In This Episode

On the one-year anniversary of the peak value in Bitcoin, Buck, Dan Ferris, and Stansberry’s top retirement expert Dr. David Eifrig break down the grim-seeming news facing investors this month, from the “worst December for markets since the Great Depression” all the way to oil’s slide and the sentencing of President Trump’s former top lawyer Michael Cohen.
Having worked at Goldman Sachs for almost a decade, Doc gives his take on the bank’s 1MDB scandal, and why he has no doubt the bank knew what was going on in real time. Dan and Buck discuss Trump’s pressure on the Fed to table its rate hikes, and Doc explains why he doesn’t pay much attention to the Fed these days.
They’re then joined by this week’s podcast guest: Steve Koomar, the publisher and editor of Vigilante Investor. Steve is a career investment professional with 25 years of experience, working for Goldman Sachs before becoming International Fixed Income portfolio manager for Prudential Investment Management. There, he managed fixed income investments and foreign exchange risk in every major global market.
In a week where Stanley Druckenmiller is calling this hemorrhaging market “the best economist I know” the gang gets Steve’s take on whether a tumbling stock market really does signal a recession is imminent – or if any particular sector is the canary in the coal mine.
Steve explains why a recession is probably coming in 2019, and how investors can prepare – starting with an asset he’s invested in since 1988 that he calls “great for wealth-building, but also great for wealth management.”
Nevertheless, there’s something much more urgent on his radar – an epic amount of wealth creation from a tech boom that no recession can seriously derail. “I think that the investments will do very well because the growth is so phenomenal… there’s so much value being created there.”


Featured Guests

Dr. David Eifrig
Dr. David Eifrig
Editor, Retirement Millionaire,Retirement Trader,Income Intelligence
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Steve Koomar
Steve Koomar
Steve is a career investment professional with 25 years of experience. During his tenure with Goldman Sachs, Steve specialized in Derivatives, Japanese Bond Trading, and Global Proprietary Trading.
READ FULL BIO

Episode Extras

NOTES AND LINKS

For more information on Steve’s work - Click Here

To see more of Dan’s work in Extreme Value –Click Here

SHOW HIGHLIGHTS

1:12: Buck notes that December is so far the worst month for stocks since 1931, in the height of the Great Depression, and Dan Ferris puts the statistic in historical perspective. “I don’t know that a single month’s performance means a great deal.”

2:45: Doc talks about the part of the brain that regulates the fear and sense of risk investors are feeling now, and why he’s increasingly urged his readers to transition to cash since last summer since witnessing the mania and euphoria at a Vancouver conference.

5:15: On the one-year anniversary of Bitcoin’s peak, Doc talks about how he compared its rise and collapse to the Dot.com collapse to a roomful of investors at Las Vegas, and how, properly scaled, the Bitcoin rise and crash made the tech bubble look “like a pimple on a teenager.”

8:18: Doc explains why he hasn’t paid much attention to the intrigue swirling around the Fed and its cheap money avalanche.

11:05: Buck brings up the big news about Goldman Sachs this week, with the bank being criminally charged Monday by Malaysian authorities for its role in creating the same investment fund known as 1MDB, helping to cap a 34% slide for its stock for the year.

24:03: Buck introduces this week’s podcast guest: Steve Koomar, the publisher and editor of Vigilante Investor. Steve is a career investment professional with 25 years of experience. During his tenure with Goldman Sachs, Steve specialized in Derivatives, Japanese Bond Trading, and Global Proprietary Trading. As International Fixed Income portfolio manager for Prudential Investment Management, he managed fixed income investments and foreign exchange risk in every major global market.

29:20: Steve reveals some pockets of inflationary pressure he’s seeing in the economy, with consolidation of the airline industry fundamentally altering supply and demand. The whole transportation industry could be seeing upward pressure in prices – and Steve predicts wages could be next.

32:40: Dan asks Steve for his take on the sagging transportation index. Do the Dow transports having been crushed this year factor into his thinking? Steve lists how the trucking, railroad stocks have gotten slammed, and how this implies slowing growth and recessionary signals.

34:26: Steve’s been an investor in farmland since 1988, and Dan asks about his fund, a farmland and real estate investment trust. “I’ve learned that farmland is a great wealth management asset. It’s great for wealth-building, but it’s also a great wealth management asset. “What could be safer than black dirt that grows food?”

38:40: Steve discusses the historical average appreciation of farmland, why that’s been depressed lately, and how China’s retaliatory tariffs on U.S. grain could mark a solid entry point for potential farmland investors.

40:23: Dan asks Steve about Stanley Druckenmiller’s statement that the stock market is the best economist he knows of – the most foolproof indicator of where the economy is heading. With cyclical sectors performing poorly, he’s excited as a value investor. Steve explains why he pays attention both to valuations and cyclical sectors, but doesn’t use either of them as a predictive measure.

48:10: Steve reveals that, despite his forecast for a recession, he’s never been a short seller and isn’t about to start now. One sector is about to get a huge lift from 5G. “I think there’s a number of stocks in my portfolio that will benefit from the integration of 5G into the entire consumer economy.”


Transcript

Announcer: Broadcasting from Baltimore, Maryland and New York City, you're listening to The Stansberry Investor Hour. Tune in each Thursday on iTunes for the latest episode of The Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here are the hosts of your show, Buck Sexton and Porter Stansberry.

Buck Sexton: Hello, everybody. Welcome to the final episode of 2018 of The Stansberry Investor Hour. I am radio host Buck Sexton—some of you hopefully know who I am at this point. With me is a fantastic crew this week, very exciting stuff. We have Stansberry member and editor of Extreme Value, Dan Ferris, and the one and only Doc Eifrig as well.

Doc Eifrig: Whoo!

Buck Sexton: Gentlemen, there is so much financial knowledge on this podcast this week, I am overwhelmed. Good to have you both.

Dan Ferris: Good to be here.

Doc Eifrig: Glad to be alive.

Buck Sexton: So, I'm gonna try to do a little traffic cop, here, just to get this started, then I'm gonna listen to you guys because you actually know about these things. Big headline this week was that they were saying it’s the worst December so far for the stock market since the Great Depression. What does this mean, how much should people care?

Dan Ferris: I guess—this is Dan, I'll go first. It doesn’t mean a whole lot to me. It means—I think 1931, the performance was something like minus 15 or 16 percent and, you know, we're looking at minus some single digit number that I can’t even remember, because it’s just not that important to me. [Laughter] And that’s why they're saying this.

And when you say things like “worst stock market December since Great Depression,” you know, it’s obviously an attempt to get people to click on your headline and read your article. And I really don’t know that a single month’s performance means a great deal. So, you know, it’s not fun. [Laughter] I'm not having fun, here, with long positions, but you know, I told everybody to put half their money in cash, so, I'm not really losing sleep, either. But I wanna hear what Doc has to say about this, if anything.

Doc Eifrig: [Laughter] Yeah. So, I just heard this sort of for the first time, but I'm—what I'm impressed by is what happens at the top in a late stage bull market. Confidence increases, risks get ignored. And Dan, you know this—on October 3rd, my presentation was titled, “How to Survive the Collapse.” I talked about a bunch of stuff. We'll come back to this question that Buck poses.

But I've talked about the amygdala all year, and really in the summer, gave a talk to Retirement Millionaire lifetime people that was similar and I felt like moving into cash and cash-like instruments was a great place to be. And so, that’s the kind of thing, personally, I do. I mean, I can’t follow my own picks, but in terms of being in stocks as an asset allocation category, I just have not liked stocks.

And, really, what triggered it for me was in the summer when I went to and saw a Bitcoin presentation in Vancouver. And then, you know, you look at the Bitcoin chart—I think I've shown you or you've seen it Dan, and I don't even know what you think of Bitcoin. But, you know, to me, it just seemed like everyone was trying to get the home run in two weeks and to retire on their multi-million dollar lottery ticket in stocks or Bitcoin or whatever. And that’s kinda the sign of the top being in. I started to hear that everyone was buying Bitcoins, you know, high school students when I stopped by friends’ houses were laying on the couch and they were feeling rich. And that’s just kinda the time that there’s kinda too much money floating around chasing financial assets.

So, yeah, and I'm not losing much sleep, either, because there will be and there are opportunities, but for me, the question is, how does inflation play in this market downturn as well? And anyway, those are kinda my general feelings and thoughts.

Buck Sexton: You mentioned Bitcoin. Do you know today is the one year anniversary of the peak in Bitcoin?

Doc Eifrig: [Laughter] I did not know that, but yeah. Have you ever seen—I don't know if you saw my presentation in Vegas, but I had this chart where I show the Bitcoin and the Internet bubble, the dot com bubble on the same chart, right, the same, basically, shape where it goes along, goes along, and then exponential curve up to a peak. And I intentionally had my junior analyst put the peaks right in the same day, and then you look at it and you're like, “Holy mackerel, this is exactly the same as Bitcoin and the Internet bubble.”

And, at that point, that chart showed us about halfway down the collapse of the backside of the bubble, right? And then I go, “Oh, but you know, my analyst, he’s junior, he forgot to put it on the same scale as a percentage gain and change.” And when you put it on the same scale, the Internet bubble is like a pimple on a teenager. It’s like a little, tiny bump on the bar chart, and this Bitcoin thing goes up like a rocket ship [Laughter] to, like, 4,000 percent, 4,500. Anyway. Yeah.

Dan Ferris: All the coins are down 90 plus percent. I think Bitcoin itself is, like, minus 98 percent one year ago, from one year ago.

Doc Eifrig: Yeah, yeah.

Dan Ferris: Anyway, what else you got for us, there, Buck?

Buck Sexton: I'm just, I'm sitting here taking notes and learning, but I do have a tweet from the Tweeter in Chief, President Trump. You mentioned inflation, how that’s gonna play into the market. The President, earlier today, wrote the following to his 60-some-odd million followers, I think. I hope that people over—

Doc Eifrig: How may does he have?

Buck Sexton: He has—I can tell you, give me one second—56.3 million followers on Twitter.

Doc Eifrig: Oh, my God. Think of all the people just wasting their time.

Buck Sexton: And here’s what he wrote, “I hope the people over at the Fed will read today’s Wall Street Journal editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”

I turn that over to you. Doc, why don’t you go first?

Doc Eifrig: Dan, go ahead. [Laughter]

Dan Ferris: [Laughter] Yeah, neither one of us wanna touch this, because, you know, obviously, the tweets are a little, they're a tad misguided, let’s just say. And, you know, when I hear this, I'm like—well, first of all, it’s bound to backfire. Because these people are supposed to be independent. They're supposed to be making their decisions independent of all kinds of input, not just political input from the Chief Executive.

So, here’s Trump tweeting and yammering away over and over and over again about this, and it makes it harder and harder and harder for them to do the thing he wants them to do [Laughter] because of the appearance of it.

Doc Eifrig: Right. [Laughter]

Dan Ferris: Now, you know, if they're panicking enough, of course, they won’t care about that. But I don't know if they're gonna be in a panic just yet. So, I don't know, I was sitting here this morning thinking—you know, do people who are paid lots of money and work at big banks really sit around talking about dot plots and the Fed and the direction of, you know, the short term direction of interest rates?

And I guess they do, but I think if a prerequisite for those meetings was, only the people with a successful track record of consistently predicting the Fed’s behavior can speak, there would be no meeting, you know? [Laughter]

Doc Eifrig: Right.

Dan Ferris: And that tells you what I really have to say, right, which is—no more.

Doc Eifrig: Yeah, and I've not really paid much attention to what goes on in the Fed and the markets, because back in my days when I was at Goldman, if you look in the history books, there was a guy who sat inside Goldman who’s still, I think, serving jail time. He might have just gotten out. But he was in the Economics Department and worked with Giordano and Dudley, who’s just resigned, you know, left the New York Fed this year. And these guys had inside connections, and they knew what interest rates, what was happening long before. And certainly, what was going on with treasuries and the long part of the curve, which were much more meaningful insider trading information to have.

I don't know. Like I said, or what Dan is saying, I would echo Dan’s thoughts, which is—eh, Trump is trying to influence in a way that almost, it almost backfires. You know, you get so annoyed with some of this stuff that you kind of, you hope that human nature doesn’t resort to, “I am in control! I will go ahead and raise interest rates even more than 50 basis points! We'll show him!” I mean, I don't think they’d do that, but groupthink and process and all that…

Turning to the inflation question, Buck, which really, to me, is the more important one—you know, oil down below 50 and some other things, and it'll be fun to have when Koomar comes on and joins us. He was at Goldman at the same time and stayed on longer than I did, and even managed a fixed income portfolio over at Prudential. And he—Dan, you met him once a long time ago at the Value Investor Conference in New York. He and I were getting together, and I think he came to the meeting just to pick me up, and then you were standing there. I don't know if you remember meeting him.

But he’s kind of a guru in the commodities markets as well as an inflation sort of follower. And I'm excited to kinda hear what he has to say, because the commodity indices and oil now are sort of backing off, and to me, that’s kind of a sign, maybe, this is going to abate. But I'm definitely, everywhere I go, I'm seeing inflated prices, hotels. I mean—I don't know. Air tickets now, they seem to have me figured out. I used to be able to hack stuff and find the best deal. And now, it seems, if I go incognito and try to find a ticket, if I go on a different phone, they know that I'm in the same area looking for a ticket. [Laughter] It seems like each time I log back on, they've raised the price another 10 or 20 bucks for an airline ticket. It’s pretty funny. I'm getting frustrated, because I used to be able to figure and find cheap flights this time of year, but not this year.

Buck Sexton: You mentioned Goldman. Can I just direct your attention to Goldman for a second to the big news this week about Goldman with the 1MDB scandal? I've started to read the book about the guy that was at the center of the 1MDB. It’s incredible. I mean, I'm a chapter into it, so, I'm very early in it. I've got a couple other books I've gotta finish first.

But this guy, Jho Low, is pretty unbelievable, right, the whole story around it. But it’s been painful for Goldman Sachs—34 percent drop in the stock price this year. And the bank was criminally charged this week by Malaysian authorities for its role in creating the same investment fund known as 1MDB. Doc, what do you think?

Doc Eifrig: Yeah, I had seen an article, I wanna say, two, three weeks ago. And I wish I had known we were kinda heading into this area. But it sounded to me, it reminded me of my days in London with Goldman where the partner in the office running it knew exactly what was going on. And I don’t wanna talk too much smack, but back then, tapes disappeared, you know, after I sort of complained and said, “No, this guy said this on the tape and we didn't do the deal,” and the partner said, “Yeah, you did. It’s good.” And it was around the time that Druckenmiller and Soros and those guys were trading big time in German bonds. You know, the tape, the recorded tape just kinda disappeared.

And so, when I started hearing these stories of a Goldman office and Goldman claiming that the guy there, that these were rogue employees, [Laughter] it reminded me of my frustration with my time at Goldman where they just kinda stuck something on me that I thought was completely unfair. And again, like I said, “Well, let’s go listen to the tape.” John Farmer was the partner in charge, and of course, the tape had just disappeared.

So, I don’t have any doubt that high level folks at Goldman knew what was going on. It’s disappointing, again, but it could be that these guys—Jho Low? What’s his name? How do you pronounce that?

Buck Sexton: Jho Low, yeah. J-Lo is the actress and singer.

Doc Eifrig: [Laughter] Yeah. Yeah, I just, I think that these guys, under the shroud of highly connected—you know, they did some Mickey Mouse stuff with Greece, as you know, before Greece blew up. Yeah. There’s lots of money floating around this part of the world, and these guys can be connected. What book are you reading? I'm curious, I may check it out.

Buck Sexton: Oh, The Billion Dollar Whale.

Doc Eifrig: Okay, I'll check it.

Buck Sexton: The Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World. It’s amazing. I mean, this guy, Jho Low—and keep in mind, I'm only 20, 30 pages into it, so, I'm just starting it, but I know a little bit about the back story. He managed to steal, they believe, billions of dollars. He’s now in China. China won’t hand him over. They consider him a strategic national security asset—whatever that means. I'm sure it means a lot. And he was hanging out with Leonardo DiCaprio. He threw what was considered—and this is in the first chapter—the most expensive birthday party in the history of Las Vegas. Which, you can imagine, that’s a pricy party.

Doc Eifrig: Wow. Wow.

Buck Sexton: And he had, he bought incredibly expensive jewelry for world famous Victoria’s Secret models, some of whom actually went out on dates with him, and he’s kinda like this frumpy little guy. It’s amazing, it’s incredible, if you get a chance to read it. It’s all just come out in the last—well, in this book, it’s gotten a lot more attention in the last few months. But people are—and he hasn’t faced a single criminal charge yet. They think it might be the biggest fraud of all time—billions of dollars.

Dan Ferris: Bigger than Bernie Madoff? I mean, Madoff was, like, 60 billion.

Buck Sexton: Well, was all of that lost?

Dan Ferris: No, it wasn’t all lost. I don't know the ultimate loss, but it was—

Buck Sexton: Because I think this guy—I'll find out. I mean, I know it’s billions. But yeah, millions—maybe. Like I said, I'm on chapter one of the book, so, don’t take too much of what I say. I'm just amazed at the basics of the story.

Dan Ferris: Alright. So, we've got a lot of stuff happening here. I mean, this is only the beginning. I mean, I'm curious to get to our guest at some point and ask him what he thinks about what’s been happening the past couple of months.

But some famous folks have kind of chimed in, and that always kind of interests me. Jeffrey Gundlach says he’s pretty sure—Jeffrey Gundlach, the bond god—says he’s pretty sure this is a bear market. And then I heard Stanley Druckenmiller today say that the stock market is the best economist he knows of, and it’s saying that something is very, very wrong.

And that’s—you know, it’s one thing to say that you're pretty sure we're in a bear market, securities prices are behaving in a certain way. But it’s another thing to kind of take signals from the market. And I wanted to ask Doc about this—do you look at things this way, where you say, “Well, the cyclicals like autos and banks and things, they're way the heck down. They're down a lot more than the S&P 500, and that’s really bad.” Does that make sense to you, Doc?

Doc Eifrig: Yeah, and it’s funny. When Koomes comes on, he’s kinda the first guy that turned me on to thinking about cyclical things like that and moves. And I remember—gosh, it was a long, long time ago, but maybe in ’86 or ’87, he seemed to be a little more up on that macro of stuff. And yeah, I mean, I think it makes sense.

Dan Ferris: Yeah, all the stuff you and I had on our charts in October at the Stansberry event.

Doc Eifrig: Exactly, exactly. And to me, it’s just sort of obvious—like, okay, why do you want to be 67 years old with 90 percent of your money in stocks at that point, or even 25 years old with 90 percent of your money in stocks? Why not wait for and hope for, maybe even pray, for a little more cyclical rotations out of things? And like I said, I was a little more focused and worried about inflation. Now, that’s abated a bit, but I'm definitely curious to see what Steve is thinking about transportation and some of these other indices and markets that, to me, sort of predict or, like I said, are the best economists there are.

And Steve has, you know, this newsletter—this little small, tiny newsletter that I somehow convinced him to start writing for fun, basically, so I could get his monthly views on things. [Laughter] And he’s been somebody I've gone to for, gosh, now, ’96, 2000—30 years for wisdom on the market. So, I'm excited to hear what he’s thinking. I don't know, I don’t feel like I'm really answering your question, Dan, but I don’t really pay attention to those guys specifically, but I do think stuff has been incredibly overvalued almost across the board.

Even housing. You know, right now, I'm in Buffalo, New York, and I'm sort of shocked at, it seems like real estate signs have disappeared. But more importantly, you look at some of the prices that last sold and I'm like, “How does a family of four buy and move into that? What job do they have here in Buffalo that they can afford the price for that kind of a home and size?”

So, I think things have been—there’s been cheap money floating around, and it’s starting to go away, so that’s the bottom line.

Dan Ferris: That is the bottom line, and it creates all sorts of havoc and all sorts of misallocations. It’s insidious. And like you say, things got to be—you know, stocks in late August, early September, by various measures, were more expensive than at any time. More expensive than March, 2000; more expensive than 1929. Bonds, of course, the year before that were the biggest bubble in the world—at least that’s what I called ‘em. And, you know, just all-time high valuations. You know, negative yielding, sovereign debt and all that.

And that can’t, it can’t end well. And who knows? Maybe it’s ending now, maybe this is a correction. I don’t predict those things, but I do know that your returns that you get are based on the price you pay and the kinda risk you take and risk taking was nuts. I mean, a year ago, when Bitcoin was peaking, that was like, that was kinda the peak in, “Let’s do something crazy” risk taking. And you see how that turned out, minus 98 percent. [Laughter]

So, you know, there might be some down side, here. I'm not gonna make predictions, like I said, but you don’t—valuation eventually matters a whole lot, I guess is my point. [Laughter]

Doc Eifrig: You know, echoing that, I sat on a couple of—you know, saw presentations, marketing online, and you see things where someone’s predicting Bitcoin price? I mean, gosh, I can understand a business like Ingersoll Rand and say, you know, this is their cash flow. I really can’t tell you what the P/E ratio is going to be, because I really can’t tell you what interest rates are gonna be, and I really can’t tell you what demand is gonna be for their products 10 years from now. But I can give you a rough idea if they're paying a dividend over the next three to five years, kinda what that might mean for you, cash flow back.

I can make a similar prediction about stock price, kind of, but you know, something like Bitcoin where I remember one guy said, “Oh, yeah, Bitcoin is gonna be at 7,000; 10,000; 20,000.” You know, and they're saying it truly as if they're saying to their mom and dad, like, “Honestly, Mom! Honestly, Dad! I swear, this is going to 20,000, and I know it! I know it. I bet everything I have.” And I don't know how you can do that in something that’s just, it doesn’t create anything, it doesn’t, there’s no pitchforks, there’s no hose, there’s no shovels, there’s no hammers, there’s no nails. It’s not doing anything, creating anything other than, allegedly, a place to have electronic money.

But I don't know—I don't know about you, but we already have electronic money as far as I can tell and it moves around just fine. I can transfer stuff through Bank of America, Wells Fargo to you, Dan, in 30 seconds. Buck, I can send you stuff electronically and feel pretty secure about it. I don't know. It’s strange.

If I can—this might be sliced into the early conversation—I just happened to look up, here. I saw a news story on November—this is relating to the Jho Low stuff. On November 1st, two Goldman Sachs, former Goldman Sachs bankers, Leissner and Ng and Low were indicted. You know, was it $200,000,000.00 they admitted to moving in proceeds and bonds and the accounts controlled by them and a relative. And they gave back, they agreed to forfeit almost $44,000,000.00, pleaded guilty to conspiring and laundering money and violating the Foreign Corruptions Act. I mean, these are two investment bankers at Goldman Sachs!

Anyway, I just wanted to add that because I just came across it on my screen about really—it’s hard to imagine that other folks at Goldman didn't notice $200,000,000.00 being moved around [Laughter] to their buddies’ funds.

Dan Ferris: Of course, yeah. Goldman, to me, is like—this doesn’t surprise me at all. Goldman, to me, is like, they're the bank that mysteriously winds up on the right side of the trade, no matter what, you know?

Doc Eifrig: [Laughter] Exactly.

Dan Ferris: Yeah, and you know when that happens that something, eventually, they're gonna get caught doing something that’s probably not kosher. And they had—you know, they sold toxic waste to their customers in the financial crisis era.

So, I don't know. This stuff doesn’t surprise me. The incentives, and you were just speaking about the ease of moving money, you know? The incentives and the ease of moving money, you know, you're sitting there in New York and you're watching billions of dollars or hundreds of millions fly across your screen—eh, you know, what’s a million or two between friends? And it’s just, it’s too easy—it’s too easy to go bad in a situation like that. [Program music plays]

Buck Sexton: Our guest this week is Steve Koomar. Steve Koomar is the publisher and editor of Vigilante Investor. He is a career investment professional with 25 years of experience. During his tenure with Goldman Sachs, Steve specialized in derivatives, Japanese bond trading, and global proprietary trading. As international fixed income portfolio manager for Prudential Investment Management, he managed fixed income investments and foreign exchange risk in every major global market. Steve later served as a portfolio manager for a large hedge fund and performed consulting services in insurance products and distressed residential mortgage backed securities. He currently manages a private farmland real estate investment trust. The Stansberry Investor Hour, please welcome Steven Koomar!

Steven Koomar: That’s quite an introduction—thank you.

Doc Eifrig: Hey, Buck—how many years did you say he’s been an investment professional?

Buck Sexton: Twenty five years is what it says here on the sheet.

Doc Eifrig: I think he’s trying to make himself younger than he really is. I count 32, Steve, that I've known you.

Steven Koomar: [Laughter] That’s right. I remember walking in the door with you about 32 years ago. That’s right.

Doc Eifrig: So, Steve, I'm gonna take the first question and throw it at you. We've been talking about, sort of, our takes on the market and inflation, the indictment for the stuff over in Malaysia with Goldman and all that. Thoughts on it? Any order? Go for it. Give us, kinda, your feelings.

Steven Koomar: On the—I think inflation is an interesting topic in that there really isn’t any out there. If anything, there still is deflationary pressure, which you can see it in the commodity markets and you can see it everywhere.

I think the real problem is that we had an inflationary mentality, inflationary economy in the U.S. until around 2008. And when the debt bubble blew up, that was really the end of the long term credit cycle, something that many people called a Kondratiev wave, and the debt which had accumulated higher and higher and higher, the private sector debt of the U.S., which accumulated higher and higher for 75 years, about, since the bottom of the previous cycle in 1933 started to decline and is still in decline. And it’s gonna be a long term decline of U.S. private sector debt that we go through to get the economy back into good health.

That is a deflationary event, unlike the inflationary event of the prior 50 years or so where the economy was running on higher and higher levels of debt where consumption was running ahead of incomes. Now, it’s going the other way around. Consumption is running behind incomes, and that’s deflationary. It’s something that you're seeing in Europe very strongly. You've got zero interest rates—they're still below zero interest rates in most of those countries, and there still is no real inflation and really not that much growth. In fact, it looks like it’s maybe negative in a lot of the European economy right now.

And China is about—you know, Japan’s been in a bust since 1990 and China’s about to do the same thing. So, we're looking at a period of deflationary growth, and I think that the potential for policy missteps by Central Bankers is, it’s a pretty high risk of missteps here, that the rates need to be lower than what we grew accustomed to in the last 50 years. They probably have to be a lot lower.

Doc Eifrig: Interesting. So, what do you make of—and I kind of appreciate that you sound a little more monitorous than I remember you being, but what about this fact that I'm having trouble finding cheap prices to fly and stay at hotels? I put up a chart—I didn't share this with you ahead of time, but I go out and make wine out in California in the fall. There was a point where Hilton Hotels were literally four figures. So, I've got $1,038.00 for Hilton San Francisco Financial District, $900.00 over in Oakland by the airport. Never seen before.

I mean, I have done this trip for 25 years, and we're looking at, the year before, those numbers were 300, 400. And then we can’t find anybody to pick grapes. Like, you can’t find anyone to help with the harvest. You've gotta increase the pay, you gotta pay them overtime or pay them enough to attract them from somebody else since there’s not that many migrant laborers to help.

I have felt inflationary pressures coming on on the price side of it with CVI sort of creeping up at the end of the year, middle of the year, over from 17 staying 3, 4 year over year. Core is still steady, you know, at 2, but are you—do you think the debt unwind is gonna be deflationary, or—

Steven Koomar: Very deflationary. I think what you're seeing, you're seeing pockets of inflationary pressure, which, for instance, what you're seeing in the airlines is really just, the supply and demand fundamentals have changed because of consolidation of the industry. And the excess capacity that we had in that industry forever, really, almost since it started is now gone, and there’s fewer carriers, and there’s a lot more discipline in the way in which they manage their businesses.

And so, they're managing their businesses to keep excess capacity from occurring again. And they're doing a great job of it. And I think that’s a lot of what you're seeing, and I think that that inflationary pressure in the transportation sector, particularly in the airlines, will continue to persist. But I think that’s—and that’s one of the areas where I recommend quite a few stocks is in the airlines right now, for that exact reason. But I don't think that’s prevalent across the economy.

And yes, I do agree, there is significant wage pressure, and that’s probably a good thing, because wages have really fallen behind. You know, average incomes, middle class incomes have really not participated in the good times of the last 30, 40 years. And so, I think wage pressure, growing wage pressure is probably overdue, and I think you're probably gonna get a lot more of it, and it’s gonna mean that many businesses are gonna have some margin pressures. It’s gonna make a real interesting time for stock picking in terms of figuring out where those margin pressures are gonna be a problem and avoiding those areas.

But yeah, I definitely think that that’s something that we're gonna see more and more of. But, you know, the wage pressures were there in the ‘30s when the labor unions started to get going, in the ‘40s and the ‘50s. There was substantially higher wage pressure in the U.S. economy. But inflation never rose. I mean, interest rates stayed below 1 percent until 1947, despite the Great War, and despite nominal growth over 10 percent many of those years, you had interest rates below 1 percent that entire time. And you never really had an inflationary problem. You did have a lot of wage inflation, and a lot of the difference was the productivity. They made up for it with productivity. And they found more laborers that they didn't have before. They brought women into the workforce during the war and things like that.

So, yes, I think you will continue to see pockets of inflation, and as an investor, the challenge is to be able to enjoy that inflation, find where it is and participate in it.

Doc Eifrig: See, I told you this guy is somebody to listen to and think about following. He’s got sort of insight into all of this. I just love it, I love it. [Laughter]

Dan Ferris: Steve, this is Dan. You mentioned transportation. Of course, if I were to look at indices and try to find a deflationary pressure, I mean, the Dow Transports have been kind of crushed. Is that not—do you not look at that particular index that way?

Steven Koomar: So, yeah, the railroads have really gotten crushed. The trucking companies have really gotten crushed. And I think that is looking what’s going on in the stock market right now and the forecast that that implies for slowing growth, which I think you're gonna get, I think you probably have a recession coming this year. There’s a lot of signals out there that that’s coming. And that would likely hurt those industries.

And you would think it would hurt the airlines, too, but the airlines, that one part of the transportation—I think I misspoke when I broadly said transportation. What really looks good is the airlines, because the airlines have this really good management of their excess capacity to where they can squeeze more and more dollars out of every traveler going forward for a while, until the discipline breaks down.

And I think—so, yeah, I would definitely differentiate between the different parts of the transportation sector and say the airlines is where that is that pocket of inflation. And the rest of it is, right now, appears to be suffering from a bit of deflation.

Dan Ferris: Okay. So, that makes a lot of sense. That’s a very simple and [Laughter] expected answer, I guess. The thing I want to know about, if you don’t mind me kind of changing gears on you a little bit, here, is this fund, this farmland real estate investment trust. I wonder if you can just sort of tell me about that a little bit and, you know, what are you doing, what’s in it? Is it just, you just buy from it and then collect income?

Steven Koomar: I've been an investor in farmland since 1988. I grew up in a farming community and farmers in my family, my grandfather was a farmer.

Doc Eifrig: Hey, Steve, I wanna interrupt for just a second, just so Dan and Buck and the listeners can get a sense of this. Steve, a long time ago, was actually hiring—Steve, were you hiring graduate students, undergrads to go and check soil samples for farms, that you can buy land thinking that, eventually, O’Hare might do another airport, that Chicago might have to build another airport and all that?

I mean, you've been buying land intelligently forever. You were in Brazil long before anyone was talking about Brazil farmland. Right? I mean, is that—

Steven Koomar: Yeah, I have, I've been involved, and I have been engaged internationally. And so, yeah, it’s been a part of my investment activity, really, for my entire professional life. And I appreciate that, Dave. You've seen me. You've been alongside me along these steps, so.

Doc Eifrig: Yeah, yeah.

Steven Koomar: And I've learned that farmland is a great wealth management asset. It’s great for wealth building, but it’s also a great wealth management asset in that it’s not correlated to other asset classes and it has good, steady, and growing income. And, in the end, the idea is—you know, really, what could be safer than black dirt that grows food? I mean, everybody needs to eat and the population’s growing and becoming more prosperous, and as it becomes more prosperous, there’s more protein demand.

And so, there’s always—it’s a steady growth industry. Now, there’s big cycles within it, because sometimes there’s gluts and sometimes there’s scarcity that’s often caused by weather changes. But over the long haul, it’s a very steady asset.

And so, the idea that I had was, a lot of people have come to me and asked me if they could invest with me, and that was always a hard thing to execute. So, I decided to put together a real estate investment trust with the idea of bringing in outside investors, making it easy for others to access at least a somewhat diversified portfolio of farmland and perhaps eventually making it a tradeable asset, giving some liquidity to it if we, at some point in time, decided it makes sense to go public.

Right now, it’s still very small, and we're still growing it privately, and that’s the way it’s turned out to make the most sense to develop this as a private asset class. There were a few public, large public rates that came out in the last couple years, and one has done pretty well and a couple have kinda stumbled a little bit. It remains to be seen whether this asset class will really succeed in the public markets, because what drives farmland is very different from what drives other real estate and definitely way different from what drives the stock market.

And so, investors just have to adjust and learn and have to get a big enough following for it to see if it works. So, I mean, that’s—but I think that it’s an asset class that really can benefit a lot of investors in that it has stable, growing income, and stable appreciation on average. It’s about 5 percent a year over the long haul. Lately, it’s been down the last few years, so it’s—right now, it looks to me like it’s actually an opportune time to get involved. The asset class is a little bit depressed, particularly from the sentiment from China, and China, the tariffs on U.S. grain has caused U.S. property values to decline a little bit, and it’s because U.S. farm income has declined significantly in the last few years. So, it makes for a little cheaper asset, and pretty good timing to get involved.

Dan Ferris: Right. Good time to get involved, not a good time to go public. [Laughter]

Steven Koomar: No, people don’t want to jump into something that’s got negative momentum, for the most part. You know, that’s kinda the nature of markets and investors.

Dan Ferris: Well, that’s interesting. I just, I'm kind of interested in that. I've dealt with various securities over the years that have gotten into farmland in different ways, and some of them were just really—I don’t wanna call them disasters, but they were really disappointing outcomes, and it’s kinda, you know, I hope this thing—I don't know. I hope this thing keeps going, I hope you go public, I hope you make a billion dollars with it, because it’s a great idea.

Steven Koomar: Well, thank you.

Dan Ferris: Yeah, sure. [Laughter]

Steven Koomar: I hope so, too. [Laughter]

Dan Ferris: You know, I was asking Doc, though, you know, we're talking about the transports being down and so forth and you just mentioned negative momentum.

I was talking to Doc earlier, before you came on, and I was—the question I was trying to ask, which I did not successfully ask—we mentioned Stanley Druckenmiller, and he said the stock market is the best economist that he knows of, and it’s been that way every cycle he invested in, and he talked about it meant a lot to him that various cyclical industries were performing poorly. And, to me, I'm a value investor, and momentum and watching different indices, it really—like, 99 percent of the time, it just doesn’t mean a thing except when a really huge, historical peak evaluation or a huge historical trough evaluation has existed.

So, and I was, I'm glad that you came on so that I could ask you, do you—is that how you look at the market? Do you look at the market as kind of providing you signals like that? Because, to me, I'm not always sure, you know, that there’s a signal. It’s just a recent near term performance and I don't know if it has meaning or if it doesn’t mean anything at all.

Do you see what I'm getting at? Do you look at these things, do you look at the automobile index and maybe the banks and so forth and say, “Well, they're down a whole lot more than the S&P 500, and that’s really serious, and it’s really bad,” which is what Druckenmiller was saying this morning. Does that kind of thinking work for you?

Steven Koomar: Dan, I think, if the backs look cheap, the banks look cheap. And you do have to ask yourself a question—are they gonna get a lot cheaper? Is the economy gonna get a lot worse? Are loan defaults gonna rise and loan losses gonna rise? Are there gonna be other things related to the economic activity that are gonna slow down their profit growth? But if you think that those things aren’t changing, then when the banks get a lot cheaper, then they look like a pretty good buy to me.

It gets a little bit circular to look at the bank industry as an economic indicator to me, because where does it show value and where does it show cycle? It’s kinda hard to differentiate them. So, when I wanna look at economic signals, I'm more likely to look at the things that everybody else looks at, you know? The purchasing managers, the momentum of GDP, lots of different things like that.

The individual industries and what’s going on in the industries is interesting to talk about, and it does tend to confirm what’s going on in the economy, but I don’t generally use it as a predictive measure.

Dan Ferris: Okay, well, Goldman is below 90 percent of book value, here, at 12.5 times trailing earnings. [Laughter] How does that look to ya? [Laughter]

Steven Koomar: It looks pretty good, but they do have a big liability out there with this Malaysian scandal, and we don’t know how that’s gonna turn out. And I think that, for that reason, the 90 percent of book value trade might make a lot of sense right now, because we don’t know how much book value could get wiped out. Probably not a huge amount, but it’s still an unknown. You know, the company clearly did some things wrong there, and they're gonna get fined. We don’t know how much. They could get sanctioned by other authorities outside of Malaysia. I mean, they could get sanctioned by the U.S. Treasury, by the Fed. And they could lose some business. They've certainly been embarrassed by this whole thing and this could hurt them in many different ways.

So, I think the jury’s out on that. I think it makes sense for investors to be very curious there.

Dan Ferris: You know, Steve, when I look at these giant financials, they just—they intimidate the heck out of me. I feel like they're, you know, it’s not that they're too big to fail, they're, like, too big to analyze, almost. Do you look at them? Do you buy them at various times? Do you feel that way, too, or no?

Steven Koomar: I think they are hard to analyze, and I think, to analyze them with the kind of detail that you—you know, you have such a rigorous approach yourself that I can certainly see, because you can’t, I don't think you can possibly, you could maybe analyze one of their many businesses with that kind of rigor, but you can’t analyze them all that way. It would create too complex of a picture.

So, yeah, I don’t profess to be nearly as rigorous as I know you are on the value investing side. And I do, from time to time, invest in bank stocks. I've got some Wells Fargo, which I've just bought some, in my portfolio. And, you know, I think I look at it and look at the—I can look at the conglomeration of the businesses. I'm comfortable looking at the conglomeration of the businesses and making an evaluation what the likely earnings level and growth rate will be going forward, and if I can buy it at the right level, I'm comfortable with that being a part of the overall portfolio.

Dan Ferris: I see. So, I'm just, I'm trying to kind of—I'm trying to corner you, here. [Laughter] I'm trying to go from both sides.

Doc Eifrig: Good luck with that, Dan. Good luck with that. Let me watch this. [Laughter]

Dan Ferris: [Laughter] Well, you said, I was asking you about looking at stock market indices and then you said, “Well, I'm more like you,” meaning more like a value investor. But then you were kinda saying, “Well, I'm not as rigorous on the value said as you,” so, I would like to—

Steven Koomar: I will say both. That’s true.

Dan Ferris: - give our listener kind of a picture of how Steve does what he does and what he looks at, what he winds up with in the end. So, what do you call yourself? Like, I call myself a value investor. You know, what does Steve Koomar—what does he call himself?

Doc Eifrig: Vigilante investor. [Laughter]

Steven Koomar: Yeah. I would call myself an investor in growth and value, both. And I wouldn’t, I don’t—I'm not exclusively one or the other. I like having, there are times when growth, as an investment style, works really well. There are times when value as an investment style works really well. I like to have some of both in my portfolio. And my stock picking kind of melds the two rigors together.

Dan Ferris: Do you sell short, Steve?

Steven Koomar: I do not.

Dan Ferris: You do not. So, you're a long only, kind of a hybrid approach?

Steven Koomar: Yes.

Dan Ferris: And are you—you know, we know you've got this private farmland ________, you own some Wells Fargo. What else are we—I don’t want you to necessarily, some people just don’t like to talk their book. If you do want to, of course, we’d love that, but what else—is there anything else that you like right now, or are you kind of terribly worried that this deflationary push might keep going? Is there something else that you really like right now?

Steven Koomar: Yeah, I think that what I like the best right now is investing in the telecommunications revolution that I think is about to get a huge lift from the introduction of 5G. I think—and there’s a number of stocks that I have in my portfolio that will benefit from the development and integration of 5G into the entire consumer and industrial economy across the world.

That’s something that I think, regardless of the deflationary trend and how strongly deflation exerts itself in the coming years, I think that the 5G investments will do very, very well, because the growth will be so phenomenal there, and there will be so much value that’s created there.

Dan Ferris: I see. So, are we talking about companies who are incorporating 5G into their existing networks or companies selling technology to them, or—where’s the real juice in this?

Steven Koomar: I don’t wanna invest in the companies that have to make the big investment, because I don't know whether they're—they're gonna have to spend so much money that the network developers like AT&T and Verizon, they're gonna have to spend so much money developing their network. And I just don’t know how fast the revenues will come in, and whether they will get a good return on that investment. I think they probably will, but I'm less certain about that.

But if the companies that produce the mobile technology or that develop the chips that are going to enable the automation—and there’s gonna be an explosion in automation that comes from 5G. Those companies are gonna see significant growth, and the companies that make the network equipment that has to be bought, like Nokia, like Ericsson. Those companies are gonna do exceptionally well. They're gonna see four, five years, at least, of really, really rabid sales growth and significant, in many cases, increases in their consulting business, et cetera, because they're gonna have—people are gonna have to figure out how to optimize these networks. They're gonna be so advanced. They're gonna integrate so many different types of radio signals in order to create the kind of incredible coverage and speed.

I mean, there’s gonna be a thousand times more bandwidth, more volume with 5G compared to 4G, and it’s gonna be 10 times faster, maybe as much as 100 times faster. It’s gonna accommodate maybe as much as 100 times as many devices. And they're seeking to reduce the latency where you sometimes get a little bit of a lag in a communication. They're gonna try to reduce that latency factor by a factor of 5. And the goal is to have 100 percent coverage.

So, the industrial automation, Internet of Things, is going to have much more ability to communicate, and including, in terms of automation, autonomous driving. And you'll get to the point where autonomous driving may not need to have big computers in the cars operating. Because if you have this incredible communication infrastructure out there with 100 percent coverage, the car can communicate through the cloud and be driven, or be steered or whatever via the cloud and have all the processing done remotely.

Now, that’s—fully, 100 percent autonomous vehicles, I may not see it in my lifetime, I don't know. But we're certainly moving in that direction towards more and more autonomous vehicles. And that’s just one of many areas where automation is gonna just take off.

Dan Ferris: Yeah, I've seen some simulations of how autonomous vehicles behave at intersections, and it’s absolutely fascinating, because they don’t stop. I mean, human beings simply cannot do that, and I could imagine one day, probably long after you and I are dead and gone, where you're kind of not allowed to drive any more, and your insurance company simply won’t let a human being on the road with autonomous vehicles.

But what I really got out of that excellent explanation that you just gave us was that you're long Nokia?

Steven Koomar: I like Nokia, yes.

Dan Ferris: Wow, that’s quite an interesting bet. Because they haven’t, obviously, done too well for a while, ever since Microsoft sort of cursed them, [Laughter] I think, was the high in the stock over the past five years or so.

Steven Koomar: Their big focus now is radio telecommunications. Their equipment is gonna be put in towers all across the continents, and especially in the U.S. where you don’t have Huawei as a competitor. And they have—that’s where they've really focused their attention. They've moved out of making phones and they've moved into network development. That’s their strength now, and so, this really plays to Nokia’s strength.

Dan Ferris: That is really cool. I'm gonna have to look into this, because obviously, it’s not in the stock price today, so, I thank you. [Laughter] Great idea. But I think we're really to the end of our time, unless Doc has anything that he’s got on his mind.

Doc Eifrig: No, I mean—yeah, I think that we should let people know, too, Dan, that I convinced Steve a few years ago now to start kinda writing his own newsletter, VI Investor. So, if you wanna follow Steve Koomar, which I can’t imagine doing on Twitter—that’s not a very good sell for your Twitter, is it? [Laughter]

Steven Koomar: [Laughter]

Doc Eifrig: Does your wife know you're Twittering? Do your kids know you're Twittering? [Laughter]

Steven Koomar: But that’s right, VigilanteInvestor.com, you can read about me there and learn more about my newsletter, and you can follow me on Twitter at VI Investor, and I appreciate that, Dave, very much. Thank you.

Buck Sexton: Well, Koomes, Steve Koomar, thanks for joining us and thanks for, during the holiday time, I know you're in the midst of a move, you're finally leaving the high tech state of New Jersey, and I don't think you've decided yet where you're going to land, but I know you're visiting family in farm country in Illinois right now, and happy holidays to you and your loved ones. You've got—gosh, one kid graduated from West Point, another one from Naval Academy, another gal who is a Division I athlete and she got married a couple years back, and another one’s still in college. Are all these kids coming home to visit you for the holidays?

Steven Koomar: We're gonna meet up in Hawaii. It'll be fun. The oldest is serving as an officer for the Army in Hawaii, so, we're all gonna go out to him.

Buck Sexton: Alright. Well, then I can say Mele Kalikimaka to you, Steve.

Steven Koomar: Mele Kalikimaka—thank you.

[Program music plays]

Buck Sexton: Alright, everybody, it is time for the mail bag. Some of you, I think, it’s your favorite part of the show, we get to hear from all of you. And if you want to give us your feedback, you just write to [email protected] We read them all, even the ones that have a little bit of a sting in them.

E-mail number one comes from Braden. “Hey, guys, I'm a long time listener of your show, and as a recent college graduate, the conversations you have on air really improved my understanding of the economy, politics, and the importance of education in building wealth, so thank you for your continuous teachings. My question is aimed more toward Dan as a value investor. Do you think dollar cost averaging into index funds is a good strategy for someone my age (24) or do you think it is wiser to sit in cash and wait for the right time to buy shares of a company when you believe they are undervalued? Eager to learn, Braden.”

Dan Ferris: Okay, Braden. One thing you'll learn is that it’s hard for me to give this kind of advice, because the question you're asking—I mean, it sounds very sort of generic, you know? Do I think you should do dollar cost averaging in the index funds at the age of 24, or should you sit in cash and wait?

Unfortunately, there is no generic answer to that that’s appropriate. Sure, at your age, one would hope that you could be patient enough and put a little bit of money in stocks every now and then and, you know, if you don’t want to spend your life analyzing equities, then that’s probably the only thing left for you to do if you want to be in stocks.

But I don't know you, so, I don't really know what exactly you're doing with your own money, and that is more important. It’s more important for you to sort of decide whether you're fish or fowl. What kind of investor are you? Are you going to actively manage your own money and buy and sell stocks? You don’t sound like a trader, but you kind of have to answer this question for yourself, unfortunately.

But I really do think that’s the right answer, Braden, and thanks for the question.

Buck Sexton: And let’s ask Doc if he wants to chime in.

Doc Eifrig: Sure. I can follow up your thoughts to our listener, Braden, and just tell him that, I think, when you're younger, we generally wanna have more money in stocks, because over the long term, that asset class seems to perform fairly well long term as, maybe, 8 to 12 years kind of a picture. And I think that you're less likely to do it when you're older and don’t have as much money and have expenses already fixed and locked in.

And so, you could turn yourself into a millionaire or a multi-millionaire, like I told my sister, about your age. I said, “Look, just take any extra money you make from this point forward, so if you're making, let’s say, $30,000.00 a year and next year you go to 35,000, take half of that, 2,500 bucks, and put half of every salary increase going forward the rest of your life into investments.” And whether it’s stock index; fixed income funds; a newsletter from Dan Ferris, a value investing newsletter; a letter from my buddy, Steve Koomar, Vigilante Investor or Retirement Millionaire—whatever it is, or any other Stansberry newsletters that we've got, and follow us and follow our portfolios and how we think about it. Take that money, regularly invest it, keep it going, and just start doing it. Because you're gonna have to go through all the—what would you call them, Dan? The emotions that we experience when we lose a lot and when we make a lot. [Laughter]

Dan Ferris: Yeah.

Doc Eifrig: And that kinda makes you a better investor, and the sooner you can learn those lessons, I think the better you will be investing in the long term. And, really, the purpose of it, in my opinion—and this is the question is, why are you investing? And for me, it’s so I can be at my age now and have all these different sort of income flows coming to me which allows me to sort of live more comfortably. And I don’t wanna say do what I've always wanted to do, because that’s changed over my life, but it does allow you to do many of the things that you enjoy doing if you've got income from other people’s efforts—that is, a stock business or a fixed income, if you're borrowing, I loan to friends and small businesses. So, they're paying me back in exchange for having a chance to do their dreams. I love that!

And so, it depends on your goals, but I like Dan’s answer and I like my answer, so I hope you decide to do whatever is right for you and good luck with that.

Buck Sexton: Alright, e-mail number two. We have Gary D. who writes, “Hi, Dan and Buck. My best friend and I were having lunch today, and as always, the table talk centered around investing. He has long been an owner of and a staunch supporter of General Electric, despite what I share with him about Porter’s views. We talked about the upcoming GE bankruptcy. My arguments for his head in the sand defense and how that might play out—he’s convinced that Trump will not let a GE bankruptcy occur and will step in with some kind of bailout program, much like Obama did with the ‘too big to fail’ back in 2009. How do you think a GE bankruptcy would play out? Is there a chance that the U.S. government would consider GE too big to fail and step in for the rescue, or will it let them slide down the chute the way they should, all while we watch Jack and Jeff slowly twist in the wind? Thanks, and keep up the good work, Gary D.”

Dan Ferris: First of all, I think it’s hilarious, you know, implying that the government should just let them slide down the chute and that we should watch Jack and Jeff, former GE CEOs, twist in the wind.

You know, this is a prediction. You know, how do I think GE bankruptcy will play out? It’s a prediction. I don't know. It’s a complex entity, and it depends on what kind of debt—you know, if you go into Bloomberg right now, there’s like 400 GE related debt instruments. So, you have to know where they are, how senior are they, where are they in the capital structure and so forth. And even that won’t help you predict how it’s all gonna happen.

I don't think it’s too big to fail. I don't think that. But I do think it’s kind of too complicated, and it’s not necessary to kind of predict it. You can just let this happen, and there’s no hurry to figure it out. It'll happen, and we'll all see it in 2 or 5 or 10 years or however long it takes.

Buck Sexton: Well! Doc, you wanna comment on this one?

Doc Eifrig: Sure, I’d love to. Gary D.—listen. I've got an answer for you that’s pretty simple, and unless you're a subscriber to our letter called Stansberry Credit Opportunities where we've got a staff of three or four full time folks doing nothing but studying opportunities like this and they are looking at GE’s credit and their bankruptcy process and all that, and they're doing it full time. So, that’s four folks doing it full time.

I don't even know why you’d waste another minute, if you're not a subscriber of SCO, to find out what we think about it, spending any time guessing or thinking that I or—in all due respect to Dan knows what the heck’s gonna happen to GE. Move on. There’s better, bigger fish in the ocean. You heard my buddy, Steve Koomar, throw out a couple picks today. Dan’s got some great ideas in our newsletters, or just get an index fund.

But, God, why waste time? Why waste any of your life thinking about GE? Ugh. Enough.

Dan Ferris: Buck and Doc, it’s been really fun today. You know, have a great holiday, and I'll see you when I see you.

Doc Eifrig: Thanks for having me on, and happy holidays to everybody—you two, especially.

Buck Sexton: I wanna thank everybody for listening to The Stansberry Investor Hour. Doc and Dan have already said, obviously, that there’s not gonna be a show next week because of Christmas. We will be back on January 3rd and we will talk to you then. Happy New Year, everybody, and Merry Christmas.

Doc Eifrig: See you next year.

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Announcer: 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 Porter and Buck? Send then 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 decision 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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