Episode 48: Macro Outlook with MOVE Index inventor Harley Bassman

Ben Lakoff, CFA
June 14, 2021
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Harley Bassman was the inventor of the popular MOVE index, the treasury volatility cousin of the VIX. Since he has “retired” he has continued to make a name for himself giving away decades of accrued wisdom for free on his blog The Convexity Maven.

This conversation we talk about Financial Markets and some key drivers including Inflation, Interest Rates and demographic shifts. We go into detail on Portfolio Allocation and some great ways to position your investments over the next few years.

Enjoy this conversation with Harley Bassman!

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Show Notes

0:00:00   Welcome and context

0:02:07   What is your background?

0:05:16   How do investors use the tools?

0:09:35   What is going on with the markets?

0:17:30   Why is it never different this time?

0:19:41   What are your thoughts on MMT?

0:25:34   Positioning your portfolio when you see that inflation is coming?

0:30:40   Who will be most impacted by inflation?

0:36:20   How does the 60/40 portfolio plays out today?

0:41:30   How are mortgage reads performing?

0:47:10   What are the SPY options?

0:56:21   What about the European market?

0:58:36   What are your thoughts on real estate?

1:02:35   What are your thoughts on Bitcoin

1:12:00   Where can people find out more about you?

Show Links

The Convexity Maven

Cboe Volatility Index (VIX)


Bassman Family Site

The Wages of Fear

The 2021 Model Portfolio

Stocks in the Weimar Germany Hyperinflation Period

Mortgage REITs

Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host Ben Lakoff.

Hello and welcome to the all to asset allocation podcast. Today’s interview is with Harley Bassman. This was the first recorded interview of 2021.

I know I’m behind, but the world of financial assets feels really out of control right now. And in these times it’s Oh, so common to hear the phrase it’s different. This time. What I love about Harley is that he contends that if you look hard enough, you’ll see that it’s never. Different this time. We’re all humans driven by the same things, which is actually refreshing.

Sometimes Harley was the inventor of the popular move index. Mov E the treasury volatility, cousin of the Vicks, since then he has retired and it continues to make a name for himself, giving away decades of accrued wisdom for free on his blog. The convexity Maven highly recommend checking it out for his writings.

There’s tons of great knowledge there in this conversation. We talk a lot about his most recent pieces, wages of fear and the 2021 model portfolio. We talk about financial markets and some key drivers, including inflation, interest rates and key demographic shifts. We go into detail on portfolio allocation and some great ways to position your investments over the next few years.

There’s a lot of gold here. That’s for sure. Before you listen, please don’t forget to like, or subscribe to the podcast or even better leave a review. If you’re watching this on YouTube, please subscribe or like the video. I really appreciate it. And it really, really helps. Apparently. That’s what they say either way.

Enjoy the conversation with Harley Bassman

Harley. Welcome to the show.

Harley: [00:01:58] Thank you.

Ben: [00:02:01] First guest of 20, 21 happy new year to you as well. Both of us in sunny, California. This is, this is great. Maybe next time we’ll do it in person, you know, in 2025, when we can all move freely and, and talk without masks on I suppose.

Oh my God. I hope so. Well, I’m excited to have you on the show today. You run a great blog, big fan of all of your work. But before we get started just for my listeners who don’t know who you are, can we get a little bit of your background, who you are and where you are?

Harley: [00:02:30] Sure. Native of California U Chicago BA so monetarist for whatever that means to people.

Things that’s been, I guess, disregard for awhile now. I spent most of my career, 26 years at Merrill Lynch where I ran a mortgage and auction businesses came out to California a few years ago to work for pinnacle where they’re hedge funds. And now I run a hedge fund of one myself. And I ran a book.

I called it episodic commentary, not a blog. But it’s all the same thing. And people are welcome to to sign up for it. Good. My website connects the It’s right. There are because it’s, I mean, email ads is free. So you get what you pay for it.

Ben: [00:03:06] Yeah, absolutely. Episodic. What’d you call it episodic.

What solid commentary. Episodic commentary. I love it. No. And the convexity ma many I’ll link it up in the show notes, but fantastic resource really love a lot of your writings. And before we get into that you were the creator, the inventor of the move index.

Harley: [00:03:29] Yes. And I spent the better part of 15 years trying to get people to care about it.

I talked to him, talked to him, the journal, the times, Berens, Bloomberg, all these people. And they, they didn’t care that much for it. And last 10 years it’s become actually rather popular. I’m not sure why that is, but I’m happy that it’s working. It was created almost the executive type of the VIX when the dicks came out, they occurred to me that that was just like similar for bonds.

And I constructed that in a way that would be very simple and that would they’re eager the speed right off a machine. There there’d be no dealer marking it. Is this automatic wisdom as a way of it’s like unscaled absolute index. So it, it it gets a clean read. Then you can say something as double or half of what it used to be.

And it was my way of helping people involved in optionality or convect to the, have a rough idea of like what zip code is volatility in, you know they’re gonna go, the horses went that way, boss kind of thing. 80 or one 20 or now is in the low fifties. That was the idea.

Ben: [00:04:39] I wanted to start a little bit more high level, but that’s, that’s incredibly interesting. And I’ve always been trying to think through how this massive amount of Robin hood traders playing options is impacting different things.

So it’s good to know that. Well, obviously it is impacting things, but it’s, it’s, it’s skewing the whole reading of something like the VIX that’s just mindblowing. And we’re not sure how that, how that impacts other, other aspects of the market. Is there some, some thing that you can just point at within the market and say, this is impacting it this way, or it’s, it’s kind of included in a number of different ways in ways we can’t really point out that easily

Harley: [00:05:19] for real option geeks market makers and professionals.

This is me with anybody. So anyone else who, his podcast you don’t care about?

Ben: [00:05:32] No worries. Yeah. No, well, it’s very interesting and I mean, the move is still around and tracked by a lot of people and you were credited with creating that, so really, really awesome stuff. And as we sat , on your website Oh on your episodic commentary site. . You have a lot of really good commentary.

I’d like to just start off with your overall global macro view what’s happening in financial markets your, your last two pieces between the wages of fear and your 2021 portfolios, I think kind of package these things up nicely. Do you mind just kind of talking to me about what’s going on in financial markets?

Harley: [00:06:08] Think it’s pretty easy. If you are interested in niche to blips, if you’re interested in short term trading or day trading or anything like that, then turn the video walk, you know what you want to listen to me? Cause I don’t care. My horizon is two to five years. I’m an investor, not a trader. And that means the most important rule of investing is sizing is more important than entry-level.

I really don’t care about the price I get in it. If I like the idea and it makes sense to me because I know I can’t time it. And there’s plenty of studies out there and people on, if you miss the, the, the, the top 10 best days of the year, you, you, you, you lose money foot like that. And the odds of you finding that are nil.

So what’s the big picture. The big picture is twofold. One. We’ve had 10 years of QE money printing. And the initial QE after the financial crisis was a good idea. We are a leveraged financial economy. Okay. That’s what we do. We were not goal-based anymore. This is levered money. And therefore the plumbing of this money has to be, has to exist.

It can’t rip the plumbing out. And so when you had a crisis in Oh eight, no nine between the clearing and the banks and everything else. The government had to step in to save the plumbing. Now, is this a good deal? Do these guys deserve to be saved? I could assure you that my boss at Merrill Lynch was being jailed as far as I’m concerned.

And did Obama and justice make a mistake in not prosecuting these people definitely positively. I mean, they went after guys 89 for less. But nonetheless QE one had to happen after that. Was that a good idea? It was good in spirit. It was bad, bad in, in, in, in the result. And you had a public policy deck cause what happened is the printing of money in QE two, three, four infinity creating inflation with inflation, went to assets, not to wages and thus you’ve exacerbated all of our problems by widening the income gap, the wealth gap and everything else that wasn’t the pheasant tent, but that’s what happened over here.

Cause the money had to go someplace. Why did the fed wants inflation is the question you’re supposed to ask next? And the answer is we had too much debt after Oh eight Oh nine. We had too much debt. We had to get rid of it. How do you get rid of debt? There’s three ways. Well there’s really two.

The first one is you grow out of it. So what we did to hold more to, that’s not going to happen for a lot of reasons. So up the table. So you have two ways out of debt. You default, or even flight inflation, the slow motion default. So since the fed did not want the defaults, which would cause unemployment other problems, they said must create inflation.

That was the idea of QE and all the money printing. They got the inflation in assets, not a wage that didn’t work. They’re trying to get now, but it’s different now because we’re going have fiscal policy along with the QE. The fiscal policy is going to put the money in the hands of people. Who will spend it as it was putting money into the banking system where it’ll just get absorbed into stocks, bonds, gold, real estate and everything else.

So this is new. This, this, this new plan is going to go work now in conjunction with that. So that that’s the, that’s the top, the surface of the ocean, which we can see of this giant iceberg. But as you know, an iceberg is basically 90% under water. The underwater portion of this is the demographic. And I have, I, I have many charts in my writing.

You’d go through my website and go look them up about the demographics over the last 60 years. And what you had was this baby boom explosion people born 1946, 64, as this pig in the pie throughout works through the system. You had the big inflation of seventies, eighties. And then since then this collapse of.

If an inflation and interest rates why? Because the average boomer was born. I think 55, which means in 1985, that’s the big bulge, but the leading edge is happening in the seventies. And what do you do? The boomers got married earlier, had kids earlier formed households earlier when you do that, what happens will you buy a washing machine?

You buy a baby stroller, you buy a car, you do all, you go on vacations with the family. You’re spending money. You have a big demand. You’re demanding from a supply. Who’s a supply from that’s from the little more two generation just smaller. So there’s more demand supply and UPPCO prices. And you can measure this by the growth of the labor force because labor forces ages 18 to 65, or you can whittle it down.

If you want a 25 to 55 most productive years, whatever it might be, you can chart labor force growth versus interest rates. And like at my five years, it’s the same chart. Labor force growth is going to turn up three to five years from now. And I’ve been writing about this for 10 years now. Because the demographic is baked in the cake.

I mean, you can’t be reborn 10 years ago. I mean, we know what it is. So therefore, 2023 or 25, they were books with tips up and you should see interest rates tick up and you see inflation tick up. And when you combine that demographic with QE and fiscal policy, there you go. That that, that should create.

The inflation, which should also create high registration, although it may not, the fed could hold it down and just create negative interest rates. Okay. You will get the inflation. And will it be in rates? I think it will be, cause the reality is that the fed wants the steeper curve. They want to keep rates lower on the front, but the steeper curve of the backend financial institutions do better and pensions and insurance companies all do better Juris company.

So I mean that, that, that’s, that’s deeper. Current is no problem with that. In reasonable terms. So that’s, that’s the big picture and, and so you want to invest accordingly to that. Yeah.

Ben: [00:12:15] And I think that paints a fantastic picture. I mean, the world has been drunk on cheap debt. You have these demographic moves that are really going to impact things.

I love your comment about sizing is more important than timing. But as one of your like, mantras that I see a lot on your site is it’s never different this time, which I love because especially right now, I find myself always saying, Oh, it’s so different this time, the the, you know, government debts are so much higher.

The world’s very indebted. Rates can never go up because of the size of these debts. We have these crazy new things like MMT that are coming out of the woodworks. It’s totally different this time. I think it’s a great gut check to read your blog. And it’s like, no, it’s never different this time. I’ll challenge you all of these things that you said, all of these factors that are moving around how do you piece through these and say, no, it’s never the different this time.

Are you looking at somebody like Japan? Are you like how, how do you rationalize this when it does feel, in fact so different this time. Well,

Harley: [00:13:20] it is never different this time. The problem is, is you just don’t live long enough the cycles and the, and the movements are longer than your 40 year investment career Erie to your life.

So that’s why you never see these things, but they all happen over and over again. I mean, there’s a reason why, you know, we read the Greek tragedies, we read Shakespeare and then unwell get into politics. But we, we nowadays, but what, why do we read these things? Because nothing has changed. What is the great destroyer of mankind, hubris, ego, greed, fear.

That’s not different. And, and those will happen over and over again. And we will have speculation and we’ll have fear and cycles. MMT is not new. Okay. It’s just called something different. But then once upon a time you’ve always had, you know, the Kings and Queens of the realm. We’ll go in, you know, shave off the silver, the edges of silver or, or, or, or create some kind of other currency.

And this always happened and we know how it ends. The thing is these cycles can take a very long time. Roman empire took 400 years to auto cycle on through. So I mean the back of plucking up, you know, post-World war two cycle of of 60, 70 years. I mean, not the man. Now as a trader or an investor, you know, you really can’t trade for a hundred years.

You kinda got triggered your window really is probably 10 reasonably to operate in. So that’s kind of the, kind of the big, I mean,

Ben: [00:14:43] I think that makes a lot of sense. Ultimately we’re all just monkeys with the same primal instincts and you know, it always goes back to that. So I do get that,  talking about this bigger picture, you know, as an investor, You have these shorter time periods.

Now it’s different at hedge fund of one thinking of like multi-generational wealth and preservation and things like that that is perhaps a little bit different investing across multiple generations. But knowing that okay, inflation, it has to come. It’s definitely coming. And it has shown itself and asset prices.

And now they’re going to direct and consumer encourage people to send, spend, get the velocity up it’s coming. But if we do something like MMT, which we likely will the, yeah, well, I mean, it’s here, but I mean like full on just flood Gates, open M and T

Harley: [00:15:38] you don’t think by a billion dollars, which is forks to GDP is like a number you were spending more now than we did.

Like, you know, a little more too. I mean, this is like compared to the Marshall plan inflation, just these rooms. Oh, do get it numbers. Are they justified as the reasonable thing to pay attendant? Yeah, it was a public policy idea is a good idea. Yeah. So I’m not saying we shouldn’t do it on the say the scale is big public.

These are very big numbers

Ben: [00:16:03] are very big numbers. And I think that’s almost a benefit of them because they’re so unfathomably large that people, you know, it’s just a trillion here, more billion here. It is what it is, right?

Harley: [00:16:16] Oh yeah. Yes. It could be 20 years before we get the inflation that could easily happen in Japan is proof of something.

I’m not sure what Japan is, is all. I mean, whenever I talk about any of this nonsense, the only reasonable pushback is what about Japan? Cause their deficit is barely larger than ours. Their QE deathly bigger than ours. So what different demographic, which is old and shrinking. The money they’re borrowing is internal money.

Most GGBS are owned by locals. It’s not international business per se. So they owe it to themselves. They have a massive savings there, generational savings, which is much bigger than anywhere else on the planet. And in theory, that savings offsets the JGB debt. So they kind of, you’re, you’re picking one pocket to the other.

So it’s a little different if they default the default for themselves, if we default prescribing China, which by the way is not Danny at all. But, but that is the defense. We have an external debt and, but no, we don’t, but we put our money. So this is what third world countries are, have a problem because they borrow a dollar and they can’t print them, but we can’t print ours so we can push ahead.

I mean, it’s almost like, I guess almost like gravity, either religion. You’re going to believe you don’t. I mean, I mean, If it’s possible to print the currency of the realm at a faster pace than the growth of the actual economy. And it doesn’t cause a problem. I suppose that’s fine. It can be, if you only have X amount of loaves of bread and you double the amount of currency out there that at some point breads got double in price, or I’ll say make more bread or whatever, and then tea is not wrong in the concept that you could borrow.

What’s an empty, modern monetary theory. And what it says is that you can borrow the government could borrow money as much as it wants, as long as there is Slack in the economy. So the idea that I could print the more money in my last example, but we can make more loaves of bread. There’s bakers who were, who were at all the beach, who, you know, if there’s demand, they’ll come from the beach, Laguna the bakeries, and I’ll make more bloods of bread.

So that’s fine when you went to have bakers. So when you’ve used up all the Slack in the supply in your capacity, then you get inflation and that’s the signal that you’ve reached your limit. The problem you have there is that no one has a model for inflation. That’s viable. Nobody, not the fed, not wall street, not anyone else.

We don’t know what we can’t model, let me have knowing where it comes from and we can’t predict it. So therefore you’ll only know inflation has arrived when it arrived. And of course, by then it’s too late. So, so this is like being on a diet, you know, you stop your fast mean it’s too late. The other issue is even if you had that model of inflation, let’s think about the government is borrowing money and spending it.

And we have a policy of how the money is spent to go and say, okay, we’ve reached our limit means you now have to go and reduce that spending because the old spending was a deficit number. She got taken down, she stopped borrowing, how are we going to go and dial back? That is just not going to happen. I mean, we could say we’re going to go on a diet, but we’re not going to, it’s just not realistic of the way politicians work.

They’re elected for a very short term. And the way the carrot and stick is created now it’s unreasonable. So are if NMT wrong, if it was actually implemented, as they say that we’ll borrow money, as long as there’s no inflation. And when the patient comes, we will cut that. We will cut the government budget by 15% or 20%.

That’s fun debt, but they’re not gonna do that. So it that’s the flaw in the whole thing.

Ben: [00:20:12] Yeah, certainly. I don’t want to go down that path of short-termism and issues with all of this, because that’s certainly playing into a lot of this. Right. But something that I thought about when you were talking is like the Titanic floated until it didn’t right.

Everything works until it doesn’t. And I feel the exact same way about MMT, but knowing that MMT is here, that it will just get more and more drastic from here on out. I mean, politicians will, will, will give more money. They’ll forgive the college debt because in this plays into your whole hypothesis about increasing consumer spending of the millennial class, like pull off their debt load, they’re going to have more disposable income to spend.

But knowing that the fed and the governments will be monitoring inflation, whether it’s CPI or other and, and combating that it feels counterintuitive to position your portfolio, knowing that inflation is coming. And you might, you might be in a world of hurt in the short term. Is that, is that fair?

Harley: [00:21:22] I think we kind of think about two things here.

I don’t want to go into politics too much, but it’s, as much as I just said, the MNT is, is not, you’re not going to work, but you know, it’s not gonna work. I guess it will work in the grand scheme of the fed wants inflation. The government wants inflation and, and maybe having inflation is better than plan B, which is having lots of people, you know, Throw on other houses, not be able to get food and not have any jobs.

I mean maybe, maybe, maybe this might be a better idea is it’s a silent tax across the entire country. So there’s two good things about it. One it’s silent that they need, the politicians aren’t raising taxes are going up. And number two, it’s universal that goes across the country. Is it regressive? Yes, it is regressive taxes bad.

But you know, maybe, maybe that is the best way to go solve the problem with this now from an investing standpoint, what do we do? So let’s talk about the public policy idea and now look at our own personal portfolios. What you want to do is own things that I don’t think a solid get your arms around, but things that have real value that will hold them.

If you look at Chris Cole, I interviewed him and he will someday I’ve stolen so many of these ideas. Thank God. Breasts cries out there. He wrote a piece brilliant, Oh seven, eight years ago. It’s on the internet. You can find it, any other chart in there about the German stock market during why more Germany and yes, you have the people or the people pitchers, wheelbarrows full of worthless Deutschmarks.

But the stock market actually kept pace with inflation because Volkswagen Daimler, Benz, you know, these guys that are making they’re real companies, making real things they’re going to raise their prices with, with inflation because it is a real asset there. And you know, there’s, is there a lag of years?

Yeah, but I mean, over the course of time, you are a real asset there. That’s going to hold value. This is my goal. Interesting idea. Is Bitcoin also in that camp maybe? But, but. Real estate, clearly real estate will hold this value. Will the real estate go down initially? Yes. When you get the inflation, you will likely to higher rates.

If you get the higher rates, then the discount rate either either the cost of borrow money or the cap rate on, on a commercial property will go up. If you raise the discount rate, then the forward dollars are worth less today. And therefore the price of the asset goes down. So you will have initially have prices go down of assets, but over time, they’ll catch back up again.

So owning stocks, in some sense is inflation. Hedge. People will fight and scratch about that, but you are owning a real asset as opposed to guarding a bond, which is clearly a loser because you’re promised X dollars of currency X years from now. That’s clearly a loser. So moving into real assets is is the concept.

Ben: [00:24:26] Yeah. Yeah. But I think this rhetoric is a kind of spreading a little bit of like get out of cash. It’s being devalued. There’s going to be inflation, which are two separate things, but still like the impact is the same. Get into some sort of asset because cash is going to lose its value.  I get this, this makes sense, but.

In terms of like, and perhaps we’re going back. And I definitely like to talk about the picks and positioning your portfolio, but this just screams to me, further wealth inequality and the divide and further issues around that of the people that have assets and the, and are able to invest. And the people that don’t and are living paycheck to paycheck, they’re the ones that really really get screwed or hurt in this situation.

And that just leads itself to more government support and kind of just this disgusting cycle that I see that ends with pitchforks and torches in a pretty pessimistic state.

Harley: [00:25:27] Right? Well, there’s a timing issue of how long it happens. I mean these things could be many years and I own gold. I’m not a gold bug.

I mean, I’m always crazy guys on TV saying Bible now by Slover. Now it can be quite a while. Gold is a very long-term asset. It’s going to be a 10 year, 20 year cycle and gold public policy. We mean, we are betwixt in between right now, what to do there. And I agree that a lot of his policies are, are helping the wealthy.

If you do look at the charts of wealth concentration, we’ve had two cycles of this and both these cycles have reverted. Not because the government raised taxes or anything else that reverted, because asset prices went down, the stock market, you know, breaks in the, in the thirties. And again in the seventies is when you saw wealth inequality, collapse, because by definition, the wealthy of assets, then we’re done.

That’s why they’re poor. That’s not a good thing, but that is, is a cause we have that. So how the government resolves that is unclear because I don’t think they could actually wave their hand, but, but it might work. But if you do get inflation and you do get higher rates, you will initially get lower asset values.

And I can almost assure you that if you get rates above three and a half to 4% on the tenure, you will see a compression of wealth gap. And you’ll see other bad things that happen which is why I have, you know, structured a trade which I am trying to find a way to bring it to the common man.

I have not found it yet, but these long data, like seven to 10 year options on interest rates that’s, that’s, that’s the master hedge for this whole, this whole thing, because what you’re really going to worry about is if you do get rates above three or 4%, What you’re going to see is presently. What we have is stocks and bonds go up and down to after directions, lots of bonds down by like a little bit today, boozers up with 38 points in the bonds down a tad bit higher.

So if you have a levered portfolio for risk parity portfolio like Bridgewater, how did become famous? You’ve got to figure this out. You have a hundred dollars for risk parody. Is this, you know, they go up and down in opposite directions, 100 bucks, you buy $70 a stocks, you buy $130 of bonds. Now you have $200 invested.

You’re going to borrow, you know, a hundred bucks from somebody. Forget that. And you get that ratio of 70 to one 30 by the correlation of stocks to bonds, which is basically. Simple calculation. You can do it at home. You know, just pick the prices every day and you go, and then you adjust that ratio. So you could go 65, one 35 or 85, one 15, whatever it might be.

That portfolio exists because they go in opposite directions. If you get rates above three and a half, 4%, you will see that correlation flip and they do this. I’ll put them together. And if you get down together well, and you’re levered two to one that’s, that’s, that’s lights out. That’s what happened in March.

And that’s what that was really cause you had stocks and bonds, both going down and gold, going down, everything went down together, correlation one trade. And that’s when the fed really stepped in, because that was like all of a sudden it was margin call across the board for everybody. And there was no money left.

That’s when the fed had to come in with, with the 20 bazookas. If we get ready to move through that 4%, you will, it may not be immediate. It will be a panic sell, but you will see both asset classes go down. And if you look back over the last 70, 80 years, you will see that the correlation of stocks to bonds averages zero.

There’s no correlation. It goes above. That goes below when it goes up. When, when, when, when he, when it goes, when they go together is when you have higher rates. And there are charts that I produced in my website from bank America, from credit Suisse, jerked drug mimic in Australia, but also the exact same thing, the exact same location.

Ben: [00:29:34] That’s, that’s something you’re monitoring and watching very closely as these, you said 10 year treasury above three and a half. That’s kind of the benchmark, but just go heading up that way and things could get really ugly, right? I mean, the, this was,

Harley: [00:29:53] I at least two or three years before that happens, because the demographic like moving up, we don’t get that, that lift in labor force growth until 23, 24, 25.

So, so it’s time to go here. No panic. Right. But that’s, that’s, what’s coming.

Ben: [00:30:08] Well, and, and so teasing that one out. I mean, that’s the death of the risk parody portfolio, but it’s also the death of the gold standard portfolio, the 60, 40 stock and bonds. If you have this bond portion, that’s supposed to offset your losses.

When, when stocks go down, well, if they’re all correlated, they’re not a very good offset. They’re not a very good diversifier.  I’ve had, I had Vincent Dillard talking about the nuclear winter of that 60, 40 portfolio.  He wins the title for the best title with it, but I mean, as soon as, so transitions going toward that world where bonds don’t work as a hedge in your portfolio or diversifier, where are investors going?

They’re going further out the risk spectrum, the like, They just continue to hold bonds and they don’t function the way they used to function. How does this work?

Harley: [00:31:01] Well, push back on the idea that 60 40 is doomed. I mean, 60 40 is just an unlevered risk parity portfolio. Okay. But we had 60, 40, 40 years ago, longer than that.

I mean, the old rule on wall street was you invest your age in bonds. So when you’re 25, you have friendship, bonds and  stocks. And when you get to the older, you reversed them because your horizon is shortening. So you had that going on in the sixties and seventies, that rule was not brand new. When you’re talking about, which is correct, is that is the hedge valuable go away, but in the sixties, seventies, eighties the correlation went positive and negative back and forth often.

And I have trucks of that on my website also. So I mean, I mean, so I wouldn’t call it the demise of that. I’ve still recommend being diversified. It just won’t be, it will just be more volatile. Because the correlation will be going the same direction. What do you do about that? I mean, I think what I’ve done is yes, all this money does lower interest rates.

The fed QE does lower rates, which pulls everything down. Cause it forces you out of treasuries into other things. But the underlying risk, the default risk hasn’t changed all that much because the companies aren’t getting the money, they’re just, you know, make this borrow at a lower rate, I suppose. So I’m not sure defaults actually are improved dramatically.

But the kids getting me able to borrow money at a very low rate. So I prefer to get rid of my credit risk and take on leverage risk. So if I own a fund or closed end fund or, or, or some kind of fund on junk bonds, five years ago, I’ve sold those and I bought mortgage rates. And closed-end funds on muni bonds.

So unique quality, not the junk bond, quality beauty closed-end funds. Hey, you’ll for four and a half percent. And those have no Illinois, no Puerto Rico, no Connecticut, no New Jersey, all the crap you don’t want to own is California crap. I don’t know. I mean, I mean, it’s, it’s certainly better than Illinois or New Jersey is New York dad.

New York is, is not, I mean, as much as everyone hates New York, maybe the MTA has a problem, but you know, something to, to understand is that in California, half of the personal income tax comes to the top 1% as a public policy matter, is that good? No opinion. The problem with that is it’s a very volatile number because the stocks go down the top 1% have less income.

And therefore they pay less taxes. That’s what happened in Oh eight Oh nine. And that company got into a pickle in New York. Most of their money come from property taxes. Prop taxes are very stable. And people gotta live somewhere. If people tend to pay their taxes first, they don’t wanna lose their ultimate default.

They, they, they pay the property taxes. So therefore New York, York’s actually a much more stable financial environment, your state, they in California. But they, the, the pension problems in New York state and California are nowhere near as bad as Jersey, Connecticut or Illinois. So, I mean, I, I have the problem with putting those assets and, and if I can get a triple tax-free for four and change.

Is that bad? How do they get they get leverage fine. I’ll take the leverage risk because I think the fed keeping rates at zero for at least the next two or three years, they’ve said, they’re going to do it. The market’s present. They’re going to go and do it. Then therefore I can go and take leverage risks to enhance my yield.

Well, the credit risk, I like that. And then I can either hedge or not heads that the, the, the, the, the duration component. But, you know, if in my tax bracket I’ll make an 8% on these things. I’m fine. I can remember that. I made Denver trays in that.

Ben: [00:34:53] Yeah. Well,  that makes complete sense versus going into a corporate bond fund or something and taking on all of that risk.

I get that. And then, so this is a good transition into your model portfolios piece. So one of them was these municipal bonds closed in funds. And you mentioned in there definitely not Illinois, New Jersey, Connecticut. That makes a lot of sense. You mentioned Puerto Rico as well, which probably is a good choice to include not in that, in that no list.

That makes a lot of sense. And then you also mentioned mortgage rates. So can you talk a little bit about mortgage REITs and for my listeners that aren’t familiar, how that’s different from like an equity REIT.

Harley: [00:35:30] I think the mortgage rates you play that probably the best trade out there right now is a risk involved.

What happens is this so. An Annalee or AGMC are the two biggest Morgan trees out there. And they basically, by Fannie Freddie, Jenny mortgage, mortgage bonds, they’re basically government bonds. There’s no credit risk. They’re not going under. And what these guys do and mortgage rates. So a property, most of these out there are either equity or property rates where they’re buying the actual hotel or the, or the shopping mall, and then borrowed money against it and then making money, blah, blah, blah, blah.

These guys don’t do that. They buy the bonds in this case, bonds backed by home mortgages, very simple. They will, that’s another couple hundred dollars they’ll go in. They’ll buy $700 of bonds and then borrow 600. So they’ll limit seven to one. So what’s your first risk? You’re borrowing 600 bucks. If that borrow costs.

Which is now like, you know, under 1% goes up that’s bad. Okay. Well, the fed has told me that I’m taking that rate up for two or three years. Okay. That’s good. Then they have a mortgage security. It’s like a seven to 10 year treasury. The risk of it is so Fred’s go up. It can go down by a lot. So what do they do?

They then sell these derivatives, but forget that they sell tenure traders. Then they got 700 bonds. They’ll sell 700 million, 10 minutes against it. So now they got that duration boxed up. Not quite because what happens next is a mortgage. Security is callable. If you have a mortgage if you’re watching a show, you like they do you can, you can pay off your mortgage whenever you want.

So that mortgage that you have, which is packaged up and put into a Fannie Mae bond, that bot is actually, it could be a 30 year. It could be one month. You never want to be called. And that’s kind of, this is what I did for most of my career is the optionality connects me of those mortgage bonds. Like how do you figure it out?

Okay. So that you’re short a 10 year treasury, but you’re long to do a three month piece of paper or a 30 year piece of paper. It’s going to be okay. That embedded optionality has to get hedged out and they go and they buy options, I guess. Well, as we started the show, we have the move index. Where’s the move.

The moves in the low fifties is at record lows in volatility. So the cost of buying deck that optionality is it forever lows? That’s the whole idea is all these risks are basically deathly reduced from where they been. So I have my financing cost is picked by the fed the backend rate. Is hedged out and the actual movement is going to be diminished because the Fed’s gonna do QE and keep holding rates there.

And even, so instead of moving 2%, you could move half a percent. Even that half percent, the cost of hedging that convect to the out is now been reduced because of low volatility. And these things deal nine, 10% right now. So that’s, that’s, that’s the whole idea.

Ben: [00:38:50] I think, I think those are great pigs. The public ones that you mentioned, the big ones Annalee and what

Harley: [00:38:55] AGMC EMC, there’s other ones out there that also do other things, but to get a little more complicated you could look them all up.

And what they’ll do is mortgage servicing or they’ll do non-agency paper, the building would dust fill rate mortgages. Some of them will do commercial mortgages. The BDCs out there, like an areas capital or ready capital, like they’ll go at. And it makes w w very high in the capital structure they’ll make loans to people or to businesses lover of them up.

But once again, they’re, they’re, the credit risk is very low. Then the money really is a leverage component, not the credit component. And so that’s the risk I prefer now three years from now. Am I going to be saying the same thing? I’ve got a lot more worried, but, but I’ll, I’ll put that coupon now.

And next.

Ben: [00:39:40] Yeah, You’re basically holding this until rates starting to go up, which is like an existential risk to these things starts taking up, which what you’ve talked about. And then, and then it’s, you do not want to be in mortgage REITs at that point of time.

Harley: [00:39:54] Yup. The trade one is if you’re going to, you’re going to talk about the SMP option trade or

Ben: [00:40:00] yeah.

You have a couple other good picks in here. And I think that the reason why I like a lot of these picks is it’s very you you’ve talked about your, your thought process and they’re different from like the average pick. Why don’t we jump into the spy options?

Harley: [00:40:16] Well, just, just to make sure, I mean, so it’s on my website under both portfolios and this is my PA I own more than this, but everything that I’ve written about, I own.

So I’m, I’m email cooking here. So we’re gonna, I mean, a lot of people said that the Democrats, when everything, it’s going to be like, you know, nuclear, winter plus stock market, the bond market I’ve never been a believer of that per se. I’m not saying that Democrats are good or bad. It’s like I put out too much value with these.

Predictions, but it is pretty clear that the Democrats, if you do get them, you’re probably going to have more spending. So the MMT fiscal policy is probably going to be greater. Theoretically, although it does seem to be the case that Republicans have prison, a bigger gap than Democrats have over the last 60 years.

And just kind of weird that the Republicans claim to be the conservative conservatives backwards, Clinton balanced the budget, Obama almost. I mean, Trump thing down pick up the politics there. But I think you’re going to see a cycle, either part party, definite Republican of spending and QE and fiscal expansion.

And that will initially help stocks only in nominal terms. And so, and I felt that I have a floor on my position that we were probably would not go much through. Two 50 2,527 50. Cause you get PEs there around 17, which with rates down one or the other one, and again, that’s, there’s a pretty good deal there.

Remember the PE is the inverse of the earnings yield. So PE is 17 means you’re earning 6% on your money. And 10 years are 1%. If, you know, if junk bonds are 5%, I’m still earning more than these other alternatives. But I know Shiller says that there’s no interest  wrong smarter than me, I suppose.

But I mean, I, I just don’t buy the fact that rates don’t have an impact on, on investment decisions. So I kinda think of that, your floored out there. And so I can buy a listed option. And it gets very technical about what is a good ticket, but basically I bought a four 15 trade and sold two 75 per zero cost.

When I was in the market, there’s a three, 600 if you actually go back through my stuff, I actually recommended in, was it Jan, July, June, somewhere there I, I recommended the, the two 40 versus the three, three, three 40.

Ben: [00:42:44] So it was a three 65 strike four 10 put option strike two 75.

Harley: [00:42:51] Well, wait, I had another, I had the exact same trade, but everything lower down was two 40 on the front and something else in the back.

The three 10. Yeah. Anyways. I mean these same ideas. What’s important about this. I mean, first off, this is pure SNP risk. This is not an arbitrage. This is not a heads. This is outright the law of the market, but. What’s good about it is this number one, you’re using options and the option market makers. They don’t care if you’re buying a selling, they have a computer’s grinding it out.

They’re making money, buy, sell, buy, sell, buy, sell. They have no position in the day’s over. They need to make a very tight market. Therefore they kind of lock up most of their inputs. And one of those inputs they lock up is where they borrow money at. And they borrow money at the best rate possible.

Citadel, Cisco Hata borrow money, the same way as Merrill Lynch of bank of America. So I’m basically buying assets at, you know, a quarter percent borrow rate. That’s incredible. It’s a much going, borrow it anywhere else. Also if you actually own spy or, or stocks in a portfolio of general of diversified stocks, you sell them.

Now, take your gain, take your loss, take whatever. And you convert to this trade. Yes, you miss out on the first 9% of the up move. But you’re protected down 25 odd percent, right? Cause you don’t get put the stocks until you’re tracing them 50. I kind of liked that profile. And I have the cash and I can invest the money in something that, you know, some short term bond fund is going to pay more than a quarter percent.

So I’m kind of almost arbitrage at that. Cause a board Citadel and a quarter percent investigate and you know, PIMCO it, you know, something that I want to change. What’s wrong with that. So, but that’s how I get my exposure to equities. Is these long eight options as opposed to picking out names or, or buying?

I’ll tell you this. My son actually was looking at buying and he’s one trader. Is that better than I have will tell you that in any case he wanted it, he was looking at the ETF. That’s three to one. Up and down, right? You have to pay for all three to one. And he said that the gossip is you don’t buy that because as a long-term trip, virtual trade, the answer is yes.

The reason why is that if S and P yields a 2% dividend, if you’re getting three X the risk and you better get 6% of dividend, but you don’t, the ECF is absorbing next to four points, plus their fee. That’s why these, these things are, are, are total losers over the long-term. If you want leverage, why don’t you go and buy a deep in the money?

We’ll get a call option. It’s the market was 3,600. I advised him and he did it. Shockingly. He bought me the 2,600 to 60 strike call for a hundred and the fed points. So he paid seven points. He paid seven points over the intrinsic, and he has an embedded put in for the 200. And you’re only paying 107 versus buying the market at 3,600.

Do you, in theory, could buy three X. And so for the leftover and the re, and so basically you take all the dividends, embedding them in the option. You’re borrowing at the Citadel rate and balls were low. So that was the best, the better trade to get exposure. If you want to buy a whole Brown cup for a couple of years, that’s a much better trade than buying these up 11 ETFs.

Ben: [00:46:28] Oh, absolutely. That’s a man. I hope. Well, yeah. I feel like the options are just the next step. These Robinhood traders start, you know, they get their free stock when they sign up. I need to sign up for the thing. At first, it’s incredibly addictive. It’s terrifying to me. But you know, the next iteration you start looking at these leveraged ETFs, then you start trading options, and then you start buying these deep in the money calls like this.

This is going to have some impacts. Actually, well, yeah, and then you can buy Bitcoin and which is a levered bet on all of it. Everything. With this trade the way that it’s structured, because your call is above your price, you’re missing out on this little price, but you’re, you’re participating in the big move up and then you’re put as below the price.

So you are put those shares at a really attractive price, if it does just Tang. Right. But you’re protected for a

Harley: [00:47:21] little bit. You got to be willing to own the market at that price. Right?

Ben: [00:47:26] So don’t, don’t sell like, you know, 10,000 shares or

Harley: [00:47:31] 10, no, in the real world, the optimal trade is if you own stocks, you sell them and put this trade on.


it’s an asset replacement trade.

Ben: [00:47:43] Yeah. A shorter term. So you have tax implication thoughts, like versus just holding the index,

Harley: [00:47:49] right? There, there, there is a test situation that you got to think about and and that’s up to you to figure it out on your own. My thought was that this is Biden while you’re probably going to higher taxes.

So I’ll take my taxes now at the lower cap rate, because next year is gonna be a higher cap rate. Is that really going to happen? Who knows?

Ben: [00:48:07] Well, I mean, all of the things we’ve talked about, it’s pretty unlikely that taxes will go down in, in a significant manner over the next forever. I take that trade all day

Harley: [00:48:19] long, but the auction goes out, it took 23.

I mean, so you got, I mean, this, this is, I mean, so you can go a long time to go play with this thing.

Ben: [00:48:27] Right. Looking through we talked about closed in you talk a little bit about long dated interest rate options and the European Dow. Do you want to talk about those trades as well?

Harley: [00:48:39] The login rate option stay tuned.

I’m going to find a way to offer this to to, to, to the company. Oh yeah.

Ben: [00:48:45] That’s the one that’s not available. Right. Gotcha.

Harley: [00:48:48] And the the SX vibey is listed on the UREX in London or Germany. They expect for exchange. Sorry. And this is a very similar idea. The math is, is, is identical. If you wanted to do the full on risk reversal, you can buy at the money spot call and sell like a 26% of the money put Brazil cost.

And that is because rates are negative in Europe. So you’re borrowing at a negative rate compounded for four or five years. We think about that for compounding a negative rate for years. When you do some of these  trades, because route is need to price off the forward. The forward trades in the market, maybe not in public markets, but in private markets.

And the forward is kept at the theoretical right price. Cause it’s not arbitrary. Juries will come in, like when I was on wall street and I would do this, I wouldn’t have forced that thing to get to collapse or I just take free money. You ever read Liar’s poker Solly, ARB, th that whole thing, what those guys did, they were the first guys to do the futures forward, trade and collapse things as other nail that money.


Ben: [00:50:03] I was expecting  something like real estate just makes so much sense to me right now because you’re borrowing it at such low rates and you’re locking in the price of dollars today and some asset that’s gonna appreciate. And then the, you know, the rent is going up with inflation supposedly as well.

Is it crazy to be super bullish on real estate? If you can buy it, buy something that’s somewhat attractive right now,

Harley: [00:50:27] I’ve always been a suspect of these of certain asset classes, because it’s unclear to me about the expenses involved. I mean, buying a port, a diverse portfolio of residual real estate in a structure strikes me.

It’s interesting because it’s, I think it’s very expensive to go and, you know, wash the floors, paint the walls, change the roof, I think was very expensive to do on a grand scale. I think a lot of people use sweat equity to go and pick their places up. So when you see the guys of TD saying, I bought a house, I sold them their profit.

I suspect that the guy who did the painting himself

Ben: [00:51:04] if you want to go higher,

Harley: [00:51:09] you can guys manage, but to go and do these things it’s expensive. So, I mean, I think buying your own home. Is is finally borrowing, taking, taking a mortgage. I mean, I think I’ve taken it of work. This is my very first thing on that piece. Don’t fire or darn close to it. I mean, if you have a house you should go and borrow money, you should go refinance.

Now, th th that clearly is the best thing to do, and for most people it’s tax advantage. So, so yeah, if you could, I don’t want to go with , you know, pump up hoping home equity loans or, or those kinds of things that get too much leverage, but I mean, theoretically, if you can go and refinance, take us the money and pay off your credit card debt, and then promise not to go and build up more credit card debt, which are not going to happen, that’d be the right thing to go and do.

Because that is the biggest money out there. But you don’t want to go and take the equity out of your house. Spend it, and then it’s gone. I mean, equity in your home. The reason why the boomers have so much money as a, as a group of wealth is that they bought real estate in the seventies and they never took money out of it.

And so that best with lever five to one, right? Think about that. You buy a house for a hundred thousand, you put down 20, you borrow 80. If it goes up 10%. So it goes from a hundred thousand on a house to 110, that’s up 10%, but on your money, it’s up 50% because you only invested 20 K borrow the 80.

So what writes? He made 30,000 equity. The boomers basically bought their houses five to one and it just compounded for 30, 40 years. It’s interesting. If you go and take, you know, a three or 4% rate and taking the 40th power, it’s a very big number, actually.

Ben: [00:52:55] Absolutely. This goes back to the original thing, the world’s drunken cheap debt, and the people that have been levered up to their eyeballs when everything’s going up to the right, like it works out really well.

And it gets really ugly really quickly if it goes the other way. But you know, fortunately we’re in this, we’re in this world where asset prices only go up. That’s for sure, because

Harley: [00:53:16] there is a window, the volatility is relatively low. Things are moving around, stocks up and down. Bonds are up and down, but things are basically pretty stable right now.

You have plenty of time right now to go and adjust your portfolio as you like when you hit the all-time highs, maybe, maybe not, but in most things are, have come back to where they were in February. No is the spoos, the Fang are higher. You know, some of the banks are lower, but really, you know, if you could move things around now and, and, and there’s liquidity in the market, so it could take size.

You can, you can, you can get stuff moved around. You’ve you couldn’t trade 10 shares, you know, with March now you can trade thousands of shares at a clip. So here’s your window and you know, adjust accordingly, which is great.

Ben: [00:54:01] Yeah. Well, you mentioned Bitcoin very briefly in your in your model portfolios and yeah, just love to get your thoughts on this.

We’re talking about inflation. This has potential inflation hedge, also a potential massively speculative asset. You have a pretty strong opinion one way or another.

Harley: [00:54:20] Well, the answer’s yes, I’ve had one of my favorite pieces is Two tubes for the masses. So my website I, I shoot down Bitcoin which it was written right near the previous high.

So my 18,000 so I felt pretty good at the time now because I go, yeah, you know, here’s the thing about Bitcoin? What is Bitcoin? Is it a store of value or is it a stick of the vehicle or is it the means you use for blockchain transactions? If I could buy blockchain ink, I’d invest net right now.

Bitcoin is not buying blockchain ink. It’s buying something else by the token that sits above that Bitcoin is not viable as a means of transactions, just too cumbersome. I mean, the, the, the, if you compare the speed with which visa, how many trades visa does per day. You know, it’s gazillions versus Bitcoin.

I mean, really can’t handle that may take us per day. So it’s really not viable presently as a means of transaction. It is not a store of value. Period is not, it has evolved like 50 or 60. The vol of the yen is like 6%. They, they need the year. I was like seven pound. Sterling’s eight. Russia’s like, you know, 14.

Okay. I mean, it is not a store value. And did they speak with the vehicle? Can it go up? Yes. Double, triple, yes. People will say Bitcoin is a great investment because of convex. What does convexity mean? As you tell your mother, mother, or father or whatever. Okay. Convexity means you make or lose. Different amounts for the same result.

If I make a bet, I could make a dollar or lose a dollar that’s zero conducts me. I’d like to make two and lose one, have positive Connexity. If I can lose three, make two that’s negative convexity, treasuries have slight positive convexity mortgage bonds have negative convexity and all the geeks on while she’s trying to figure out how much more I should get paid for a mortgage bond.

Plus the treasury bonds. Bitcoin is positively convex to the extent they can. It’s what 35,000. Now how much can you lose? 35,000? How much can you make millions? So therefore you can make, when you lose it is positively convects, but that does not make it a store of value store value means there’s. I have X number of loaves of bread and I’m store the ability to buy loads of bread in the future.

It’s not a big one. That doesn’t mean you should buy it, but I mean, it’s, it’s not stored value. I’m not sure what it is.

Ben: [00:57:11] And I think that’s the market has buyers and sellers. Right. And I think that the argument I mean, I’m pretty bullish on Bitcoin for a while. Now. It’s at half a trillion dollars.

Gold’s at $10 trillion that the speed and transactions, these things are being solved. They’re just technical hurdles and it only has 12 years of history. Of course it’s going to be very volatile and not serve as a store of value because it’s so new. Gold’s been. Praised by people for thousands of years as someone of a store of value, just looking at gold versus Bitcoin.

Bitcoin is divisible into a tiny, tiny fraction. It is transferable peer-to-peer. I can memorize 12 words in my head and, and walk through a military line. That’s shaking me down and pulling all the gold coins out of my body. And assuming that there’s internet, wherever I go, and another person willing to buy this, I can transact and get the local currency at that point.

These are aspects of it that make it very desirable as a potential store of value. I agree right now it’s very speculative, but people get one small detail.

Harley: [00:58:16] Okay. Yeah. Fuck. Play Bitcoin is active warning as a sovereign nation. Okay. Because what is a country really? But it’s currency and how they act, how they act, how they.

So the us government does not want Bitcoin to be, you know, to take over the us dollar. Being the reserve currency of the world is, you know, and our military is the power of the country going away. And so what’s going to happen is this at some point Bitcoin, they’re going to clip it quite, not like gold to commodity.

They’re going to call it a bank account. And what’s the bank account you’ll have to go. And, and your tax forms. If you, I mean, I’ve owned four bank accounts. If you own them, it was totally legal. You got exposed them. You don’t disclose them. What happens to you?

Ben: [00:59:07] The F bar? I fill it out every day. Every year

Harley: [00:59:10] you go to jail?

Yeah. Okay. Okay. So this whole notion of, I have my 12 words, like walk through the board and you know, Al Capone did not go to jail for drugs or bootlegging or murder. What do you go to jail for?

Ben: [00:59:28] Tax excavation.

Harley: [00:59:31] Okay. So when they have when, when the government decides to do it and they make you you disclose your F bar and you don’t do it because you have some clever idea, there’s small, final cares.

You actually mean something. Then they’ll put you in jail. And if you want to go and risk being in jail, be my guest. I mean, as often as you do, they’re illegal, but once that happens, it will not be as much fun for people and the Russians, the Chinese, when they find it was, I mean, that’s why you have, you know, with 95% of Bitcoins owned by 1% of the people, because they can’t get the money because the actually ever tried to type of 12 words in the Russians or Chinese government, we’ll go shoot them.

We know some people’s country. Yes. But I mean so I think because no one can get to a hundred thousand or 500,000 before that happens. Yeah. Why not? But let’s be clear. You just come in, it’s not going to go and encourage a lot of Bitcoin to go and become the currency of the wealth and this idea that digital currencies coming.

Yes. We already have that. It’s called Venmo. Okay. So I mean, I it’s I, it’s a great spec of the vehicle and if you want to go and speculate, be my guest.

Ben: [01:00:43] Yeah, no, and I agree. I mean, we’re going the route of fully digital. Then you can push monetary policy, fiscal policy directly into your wallet. That’s controlled by the fed, cut out a lot of middlemen.

There’s tons of benefits, but you know, F BARR, I have foreign bank accounts. I report them. It’s not illegal to have those. So I, I do agree that Bitcoin will go that way and I’ll have to disclose those. And if it gets to a value that’s too, too high and an existential risk to the, the nation state then yeah.

In a place like Russia or China, perhaps you are at risk and you don’t disclose. And then once they do find out you are even more at risk. But yeah, it’s a, that’s an interesting thing to think through, for sure. I

Harley: [01:01:27] would venture to guess that if you pull aside most Bitcoin people and ask them the reasons why there are Bitcoin aside, the tech is going up and they’d probably say something like it’s all it’s money off the grid.

That’s the whole point is when that’s false, it’s just not on, it’s just become as a put on the grid yet, but they will.

Ben: [01:01:46] I mean, I can buy a gold bar with a bag full of cash and put it in a safe at my house. And that’s out of the system off the grid, pretty untraceable, especially cause it’s physical.

Harley: [01:01:59] If you have 10,000 bucks and you try to put that cash into into the decking system,

Ben: [01:02:04] then getting it back into the banking system.

But I’m saying just that gold bars sitting

Harley: [01:02:08] in there, you have to file some dollars of cash in your hand. Like what are you going to do with it? Cause we can’t buy anything with it without, you know, having flags get raised.

Ben: [01:02:17] Right.  That idea of having the gold bar. It it’s it’s like that, but I can break it into $3 increments so I can, I can pay the, the, the garner or whatever.

Yeah. You’re a

Harley: [01:02:29] gardener. I agree.

Ben: [01:02:32] It’ll take a long time when Bitcoin’s at $10 billion per coin. Right. How Harley I want to be, I want to be aware of your time. I think we’ve gone into a lot of great detail and some really good trades and some really good macro views. Again, I’ll link all of these things in the show notes your website, some of these pieces that we’ve talked about, I’ll try to dig up that Chris Cole one as well.

Because I think that’s quite important, but yeah. W where do you want to leave my listeners? Where can they find out more about you? What you’re doing?

Harley: [01:03:02] My website mixed me a Harley yes-man dot net is the email. All the website. The Ben website actually is a best Which is where I have our daily vacations.

You know, if you’re listening to this, you can probably afford a vacation go and do it. You are not irreplaceable. The graves are full of replaceable people. And so I’ll tell you this. It’s, let’s all about character. Thank God it worked. And two is you’re born, you live, you die. And your dad for a very long time, like much longer than you think.

So you shouldn’t, you should don’t don’t don’t waste your time with your head buried in the office, get out there and join a constrained family and you can’t take it with you.

Ben: [01:03:44] Those are the important things. What a, what a wonderful way to leave it. Well, happy new year Harley really appreciate having you on today and thanks for all of your wealth of knowledge you dropped.

Yeah, there you go. First off. Thank you very much for listening all the way through. I hope you got a lot of value out of that conversation. As always. You can find show notes, links, and [email protected]. Please share this with anyone you think might be interested in drive any value from this conversation.

And as always, you can reach out to me for any feedback or questions. Please give the video a like, or even better subscribe on YouTube or your podcast player of choice. This really helps others find the podcast or the video as well. Thanks a lot. Hope everybody has a fantastic day and stay safe out there and invest wisely.


Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.