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

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Tune in each Thursday on iTunes for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here is your host, Dan Ferris.

Dan Ferris:                 Hello, and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm also the editor of Extreme Value, published by Stansberry Research. This week we will talk with Gregory Zuckerman, author of The Man who Solved the Markets, a recent book about Jim Simons and his firm Renaissance Technologies. Renaissance, simply put, has a better track record than everybody – better than Buffet, better than Soros, better than Druckenmiller, better than everybody.

And I recommend the book. I wasn't expecting to love it because I thought, who could possibly find out anything about renaissance and Jim Simons. Because the firm, I'm telling you they're one of the most secretive firms in the financial industry. We'll talk with Gregory and you read the book, and he found out all kinds of wonderful stuff.

Before we do that, I have a few thoughts to share, as usual. And gee, wouldn't it have been nice if somebody told you that this Coronavirus stuff was going to be worse than the stock market thought and that it was going to do a lot of economic damage and that the Fed was going to make a huge rate cut, maybe even before the next meeting? But what's that you say, dear listener? We here at Stansberry Investor Hour told you that? Gosh, it's a good thing we're here, isn't it?

Certainly from where I sit it's a good thing you're there too. I don't mean to sound gloaty. I'm obviously kind of just having a good time here, but as we all know by now, the Federal Reserve cut its benchmark, Fed Funds interest target to between 1% and 1.25% earlier this week. That's a 50 basis-point cut from the previous target of 1.75%. You identify it by the top of the range, from 1.75 down to 1.25.

It was the first time they made a rate cut between the scheduled policy meetings since the fall of 2008. Gosh, what was happening in the fall of 2008? Oh, I remember now. The world was coming to an end. It was the worst thing since the Great Depression, and they're doing that kind of thing now. The Fed Committee met by video conference. Monday night they slapped together a press conference, which the Wall Street Journal called hastily arranged on Tuesday, and they did a 50 bps cut. And the Fed chairman, Jerome Powell, the virus and measures taken to contain it will weigh on activity here and abroad for some time. Economic activity.

And it's not a surprise. Australia cut rates, Malaysia cut rates. You remember last week we said Malaysia put $4.6 billion into the stock market. The Wall Street Journal said finance ministers and central bank governors from the group of seven countries said they stand ready to cooperate. The Bank of Canada is expected to cut rates at their policy meeting, Wednesday they said. Group of seven is U.S., Japan, Canada, U.K., Italy, France and Germany.

It's kind of just like we said a few weeks ago, isn't it? Massive global economic damage, global central banks coordinating in their efforts to prevent a global recession. Of course you probably also noticed that the stock market didn't seem to like the emergency rate cut. On Tuesday, the S&P 500 closed down about 2.8%, pretty substantial move for one day on Tuesday. How about that? The chairman of the Federal Reserve freaks out, panics, cuts rate half a percent. It cuts the rates by half a percent and the stock market doesn't like it.

OK, it's like this. Let me tell you. Say you want to learn mountain climbing. You've never done it before. You hire a guy who has done it before. He's been there, done that got the T-shirt. Climbed every mountain, knows what to do, he's safe, great reputation. He's got your back. You're sure he's got your back. You're not worried about anything as long as this guy is on the mountain with you. Then you go up on a mountain with him. You're roped in. He's got your back. You trust him with your life.

You don't want to hear this guy saying [yells] freaking out, right? That would make you feel bad. Well, that's what's happening here. The Fed, everybody thinks the Fed has their back because in a crisis they'll do just what they did, which is cut 50 points. And they convene this quickie meeting and they all unanimously agree on this 50 basis-point cut, and they throw this press conference together and Jerome Powell tells the whole world about it. Gold goes straight up, bonds go straight up, stocks lose their breakfast and close down almost 3%.

So that guy everybody is roped into, that guy everybody hired to take care of them on the mountain, that guy who everybody thinks has their back, it kind of seems like maybe, at least on Tuesday, the day of the announcement, maybe they don't think he has their back. And really they shouldn't. They should never have thought that to begin with. Low interest rates are not a substitute for economic activity that will not occur due to coronavirus or even just the preparations for coronavirus even if it never happens in a big way.

Even if you don't believe that coronavirus will spread a whole lot more and kill many thousands more people all of the world, it's too late economically. The damage is being done. So I understand what Jerome Powell is thinking. Because he's right. Millions of tourists for example will not go to Italy this year. I think they see around 60 million tourists a year and I hope they get at least half of that. I think that would probably be a better outcome than what might happen.

And so you take that and multiply it by China and all the Asian countries where the coronavirus is hitting a little harder at the moment, and wherever else it may have yet to hit. We don't know. We've done a pretty good job about saying hey, we don't know how this goes and our view is all about the economic damage and the implications for investors and what you ought to do about that. So I hope I haven't seemed like, and I hope I don't now seem like a raging lunatic who's telling you to buy gold and guns and groceries and head for the hills.

I'm not saying anything like that. I'm just saying, and I was saying the past few weeks when the market was a little higher. I don't think the stock market understands how bad this can get. And so far, that's turned out to be a pretty decent bet. I think so far we've gotten it right. A little pat on the back for myself. I think we've done OK. And I hope you bought Treasury bonds. We've been talking about that for a few weeks. They've done great. Of course we had Mr. Raoul Pal on the program recently and he was talking about all this. He was buying Euro dollar futures. They've done pretty well too.

And I hope all the people who have been acting like this isn't an enormously huge deal will admit they were wrong. It is an enormously huge deal. It has big implications that could even get worse. We could see a recession. I don't know. I'm not predicting one, but it's quite possible. And for my Extreme Value readers, I'm titling the March issue, "How to Invest for a Crisis," Because I think this might only be the beginning and I don't think you have to invest for a crisis by selling everything and hiding out in your basement with a shotgun.

I think you just have to do common sense things. Do normal common-sense things that I tell my readers about. And we'll also tell them what kind of businesses we're looking at to buy if we really do get an event, like a big bear market, like a 2008 style thing. I'm pretty sure the way the future's market looks like right now, the Fed Fund futures, I think we're going to see another cut. I think we're going to see another 25 basis-point cut by April. And I'm saying that in early March, so that's coming up pretty soon. The actual Fed meeting is what, March 19 and 20? So maybe we'll see it then if we do at all, if I'm right about that at all. Or if what the Fed – it's really not even me. It's just if the Fed Fund Futures Market is right and has the situation read correctly maybe that's when we'll see it.

If this does continue to happen. We could be at some point you can't be – I can't be Pollyanna. At some point we could be looking at kind of – it could be looking pretty crashy. It could be looking like a market crash. It could be looking like 2008. Probably not in the extended manner, because that was an honest to goodness financial Armageddon type event. This is simply an event that is not about the poor quality of a bunch of businesses. It's about the connections between people in a globalized economy.

And what happens when a lot of them get sick and a lot of the other ones get afraid. It really is. It's not about financial poison having invested banks and other businesses. It's just about this thing that affects economic activity for some period of time. And at some point, possibly even right now people will go too far with their fear. They'll go too far in the stock market, they'll go too far in their daily lives, that's just human nature. I can't say when that is and I'm going to stick to my same old same old, what I always do.

I always say, what? Prepare, don't predict. We don't have to predict anything. We just have to prepare for what may happen. But, you know, the 10-year Treasury yield went below 1% for the first time in history on Tuesday when the Fed cut rates. That's not exactly a sign of vigorous, healthy economic activity. It could be pointing towards a more extended event like a recession. And you know a recession can last three months right, one quarter. So a recession doesn't have to be the Great Depression, right? It can be three months, boom, we're done and you better be buying good businesses the whole time because then the market rallies and off we go. And there was a major opportunity and you missed it or not.

And one thing I'm confident of though is that the Fed cannot stop a recession with rate cuts. That's one thing I'm confident of. It certainly – it's never happened that way. What's happened in recent history, what I would say meaningfully recent history, not a hundred years ago, is that the rate cuts kind of started right before the recession and continued and accompanied the recession. And maybe the cumulative effect would have helped get us back out of the session, but they don't prevent it. So this idea that the Fed is coming into the market and juicing it up with cheaper money, it's good as far as it goes but it cannot prevent economic destruction simply put. It can't prevent recession.

And overall, my view of the Fed is that they don't actually know what they're doing. They don't control things the way they think they are. These people want you to think at the Federal Reserve, they want you to think that they're a team of highly trained doctors, sort of using the finest surgical-grade steel tools, honed to fine tolerances and they're excising tumors from the global economy, but they're really just a bunch of imbeciles with hammers. And an imbecile with a hammer thinks every problem is a nail. Oh, everybody's going to get sick from coronavirus? Cut rates. That's the one tool, right? That's their big bazooka. That's it.

And on top of that, I had to laugh – I had to laugh at President Trump who tweeted – as soon as the Fed cut rates he tweeted out and he said essentially that it wasn't enough. We need more. And in the past he's made these comments. We have the best economy, that should mean the lowest rates. It's ridiculous. He doesn't seem to understand the relationship between vigorous economic activity where there's a demand for money and people who are lending it have to be compensated some decent interest rate. The relationship there is pretty sound I think. I think it's still intact. I don't think that's changed and he seems to think it's the other way around and I don't think it is.

This won't lead anywhere good. You can't just keep cutting rates and juicing the economy without undoing it later and have it lead anywhere good. That's how you create bubbles and problems. That's how you do get that financial disaster, which I think the coronavirus is not quite like. So we could be setting ourselves up for 2008 starting now because the Fed is cutting and they could continue doing so, and then last fall – not last fall, fall of 2018 with the market down 20%, the Fed was trying to back out of previous cuts by raising interest rates and they couldn't quite pull it off. So there could be problems here. You need to prepare. You need to know how you're going to act and what you're going to do with your money that's going to prepare you for this and help you not lose your lunch if something really bad does happen in the market.

And I'll tell you something, too. I'm in Florida right now. We're having our annual meeting that we have amongst all the editors in Stansberry, and we are talking about what's – part of the discussion is what's on our customer's mind. And what's on the minds of those people who we would like to become our customers, our readers, our listeners. And the one thing the marketing folks are saying that – the one thing they were saying this week, even after what's happened in the market the last couple weeks here, they were saying that bullish messages are reaching people much better than bearish ones, which kind of surprised me a little bit.

Because bullish messages usually reach people when stocks are going up and everyone's happy. But when people are panicking and selling and the market is, you know, I think it eventually got down to 15% below the all-time high, they don't usually respond to the bullish marketing message. So I think there's still optimism in the market and people still don't quite appreciate how bad this coronavirus situation could get in terms of the economic damage.

A couple days ago – sometime this week on Twitter, Chris Cole from Artemis Capital, who we've had on the show before, he says, "A generation of investors believes that central banks are omnipotent and that preemptive strikes on financial stress are the solution to every crisis. Today that world view is being tested. It could represent a profound shift in the collective consciousness and a new regime." And I have to agree with that. It could. We could be just as easy as people can be confident that the Fed has their back, they can go through some terrible time and then believe the other end of it, which is the world is coming to an end, the Fed can't do anything. People change. These perceptions change in response to how the market performs.

And a lot of people today think it's normal to just keep making 10, 15, 20% a year for five, 10, 11 years in a row without a break, and they think it's perfectly normal. And they think it's normal to rely on the Federal Reserve to have their backs in the manner we've discussed and support asset prices with quantitative easing, repo activity, all the stuff you read about in the Wall Street Journal, and outright money-printing if that's what somebody thinks is needed. So the cutting of interest rates has the potential to create real pain for many investors.

It can bankrupt retirement systems. Many of those systems are underfunded. They operate on the assumption that they'll generate 7% returns annually forever on retirees' assets, and I think that's probably a bad assumption near the top of an enormous overvalued bull market where the Fed's trying to juice the system and it's kind of seems like it might not quite be working. And there will be a lot of pain for banks, especially smaller ones who are not too big to fail and they'll get less for the loans they make. I just checked with FRED, the Financial Reserve Economic Data, and indeed for as long as they've been keeping that data, the most recent reading on the average 30-year mortgage was the lowest it's ever been. And I think the data goes back to 1971. It was something like – it was either 3.24 or 3.24%. The number doesn't matter. The fact that it's the lowest ever matters.

But, you know, it's funny because you still have to have confidence about your job and your own situation before you sign on the line which is dotted no matter how low the rate is. So it's not all a no-brainer. It's not all just the Fed fixes it and everything's fine and you've got to be careful and I'm going to talk to my readers about all of this stuff in Extreme Value this month, and I hope that you've gained some insight and some useful stuff and I hope you made some money by buying bonds and Euro dollars over the past couple weeks, because that was sure the thing to do. If you're a trader and you like these short-term bets, man that one has worked gangbusters. I may have made a little bit off of it myself. With that, let's talk with Mr. Gregory Zuckerman now. This should be really good. Really looking forward to it.

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OK, it's time for our interview. Today's guest is Gregory Zuckerman. Gregory Zuckerman is the author of the critically acclaimed books, The Greatest Trade Ever and The Frackers, and is a special writer at the Wall Street Journal. At the Journal, Zuckerman writes about financial firms, personalities and trades, as well as hedge funds and other investing and business topics. He's a three-time – count them – three-time winner of the Gerald Loeb Award, the highest honor in business journalism. Zuckerman appears regularly on CNBC, Fox Business, and other networks and radio stations around the globe. Gregory Zuckerman, welcome to the program, sir.

Gregory Zuckerman:  Great to be here.

Dan Ferris:                 So before we get into talking about this fantastic book of yours that I just read, The Man who Solved the Market, I want to talk about what got you started in this dual kind of career path of being in journalism and covering finance. How did you get into journalism and how did you get into finance, and was it basically the same thing and how young were you when you first developed an interest in finance and/or journalism?

Gregory Zuckerman:  So I'm a little bit unusual in the world of journalism, especially in the world of financial journalism in that I stumbled into it. I didn't grow up thinking I'd be a writer. I always thought I'd go work on Wall Street. I read all the books, I had my – I remember paying my counselor at sleepaway camp to bring me barons from his days off. I would trade from a pay phone at camp and I read all the books and was going to go work on Wall Street. Then I graduated college and I did well. I went to a good liberal arts school and did well, and I couldn't get a job. I couldn't get an interview on Wall Street. I didn't really know anyone. I had spent summers working in camps. I figured hey, I got a pretty good GPA, get a job and it didn't work out that way. It was a bad time at Wall Street at that time and they aren't going to hire someone who wasn't somebody with no background.

So I kicked around, I put some banking conferences together and I got fired a couple times. I started a bunch of businesses – some of them which worked, some didn't, but I didn't really have a career in the making. And then I saw an ad in the newspaper to be a financial reporter. It was for a trade publication and then I went in there and they gave me a leak document, a pretend leak document. They said go write about it and I didn't have any clips to show them. I didn't work on my high school paper or college paper and like that. It hadn't crossed my mind to be a journalist.

And then I'm taking this test and I'm like, "Wait, this is a lot of fun. I get to write about Wall Street. I love Wall Street. I always liked reading about it and investing, etc. etc., and I get to write about it. How cool is this?" This is what I should be doing. So I sort of stumbled into it and I went from there from that little newsletter to the New York Post for a little bit and then I've been at the Wall Street Journal for 23 years. So I'm unlike most colleagues, most people in my business always wanted to be writers and financial reporting is sort of the job they found or found them. I think one thing that distinguishes me with them is that I actually love finance, so that's helped me in my career.

Dan Ferris:                 That's a good story. Tell me, Greg, what is a special writer? Does that mean you get to do whatever you want? It sounds kind of cool.

Gregory Zuckerman:  Special writer means they've run out of money to give you raises so they give you a fancy title instead. And it doesn't really mean that much. It means I'm a reporter. I mean I am an investigative reporter now, so I don't cover a beat. I look for good stories but I'm a reporter. It doesn't mean that much difference. I've been here a while so I guess a special writer. But I do roam a little bit more than my colleagues.

Dan Ferris:                 OK, that's what I sort of would have guessed is that you kind of get to roam around a little bit. So I got nothing else. I've got to jump into talking about this book of yours. It's called, The Man who Solved the Market: How Jim Simons Launched the Quant Revolution. A lot of the times with folks who have written books, like I'll read as much as I can deal with or something and then we'll talk about whatever I can get from that. But I read every word of yours cover-to-cover, couldn't put it down. It was a good story.

And as we talked, before we started recording, I'm just shocked that you went through with it and took on the task of finding out what was going on inside of Renaissance. Was that a hard decision to make?

Gregory Zuckerman:  Yeah, so I spent a considerable amount of time trying to decide if I should be doing this thing and whether I could pull it off. I had a deal with my publisher – I had an advance, a book advance and we writers could use the extra cash, but I didn't cash my check because I knew if I cashed it I'd spend it. If I spent it I won't be able to give it back. And if I give it back – and I knew I wasn't sure I would be able to pull this off and complete the book. So I wanted the ability to give the money back to my publisher. So yeah, for a long time, like six months I didn't cash the check.

Finally somebody from the accounting department from Penguin Random House got in touch and they were like, "There's a discrepancy here. Why haven't you cashed the check?" Eventually I got comfortable enough that I thought I had a decent shot of writing this. But yeah, I was never sure because they're the most secretive firm on Wall Street. They had no interest in helping me. And even if I had got – early on I got some people who used to work at the firm. I got them to talk, which was great and the color was amazing and the characters were fascinating and I got really excited about the book.

But even then, I was like, "Yeah, I'm going to do this thing." I'm pretty sure I can write about the early part, the early years and that's maybe the first third of the book. But I'm still scared to death that Simons won't talk to me and people inside the firm right now won't talk to me and I need to get to them. So I thought I'd give it a shot and plead and beg and get people to talk through any means possible, and that's kind of what happened. But yeah, if you ask my wife, I kept her up nights wondering if I could get this thing done.

Dan Ferris:                 Yeah, yeah. I would have guessed that. It's a huge, huge topic. But you did talk to Simons, didn't you? You had a substantial interview with him.

Gregory Zuckerman:  Yeah, I did. I spent about 10 hours with him in his office over a number of days, but I also have had e-mail communication with him. He's been very helpful. I need to make clear he didn't talk about secrets of the firm. He wouldn't talk about a lot of aspects of the firm. It was mostly conversations about his early history, which is fascinating in and of itself. His period breaking code for the government against the Russians in the Cold War earlier, his math advances and breakthroughs in early part of his life and his more recent years, which are also equally interesting. So he was very clear about what he would talk about and what he wouldn't. But thankfully I was able to talk to Jim for a considerable amount of time.

Dan Ferris:                 I mean I feel like I just want to ask you, you know, there had to be a feeling of star power when you walk into the room with Jim Simons. It had to be really a special moment, no?

Gregory Zuckerman:  I'd met him once earlier. I wrote a story about him for the Wall Street Journal. It's funny, with all these people I've been lucky enough to meet all kinds of superstars in different walks of life. Sports as well – Steph Curry, I wrote a book with my two sons and got to meet – two books with them. I met all kinds of sports stars. When you finally meet them they're like anybody else. To someone they said having Jim Simons is brilliant. Obviously he's got all kinds of interesting, fascinating stories and experiences, but, you know, he puts his pants on one leg after the other just like anybody else.

And I'm there for a job. I'm there to grill him and get information from him and often there's information that he doesn't share. So it's businesslike in that regard. So yeah, for the moment I'm like geez, I can't imagine how many people would like to trade positions with me right now and ask questions. But then I realize I've got a limited amount of time. Usually it was like, I don't know, an hour – hour and a half with him and I've got to fit in – I've got so many questions to ask him for this hour and a half. You better get going. You better focus, Greg. So yeah, for a moment I'm being thrown and then you get back into it.

Dan Ferris:                 Was there a moment in the research when you were like, "OK, this book can go forward. I can actually do this." And if so, what happened to tell you that?

Gregory Zuckerman:  Yeah, it was when I got a source within the firm today, and eventually I got more than one. But when I got somebody in – a lot of it, it felt like a leap of faith. Like I was jumping off a cliff. It's because I had that early period. So I knew the first third would be good, or at least I could write the first third of the book when they talk about the early history. But then I needed people – I knew I can't write this book until I have more than one person who's aware what's happened at the firm more recently. And then when I got that I was like, "Wow, I think I can actually write this book." But that was sort of deep into the process. So yeah, there were many months when I was unsure of myself.

Dan Ferris:                 So I want to talk about some of these characters. Obviously Simons is the main one. And I found it fascinating that a number of times throughout the book he was seen accurately it seems, that he was reluctant to let the machines do all the work because that's what Renaissance is known for. They program the machines and the machines do all the work, but he was telling folks never completely trust a computer model of the market. Never place too much trust in trading models was one of the things that he told one of the guys. And I was fascinated by that. The head guy who makes this revolution, this leap forward in money management by letting the machines do the work says don't trust the machines. I mean, it was funny to me.

Gregory Zuckerman:  Yeah. Frankly that was one of the most startling elements of the book. It wasn't just that, it was Simons and his colleagues in some ways weren't as dedicated to quantitative investing and turning the decisions over to the machines as I would have expected. It also was the case that I'd talked to some of these people who have left and have made millions and millions from developing the greatest quantitative trading system in history. And yet with their own money they will do some quantity investing with investors like that, but they'll also put money with like David Einhorn and some fundamental investors.

And I tell them the story in the book how the end of 2018, Jim Simons is on vacation with his wife, the market's crashing and he gets nervous like anybody else would. He picks up the phone and he calls the head of his family office and says shouldn't we be buying some protection here? Which I just found startling. I said that to Jim and he didn't really appreciate the irony of it but there is real irony that the pioneer in quantitative investing and turning decisions over to machines sometimes gets nervous like everybody else and sometimes isn't as sure of the models and certain that they should be deferring the decisions to them. And things have changed I have to say. Lately in the last decade or so from almost never overrides its models, but like you said for the first 12 years from 1978 to 1990 he went back and forth in what's the best approach to trading. So I thought that was fascinating.

Dan Ferris:                 Yeah, and during that period it was interesting. You published the results of the firm and it seemed like even in the '90s they were putting up incredible results, like just making incredible money. And yet the narrative in the book is this thing's not doing so great. It's like I looked at the results and I looked at the story you were telling and I was like, "These people seem like they're worried about something falling apart or they're worried about it not being good enough and it's crushing everything." I was a little surprised by that.

Gregory Zuckerman:  Yeah. Well, part of that is because until around 2000 they weren't that big. So it's one thing to crush the market at let's say 800 million AUM, which is impressive but it's not the same as when you're managing billions, and only till around 2000 – only till 1996 – 1996 they turned the corner on equities and until then it was just so big they can get. When you're only managing money and futures and commodities and such you really can't manage that much money. And in 1996 they figured out equities but they only really dedicated cash, real serious significant cash around 2000.

That was a remarkable year for them and the market collapsed and they were up like 100%. So yeah, they themselves weren't sure they would be a huge success until then, and then they always worried that the models aren't necessarily going to work. To them that's one thing that distinguishes them from LTCM, which sort of doubled down and put more money into its trades when they weren't working. Renaissance isn't like that, so like you said they weren't 100% sure that they had solved the market as it were until the early 2000s I would say.

Dan Ferris:                 Yeah, there's some other interesting characters in the book. James Axe is one that kind of grabbed my attention. He's kind of a tragic guy. He lost touch with his kids for many years and actually he passed away some years ago, and he struck me – and he was so angry. That was the other part of him. Here was this angry guy, who was obviously brilliant, and he's angry as hell, he makes a ton of money, he goes through this painful split up and winds up not seeing his kids for years and then dies kind of young. And Simons also lost two sons in tragic accidents. It's like you'd never trade places with these people no matter how smart or rich they are. They're human beings and they went through horrible, horrible things during this book.

Gregory Zuckerman:  Yeah, that's exactly right. And you asked when did I get excited about the book, and when I realized that they were characters, true, fascinating, interesting characters and they're not just bland mathematicians, brainiacs, but they are human beings who have pain and deal with ups and downs and struggles and unsure of themselves. One of my fears writing the book was OK, they're up 66% a year since 1988. What are the crises, what's the tension, what are the obstacles? You need that as a writer and as a reader.

And then again, like you said when a guy like Jim, actually started hearing about their lives, the ups and downs, the difficulties and – Jim, yeah. He lost two sons tragically and suddenly. And he had other kind of health and other issues in his life. You can learn from that. Part of why I do this is selfishly as a human being, I like to interview and meet with and learn from really smart, successful people who have endured and dealt with challenges and I like to learn how they handle it in the ups and downs of life. So yeah, when I realized that there were characters, there were true full characters at this firm, that got me really excited about the project.

Dan Ferris:                 Yeah. I mean we could probably go through many more, but just one more is the odd couple – Mercer and Brown. Peter Brown and Bob Mercer, who were what? Were they co-presidents or something?

Gregory Zuckerman:  Co-CEO's, yeah.

Dan Ferris:                 Co-CEO's, yeah. And just the one guy says he doesn't even like to talk to people at all. Like Mercer doesn't like to talk to people at all and the other guy is like – and keeps seemingly regular hours at the office and then Brown is like he never leaves and he can't shut up. How those two got along, I guess opposites attract, huh?

Gregory Zuckerman:  Yeah, they're a fascinating pair. So yeah, until 1996 as I suggested earlier, Simons and his colleagues had a successful firm but they weren't winning any awards. They weren't tearing it up. And they could not figure out a way to make money – serious money in equities, trading equities. They were doing bond futures and commodities and currencies. And it took these two recruits from IBM to computer programmers to scientists, Robert Mercer and Peter Brown, to take their equity system and figure out a way to make money with it. And there were other characters, as you read in the book – David Magerman is a computer programmer who was basically the low man on the totem pole and no one really liked him and he messed up time and time again at the firm.

And he found a glitch, and it was sort of a fat finger, there was a number that wasn't updating and it underscores the point that you need good fortune as much as you need smart people. But Mercer and Brown are really the ones who developed their system. They originally kind of originated it at Morgan Stanley but it really wasn't working well. And yeah, there's a reason they became the co-CEO's because they are the ones mostly responsible for the huge breakthrough that took place in 1996 and to some extent they were off to the races.

People can read about it in the book, but it is pretty fascinating how – and how quirky they both are. Like you said, Robert Mercer rarely talks. He whistles all day long – show tunes and classical music and such, and he's just an odd guy. He gets on his colleague's nerves for a while and then obviously when it came to politics he really started causing a rift within the firm because he is I would argue the single most important reason why Donald Trump is in the office is Robert Mercer. So a bunch of repercussions that resulted from their huge successes and the billions that resulted.

Dan Ferris:                 Hey, refresh my memory, Greg. Was Magerman the guy who didn't even do any work for the first several days because he thought the firm might be a scam? I can't remember who that was.

Gregory Zuckerman:  No, that was Patterson. Yeah, there are a lot of – I forgot about that myself. A lot of unusual people. He didn't think it was a scam. He thought it might be a scam, yes. He was a suspicious guy and he saw the returns and like some other people on the outside, he's like, you know what? Something looks fishy here. How can they be doing so well and the returns be so steady? So he looked into it and he got pretty convinced that things were legit. But yeah, a bunch of interesting mathematicians and scientists, quirky, colorful, stubborn. You throw them all together in a mix and sometimes it doesn't work, but in this case it did.

Dan Ferris:                 OK, so let's talk about if I asked you, if I said OK, Greg, what did you really find out? You must have found out something about what they actually do inside that firm that makes so much money. What would be the big ideas or as specific as you like actually, not just big ideas, that you would name in that regard?

Gregory Zuckerman:  It's a lot of things. It's hard to just name a few. I'll give you some quickly. But the thing to remember – the key thing to remember I think is that they don't make predictions. People misunderstand what they do. They're not trying to figure out where your oil is going or Facebook shares. It's all about relationships. They go 5,000 stocks long, 5,000 short more or less, and they look for relationships between groups of equities. This group of stocks versus another group. This group of stocks versus a factor. This group of stocks versus an index. So they're market neutral in that regard which helps them a lot and there aren't that many people that do what they do.

There's a lot of quant trading today obviously, but people like AQR do it very differently. On a smart beta is very different. They're sort of medium frequency. They're not high frequency. They don't trade that frequent. They're not churning things over all the time. It's basically holding periods of, I don't know, they call it seconds to seasons or moments to months, but you can think of it as a couple days more or less the average holding period, which is very different. And why they're so good is a whole list of things in the book. But partly it's the talent. They hire a scientist and mathematicians that are responsible for breakthroughs in their specific areas.

Physicists, all kinds of areas of science. Astronomy, they often like astronomers. Not astrologist. If you're an astrologer you probably should not apply to Renaissance. But it's breakthrough scientists and they also manage them differently. I would argue that my book is as much a management book as it is an investing or trading book in that they have very, very unique ways to manage and to create incentives within the firm I write about and how people interact. There's no other firm like Renaissance in that there are 70 people or so in a room and people make presentations to these big teams and they all can see the code.

There's like 10 million lines of code in C+ and anybody can see it. Anyone can change it. Anyone can improve it. They can all work on projects whereas another firm, even well-established, well-respected firms on Wall Street, they all feature silos. In other words, thiefdom. Some manager did really well, his firm didn't do so well that year, so what they'll do is OK, they'll carve out a fund for that person.

Then those are there for other people too, and as a result you don't have groups – large, large groups of people like at Renaissance working together, working on the same projects, seeing what other people are working on and they can improve it. So they invest it in a different way in terms of looking for relationships. They hire differently and they create incentives internally. Their pay is based on one fund only. I can go on and on. There are all kinds of different things that they do better than everybody else.

Dan Ferris:                 Right. And there was one thing that Simons said explicitly. I don't know if he told you this in an interview, but I do remember the quote. I wrote it down. He said, "We're the best at estimating the cost of the trade." Does that refer to earlier in the story where he's talking about knowing the frictional cost, how much you can expect to make when you actually – by the time you actually get in versus when you actually get all the way out?

Gregory Zuckerman:  Yeah, it's a really important point because the sexy stuff is the trading – these signals as I call them. The researchers at the firm, people who can say OK, we should be buying XYZ and selling PDQ. But they don't see it that way. They see that as important, but just as important if not more important is how they trade and when they trade and they have all groups dedicated to that. In the friction, like you said, early on they called it the devil. What it is that how they're impacting the market. In other words, early on remember when I talked about 1996 being a turning point, they had great trade ideas before 1996.

But every time they would go and make those trades the results were never as good as they should have been on paper because they were impacting the market, they were pushing stocks up or down more than they thought they would. And they're great – like that quote you said from Simons. He says I don't know if we're the best traders but we're the best at knowing the impact our trading has on the market. So there's risk management, there is how to trade, all kinds of techniques that I'm not sure everyone has emphasized as much as Renaissance.

Dan Ferris:                 Yeah, there was another thing I wrote down too. I forget where it appeared in the book, but there was a whole bunch of stuff and then at the end of the sentence it says, "And then leveraged the hell out of it." So there's leverage involved here too.

Gregory Zuckerman:  Yes. And I don't think people emphasize that enough. To me the secret sauce is creating really good but very steady returns. They're not amazing returns. They only get it right about 51% of the time is the way they look at them. Like a casino, but they'll take those steady returns. And because they're so steady and productable and reliable they can go to Wall Street and get really good cheap leverage, and then they leverage the hell out of it. So maybe 10  times.

So part of it is a leverage story – borrowing money and leveraging it up. And there are risks obviously. If they went down 5% in a month or 10% in a year they'd get crushed. But they don't and that's the beauty of it. You create these little improvements, advantages they have, there are techniques that I mentioned and I mentioned throughout the book. And then they'll take all of them, add them up, create this steady stream of returns and then leverage them up. That's the secret.

Dan Ferris:                 Yeah, and you made another point too, which you alluded to earlier. They look for so called alternative data. Like it seems they're always looking for some possibly weird new data set that maybe others wouldn't even think would correlate with asset prices of any kind. And I found that fascinating too because there's this website's spurious correlations that shows all kinds of crazy correlations just for laughs. And it made me wonder, you know, here's these scientists who know all about spurious correlations, and yet they're looking for any – it sounded like they're looking for any data set that'll correlate reasonably. Although the point was made if it's too absurd they won't do it. But if it works and they can sort of vaguely understand why, it could be anything. Any two things that correlate. I was fascinated by that.

Gregory Zuckerman:  Yeah, I agree. And that does distinguish them too. A lot of people or maybe most quants won't touch it unless they – a correlation, a phenomenon as they call that, they won't touch it unless they can understand why it's happening. Simons and his colleagues are a little different in that regard. The way Simons explains it is I know the earth revolves around the sun. I don't need to know why to know that it's going to be something that I can rely on and depend on and bet on. They're not as certain about their signals. And I'm not saying they treat them equally.

There are signals, there are phenomenon that they trade and they don't understand but they won't put a lot of money into it. They'll put a little bit into it as they explore and try to come up with an explanation. But that does distinguish them. Most firms won't do that. So that to some extent is an advantage, but as you suggested it's also a danger to have spurious nonsensical correlations, coincidences that you have to be aware of, but they're scientists. So that's what they're all about, understanding what might be a coincidence, what might not.

Dan Ferris:                 Yeah, I found that really interesting. And so I also noticed at the end there were some definite lessons learned in all of this research you did and reported on. You already mentioned that they avoid predicting pure stock moves. They go for the relations between various data sets. One of the things that it did surprise me a little bit I suppose. I think I wrote down the sentences here. It's a quote from the book. "The gain Simon and his colleagues have achieved might suggest there are more inefficiencies and opportunities than most assume. In truth, there are likely fewer inefficiencies and opportunities for investors than generally presumed. "And then you pointed out they make money only 50% of the time.

Gregory Zuckerman:  Fifty-one percent, barely.

Dan Ferris:                 Right, barely more than 50 – yeah. So I think it was 50.75 that you quoted in there. But it makes me wonder, this is your competition if you think you're going to be a trader. Like your competition's right half the time and they have the most brilliant people in the world and they've learned that there are probably fewer inefficiencies. It's like, what hope is there for the rest of us?

Gregory Zuckerman:  Yes. Yes, right. So I didn't really want people to come away saying wow, I can do what they do and there's a lot of money being left on the table and we should all be traders. If anything I was kind of stunned by how yes, the returns are amazing but they cap their funds – the key fund we're talking about, the medallion funds – at $10 billion, and yeah, they use a lot of leverage so it can get as big as 100 sometimes, but they do cap the funds because they don't think it can do well if they get bigger. And when you speak to them, they think the market has become more efficient and it's unclear how long their own profits are going to last.

They're not closing any time soon and frankly they were up 50% last year, so it's not like their firm's falling apart. But I've been reminded of the efficiency of the market. It's not to say there's money to be made, and even they say fundamental investors sometimes can do well, and as I said earlier they invest in fundamental investors with their personal money. But it was, yeah, the whole experience writing this book was a reminder of how efficient the market has become.

Dan Ferris:                 Another thing that was kind of towards the end of the book that I thought was hilarious and we sort of alluded to this earlier as well, with all the powerful science and computers and all these genius mathematicians, you sort of remarked at the end of the book, you said it remains hard to teach a machine the difference between a blueberry muffin and a chihuahua. I cracked up when I read that.

Gregory Zuckerman:  Yeah. I've seen those presentations where we'll show them together and it is a reminder that we haven't made as many advances as you would think. And the Renaissance people also, it's machine learning a lot of what they do. The machine is teaching itself. But they also make it clear to me, these are people on the inside who work there today that they don't embrace the most sophisticated machine learning or AI techniques like neural networks and we just let the machines go on their own and press a button kind of thing. They don't believe that the market has that much structure. It's more chaotic. So even these guys, these quants are sort of humble in the ability of what the machines can do.

Dan Ferris:                 Yeah, that makes sense. I'll tell you, it's a fascinating story and I'm really impressed that you got as much out of these guys as you did. So kudos to you and I encourage everyone listening to read the book.

Gregory Zuckerman:  Thank you.

Dan Ferris:                 It's really good. Really good.

Gregory Zuckerman:  I appreciate it. Listen, the hardest thing I ever did but I love hearing people's responses, if people want to e-mail and give me constructive criticism or ideas for the next book, all that kind of stuff, I love hearing from people. But yeah, this was my obsession for – it was an obsession for two years, chasing – chasing Simons and his colleagues and getting people to talk to me. As I said earlier, I wasn't sure I could get this thing done. So I'm just thrilled it's over and I got it done and I'm glad people like you enjoy it.

Dan Ferris:                 Yeah, you bet. So, Greg, we're pretty much at the end of our time here, but I always like to ask my guests at the end of an interview, if there was one thought you could leave our listeners with about anything, but they're usually about finance, but about anything – life, whatever. If there was one thought you could leave our listeners with, what might that be today?

Gregory Zuckerman:  So I guess one conclusion I came to from writing the book is the importance of having a system and having decisions dictated by either a model, a system or just a set of rules. In other words, if you're a trader, you're an investor, the risk is getting carried away with a story. And if you look at the biggest mistakes over the past few years, investing mistakes, it's often sophisticated investors who got carried away with someone's story, be it WeWork, be it Theranos, be it Valiant. It happens over and over again and sophisticated investors often fall for it.

Like I said, whereas when you rely on machines and data, you become more sophisticated, you turn the decisions over to those machines. And I don't want to suggest that everybody's got to use a computerized trading system, but you should have a set of rules. So if you look at pilots and surgeons, over the past few years they've improved the quality of their work by embracing a checklist and sets of rules and they're not just winging it. And the thing that really depresses me is when you look at the most important decisions in society today, like in the White House, where the Fed, they're sort of winging it and using intuition and instinct, and they're sort of proud to ignore data and just sort of use their gut, and it scares me.

So my big thing is systems over stories and to the extent you can ignore the stories. They don't even know the stocks they're investing in, these guys. It's a crazy thing. They don't know the names, they don't know the companies, they don't care about the companies. Again, not everyone has to use this approach. It's not for everyone. It's not clear everyone can do it successfully, but there is some lesson there about using the scientific approach – using data – they're relying on data and much less, today especially, just hard for the fundamental investor using his or her instincts.

Dan Ferris:                 That's a good thought. Have a system. Thank you for that. And I can't help noting that –

Gregory Zuckerman:  Sure.

Dan Ferris:                 I remember one character in the story, Elwyn Berlekamp from earlier in the firm's history, he viewed narratives as dangerous and he thought they breeded misplaced confidence, and he was more pushing for the machines being in charge at that moment. And I think that falls very nice on your comment.

Gregory Zuckerman:  Yeah, and there's that story later on, I don't know if you recall, where Bob Mercer is talking to an outside investor and he talks about Chrysler, shares in Chrysler and everybody's cringing because Chrysler doesn't exist anymore because Mercer didn't know. He didn't care. It was just a name for them and you don't want to get caught up in the narrative. Right.

Dan Ferris:                 Right. I do remember that. Another funny moment in the book. That was a great story. Lots of good stories here, lots more characters than we can talk about in this interview, and I encourage people to read for themselves. I hope that next time you write one of these books that we will get to talk to you again or maybe even not. Maybe we won't even wait that long, but I hope you'll come back and talk with us sometime.

Gregory Zuckerman:  Sure. I'm happy to join you guys. You do good work and I'd love to stay in touch and as people have thoughts after reading the book, I'd love to hear them. Feel free to e-mail me or I'm on Twitter, I'm on LinkedIn, Gregory Zuckerman, so feel free to reach out.

Dan Ferris:                 Great. Great. Thank you for that. So we'll hopefully talk to you sooner rather than later and for now bye-bye and thank you.

Gregory Zuckerman:  All right. Speak to you soon.

Dan Ferris:                 OK, wow. That was really cool. I do like the book just as much as I said, maybe even more. I'm shocked that he found out so much about this highly secretive firm. You know, Greg also mentioned there at the end he was talking about developments in the medical field and in aviation, and there's a real good book I'm reading right now called Blackbox Thinking by a guy named Matthew Syed, S-y-e-d. And it deals more directly with some of those developments and how they came about and what they mean and what they are. It's really cool. And the title Blackbox Thinking is not maybe what you really think it is. We normally think of a black box as something mysterious that you can't know what's going on inside of it, but this is talking about the black box in an airplane as being an objective viewpoint of what really happened versus the perception of what really happened that you may have. Anyway, wow. Great interview today. Let's take a look at the mailbag.

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All right, it's time for the mailbag. This is where you and I get to have a very frank conversation about investing and whatever else may be on your mind each week. You write into [email protected]. I read every single e-mail. I've read every single word of every single one this week and I respond to as many as I can, and then you write back in maybe and then I'll respond some more and we'll have a nice conversation. Once again that's [email protected]. Looks like I have, what two or three of them – three or four of them this week.

The first one is from Stewart T. He says, "Hi, Dan. I listen to the podcast every week and enjoy it immensely. My question, Stansberry advisors and yourself have recommended holding some gold and precious metals as a hedge against a correction or bear market. Yet, since this coronavirus has caused a correction, my gold stocks and precious metals have tanked along with the market. They are in fact down more than the rest of my portfolio. Can you explain why they are falling and why I should keep them as a hedge when they have done nothing at all to protect my downside?" Thank you, Stewart T.

 I think I can explain it, Stewart T. First of all, there's a couple of things. Gold stocks are different than gold the physical metal. They can go up and down almost seemingly independent of the two. But I know the action you're talking about. It's been really volatile in gold and gold stocks since all this began. Now the first thing I would point you to is take a look at a longer term, and by longer term I mean like couple of months. Just take a look at a longer term chart of gold. We are generally up here in the 1,600's. We're generally higher than we were in the 1,500's and indeed there was that really big spike.

Gold gapped up. It opened higher than it had closed and kind of took off. And then yes, corrected sharply and went down when everybody kind of probably expected it to keep going up or at least stay about at that level. But that's gold for you. It's very volatile. Take a look at the performance of gold from the top of the stock market in October 2007 to the bottom of the market in March of 2009 and you'll see what I mean. Gold started that period, it was around 700 – I don't know the exact numbers, and it's not important. But I noticed that it went up – straight up, and then straight down, lower than where it was in October and then straight up and finished up about 22 or 23% higher at the bottom in March 2009.

Gold was about 23% higher than it had been in October 2007. So the hedge worked. It did protect the buying power, the money you put into it. It worked. But man, the trip in between that was as you point out really volatile, and that's the way gold goes. There is just no getting around it. And gold stocks are that with a little shot of steroids. So same deal. And it matters which gold stocks and when you bought them too. You don't want to buy all this stuff the day it flies up, straight up. That's not the day to buy all this stuff. The day to buy all this stuff is long before any of this happens.

I've been talking about gold. I've been recommending companies where gold is their main assets since January 2018 and talking about the market being overvalued since May of 2017, and even other times before that. So I've been talking about holding gold and holding cash and being careful for longer than it was cool, that's for sue. It's like I always say, it's a matter of being prepared for these things and I think so far actually gold has done a reasonable job. But sure, I know the action you're talking about and it's just the volatility of the instrument and I wouldn't worry about it. I think it will do its job. Very good question, though.

Next one is from Dave J., and Dave says, "Hi, Dan. Enjoy your show. Was wondering why you never mention Dan Shum," who we interviewed on a previous episode. "Was wondering why you never questioned Dan Shum when he said Buffett's name was Mary. Twice he said Mary Buffett instead of Warren Buffett. My BS-meter went off. Was not calling him out on this on purpose? Just wondering. Keep up the interesting podcast. Dave J."

Dave, Mary Buffett was married to Peter Buffett. That's Warren Buffett's son. Mary Buffett wrote the two books that Dan Shum was talking about. I have them on my shelf. They're called Buffettology, and she was around. She was around Warren Buffett and he liked to hold forth about investing and she soaked up plenty of wisdom. And she got together with another fellow and they – I think she's divorced now from Peter Buffett. She got together with another fellow and she wrote a couple of books. Mary Buffett is the right name and the books are called Buffettology. I forget what the second – I think the second one is like Advanced Buffettology or Buffettology II or something. I don't remember. And I don't have my bookshelf here with me in Florida to check. So good question, though.

Next is Mike N., and Mike N. says, "Is 5G the next big thing? Would you recommend as a possible small investment? Thank you, Mike N." Kind of a general question there, Mike. You're going to have to be more specific. Throw me the name of a stock or a company or be more specific. And the reason I included this question is that I think too many people think in this mode. They're trying to figure out the next big thing. I was talking with a friend of mine today about this.

If you got the jaw – if your choice is between finding and figuring out what's a really good business that's going to be around a long time and grow its earnings, or what is the next big thing that I should jump on and try to trade, forget about the next big thing. Find yourself a good business and hang onto it and let it compound your money. Good question, though. Glad you asked it. Very glad you asked it.

Elden L. is next. He says, "Dan, as a listener for the last couple of years I'm trying to remember if you have covered those of us retired. I am in my 70's and looking at another couple of decades provided I take care of myself as well as my parents did. My question is about investments for those in my position. Everything we have is in dividend stocks with the idea of trading stocks or never selling and only taking dividends that are hopefully increasing. I don't have a lot, but I have no problem with leaving an inheritance either. Comments? I'm sure you have wise ones. Thank you, Elden L."

Elden, I'm not sure how wise I can be here. Again, this is a rather general question and I believe you're asking me if holding dividend stocks is a good idea. But again, dividend stocks is a little too general. It has to be – sure, they can be dividend payers, and a lot of really fantastic businesses are fantastic dividend payers who raise their dividend every year for decades. It's one of the ways you can find a really good business. But it doesn't necessarily mean that it's a good business. It's just kind of one of the markers we look for and if we pick 50 of these that grow their dividends, you can usually whittle down a pretty good list of four or five of them that are really great businesses. That's the best I can do for you Elden, right now. You're going to have to be more specific.

And finally we have Matthew S. And I've taken a little bit of heat for discussing climate change, and I think I've been misunderstood. But Matthew S. says, "I've been thinking a lot about your ongoing climate change discussions and felt compelled to write in. I guess I'm what you could call a lapsed environmentalist. I realized not so long ago that the most important thing for me to do is tend my own garden and get out of the rat race before I'm an old man. The way to do that is by being a good investor and a good businessman, and when you're trying to improve yourself one of the first things you look at is the company you're keeping. No one in my family and none of my college professors have ever been able to tell me how I can retire early."

And then he goes on and talks about a few other things. He says, "At this point I'd rather be sitting in a country club with you and a few climate skeptics than attending a Greenpeace rally." And he says, "The way people discuss and think about their ideology reminds me a lot of the way people discuss and think about religion. This isn't to knock religion or ideology. I'm just saying I see a lot of similarities." And I won't read the rest. And his name is Matthew S. Thank you. 

So yeah, I want to make it clear like people are telling me I'm outside my circle of competence when I talk about climate. I think you're absolutely dead flat wrong. Because my point is that it's outside all of our circle of confidence to look at the data that's actually available and extrapolate in a linear fashion from this extremely complicated data set, which the inputs to which are unknowably complicated in my opinion, and to extrapolate in a linear fashion and say oh, the world's going to end in 12 years. Therefore I have to steal more of your money and you're not allowed to drive a fossil-fueled powered car anymore. It's just gone too far.

And I recently read something by the folks over at Epsilon Theory about this and they put forth the idea that when people get loud, really loud they compress the discussion and it just gets pure noise. And they talked about – he made an analogy. He talked about the way recorded music has changed over the years since the '80s. They use devices in studios called compressor limiters and things sound different now than they used to because of that. And the dynamic range has been compressed and it just sounds – they just sound different. I'll leave it at that. And it's harder to get a word in edgewise when the state of discussion is so noisy and so polarized and just so gosh darn angry on all sides.

And my point is that if we would all just admit that we don't know nearly as much as any of us on either side of it think we do, that is a much better starting place than where we are right now. And I also think it's my job and your job and every thinking person's job to say fraud when you see fraud. We know Michael Mann's hockey stick is a fraud. We know Greta's, you know, pure BS Greta doesn't know what she's talking about. She's a teenage kid. She doesn't know anything. We know – and I don't even blame her 100%, OK? I don't have anything against poor little Greta. She doesn't know what she's talking about, and her parents aren't saying you know, Greta, you don't know what you're talking about.

Why don't you come home and go back to school? So, you know, Greta, that's BS. We know that the 97% consensus of scientists does not exist, it is not real, it's fake. It was the result of some fake research by among other people. There are a couple different sources for it. There's not just one source, but it's all phony baloney. It's nobody is really assessing the state of the consensus and it's not 97%, and it never is. That's just such an unscientific idea right there trying to establish truth by consensus. That's not how it's done. It's done by empirical experiment. And the only empirical thing we have right now is that well over 100 computer models have predicted one thing and reality has showed us another. It's not as hot as the overwhelming majority of the models say.

So I can say those things with some conviction. They are not outside any of our circle of confidence because they're easy and obvious and it's not hard to look them up and figure them out. But the rest of it? The actual science of climate? I'm not a physicist and probably neither are you. Of course, the five physicists listening will now e-mail me and say I am a physicist. But that is my point. My point is not that I'm a denier and all the climate changers are wrong.

The thing I've always said I deny the most is that you have any idea what you're talking about when it comes to this, and same with me. How can anyone misunderstand this? I've said it five times. And I'm probably not going to say it anymore, although it's fun. It's fun to be a little contentious now and then, isn't it? It sort of is. I admit it. I freely admit it and it's a bad habit and I try not to indulge it too much. But on this issue, the BS on these few data points with which I am I believe intimately enough familiar, it just stinks too bad and it's too easy to say it's BS, all right? Okay.

That's the mailbag. Thank you very much. I find all – even the criticisms that I get, I found them all very polite and very thoughtful, so thank you for that. This is a real discussion. It turns me on in case you can't tell. And the thing that turns me on the most is that you and I are going back and forth and having it. That's the most attractive thing about it. It's great. It's the way people should interact and I hope you'll continue to do so by writing in to [email protected] with all your comments, questions and politely worded criticisms. Thank you very much for that. OK, that's another episode of the Stansberry Investor Hour. It goes by so quick, man. Look, it's my privilege to come to you this week and every week. I really thank you for being there.

And why don't you go over to iTunes, subscribe to the Stansberry Investor Hour and hit that little button that says like, that will push us up in the rankings, attract more thoughtful folks like yourselves and the conversation will get better and better, right? So iTunes, subscribe, like. Stansberry Investor Hour. I'll thank you ahead of time for doing that. And of course you can go to www.investorhour.com where you can listen to every single episode we've ever done and you can get a transcript for every episode we've ever done. The most recent episode transcript sometimes takes a few days, but it will be there and all the rest of them are there. Just click on the episode, scroll down to the bottom and you'll find the transcript. So that's it. Thanks once again. I can't wait to talk to you next week. Bye-bye for now.

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Conclusion:                Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to investorhour.com and enter your e-mail. Have a question for Dan? Send him an e-mail at [email protected]. This broadcast is provided for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decisions based solely on what you hear. Stansberry Investor Hour is produced by Stansberry Research and is copyrighted by the Stansberry Radio Network.

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