Income is back and Van Eck has you covered with VETF to bring income to your portfolio.
With Van Eck's Income Investing Yield Monitor at ThinkYield.com, you can easily track Van Eck's ETF yields,
monthly flows and performance of each income ETF category.
Explore Van Eck Income ETFs at ThinkYield.com.
Investing risk includes principal loss, past performance is no guarantee of future results.
Visit Van Eck.com to view a prospectus that includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully.
Van Eck ETFs are distributed by Van Eck Security Corporation, a wholly owned subsidiary of Van Eck Associates Corporation.
When you get all your notes organized and have them easily accessible, you'll know why there are more than 100 reasons to buy and remarkable.
Here's reason number 56.
With Remarkable, you can convert your handwritten notes into text to reuse in emails, reports or presentations.
Take your office with you.
Easily, access all your documents and presentations on all devices. Just like paper, only better.
Learn more at Remarkable.com.
Hello and welcome to What Goes Up, a weekly markets podcast.
My name is Mike Regan, I'm a senior editor at Bloomberg.
And I'm Valdana Huyg across Asset Reporter with Bloomberg.
And this week on the show, well, we've heard it a million times this year, from strategists and fund managers and pretty much everyone else.
Don't trust this rally in stocks that has pushed the S&P 500 up more than 8% year to date at its highs.
Well, finally this week, we saw a bit of a dip following a really slow grind higher for more than a month following March's regional bank drama.
So what should we make of that? Is it time to once again buy the dip or is this the start of a serious correction that so many have warned us about?
And if that's the case, what are the best areas of the market to hide out in until the coast is clear?
We'll get into it all with the chief investment officer of equity strategies at a major investment firm.
But first, Valdana, I think people that listened to this podcast assume we're all sitting around a table together or something like that.
But you've actually fled the state.
I did, yeah. I mean, typically we are sitting around a table together.
Yeah, true.
Which can be fun. It has its downsides too.
Well, tell us why you fled.
It might have had something to do with you.
No, I'm kidding. I'm in Chicago for the annual Morningstar Investment Conference.
That looks like...
I'm having so much fun, yeah.
What's so fun about Morningstar?
I'm at the... Well, today I'm at the Bloomberg office because we have a wonderful office here.
And it's on the 49 floor and has really nice views.
But I get... I don't know, I get some sort of fright as soon as I approach one of the windows to look out.
Because you look down and it's so... It's just so scary to me.
But the views from further away are nice.
That's too high for me. 49 floors is entirely too high.
But the conference is really nice too. It faces the lake.
Okay.
Which is beautiful and the waters are green.
And then another side of the conference center faces the Chicago skyline.
It's very nice.
It's very cool.
Yeah. My views this week are really nice.
You're never coming back, are you?
Nah. Actually, our guests used to live here as well,
even though she's in New York City now.
But I do want to introduce her. It's Kwei Nguyen,
CIO of Equities at Research Affiliates.
Kwei, I'm so happy you could join us. Welcome to the show.
Thank you very much. Happy to be here.
Maybe we can start with a bit of your background
and how you ended up at Research Affiliates.
I really started out my career right out of college in quantitative research at BARA,
which is now part of MSCI.
And that was really my introduction to finance.
I had actually studied math in college.
You know, like a lot of college students,
I didn't know what I could do or wanted to do.
And BARA gave me the opportunity to learn something new,
apply math to an area that I'd never really looked at before.
And it really stuck.
And so from there, I made my way to the asset management world
at State Street Club Advisors,
then Morgan Stanley Investment Management,
and then finally at Numeric and Investors,
which is now a part of MAND Group.
During that time, I had my first child.
And one of the things I realized was that
being a new parent and being active in the markets,
trading in the markets was not exactly easy.
And I really lucked out because a former client of mine
from my Morgan Stanley days
had become Chief Investment Officer at University of Chicago's Endowment.
And he contacted me, said he was expanding his team.
And one thing led to another, went through a formal search,
but ultimately gave me the opportunity to
do investing from the other side of the table as an asset owner,
not just as an asset manager,
and gave me a whole new perspective on what it is
that investors need what they want and what they're trying to achieve.
With that, I stayed on the asset owner's side for about 10 years.
And when I was finally ready to go back into asset management,
I contacted several people I knew, some of whom were research affiliates.
Chris Brightman and Rob Arnott were people that I'd known
in the industry for a number of years.
And it was a small firm.
It was the kind of thing that I really wanted to join.
It was quantitative investing, but with really a fundamental twist to it.
And also, one of the things that research affiliates really stands for
is value investing.
And one of the things that I saw a few years ago
was the large gap between value and growth stocks,
something that had never really been seen before,
and something that I felt could not be sustained.
And that there would be a quick snapback towards value,
and that value would likely see a renaissance over the next few years.
So with that opportunity in mind, I joined research affiliates.
Great, Kway.
Let me just get into sort of how you're thinking about the market
over, call it the last five or six weeks.
You know, because early mid-March, we started to see the problems with the banks.
Silicon Valley Bank collapsed, Signature Bank, Silvercore Capital,
First Republic started looking weak and has been hanging on.
But at that time, it really felt like, well, this is it.
The Fed's tightening campaign finally quote unquote broke something.
And here we'll get this sort of cathartic final leg lower inequities
that so many people have been bracing for.
But it didn't turn out that way.
Obviously, the Fed reacted very quickly.
The FDIC reacted a lot of liquidity added to the system.
We saw the market rebound, at least from the index level.
A lot of the regional banks are still struggling, obviously,
their share prices.
But now again, First Republic's back in focus this week.
It does feel like we're rolling over a little bit in the S&P 500.
So I'm just curious, you know, how you thought about this whole episode
in the last five or six weeks.
Did it make sense to you?
You know, was it all about the liquidity?
Sort of let us just pick your brain about what we just witnessed over the last six weeks.
Yeah. So when the banking crisis first emerged,
the thing that I really thought about was how bad is this going to get?
Is it going to be like the great financial crisis?
How is it going to be?
And I think that we're in a much better place than we were in 2007, 2008.
Banks in general, you know, with a few exceptions are in a much stronger place.
That being said, you know, when the Fed raises rates and it breaks something,
that something doesn't usually just, it rarely happens that it's a very small break.
Usually it's a very big break.
And so while I'd never thought that we would get to a great financial crisis level of a breakdown,
I did believe and I still believe that there would be more things that break that came along,
whether that continued to be in the small regional banks or whether that bled over to something else,
such as real estate lending, private credit, definitely I think those dangers still remain out there.
And can you talk about what you actually foresee for the economy?
Because for me being at the conference this week and hearing the Morningstar economists talk
about what they're projecting, they're actually foreseeing a soft landing.
But in your view, you're saying that that may be a bit of an optimistic projection.
So can you give us your outlook and how you're seeing things evolving with the economy?
Sure. I mean, I guess I'm biased because I started in this industry in the early 90s.
And every single cycle that comes through, everybody says, we're going to have a soft
landing, we're going to have a soft landing, we're going to have a soft landing.
And I don't really know what a soft landing is because no landing that I've ever experienced
has ever really felt soft. And so I'm not really sure what that really means.
There's always going to be something that breaks a little bit worse than you expect.
It's very, very difficult to engineer that soft landing. And so I don't see, you know, why a soft
landing is what people call for when we hardly ever achieve it. Perhaps they have achieved it
before when I was a child, but certainly, you know, not since I've been in this industry.
And at the same time, one of the things I would say is that we are also not just seeing a withdrawal
of monetary support, but we're also seeing a withdrawal of fiscal support, things that we're
seeing such as extra snap benefits coming to an end. Also, the likelihood that student loan
forgiveness is not going to happen and that people have to start paying those loans again.
All of these small, you know, piecemeal withdrawal of fiscal support will make everything a little
bit more tricky as well, because the consumer, it really is 70% of the US economy. And we really
can't have a soft landing without having the consumer remain somewhat comfortable.
And then, you know, we're now beginning to see job losses spill over. At first, it was just
technology, then small pieces of the financial services industry. And now we're beginning to
see other firms start laying off people in Disney, for example, and then also additional rounds of
job losses within technology continue to roll on. So, having said that, though, you know,
the question is, this happens to the economy. We have economic cycles. It happens all the time.
How should we think about it in the equity markets? It's really not unusual for equity markets to
have already bottomed by the time we know that we're in a recession or by the time that the
recession comes around. We already had a big drawdown last year, 20% in the S&P. I think
peak to trough last year, I think it was down almost as much as 25%. That's a normal level of
decline for equities preceding a recession. And so, this year, as equities meander around,
it could be that regardless of how soft or hard the landing is, we've already seen the worst of
what there is to come, what there is to be in the equity markets overall.
And can you talk about when you're for seeing this? Because another part of the discussion
at the conference was that potentially we could even be in a recession right now. Is that what
you're seeing? Or is it something down the line? Oh, I definitely think that we could already be
in the beginning stages of recession right now. Typically, we don't know that we're in a recession
until six months after it started. By the time that we know that we're in a recession,
we may already be in recovery. I think if you look at the short-term interest rate market,
people are basically pricing in as many as two rate cuts by the end of the year from the Fed,
which leads me to believe a lot of people agree with you that a soft landing is going to be
pretty hard if not impossible in this occasion and that the Fed is going to have to react to
prop up the economy by the end of the year. But one thing I wonder is if it's possible that
we're looking at something in between like a stagflationary environment where growth does slow,
maybe it doesn't go deeply negative for a full-blown recession, but that we still,
regardless of that, don't tame this inflation problem to the satisfaction of the Fed.
So that pricing for rate cuts later in the years is mispriced and that even if the Fed's done hiking,
that they're going to hold at this higher level for a longer period, is that a possibility in your
mind? Something between a hard and soft landing, more of a stagflation type of environment?
I wouldn't call a stagflation somewhere between a hard and soft landing. I would say stagflation is
a fork in the road, will be fork into something that we just haven't seen in a really, really long
time. I definitely think the stagflation is a possibility. I thought the stagflation was a
possibility for a while. Two rate cuts by the end of the year, I wouldn't be surprised if the Fed
started to accommodate, depending on how hard the landing is, how quickly the job loss is
mount, how quickly spending slows. Remember, the Fed has a dual mandate, both price stability
and full employment. They are at odds with each other and the Fed has to right that balance.
So depending on how the numbers evolve through the end of the year, two rate cuts are still a
possibility. But at the same time, one of the things that we are seeing is that inflation has
come down significantly. I think it peaked out at over 8%. It's now running
above 4, below 5%. If the Fed does cut through the end of the year, we're not going to get back to
that 2% goal that they have. If they do cut, it will be because the underlying economic fundamentals
aside from inflation require that. And so as they accommodate, it would be surprising to see
inflation go back up and therefore the Fed is going to either have to hold at a higher level
or resume hiking, which could send us into the classic double dip, which is what had to happen
before inflation was finally tamed in the early 80s. And so where do you see inflation topping out?
Is it still above 4%? Yes, I do think that if the Fed has to ease through the end of the year,
I think inflation is going to stay above 4% in this intermediate cycle. I think ultimately,
the Fed will succeed in getting it back down to 2%. It's just that what we're going to have to do
to get there could be either very, very arduous in the short term or less arduous that spread out
over a longer cycle. Income is back and Van Eck has you covered with VETFs to bring income to
your portfolio. Find the yield duration and credit exposure you're looking for from Van
Eck's range of income-focused ETFs, which includes municipal bonds, corporate bonds,
international bonds, equity income, floating rate instruments, and multi-asset income.
With Van Eck's income investing yield monitor at ThinkYield.com, you can easily track Van Eck's ETF yields,
as well as the monthly flows and performance of each income ETF category. Take advantage of the
back-to-income play. Explore Van Eck's income ETFs at ThinkYield.com and find the right ETF for you.
Investing risk includes principal loss. Past performance is no guarantee of future results.
Visit Van Eck.com to view a perspective that includes investment objectives, risks, fees,
expenses, and other information that you should read and consider carefully. Van Eck ETFs are
distributed by Van Eck Securities Corporation, a wholly-owned subsidiary of Van Eck Associates
Corporation. Never lose track of your notes and documents again. Your notes, organized.
Introducing Remarkable, the paper tablet that does it all.
Replace your notebooks and documents with the only tablet that actually feels like real paper.
There are more than 100 reasons to buy a remarkable. Here's reason number 32.
With Remarkable, you can use tags to bookmark key topics or important files,
so you can easily find them again later. Here's reason number 74.
Access documents and cloud storage apps directly from your Remarkable. Plus, a full two weeks of
battery life. Visit Remarkable.com now and order yours today. Make Remarkable part of your business
for better meetings, uncluttered desks, and improved workflow. Your next notebook is the last one
you'll ever need. Get yours today at Remarkable.com. Remarkable.com.
So how do you break it down as far as what are the areas of the stock market that are most
attractive right now, given all these uncertainties and this very real chance of a hard landing?
I know you focus exclusively on equities, so I won't ask you about actual portfolio allocation.
Unless you want to get into that. It is an interesting time for cross-asset allocations
with money market funds, finally offering a real yield, even bank savings accounts offering
in some cases above 4%. But how are you thinking about allocation within equities and within the
whole portfolio in this environment? Let's talk about equities first. I think
with inequities, what I would focus on in the areas that really got beaten up. When you buy
something cheap, you buy yourself a lot of downside protection. If you take a look at what's got
beaten up, there are really two areas right now. The first is financials. The banking crisis or
the mini crisis in March really led to that. What you're getting at financials is a lot of high
quality banks that got beaten down because the baby got thrown out in the back water.
I think interesting ideas might be certain banks that are trading at eight times earnings that
are very high quality. City Bank, Wells Fargo, Fit That Bill, for example. Assurance companies,
were also some of the companies that were collateral damage along the way. But it's not as if people
are going to go out there and start cancelling insurance. Insurance is one of these things that
everybody needs, just like banks are things that everybody needs. Again, if they're priced well,
they become reasonable investments in the short and medium term. Met life, for example, is trading
at seven times earnings and AIGs, trading something like eight. When you get single digit multiples
like that in name brand high quality companies, they tend to offer some upside potential as well
as some stability in the event of a downturn because they've already priced so much of that in.
Other cyclical areas have also gotten beaten down. Within technology, for example, we're seeing
some attractive names in semiconductors. A lot of this has to do with the trade war with China.
But the reality is that nobody's giving up their phones, nobody's giving up their computers,
even speakers need to have some good cars. And so semiconductors, there's a structural
growing demand there. And what you're seeing is you're seeing a lot of high quality companies
again getting beaten up. And there could be opportunities to invest there for long term growth,
a company like Qualcomm, for example, is trading at 12 times. And then within the consumer segment,
the home builders, the ultimate cyclical play, the home builders are priced very
attractively right now. So both multi-group and toll brothers are trading at seven times earnings
and lonars are a little more expensive there 11 times. You do have to be volatility tolerant
every time you go into equities. And this is going to have the normal equity volatility.
But to some extent, if you're afraid of a recession, then go and buy the stocks that are already
priced for a recession. Don't necessarily buy the stocks that are optimistic that there's not
going to be a recession. And then the other thing that I would add to that is that given what happened
last year, the mega cap, stars, the fang stocks, I think there are opportunities to pick up some
very high quality stocks at reasonable multiples. So a good example of that might be a meta, right?
Meta used to be one of those great glamour stocks that really beaten up. It's now trading at 15
times. I wouldn't necessarily say that it was outright cheap. But for a company that just generates
so much cashflow and is so profitable, it looks like an interesting play. Of course,
it would have been neutered by this thing in January, because it's up 70%, 80% this year already. But
still, even so, it still represents, I think, an interesting entree into a high quality name.
That's a fascinating point about the insurance companies that you bring up, because we don't
hear people talking about them a lot. And you mentioned how cheap they got. What do you think
explains why that happened? Is it just a matter of them being loaded up with low yielding treasuries
similar to the way that the banks are? Is that the main area of concern, do you think?
Yes, I think there are really two areas of concern. I think that is one area for concerns.
Their investment portfolios. How are they doing? And you definitely see a separation between certain
insurance companies and other insurance companies, depending on the mix. Add to that,
the fact that many insurance companies over the last 10, 15 years have increased their allocation
to private investments a lot, specifically venture. And the failure of SBB and the story of venture
are very interrelated, right? The slowdown of venture caused, led to some of the issues of SBB.
The unwinding of SBB is going to undermine the funding of venture. It becomes a negative cycle.
And so depending on what the insurance portfolio is in, there could be some ramifications from that.
But ultimately, what I'm reading about in the insurance industry is that they are all able to
hold their premium rates, their loss ratios are not significantly worse than what has historically
been. Yes, last year was a really bad year for investment portfolios. This year is a lot better.
This is what happens to investment portfolios. It's not an unusual thing. What you really
do want to do is you really want to, as Warren Buffett says, buy when others are fearful.
I'm curious about your methodology. What are you looking for when you're looking at
these different stocks? Is it just the cheapness factor that you're
signaling out or what are some of the other components?
We definitely try to identify stocks that are fundamentally undervalued.
But some of the stocks that are cheap, as they say, are stocks that deserve to be cheap because
they're going out of business. A classic example of that last year was Bed, Bath, and Beyond.
We know that Bed, Bath, and Beyond recently filed for Chapter 11, but it was a long road to that.
And during that time, it would always show up on any sort of value screen, a very, very cheap stock.
And so what's important to us is to pair that with two things. It's to pair that with a quality
screen where we're really trying to avoid the companies that are close to distress,
as well as avoid companies that have what we would consider less capital discipline.
And then we also look at the recent momentum because there could be news flow, there could be
something else that is not yet in the financials that is causing the stock to move one way or the
other. What we like to see is we like to see strong risk adjusted returns or moderate risk
adjusted returns. We don't want something spiking up or spiking down. If something is spiking down,
what we would probably do is just try to either avoid it until the volatility settles down or
just own less of it. And really, there, all we're trying to say is,
the markets can be irrational for far longer than you can remain solvent. So take steps to
protect yourselves. Those are the things that we look at.
One area everyone's fearful about is commercial real estate these days, especially look at the
publicly traded office rates just been destroyed. There are, at least on paper, some pretty attractive
yields on a lot of those stocks. But I wonder if it's sometimes it pays to be fearful too,
whatever else is fearful. So I'm wondering how you're thinking about commercial real estate,
specifically both the public equities involved in the space, but also its macro influence on the
rest of the economy and the banks and the credit situation.
Sure. I mean, one of the things that I think is very interesting about commercial real estate is
that these things do show up on our value screens, but it's hard for them to make it past our quality
screens. And so we haven't really been involved heavily in commercial real estate and our portfolios.
But having said that, I think one of the things about value investing is that it is a bet on mean
reversion or is a bet on stability, right? Then you generally have this very stable situation
and that things get really out of whack. And then you buy when others are fearful because that fear
is out of whack, and then you just ride the conversions back to stability or normalcy.
The problem with commercial real estate right now, as specifically office, is that we could be in
the midst of a secular change. And that's not something that value investing adequately addresses.
And so that is something that is addressed through, for example, momentum, right? You look at the
momentum of these things, they look awful. Having said that, you know, I don't know, I mean,
we're all sitting here around a virtual table. And our conversation is extremely effective.
It's not like video conferencing was 20 years ago. And so is there really a need to have an office?
I think it's nice to have an office. I like going to the office and seeing other humans
and interacting with them and chatting. But it's not necessary like it was. It's not as much of a
necessity. And so the use of office, I think, will still be there. I just think that people will use
less of it. That's the secular change, what you mean by secular change, I assume. Exactly. And so
I think that we all have to go through an adjustment on that, both in terms of professionals, as well as
in terms of how we invest. I do worry about the lack of full return to office, not necessarily for
myself personally, but really, how does it affect new entrants into the white collar workforce?
How do they get integrated into a firm culture? How do they get trained? I was speaking to a front
of mine whose firm has basically gone mostly virtual. And one of the things that he said is
that it's actually very difficult to hire the younger analysts because they don't want to work
in a virtual office. They want to work with real people from whom they can learn. I think it's all
about sweatpants, Philbana. If they could remove the stigma of wearing sweatpants in the office,
I think everybody would be happy to come in. I'd be back five days a week. Honestly, I wouldn't
mind it either. Yoga pants, lululemon pants.
Income is back and Van Eck has you covered with VETFs to bring income to your portfolio.
Find the yield, duration and credit exposure you're looking for from Van Eck's range of
income-focused ETFs, which includes municipal bonds, corporate bonds, international bonds,
equity income, floating-rate instruments and multi-asset income. With Van Eck's income
investing yield monitor at ThinkYield.com, you can easily track Van Eck's ETF yields,
as well as the monthly flows and performance of each income ETF category. Take advantage of the
back-to-income play. Explore Van Eck's income ETFs at ThinkYield.com and find the right ETF for you.
Investing risk includes principal loss. Past performance is no guarantee of future results.
Visit Van Eck.com to view a perspective that includes investment objectives, risks, fees,
expenses and other information that you should read and consider carefully. Van Eck ETFs are
distributed by Van Eck Securities Corporation, a wholly-owned subsidiary of Van Eck Associates
Corporation. When was the last time you were truly focused? Meet Remarkable, the only digital
notebook designed to help you focus, just you and your thoughts. The Remarkable Paper tablet
provides a revolutionary way to take notes and read and review documents. With a paper feel,
never before experienced on a digital device, Remarkable is faster, thinner and smarter.
When the work really matters, Remarkable helps you forget all the noise and distractions. Create
and curate your setup with virtually unlimited space for all of your notes and documents.
Experience an entirely new way to take notes, sketch or develop your big idea all without
interruptions. Access and edit your work at your favorite thinking spot. Make real breakthroughs
with Remarkable, a digital notebook as close to paper as it gets. Your next notebook is the last
one you'll ever need. Visit Remarkable.com. Remarkable, the paper tablet.
Kwe, if we can just go back to that point because that the remote work point or the lack of the
return to office is something that is one of the factors in your economic outlook. Your thought
is it's changing everything not just from how offices are utilized but also transportation,
etc. It is changing how transportation is organized. That's one of the secular headwinds
against something like oil, gas. People just aren't filling up their cars as much as they used to.
It also puts pressure on a lot of metropolitan transportation situations such as New York's.
Ridership remains pretty low on the subway compared to pre-pandemic. But having said that,
one of the things that it does do is it does put more money back into the pockets of families.
So this could be something that cushions the blow in terms of when people have to start repaying
student loans. For example, one of the things that somebody else pointed out to me was that
he used to come to work at Midtown every day and he would have lunch in Midtown every day.
And now he works from home two to three days a week. And in Brooklyn, in his neighborhood,
all of a sudden, there are so many more options for lunch than there used to be.
And so one of the things that he's saying is that it's not just about are the people
returning to offices. It's also about the migration of different types of business to different
neighborhoods. So you may actually see what looks like a depressed downtown area, but then you
actually have more vibrant residential areas from a business point of view. So there are gives and
takes to that. I don't necessarily see the return to office as being an economic negative for the
economy as a whole. Definitely, it will impact certain regions, certain cities more than others.
But as a whole, I don't necessarily think that it is an overall negative.
You mentioned your preference for value. And last year, it really looked like value was
finally having that moment in the sun where it was outperforming growth.
Again, it's kind of a tricky subject, I think, because the composition of what's in the value
indexes versus the growth indexes has changed pretty dramatically. But if you think of the old
school growth, if you use the NASDAQ 100 as a proxy for it, it looks like growth is
back in the leadership again. What do you think explains that? And is that going to last? I mean,
is the value trade going to return this year? Do you think it's a favor? And what would drive that,
if so? The NASDAQ 100, I remember, I think has something over 20% and it's top two.
It's getting ridiculous.
When you talk about NASDAQ 100, you're really talking about some of your narrow set of stocks.
Those stocks happen to be what I consider to be a very high quality stocks. Apple is one of them,
very strong consumer base, very loyal consumer base, lots of cash generation, high profit margins,
strong capital discipline. I know that everybody made fun of Tim Cook when he started paying a
dividend on the stock many years ago. But that's just an example of he's got good capital discipline.
He knows he's not going to invest in something silly. He's going to return it to shareholders.
What I saw was not necessarily a return to growth, but really people going in and buying high quality
stocks at more reasonable valuations and having a preference for these very high quality stocks
in the face of continued market and economic uncertainty.
They're the new defensive almost.
Yes, the new defensive is almost. It's just that before, at the beginning of 2022,
they were trading at ridiculous multiples. And all of a sudden, at the beginning of 2023,
it was a completely different story. It was a much more reasonable place to start buying these stocks.
Met as just one example, but definitely Apple, Google, or other examples of that.
One of the things that value does, though, is that it's not meant to be static. It's not meant to say
value always by this company or value always by that company. Value will buy what is cheap in
the market. And then in addition to that, one of the things that we try to do is not just take
a look at absolute cheapness. Absolute cheapness is great. We also try to take a look at a more
comprehensive, well-rounded valuation, which is one of the reasons why we find stocks like meta
to be interesting. Well, quite a win of research affiliates. Quite a treat to pick your brain
here today on what goes up. We really appreciate your time. Can't let you go just yet. We do have
a tradition on this show where we have to discuss the craziest things we saw in markets this week.
So drum roll. On my little laptop. Yeah. Well, why don't you get us started?
Okay. This is another Morella special. Morella is my sister. She's our new craziest thing.
Correspondent, I would say, right? She sends me a bunch of stuff. And I asked her for something.
I was like, what have you seen that's weird? And she pointed out, and this is from a couple
days ago, that there's this new viral song from Drake and the Weekend. You probably don't know
who those two are. Yeah, I do. Come on. I've got teenage daughters. Oh, right. Okay. Okay.
And it was created entirely by AI. Wow. Yeah. It's a bizarre one.
Yeah. And I think it was like one of the top streaming. They even had to pull it from
Apple and Spotify because Drake obviously wasn't very happy. But it was totally created by AI.
I feel like if there's a way to go long on copyright lawyers, I think AI is.
Yeah, this is it. Yeah. I think it would be a private investment.
How do you hear Wheelhouse? But I feel like there's we're going to be seeing a lot of cases
over this stuff. Really, what does chat GPT do but go out to the internet and copy and paste some
information from other websites? That's pretty good. That is a good one. Really not market-related
Vildana, but I'll blah, blah. It's the potential for vastly increased productivity from Drake.
There you go. Yeah. It was pretty productive to start with. So it's pretty good.
All right, Clay, how about you? Have you seen anything crazy recently?
Yes, I saw a story early this week about a crypto wallet that was dormant for something like
eight or nine years. And I guess back then, it participated in the initial coin offering of
Ethereum. And so it was allocated just a few thousand dollars of Ethereum at 31 cents per coin.
And then for whatever reason, the owner of this wallet just sort of went away and didn't do anything.
And Rip Van Winkle wakes up while it's now beginning to be active. It's had essentially a
600,000 return return. Wow. Right. Of course, they missed the giant run up, also the big massive
drawdown. But are you really that unhappy that you missed the giant run up? I mean, aren't you
pretty happy with a 600,000 return? It's me. I'm not a little over. One of the things that really
struck me about this is that, you know, this is really an example of the Rip Van Winkle,
you know, philosophy of investing, right? You buy it for the long term. If you say you're going to
buy it for the long term, just buy it for the long term, hold it, and then look at it many,
many years later, and you'll do fine. But not many of us have that kind of patience.
But here's an example of the person who did and really. Yeah. What was the check
Bogle used to joke about? You should burn your password to
Savangard and just go have them rebooted when it's time to retire. Do not burn your crypto
password. That's true. It doesn't work. Don't do that. Well, you brought it up. So we get to
ask you, what do you think of crypto? Are you a believer? Are you a skeptic? How do you,
how do you think about crypto? To me, crypto is really an expression of sentiment.
You know, it's something that trades off of sentiment. There's no intrinsic value necessarily
related to crypto. Where crypto does derive value is in the community that is enthusiastic about it.
And so if the community is really enthusiastic about it, it's great. If the
enthusiast, if the community loses interest in it, it just goes away. So, you know, that's where it
is today. Now, can we take crypto and make something more out of it, make something more out of the
technology, the blockchain? Certainly people are trying. But thus far, I haven't necessarily seen
anything that, you know, makes that application real. I think that's, that's a smart way to think
about it. I'm going to delve into the non-encrypted currency markets, the good old fashioned currency
markets, Phildana coins. And this is courtesy. I don't know. Do you follow Steven Dennis, the
Senate reporter at Bloomberg? Oh, he had, he posts like the houses and the
he posts, yeah, Zillow. He does Sunday nights. He posts like the, the nicest and weirdest houses
on Zillow. But he posted what he calls an eye popping stat from the US men mints.
And it's regarding sitting in jars somewhere, 200 billion pennies sitting in jars. But
probably because of that lost circulation, the mint has to keep making new pennies, millions,
billions of pennies every year. Okay. And he brought up the cost for the US mint to actually
mint a penny. So it's time to play the prices precise, you're on a game show now. I hate to
inform you. I want you guys to guess the cost of the US mint to make a penny and put it in
circulation. One, one cent, one US penny. Okay, I'm going to say it's slightly above one cent.
What's she give me a number? I don't know. How do you measure slightly above one cent?
One point. I don't know. You need to you need Satoshi's, I think.
You do 1.01, so it would be zero point zero. I really don't know how to do this. I'm just going
to go slightly above one cent. All right, quite. How about you? What do you think it costs to
mint a penny? I think it's going to cost two cents. That's pretty good. That's pretty close.
2.7 cents to make a penny. Why are we bothering at this point? To bank. Oh my gosh. It's ridiculous.
And once last time either of you actually spent a penny. Have you, I can't even think of the last
time I spent one. Well, I don't keep cash in my wallet to begin with, so it'd be very hard. Yeah.
Aside from my day job, I'm also the treasurer for my son's school PTA. Oh, and they had a big sale.
And so then I had to gather the cash and actually deposit it at the bank. And in that stack of cash
was a whole bunch of pennies. You put it in the bank, not into a value. Not in the some value stocks,
quite. I don't think that our PTA is allowed to make investments. Your
mandates are strict mandates. And for a nickel, how about this? A nickel 10.4 cents to mint a nickel.
I say get rid of get rid of all of them. Well, we all have digital wallets now anyway, right?
Penmoo's, E-PAL, Apple Pay. Yeah. Although I guess they like to have those pennies.
They can make their pennies off of their transaction. So digital pennies carry on.
I think that the main thing about getting rid of the penny is I think the state of Illinois
might get annoyed. Why is that? Lincoln. It's the land of Lincoln.
You're there. You're the land of Lincoln. A penny for your thoughts. That's a penny for your thoughts.
Right. You still don't have the five volume. But you're right. Things like that, like a penny for
your thoughts. Those sort of witticisms will sort of go away and our grandchildren won't know what
we mean. What are you talking about kind of thing? I literally didn't know what really
what happened. I know people use that phrase, but I always was like, who? What?
Penny for your thoughts. Good reason to keep the penny around, I guess. Fair point,
Clay. But I think that is all our time for this week.
Quagwind of research affiliates really appreciate your time and your wisdom. And hopefully we can
talk to you again someday soon. Yes. Thank you for coming on.
What goes up will be back next week. Until then, you can find us on the Bloomberg terminal,
website and app. Or wherever you get your podcasts. We'd love it if you took the time to
rate and review the show so more listeners can find us. And you can find us on Twitter.
Follow me at Vildana Hirek. My korean is at Reganonymous. You can also follow
Bloomberg podcasts at podcasts. What goes up is produced by Stacy Wong and our head of podcasts
The Sage Problem. Thanks for listening and we'll see you next week.
When you stay on task with the only paper tablet that helps you focus, you'll know why there are
more than 100 reasons to buy and remarkable. Here's reason number 39. Remarkable was designed
to free you from distractions. No notifications, social media or email. Write your thoughts directly
onto the page or add a blank one if ideas really start to flow. Just you and your thoughts.
Learn more at remarkable.com. Remarkable.com.
There's so much news happening around the world that we're somehow supposed to stay on top of.
That's why we launched The Big Take. It's a daily podcast from Bloomberg and iHeartRadio that
turns down the volume a bit to give you some space to think. I'm Wes Kosova. Each weekday,
I dig into one important story and talk about why it matters. Listen to The Big Take on the iHeart
radio app, Apple Podcasts, or wherever you listen.
♪♪♪