It’s a little snafu of country club guy. Country club guy kind of dropped the ball a little bit.

– Ouch.

– And fortunately, Meb–

– Helped us out?

– Meb was in Chicago. And he was at the CBOE as 10-year anniversary for Cambria. So we’re really happy to have him down, and congratulations.

– Congratulations, man.

– I mean, I was ready to come enjoy a nice, mellow night, have a cocktail, relax. I get off the plane, you just put me to work.

– Yep. Meb’s a very old and good friend. And Meb’s been around our newsletter business for–

geez, 20 years now.

– Not as old as you.

– Not quite, yep. Well anyways, we’re glad to have Meb here. Brabsy, are you going to launch the show?

– Yeah. So we figure we’ll kick it off with the interview, and then we’ll get into some kind of nonsense. But we always like to start off with something that we want to give our valued subscribers–

something financial, right?

And Porter, I know that you’ve been talking about this lately.

We have our forever portfolio pretty much Sorry, I know that’s what you originally created with Austin. But we have the long portfolio and long investments. But you’ve become a little bearish lately.

– Yes.

– Concerned.

– Would love to know how many people in the room think that unemployment can get to 10% or more by the end of next year. So I’m not the only bear in the room. What’s going on in the financial markets reminds me so much of the summer of ’07 and the fall of ’07.

People forget that the subprime banking system blew up in July of ’07, but the Dow did not peak until November of ’07. And there are these huge losses in the financial system that the banks are pretending didn’t exist, kind of like what’s going on in commercial real estate.

[CHUCKLES]

So a good friend of mine who’s in my hunt club in the county here–

names will be withheld–

he works for a major financial institution, a big regional bank. And he is getting three buildings a week returned to him.

And there is no bid. So there is an enormous cascade of defaults and people handing back the keys.

And it’s not yet because of interest rates. It’s only because there are no tenants in any of these office buildings. As the things that are financing apartments and malls and retail roll over at higher rates, how are they going to push the resulting increase to rents onto the tenants?

They can’t, especially not if the tenants are now paying–

I think I’m bothering Scout’s ears. My own dog doesn’t want to listen to me. He’s like, oh, this again.

So anyways, I just think you have that same pig in the python that’s working through the financial system that we had last time with residential. And just to be clear, the problems that we had on residential were multiple trillions. This isn’t that big, but it’s still going to be a big problem for the banks, especially when you look at what’s going on with deposit flight.

And I don’t want to give away my presentation for tomorrow. There’s more to come. But just ask yourself this–

if Bank of America is only paying you 0.8%,

and you can get 5.5% in 30-day Treasuries, are you stupid?

[LAUGHTER]

And if Bank of America’s business plan is to bet on stupidity, they’re not going to go broke immediately, but they will go broke eventually.

– But that’s also a pretty accurate observation, as we love to do polls on Twitter and elsewhere, just to kind of gauge sentiment. And we often will ask people–

and by the way, this is a little too close to home because I think I’m a Bank of America Preferred Rewards customer.

And it’s eight basis points. The regular Bank of America is down near, like, four or five. So I’m double, OK?

But you ask people–

and I know this audience is not that demographic–

but you ask people, and you poll them, you say, what do you earn on your cash balance in your savings or checking? And the majority answers, I don’t know. It’s Twitter, so you can be anonymous, right? So there’s no shame in answering, I don’t know.

Zero to one is, like, 80% of the people. And very much, we talk so much about investing and where to find the great returns. And that’s just the basics, right? Like, that’s free alpha.

That’s just laziness. And so when the banks failed–

was that this year? It feels like five years ago, Silicon Valley Bank, et cetera. So many of the lessons were just laziness, and yet people–

not this audience, but most of the population is too lazy to even deal with it.

– I would just say that the hoping your clients don’t notice is not a good strategy.

And they’ve got a big problem because 40% of their balance sheet is holding 2% treasuries.

How are they going to pay 5%?

They can’t. And my advice to you is don’t be the last in line to get your money out of Bank of America. And if you think Bank of America is going to have a run on it, which it will, why would you be long stocks?

We are going to have a Minsky moment because the banking system cannot survive the losses that it has in commercial real estate and the losses that it has relative to duration risk. And when I say duration risk, what I’m talking about is the fact that the government borrowed $7 trillion at 1%, and the banks bought it all. And there’s hell to pay for that decision.

But what would I know? Because just imagine if I told you that Fannie and Freddie were going to zero. Who would have ever believed that? There’s this thing called math.

– Real rare sunshine here on the first night of the presentation.

AUDIENCE: [INAUDIBLE]

– I also like that I have a heckler.

My name is Meb.

My name is Meb Faber, short for Mebane.

Any North Carolinians here? Oh, wow. We got a bunch. All right, so you guys know Mebane, North Carolina. All right. My people, what’s up?

I live in Los Angeles now, so a long way away. And–

[GROANS]

– Meb, we didn’t do a very good job of introducing you.

– I know. And you can forgive–

I was getting heckled in the beginning for wearing a hat. I just got off the airplane and came straight here.

I was ringing the bell at the Chicago Board of Options Exchange yesterday in Chicago.

And Porter says, you got to come to this Stevenson, Maryland. And I said, OK, I can make it.

So forgive me. But, Meb. Nice to meet you. Tomorrow. You’ll get suit-Meb tomorrow.

AUDIENCE: [INAUDIBLE]

– OK. Wow.

– Getting heckled.

– I’m usually the one doing the heckling.

– Yeah, I know. This is a new twist.

– Someone’s turning the tables on us.

– It’s a new–

I figured I’d be getting heckled. It’s a new twist.

– Well, I mean, it’s kind of on you guys. Have you learned nothing from the Black Label show? Like, having cocktails while you’re doing this never–

– OK, let’s not get–

– Has never gone well.

– All right, man. Let’s not get the crowd stirred up.

– You learned your lesson.

– Let’s not get the crowd stirred up, because I got pulled aside a lot–

AUDIENCE: [INAUDIBLE]

– I got pulled aside a lot by a lot of fantastic subscribers and longtime listeners, and–

– And they said they were long armers.

– And long armers, too. They can afford the ham sandwich, and I really appreciate that. But the number one thing that I got, Porter, was man, I think the woke culture got you guys. You guys are playing it too safe. And I said, we cost this guy a billion dollars. A billion dollars. But raise your hands or give us a clap if you think we might should get a little more Black Label-ish.

[CHEERING]

– I got–

my kids told me that no one had ever been canceled three times before. I got canceled three times, Meb.

– I’m going to have to run this through compliance.

– You are. You’re not even allowed to sit next to me.

– Yeah.

– All right Porter, so one thing that we’re going to be talking about soon is we’re going to be doing something special with TradeSmith and TradeStops. And we’re going to have something with Keith, who’s a good friend of yours. And we’re going to start talking a little bit more about possibly doing some trailing stops and things like that.

What would your advice be for this audience right now for positioning for this bearish run? And maybe I’m stealing your thunder for tomorrow, but some basic things that they should start thinking about right now for their portfolio.

– Yeah, I think that you’ve got to take a look at your portfolio, just like you should have in ’07. And you got to realize that two things are going to happen simultaneously–

one, a whole lot of excess is going to get wrung out of the financial system because there’s going to be a whole lot of defaults.

That’s already occurring. It’s occurring in very large scale, and you’ve got to be blind if you don’t see it coming.

One of my favorite charts, that I’ll show you tomorrow, Meb, is the decline and the bottom 80% of incomes banking accounts goes like this, and the rise of credit card balances goes like this. And so that’s not sustainable for very long. And we all know what’s going to happen next–

default rates on auto loans, which are now over $1,000 a month for a lot of people. Default rates on credit cards are coming, and then the big problem that you’ve got with deposit flight because of the duration risk inside the banks and because of the defaults on commercial mortgages. So we’re going to head into a big default cycle.

So if you raise cash now, you will be well positioned for–

I’m going to say a peak of this crisis will be somewhere between 12 and 18 months from now. And we’ve got Marty Fridson, who knows more about distressed debt than any other human being in the history of Wall Street.

So we’re going to have lots of opportunities. There’s going to be a great–

people are like, oh, well you’re saying these bad things. I’m like, no, these are all great things. If you get a chance next year to buy Hershey at 12 times earnings, you’re going to be really excited. And you should be.

The world’s not coming to an end. Just a whole lot of bad decisions are going to do what they were destined to do from the very beginning. They’re going to lead to failure.

And if you–

just one small stat, and then I’ll shut the hell up. But think about this for a second.

In the United States today, the government raises $2.3 trillion a year through income taxes.

Virtually all of it comes from the top 10% of wage earners in the United States, a.k.a. the people in this room.

They’re running a $2 trillion deficit.

If that doesn’t just speak caution to you, then I would suggest some remedial math. There is no way to double the income tax take.

And sure, I understand the income taxes are not total tax receipts. I know. But ultimately, the income taxes are what is funding our government. The government is so out of control in spending that there is no way that interest rates are going to decrease, and there is no way to stop the spending.

So there is going to be a reckoning because there is no way that people can afford the kind of debts that they’re used to taking at 7% and 8% mortgages. There’s no way. So there’s going to be a giant decrease in consumer demand. There’s going to be a lot of big failures.

And again, I’m giving away my presentation for tomorrow, but let me ask you this question–

has anybody in this room considered going on a Carnival cruise this year? OK, I feel sorry for you. It’s brave to admit it.

– Go for the Ritz-Carlton one. It’s way better.

– You do not want to go on the Southwest of boats. Just an opinion.

But my point is, if you can’t make money in cruises this year, you will never make money.

So guess how much debt Carnival Cruises has added in the last five years?

And guess what they earned this year?

They lost money. So they’ve added billions and billions and billions in debt, and they still can’t make money, much less pay a higher interest rate.

And there’s lots of companies that are like that. The most famous one is Boeing. And nobody sees it coming, just like nobody saw it when I was writing about GM in ’05 and ’06.

Major, major, major US companies are going to go bankrupt. And they’re going to fail because right now, they cannot even earn enough money to pay their interest.

And again, what do you hear from the <i>Wall</i> <i>Street</i> <i>Journal?</i> What do you hear from anyone in mainstream media? Nothing.

Think about this–

19 of the last 20 years before GM went bankrupt, it had to borrow money to pay interest.

Did anyone tell you that? No.

And guess what? It’s now Government Motors. And even though the unions own it and run it, they’re striking. It’s never going to work.

– So is the answer we just T-Bills and chill, waiting for the dark times to come?

– Exactly. Yeah, you raise 30% to 40% of your portfolio in cash, you put it in 30-day T-Bills, and you wait for the opportunity that’s so obvious, it hits you in the forehead. And that’s all you got to do.

But one thing I got to say about GM just because it’s my favorite kicking horse is Biden actually recently claimed that Mary Barra–

who you guys might remember I dressed up as one time–

that Mary Barra invented electric cars. That’s according to President Biden. Last year, General Motors sold 34–

not 34,000–

34 electric cars.

[LAUGHTER]

– Yeah. And actually, Ford was doing a big run for their Ranger, which has been the number one gauge that you’ve always looked at because it’s the number one car sold, and they have–

I forget what it’s called. The Lightning.

– No one’s buying the Lightning.

– They are getting wrecked on that completely. People are completely turning in their money right now saying, you know what? I don’t want it. Because guess what?

– It’s because they’re waiting on the Cybertruck.

– It’s because e-cars aren’t efficient, Porter. We knew this for–

a long time ago when we had the podcast.

– I thought that batteries made energy. What, you mean I need coal for that? What?

– You got to plug it into something, right?

– Oh, one of my favorite things–

Meb, what do you think’s going on in Europe? Let me ask you a question about this. My friend, Brian Hunt–

who is a brilliant guy. You guys, you may have never heard of Brian Hunt. He runs a business for MarketWise called Alta now. Before that, it was called InvestorPlace.

It’s a business that has been publishing Louis Navellier for 30 years.

I bought it in 2016, 2017, for $5 million. Something like that. And I put Hunt in charge of running it. He’s done a great job, and that business this year is going to do $120 million in sales.

He’s a great publisher. He’s a great guy. And if you don’t subscribe to Louis Navellier, you should. He does a good job with growth stocks.

Anyways, sales pitch over.

What I want to tell you–

what’s so funny about Hunt is he’s like, have you ever seen anything more fucked in your life than Germany?

Let me get this straight–

we outsourced our energy policy to Putin. We outsourced our foreign policy to America–

[LAUGHTER]

And we’re the land of unions. What do you think happens next?

So I just–

yeah, America has problems, but we’re also the most innovative–

by far, the most productive society in the world. And if you’re not long America, you need help.

[APPLAUSE]

– Yes, Porter, I absolutely agree. There are a lot of positives about America, and policy is the problem.

It’s day one. Porter, when I joined–

– Who do you think blew up that gas pipeline underwater?

– Well, we already know. We already know exactly who did it.

– Who could that have been? I don’t know.

– Well, Biden’s–

– It wasn’t me.

– Well, Biden’s on record saying he would do exactly that.

– It wasn’t me.

– It wasn’t me.

[LAUGHS]

That’s an old Shaggy reference, by the way.

– It wasn’t me.

– So Porter–

– By the way, in the vein of Forbes, I feel like we might have a Porter and Co. cruise. I mean, you’ve got to partner with maybe Viking. Who’s a good cruise company? I don’t know.

– Crystal.

– OK.

AUDIENCE: Norwegian.

– Norwegian. Crystal.

– So Meb, what are you–

what kind of–

– Two suns.

– What kind of advice are you giving for your clients right now? What are the things that you’re writing about and you’re hot on?

– Oh my goodness. I think there was about 12 different things in the last little comment section here by Porter.

You came into this–

you mentioned talking about stops. And I think one of the challenges as humans that are very emotional is becoming wedded to an asset. And look, God bless you.

But I guarantee you there’s people in the audience who are like, you know what? I’m a gold bug through and through. I think gold is going to $5,000. And it might, but you have to at least mentally prepare for the possibility it’ll trade down to $1000.

$500. You have to prepare for–

– It won’t.

– You have to prepare for the possibility that US stocks will go down 80%. That’s happened before.

– It might.

– My favorite investing book, <i>Triumph</i> <i>of</i> <i>the</i> <i>Optimists–</i>

you look back at the last 100 years, things were crazy, right? And one of the biggest problems in life–

in markets, but also in life–

is when you have some expectations, and you’re wedding to them. I’m going to marry this girl. I love her.

Whatever it may be, it doesn’t work out. People are devastated. I want this job. My identity–

– I’m going to sell my company for $3 billion.

– Right.

– I’ll be rich. And so part of investing is–

– Whoops.

– Looking back in history, you got to realize things were super weird already. Russia closed down their market. Guess what? That had happened before. It’s awfully nuts already.

But to become wedded to one particular outcome is often how people go broke. Now, they also tend to be concentrated–

what’s the old–

– This is service.

– Charlie Munger–

liquors, ladies, and leverage. The three L’s, right? Leverage is a bad one. Liquor is the other one.

– If it flies, floats, or–

– Effs.

– I think you own both of those, don’t you?

– I had to get rid of the planes. And the boats.

– I think one of the hardest things in investing is to be asset class agnostic. And I know that will not be popular to almost anyone here. But if you think about it, through history, there’s times when things look great, and there’s times when things look terrible.

Bonds?

I mean, how weird was that period? We had negative-yielding sovereigns. I think the 100-year Aussie is down to what–

I mean, Australian–

Austrian, excuse me. Down 90%. US bonds right now, we do–

we’re back to my polls on Twitter. I asked investors. I said, how much do you think–

this is three years ago. Five years ago. 2018. I said, how much do you think US bonds have declined before?

10-year bond. Almost everyone said 0 to 10%.

And I said–

and by the way, T-Bills. We wrote a paper called “What’s the safest asset in the world?”. Everyone said T-Bills. T-Bills.

I said after inflation, it’s over half.

That’s not a safe asset. But people become wedded to things.

And so talking about the trailing stops, thinking about opportunities, there’s a great Morgan Housel–

anyone know Morgan? He has a great quote where he’s like, every previous decline looks like an opportunity. Every future decline looks like a risk. Meaning, you look back in history, you’re like, oh, I should have bought in ’09.

I would have totally bought in ’09.

Who did? Not that many people.

– I did.

– OK. But so many struggle with the emotional attachment. It’s really hard. Anyway.

– Can I jump in with a quick story about crisis? About times like this? So how many of you guys know the name John Paulson? The famous major hedge fund manager made a lot of money in <i>The</i> <i>Big</i> <i>Short</i> in ’07 and ’08 by shorting subprime mortgages, and also famously is a gold bug and remains one. OK.

But most people don’t know that John Paulson made as much money in one trade in 2008 as he made on the entire bet in subprime. Does anybody know what that trade was? It was a 6-week trade in October and November of ’08 at the peak of the financial crisis. Anybody know what that was?

True story.

By the way, the same trade was recommended to you by one of the numbskulls in this audience–

or in this panel. The fat one.

He bought all he could buy of Budweiser.

And you guys may not remember this, but I recommended Budweiser in ’06. And I said, put 25% of your portfolio in it. And the headline of that newsletter was, “I’m afraid you won’t buy enough.”

Why? Because it was free money.

And as late as mid-October, the cash spread was $20 on an $80 buyout, all cash financing. You could have bought Bud at $60 and sold it at $80 in less than a month. That’s a huge annualized return. I can’t do that kind of math in my head. But there is no better way to make money.

So what I’m telling you is the only way you have the opportunity to do that is if you have cash. So what I am telling you to do–

and I want you to hear me, because you know for the next 20 years, I’m going to play clips of this and make you regret not doing it. You have got to raise serious amounts of cash, and you have to do it now.

By the time you see the VIX go to 40, it’ll be too late. Your stocks will be down too much. At that point, you’ve just got to hold through the fucking panic. So go raise some cash. There’s got to be some bullshit that you know you’re never going to get rich owning. Get rid of it.

I’m not saying sell Hershey. I’m not saying sell your beach house that you love. I’m not saying sell anything that you have a high yield in. There’s a guy in this room, I know for a fact, is a billionaire because of Walmart stock. I’m not saying sell your Walmart stock.

I’m saying go raise some cash. You got some commercial buildings with iffy tenants? Get rid of them. You got some crappy private investments, maybe like a razor company? Get rid of it.

[LAUGHTER]

What? I don’t know. Anyways–

– Can you guys see my beard? I have one of those, by the way.

[LAUGHS]

– He uses it every day.

– Yeah.

AUDIENCE: [INAUDIBLE]

[LAUGHS]

– It’s beautiful. It sits there on my counter.

– It looks nice. Anyways, please do this. Please do this because there’s no way that you’ll be able to take advantage of these opportunities–

and they will emerge. I can’t tell you exactly what it’ll be.

Like Rick Rule likes to say, I’ve got two balls. Neither of them are crystal.

[LAUGHTER]

I don’t know.

One of my favorite lines was, I didn’t even know they ate bats in China. You know, I don’t know. I don’t know what’s going to happen. But I do know that something is going to happen. There is just no way you can have the 10-year Treasury yield at 5% and stocks trading at 25 times earnings. You cannot have that. That is not going to work.

And I can tell you what’s going to break–

it’s going to be stocks. It’s going to be stocks because the consumer is going to roll over. That’s going to happen. It is for sure going to happen.

Is it going to happen next month? I don’t know. It’ll happen, and you got to be ready because it’s too late once it starts.

– I mean, I think you nailed on the behavioral part of that, which was the hedonic treadmill. I mean, how many people here can relate to that, whether it’s yourself or your children?

– What’s hedonic treadmill?

– But the–

– Is that, like, tantric?

– The getting adjusted to money–

– Is that something like what you learn in yoga class? What is it?

– When you have money–

I mean, look at every lottery winner. Miserable, right?

Not only do the lottery winners go broke, their neighbors go broke. That’s true, by the way. And so if you’re looking at the pandemic–

ton of people had money. They had nothing to spend it on.

You adjust to that. You had the stimmies. You had all these programs. And then all of a sudden, you come out of that and you’re used to having money.

And then you spend it. But you don’t go back to being thrifty. Like, no one goes–

that’s a one-way street, which is problematic from the consumer standpoint.

– I can tell you all about that.

[LAUGHS]

What do you mean, I’m broke?

– Yeah. So Porter, I want to save a lot of this for tomorrow. And both of you are going to be speaking, so that’s fantastic. We’ll save those things.

One of our favorite segments is You Just Can’t Make This Stuff Up. And I feel like we live in clown world these days. Like, everything is so bizarre and so insane that–

I’m talking too a lot of subscribers and, of course, Porter, you know I’m known at the office as a conspiracy guy. I won’t get into the reptilian–

– That’s saying a lot, by the way. In this crowd, to be known as that? That’s saying a lot.

– I won’t–

– Oh, he’s full-bore. He thinks that there are lizards and all that kind of stuff.

– Let’s get a little hand for the lizards running the world.

– The lizard people?

– They’ve got some people in here. So anyways, I think we’re going to see some wild things over time. And I don’t think any of us care about politics. I know that we’re kind of agnostic, and we’re libertarians.

But unfortunately, politics do affect things. And we have the 2024 elections coming up. And of course it’s a total S-show right now, with all the Trump stuff, all the indictments, the Biden-Hunter stuff. He’s not going to make it to the 2024.

And of course, this stuff affects investments. Do you guys have any ideas or any take on what you guys think is going to happen?

MEB: Do you know–

does anyone know the single best election outcome indicator?

Come on, nobody?

It’s the stock market. If it’s up going into the election, it has a pretty high hit rate. We have an old post where we were like, Hillary needs to start buying futures, because going into the election, it didn’t look so good.

By the way, the best trader here of anyone–

Hillary, by the way.

Was it cotton? What did she trade?

– Genius.

– Pelosi does great. And that brings up a great point. So it goes back to, it’s the economy, stupid. And everybody in here understands Bidenomics is a complete joke, so it’s not going to happen. But one thing that I’m interested in personally is RFK being independent. I think RFK has done an incredible job of bringing a lot of crazy things to light.

– Hold on. RFK has said publicly on Twitter that he’s going to ban all fracking in the United States.

– I didn’t see that.

– You want to have that guy as your president?

– No, no. No, I’m not saying I want him as that. What I’m saying is, him running as independent is going to be–

he’s the Ross Perot. And it’s going to throw a big wrench into the elections.

– Gotcha.

– And I’m interested personally in seeing how that affects the Democrats trying to steal this thing. That’s what I’d like to see.

– I don’t know. I’m not a political analyst. But one of the things that just occurs to me about all this is that if I had told you guys way back in 2010 that America would continue to print money to pay for its own federal deficits, and that you would see an enormous rise in violence, and prostitution, and drug abuse, and suicides, and the complete destruction of American cities, and if I said that we would go on to run up $30 trillion in new debts, and that we would start behaving like a banana republic in that we’re going to arrest a presidential candidate, that we are going to–

one of my favorite things going on right now in America–

that we’re going to–

just imagine if in 2010, I had told you that America was going to forbid you to leave your home. You would have never believed me.

But somebody wrote a documentary in 2010 called <i>The</i> <i>End</i> <i>of</i> <i>America</i> and said every single one of these things would happen. And they all have.

[CLAPPING]

And what’s terrible is what’s coming next, because none of this stuff is ever going to go away until there is a violent revolution in our country.

So is that going to happen next year? No, I don’t think so. But it’s coming.

And so in addition to trying to make sure you own the right companies and make sure you do the right things with your cash, like get it out of Bank of America, I’m also telling you that these social–

sociologists call it anomie. And anomie flourishes in an environment where the paper money fails.

Why? Because the failure of the money makes it impossible for us to contract with each other, to cooperate with each other. And it destroys the middle class, so it destroys all the values of the middle class. And that is what’s really happening to our country. Am I wrong?

AUDIENCE: No.

– What do you do about it?

AUDIENCE: Get guns.

– Protect yourself as best you can. I’d move to–

– Yeah, guns. Guns, ammo, and get the hell out of the cities.

– Yeah, I got laughed at by Porter. He mocked me a little bit. I took his <i>End</i> <i>of</i> <i>America</i> too seriously back in the day when I joined him, and I moved to Medellín, Colombia. And people say, why would you do that? Well, it’s perfect weather, there’s no GMO, it’s local farmers, there’s fresh water.

– By the way, in Colombia, he’s Brad Pitt.

– Well, that’s also true. I’m a 5 foot–

I’m 5 foot 6 and 1/2, forgotten about-guy here. I’m Brad Pitt <i>Fight</i> <i>Club</i> version down there with the ladies.

– Where’s the half? Is that the hair?

– I’m giving–

that’s what the shoe’s on, right here.

– That’s the shoes.

– My body fat percentage is looking good, though. But anyways, I’ll tell you guys that I have a new perspective. And we’ve talked about it recently. It’s a homogeneous culture where it’s one culture.

There’s no division down there. And although you have–

– How many genders are there in Colombia?

– There’s two.

AUDIENCE: Two!

– There’s two. And it’s very masculine, and it’s very feminine. And I think that’s very healthy for a culture because it requires–

in a third-world country, protection is required. And the man is the protector. And the woman–

of course, they work, and they have to. But they also take care of the family. And I think that’s a very beautiful thing.

– You’re talking about–

– I would suggest that you guys look at alternate ideas for setting up a plan B. That’s just my personal thing. I’m going to–

I have a piece of land that’s 2 and 1/2 acres on a lake. I’m going to have a majordomo. That’s what they call it. It’s a couple that will live out there.

I’ll have a greenhouse with all of my own fruits and vegetables. A chicken coop. I’ll have a beautiful cabin that I’m building for $160,000. A boat.

I’ll be completely left alone, and it’s absolute paradise. And the dollar goes infinitely.

So if you guys want to talk about that, please email me, and I’ll be happy to talk to you guys about these things.

– We can do a Porter–

this is Colombia? South America?

– Medellín, Colombia, yes.

– Medellín.

– Not South America?

Or not South Carolina.

Porter and Co. retreat? We could do that there. I’m up for that. Can I tell a Colombia story?

– Please.

– So I think this is an interesting way to think about things because–

going back to sentiment, I was down in Bogotá, and I was first of all, thinking–

walking around, I was like, God, I’m out of shape. I am fat right now. But it’s pretty high altitude.

AARON: It’s the altitude.

– OK.

AARON: So it’s 7,000 feet.

– So I was at Institutional Investing Conference. This is probably a decade ago. Let’s call it 2014. And I gave a speech.

And I said, look–

beautiful people, amazing country, great food. Everything has been awesome. Your stock market is one of the most expensive in the world. Silence, just like this.

Afterwards–

I mean, it was one of the most awkward presentations I’ve ever given. I said, your stock market is in a bubble. In the little hallway afterwards at one of the little breakouts, person after person after person after person came up to me and said, Meb, you don’t understand. The pension funds put in–

whatever the number was–

$10 billion every month. X-amount every month. Oil is at $120.

The stock market cannot go down. I said, look, I don’t know. I’m just a quant. I’m just saying, on average, this is expensive.

The stock market is probably down, I don’t know, 70% since then? Maybe 80%? On a real basis, even more? Now, I want them to invite me back to finally say, you have one of the cheapest stock markets in the world right now.

Now you should be buying. But here’s the thing–

no one cares. You go back and you talk to people, they say, no shit, buddy, but nobody has any money.

And so when you talk to people in the United States–

and now I’m giving away part of mine tomorrow. And let me be clear, the most important thing when you talk to someone–

say, what are your incentives?

Like, my biggest fund–

we manage $2 billion. We have a dozen funds. My biggest fund by far is the long-only US stock fund.

Over this last cycle, how many people have you talked to–

the number one most universally held belief in all of investing, if I had to ask you guys to write it down, is stocks for the long run. Stocks beat bonds. Right? Like, everyone believes–

I don’t know one single person that does not believe that. And during this last cycle, the zero interest rate environment, everyone said, but it’s OK for stocks to be expensive because bond yields are zero.

PORTER: I didn’t say that.

– Which, by the way, I wrote a blog post–

which no one read–

which debunked that and said, is that actually true? And yes, it is kind of true. Stocks actually do great when bond yields are low because the reason bond yields are low is because everything had hit the fan for the past decade. Stock returns were terrible.

Inflation was high. Stock valuations were super low.

None of that was true over the last part of this cycle, but the sentiment–

my goodness.

Do you guys remember February 2021? We have a Twitter thread called–

for my North Carolina peeps–

“what in tarnation.” My mom, my grandmother used to say that phrase. What in tarnation are you doing, Meb, bringing all this mud in the house? Whatever it was.

What in tarnation?

And it was tweet after tweet after tweet of the craziness going on–

options trading, there was–

PORTER: FTX.

– The sentiment surveys, they keep going up. What do you expect on the stock market? It got as high as 17% a year, which sounds insane.

But that was what people were saying in ’99, which by the way, would have been me. I was in college at the time. I thought I could do 20% a year, no problem.

But you do not hear anyone now saying, now that interest rates have gone from zero to five–

oh wait. OK, so hold on. It’s still OK for stocks to be expensive because bonds–

well, wait. Hold on, none of that–

everything breaks. And there’s a preview of tomorrow. We’re actually super bullish on some things, but on aggregate, the stock market, the broad market cap weight, is super fragile.

– All right, guys. Well, we don’t want to bore you anymore, because these guys have to save their speeches for tomorrow. And I feel like I just keep digging in and getting them to reveal more and more.

Great start to the night. Let me tell you, I was so honored to join Porter again. I left in 2015. I did my own thing. I went out on my own. And I promised him that I would apply everything that I sat in his office for 4 and 1/2 years.

– He started a global diet business. You can tell I wasn’t a subscriber.

[LAUGHTER]

– But what I promised Porter was, I want to apply everything that you ever taught me. And I did that. And I’m very honored. I owe the world to this guy. Actually, he’s done more for me than anybody else. And I think he’s done that for a lot of subscribers here.

– Woo.

– And I want to thank him very much. And when he called me out of the bull–

– What, you don’t need to stop. Just keep going.

– Yeah, when he called me–

– Yeah.

– When he called me out of the bullpen–

– Go on.

– He called me out of the bullpen, and he said, Brabsy, I need you back. I need you to run the marketing. I need you to keep the integrity of our message.

I was so honored. And I wouldn’t be here if it wasn’t for you guys. Trust me. You know what he told me when he hired me? We got six months, and if we can’t make this happen, we’re shutting it down. And thanks to every single one of you right now.

– You guys all came in immediately and made everything that we’re doing now possible, and what we’re going to do next possible. And man, I just can’t wait to show you the quality of the work that we’re going to be able to produce for you. I’m super excited about it.

And our next product is going to be a biotech thing. And I’ve got a guy who spent 30 years in VC in biotech. He’s a Rhodes scholar. And he’s retired from doing VC work, and all he wants to do is help all of us make a lot more money in biotech. So it’s going to be great.

– Very excited. Thank you guys so much.

[APPLAUSE]

ANNOUNCER: Thank you for listening to the Porter and Co. Black Label Podcast with your hosts, Porter Stansberry and Aaron Brabham. We’ll see you soon.

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