And I'm particularly interested in when things have changed.
So like you said. If there has been real capital discipline and maybe consolidation, then that could be interesting. Now, sort of understanding what gold is worth is probably a big part of the equation there. And so, that might be too difficult, really, to kind of figure out with a lot of conviction. But yeah. I mean, I want to look at anything. I'm always interested in people sort of starting a conversation like "did you know" or "I didn't realize that" – I'm always interested in kind of hearing what people say.
Dan Ferris: Good answer. I'm glad to hear that you're sort of proactively not wanting to be dogmatic. That's a good quality for an investment manager to have. So we've been talking for a while. I do have – I'll have my final question for you soon that I ask every guest on the show. But before I do that, I know my listener right now is going, "Come on, Dan. Ask him the question we all want to hear" – is there a company right now that you have a lot of conviction about that you may have recently added to the portfolio as a new name or that you're kind of doubling down and increasing the position or something like that right now?
Danton Goei: Yeah. I mean, I think that there's a number of names. You know, last year probably was the financials, the banks. This year, it continues to be them. I mean, we still think they're very cheap. They've had a good sort of five months here into the year. But I would say a lot of the banks – whether they're U.S. banks or international banks – continue to look interesting. If we're looking at a particular company... I mean, maybe I'll talk about a couple. I think sort of Alibaba looks really interesting here. I know it's had a lot of sort of negative headlines out there. They just came through a Chinese anti-trust review, and a lot of the Chinese companies in general are under pressure because of decreased government scrutiny from a regulatory basis.
But Alibaba's come through theirs, and they got fined. They had to pay a $2.8 billion dollar fine. Now, that is a big amount of money, but it's also only 4% of the cash on their balance sheet. So it's not [laughs] a meaningful number in the context of the company. And it's also clear that the government there doesn't want to sort of knee-cap Alibaba, that they understand that this sort of national champion in sort of e-commerce, cloud computing, quantum computing is going to be important for the country's future.
So, I think that even though they've had to pay the fine for some of their more aggressive practices – especially the one where acquiring some suppliers to be exclusive to them – that it's also clear that the government wants them to succeed over time. And these other large tech companies to succeed over time if China's going to sort of be a strong economy, tech-forward economy in the 21st century, if they want to achieve technological independence.
And so, this big picture, geopolitical concerns are providing a huge opportunity, I believe. Right now, we think that the e-commerce business – which is growing 20%-plus – you're buying it for 15 times earnings. And you should be trading probably sort of twice that. So there's a big opportunity there. And then, other businesses like cloud computing also have a huge opportunity. So I like – on one spectrum – I guess Alibaba and just taking advantage of these big geopolitical concerns, these macro-concerns around the regulatory environment in China.
But every quarter, you look at the results, extremely strong results. And the economy there is still quite strong. The other company maybe I'll bring up is the Development Bank of Singapore. So this is a totally different industry, different area. But it also is a really attractive – we think financials today are the cheapest space in the market. This is a financial that is cheap but also one of the faster-growing parts of the world, Southeast Asia. So they're the leader in Singapore. I think this is in Southeast Asia and also India and Hong Kong as well. India is a very interesting space on a long-term basis, probably has a lot of opportunity too.
So they're in an above-average growth area at sort of below-average multiples, and they have really strong competitive advantages, having lower cost of funding versus their competitors… Because they just have a higher percentage of assets coming from low-cost checking and savings account, building a world-class wealth management business over there now and being part of AAA-rated Singapore. And increasingly, Singapore is seen as the financial center of Asia. Maybe overtaking the mantle – taking that mantle from Hong Kong. Because of the concerns of their independence, Singapore is increasingly seen as a financial and also a multinational headquarters area. So there's a lot of things to like there.
And the last thing I would just add there on Development Bank of Singapore is that the management team there – Piyush Gupta , the CEO – he's been there for over a decade, had a great track record of building shareholder value over that decade. In fact, he's sort of generated earnings-per-share growth of 10% a year for a decade already. And going forward, things look sort of equally bright there. So those are just a couple of ideas that are sort of different industries, kind of different areas but kind of highlights... When you look at a portfolio, we have some of these consumer and Internet companies in the U.S. or in China that we think are really attractive and then also a whole host of financials that we think are still very cheap.
Generating sort of 3% dividends but trading at low multiples of earnings, low multiples of book, but good growth prospects going forward, and very strong balance sheets, of course, because of the financial crisis. The regulatory requirements have been very strict. And so, they have been forced to build capital over time, making the companies very much more safe than they were before. So those are a couple of ideas.
Dan Ferris: All right, excellent. Thank you. OK, so here it is. The big final question. So if you could leave our listener today with a single thought – could be on any topic. Investing, life, whatever you like... If you could leave our listener with a single thought today, what would it be?
Danton Goei: Wow. Now I wished I talked to Chris before talking to you and getting a peek into these questions. But let me... you know, it really is about taking advantage every day in learning. That is, you know – I think that is sort of the key to becoming a great investor, is you have to improve over time. You have to be able to adapt. I think what happens sometimes is people do well with a certain approach that worked, say, for a decade. So that's quite a long time. But the world sort of changes around them and they don't adapt.
And so, you have stories of these great investors that sort of close shop. Often sometimes right when the market turns in their favor. And so, it's really about – like we talked about before, not to be dogmatic and just learning all the time and then really kind of forcing yourself to take advantage of every little opportunity to learn. So a lot of times I feel like our job is sometimes – I don’t know. Maybe like a university professor or something like that. You're just a research – and you're just trying to... now, I think a lot of the academic world often looks sort of backward. Here, we're sort of more real-time because we're trying to figure out the future.
But it's really trying to get more and more information. And so, we kind of think every day, "How can I find opportunities?" Or more like generate opportunities for me to learn. Whether it's traveling and meeting management teams, reading books in different fields that may sort of be tangential. I've been reading – for example – a lot of books I think about... these days, of course inflation is a big worry. So you read about historical periods of inflation or debt crises in the past. So it's really all about learning and giving yourself the opportunity to adapt and make better decisions.
Dan Ferris: So a previous guest of ours, a fellow named Whitney Tilson – who is a very bright, voracious reader – says, "Become a learning machine." Sounds like that's a decent summation of your final thought.
Danton Goei: Yeah. Absolutely. You know, and we're sort of all just riffing off of, I think, Warren and Charlie on this. There have just been great teachers about that... that need to be sort of a learning machine over time. And that's been a real inspiration for me early on, was the teachings and the writings of Warren and Charlie. And I've been very fortunate to have the opportunity to meet them over time. And that's something that they stress all the time, is the need to learn.
And it's incredible, right? That they're in their 90's now and still voracious readers, trying to learn all the time, adapting to the world. I think Warren's investment in Apple is really amazing and obviously a high-return investment as well. So yeah. I think going all the way back to Warren and Charlie sort of as the leaders of this value investing. And I think that's sort of one of their key lessons.
Dan Ferris: All right. Well, Danton, it's really been great to meet you virtually. We're not in the same room, but maybe we'll get a chance to shake hands one day. And it's been great talking with you.
Danton Goei: Have a beer.
Dan Ferris: Yeah. Exactly. You bet. Maybe I'll make my way to New York City and we can have beer.
Danton Goei: That'd be great.
Dan Ferris: But I feel like we're probably going to be inviting you back at some point, I'm thinking.
Danton Goei: I would love that.
Dan Ferris: All right. Good. Well, we'll talk to you again soon, hopefully.
Danton Goei: Great. Thanks for having me, Dan. Appreciate it.
Dan Ferris: Well, that was a great conversation. One of the cool things about this is, you get to sort of meet people virtually and introduce them – I get to meet them and introduce them to you and find out about them myself. And I think Dan's a great example of that because I thoroughly enjoyed that conversation. Didn't know what to expect. But he works for Chris Davis, so we know he's a really smart, experienced guy, right? That was great. That was cool. I hope you enjoyed it as much as I did. So let's take a look at the mailbag now. [Music plays and stops]
David Eifrig and I have worked together for more than a decade. And if there's anyone to listen to as it relates to retirement savings, this is your guy. He's seen plenty of people lose their hard-earned money too many times, including when the economy came crashing down on Black Monday in 1987 while he was working on the trading desk at Goldman Sachs. Doc Eifrig recently went on record sharing the warning signs of a powerful reckoning that's brewing in our country's financial markets right now.
And if you've made any money in the markets in the last year, five years, or 10 years even, the decisions you make in the coming days could be critical. So if you're worried about inflation, tax hikes, Social Security, your 401(k) or even a full-blown market crash, then you can't afford to miss Doc's presentation. Get all the details at www.messagefromdoc.com. Again, that's www.messagefromdoc.com. He'll reveal the truth about the grenade that's likely sitting on top of your retirement plans. Check it out now. [Music plays and stops]
In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your 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. Or you can call us at 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, we have a question from Mike W., which actually came in a couple weeks ago. But I shot Eric Wade, our in-house crypto guru at Stansberry, a quick e-mail. And I said, "Hey, can you answer this question?"
And here's the question from Mike W. He says, "Hi, Dan. Regular listener with a question about crypto. I keep some of my cryptocurrency at a private wallet" – that is, not on Coinbase. "When it comes time to sell, I don't want to cash out completely in dollars but would like to keep some profits in the crypto space. Accordingly, what is the best stablecoin to keep my money in? Tether, USD Coin, or something else as I wait for future investment opportunities? I'd really appreciate your insight. Thanks in advance and keep up the great work. Best, Mike W."
Mike, I don't own stablecoins. I only own bitcoin and Ethereum and that's it. But I shot Eric Wade an e-mail about this, and he said, "It depends on your definition of best. I like PAXG as a stablecoin because it's backed by gold, but the stability is that your value will fluctuate as gold does. I like DAI because it's pegged to a dollar, and every DAI is over-collateralized by Ethereum coins. I also like USDC because they've made a commitment to be licensed and follow U.S. regulations. I also like PAX for the same reason, although not many places accept it." That's what Eric Wade said. So there you go. Good question.
Next is Alex G. Alex G. says, "Hey, Dan. Love the podcast. Have recently been getting more into fundamental analysis. I have been looking at a stock that IPO-ed about a month ago. It has an $8 billion market cap in the U.S. but is also listed on the Canadian Stock Exchange with a market cap of $10 billion Canadian dollars. In the case of stocks that are dual-listed, do you just add both market caps and convert the foreign listing to USD and divide by revenue to get a real price-to-sales or what?" And he asked some more questions in that same vein. Alex, no. No. No. No. No. Absolutely not. Don't add the market caps together. What you do is just – you got to pick a currency to do your analysis in.
And what I would do is do it in both. Do the U.S. analysis, look at the revenues and the market cap – if you want to do price-to-sales or revenue-to-market cap, do them solely in U.S. dollars and see what that multiple is and do them solely in Canadian dollars and see what that multiple is. They should be pretty darn similar. They should be really close. But the numbers will be off by – the physical numbers, of course – as you point out – are about 20% different. But the ratios ought to be pretty darn close. But don’t add them together. That's not the thing to do. I'm glad you wrote in and asked. OK. Next is Gary M.
And he says very simply, "I'm a longtime listener to your podcast. Never miss a show. I was wondering what your thoughts were on the inverse S&P ETFs like SH to use as a hedge against a bear market fall in prices. Gary M." Gary, it's fine. But like all of this stuff, you have to tolerate losses on the way up. And if you really want to do it as a trade, your timing is everything. Really just put it that way. That becomes the bottom line. Your timing is everything. If you just went short this thing and kept it in your portfolio, let's just say, 2014 – whoa. You've gotten crushed. You don't want to do that.
So you want to be careful and pick your spots. And how you do that is up to you. But if you're not really good at trading, at maybe timing entries and learning how to cut your losses quickly or having some really good system for trading, eh, might not be your sort of thing. Good question, though. Chris J. is next. And, Chris, I'm just going to sum up your question. Your basic idea is, we need to get Harris Kupperman back on the show and talk about the Zimbabwe stock market versus where the U.S. stock market is right now, etc.
As soon as I saw this e-mail this morning, I shot Kuppy a message and I said, "Dude, you got to get back on the program." Because he was on the program before. It's been like over a year. He was here in January 2020. And we got to get him back on. I highly agree. And as far as your question about the Zimbabwe stock market – I'll read the question. OK? He said, "Kuppy had an interesting perspective that the U.S. stock market has no reason not to repeat the performance of the Zimbabwe stock market, a vertical performance. Especially given the excess printing of cash which isn't likely to end and that we are no longer tethered to gold or any other asset."
And you said more, Chris, but I'll just leave it there. Maybe. You won't catch me making a prediction either way. It's not crazy, though. And certainly a reason to be long and expect more crazy, speculative performance. That's not a hard argument to make. So, you know, I'm not a predictor. I'm a preparer. I don't predict. I prepare. I own a few put options as a preparation, just in case. And I'm willing to shoulder the expense, the risk that it's going to go to zero. Which is has already, really, one time on me. But it amounts to several tiny positions. So I hope that clears that up, Chris.
And, yes, we're going to get Kuppy back on the schedule and we're going to talk to him really soon. Good idea. Thank you. Next is Al M. And Al M. inspired this week's quote of the week, and I'll read you the e-mail he Sent that inspired it. Because it's good. "Dan. Just writing to show you I liked your last couple of Investor Hour rants, primarily because I'm so bearish and I've been reading Devil Take the Hindmost: A History of Financial Speculation. The various schemes described seem so similar to current events. Your rants seem right on the money to me. I suspect the bitcoin collapse is an indicator that the financial confidence is starting to fail.
Of course, it could be the setup for a big rally. However, to me it seems the complacency of even experts like Chaikin thinking, quote, "There is so much liquidity out there," end quote – it seems a bit long in the tooth. Reading Devil Take the Hindmost, the thought at the time of the collapse in 1929 was recorded at the time to have no cause for the collapse. Of course, Devil Take the Hindmost is just another set of opinions on the whole thing. However, even though I do believe in the relentless progress of man, certainly that has periods of lesser progress which seems to come after periods of extreme complacency. Always enjoy your ideas and perspective, and I suspect that's also why your results are so good. Great interview with Doc."
A recent interview with Stansberry's Doc Eifrig, is what he's referring to. "Al M." Al M., thank you so much. I really appreciate it, and I appreciate you wiring in all the time and being such a faithful listener and reader of ours. All right. We have one more this week. And it's not a question. It's just about a minute and 40 seconds or so of listener Dean who called in to say thank you and to tell everybody that he loves the podcast, and he loves our Extreme Value newsletter. So take it away, Dean.
Recorded Voice: Hi, Dan. My name is Dean. I'm an Alliance subscriber from many years ago when it was actually possible to afford an Alliance subscription. And it was probably the best investment I've ever made. I'm a religious listener to your podcast every week. And I really just want to say thank you for all of the incredible guests that you bring on to that show. They bring diverse perspectives and opinions, and there's always something that I gain out of it, whether it's an investment idea or whether it's something that's thought-provoking. A couple of examples – Annie Duke.... I've read her book, and it's made a difference in my life.
And as I mentor other people at work, it's going to make a difference in their life because I use those concepts. I read Richer, Wiser, Happier. What a fantastic book. I rank it No. 1 or No. 2 in all the books that I have, and I'm going to make my kids read it. And No. 3 here, you had P.D. Mangan on your show. That's been a life-changer for me. P.D. Mangan and his view of momentary muscular failure and how to stay fit.
I'm a middle-50's kind of guy, and it has made a difference for me because I dreaded the one-hour workout. P.D.'s idea of working out shorter but intense has made all the difference in the world for me. And I can do things that I've never done before after just a few months of really applying those concepts. And I'm going to continue to do it. And when I go on the next trip with my kids, they're going to look at me like, "Where did your dad bod go?" So it's awesome. You bring things every single week that I absolutely love. Thank you. And that's it. Just keep at it. Never stop. Thank you. Bye.
Dan Ferris: Wow. Thank you so much, Dean, for calling in to say that. It's touching and humbling, and I thank you so much. Well, that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We provide a transcript for every episode. Just go to www.investorhour.com, click on the episode you want, and scroll all the way down and click on the word transcript. If you liked this episode, send someone else a link to it so that we can continue to grow the podcast. Anybody you know who might also enjoy the show, just tell them to check it out on their podcast app or at investorhour.com.
Do me a favor. Subscribe to the show on iTunes, Google Play, or wherever you listen to podcasts. And while you're there, help us grow with a rate and a review. You can also follow us on Facebook and Instagram. Our handle is @InvestorHour. Also, follow us on Twitter where our handle is @Investor_Hour. If you have a guest you want me to interview, drop me a note at [email protected] or call the listener feedback line: 800-381-2357. Tell us what's on your mind and hear your voice on the show. Until next week. I'm Dan Ferris. Thanks for listening.
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