07 February 2023

Rebecca chats with David Hay. Together, they engage in conversation regarding David’s market outlook for 2023, the reasons behind his belief in an earnings recession, and various other topics.

David Hay is a longtime investment advisor, where he is currently the Chief Investment Officer at Evergreen Capital. He is also a financial author and recently wrote the book titled: Bubble 3.0: History’s Biggest Financial Bubble.



  • Why David believes we will have an earnings recession and markets have yet to price this in. 
  • How the tremendous amount of government debt that needs to be issued and rolled over could mean interest rates go up in a recession. 
  • What impact China’s reopening could have on the US economy and the Fed’s goal of achieving a “soft landing”. 
  • Why David believes we could see inflation come back. 
  • David’s outlook on energy and why thinks we could see a third year of outperformance. 
  • David’s investment thesis behind USO, Shell PLC and CTRA. 
  • David’s outlook on the uranium sector and thesis on Sprott Physical Uranium Trust. 


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off-timestamps may be present due to platform differences.

[00:00:00] David Hay: The stock market doesn’t typically bottom, in a major bear market. And we’ve gotta say, and we’ve seen some of the stats. I mean, NASDAQ was down 32% last year. And as I mentioned, individual investors overall, were down about 38%. So it’s been a serious bear market.

[00:00:13] David Hay: Those don’t end until the Fed is most of the way through a cutting cycle. That means stocks keep going down even as the Fed’s cutting. So this, all this enthusiasm over when is the Fed going to stop. And then when is the Fed going to start cutting? I think he’s misplaced.

[00:00:33] Rebecca Hotsko: On today’s episode, I’m joined by David Hay, who is the Chief Investment Officer at Evergreen Capital. He’s also the author of the book, “Bubble 3.0: History’s Biggest Financial Bubble” and writes a weekly called “Haymaker” that comes out every Monday and Friday. I highly recommend checking it out. During this episode, David gives us an update on where we are in Bubble 3.0, why he thinks it hasn’t fully popped yet, and that there will likely be more pain to come.

[00:01:05] Rebecca Hotsko: He also shares how this time could be different in the sense that interest rates could still go up. Even in a recession due to the tremendous amount of government debt that needs to be newly issued and rolled over and talks about what impact this could all have on markets. He also discusses why he thinks inflation is going to come back and how to invest in this type of market environment.

[00:01:28] Rebecca Hotsko: And I also get his thoughts on some of the sectors that he is particularly bullish on, including oil and gas and uranium. And he shares some specific investments in each of the sectors that he thinks are buys and shares his investment thesis behind. Why? It’s always such a pleasure chatting with David and for those that missed our first episode, David came on the show a couple months ago and talked all about his book Bubble 3.0, which I highly recommend checking out and reading.

[00:01:57] Rebecca Hotsko: If you are interested in this, David actually gave our listeners a discount code, which is invest T33, and so I have that all linked in the show notes if you’re interested, along with his. All right. With that all said, I really hope you enjoy today’s episode. 

[00:02:15] Intro: You are listening to Millennial Investing by The Investor’s Podcast Network, where hosts Robert Leonard and Rebecca Hotsko interview successful entrepreneurs, business leaders, and investors to help educate and inspire the millennial generation.

[00:02:29] Rebecca Hotsko: Welcome to the Millennial Investing Podcast. I’m your host, Rebecca Hotsko. And on today’s episode, I am joined by David Hay. Welcome back, David. 

[00:02:39] David Hay: Rebecca, it’s a pleasure to be here.

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[00:02:41] Rebecca Hotsko: Thank you so much for taking the time to come back on. We have so much to talk about today because last time you were on, we were talking all about your book Bubble 3.0.

[00:02:50] Rebecca Hotsko: History’s Biggest Financial Bubble, which is referring to the most recent bubble running up to 2021, and really just how the Fed’s actions largely  contributed to getting us here. And so I wanted to start off today. Talking about where we are in this bubble now, because the market is down about 20% from the peak in 2021.

[00:03:12] Rebecca Hotsko: Housing has started to crack as well, and so we have seen the bubble pop a little bit, but I just wanted to get your current thinking and assessment of the market and where you think we are in this bubble today. 

[00:03:24] David Hay: You know, I think the short answer is I think we’re partway through it. I don’t think we’re all the way through it.

[00:03:28] David Hay: I know a lot of people are hoping for that, and there’s a tremendous amount of denial about the severity of both how inflated things got, and then also the negative feedback that we’re getting. And to that point, one of the more amazing facts I’ve seen lately is from JP Morgan that the typical individual investor’s account is down 38%, or what was last year, which is obviously just a horrendous year, way worse than the S&P was down 18%.

[00:03:55] David Hay: Long term investment grade corporate bonds were down about 20%. So when you put those two together, it was certainly one of the absolute worst performance years, or investors, both retail and institutional. So the typical balance portfolio didn’t work. He didn’t get that counterbalancing effect from bonds.

[00:04:13] David Hay: Last year, bonds were a source of risk, not a source of safety. And yet what’s amazing is with all that damage that’s been inflicted. There’s just as tremendous complacency. Frankly, there’s no fear, we’re actually seeing inflows into equity funds. We’re seeing inflows into Kathy Woods’s Arc Innovation Fund, despite the fact that it’s down 80% from its peak, or at least it was here very recently.

[00:04:35] David Hay: So there just seems to be an awful lot of denial, but certainly no panic, no capitulation. We’re not seeing the kinds of things that you would typically see in a nasty bear market, and certainly we’re not seeing the things that would indicate that the bear market has run its course. So that’s pretty bizarre.

[00:04:51] Rebecca Hotsko: I think that is such an interesting point that it’s probably the most expected recession ever, yet people aren’t, and investors in the market as a whole, they’re not acting like a recession is coming. And it seems like the risk isn’t fully priced in yet. Would you say that’s fair? 

[00:05:10] David Hay: I do think that’s fair.

[00:05:11] David Hay: I think that what we saw last year was basically just the increase in interest rates. So we went from 1.5% on the 10-year treasury note at the beginning of the year to a peak of about 4.3. Now it’s come back down to three and a half. That’s a pretty big rally, but still a huge increase. One of the biggest increases ever from the low point or the beginning of the year, actually, if you go back to the low point, was the summer of 2020 when the 10-year treasury, believe it or not, got down to half a percent.

[00:05:36] David Hay: So really the damage that’s been done, I think you could argue persuasively that it really was just the rise in interest rates. And now what we’re looking at is whether we’re going to have an earnings recession coming up, which I happen to believe we will. I think it’s going to be a fairly serious one. I actually believe we’re going to have an overall recession, but that’s a pretty hot topic.

[00:05:54] David Hay: And if you look at the stock market’s behavior here recently, like this year, you’d say, well, the market doesn’t seem to be too worried. Now, December was a rough month, so you know, we’re in this very changeable environment. So I, I think it’s hard to say that the market’s calling it one way or the other, but what I do think is, is likely is to have a, a pretty tough earnings year, which will likely drive stocks down for a second consecutive year, which, as you know, that doesn’t happen very often.

[00:06:20] David Hay: but I think the set of circumstances that we have right now are pretty extraordinary, including the fact that, you know, as you pointed out, bubble 3.0 was immense. I think it was the biggest speculative mania in the history of humanity. When you look at so many different aspects of things like cryptos.

[00:06:36] David Hay: That was the area that I really went after in my book, particularly Dogecoin, which amazingly still has a 10 billion market cap. It got up to 88 billion, 89 billion, something like that. More than a lot of us have blue chips, but it’s still 10 billion. And even its founder says it’s absolutely worthless.

[00:06:52] David Hay: It’s a joke. I’m just joking, token, but why people are still willing to put a big valuation on it. 

[00:06:58] Rebecca Hotsko: And just on the earnings point, because I have heard that from numerous guests now, and it’s crazy to see how the Wall Street estimate is still like 230 for the coming year. And if you, I guess, reprice to what it maybe should be a 20 to 30% correction.

[00:07:14] Rebecca Hotsko: It should be around more like one 90 to 1 95 for the year. And so that’s still significant. Weighs down to that point. And then I guess just on the interest rates, because what also seems to be true is that the market isn’t expecting the interest rates to stay elevated for the entire year. I think currently it’s pricing in interest rates to reach about 5%, maybe five and a quarter, but then decrease by 50 basis points in the later half of the year.

[00:07:41] Rebecca Hotsko: And so is this the trajectory that you see or do you have kind of a different expectation? 

[00:07:47] David Hay: Well, it certainly could turn out that way. That’s not unreasonable. Had Jamie Diamond just said the other day, he thinks the Fed fund’s rate could hit six. So that’s obviously quite a bit above the consensus, but I think it’s hard to call it right now because I think it’s going to be a function of how the financial markets behave.

[00:08:02] David Hay: So if they come under a lot of pressure and the economy still looks recessionary, I think that there’s a pretty good chance. The Fed does peak out at about 5%. If not, if the market continues doing what it’s doing now, I think you could see five and a half, even 6%. I mean, it’s, I, I think the Fed for the first time ever is, at least since the Greenspan era, you know, Alan Greenspan famously started the whole Fed put thing back in 1987 after that crash.

[00:08:28] David Hay: And then that , Fed put, has been activated many times since. And it’s quite clear that J Powell wants to try to put the Fed put to death. You know, he wants it gone. And I think that when you have the market frothy again, like it has been here recently, and not just the stock market, by the way, bonds too.

[00:08:44] David Hay: Where corporate yields have come down and, and spreads credit spreads, which measure the difference between what corporate bonds pay and what the government bonds pay. That’s been narrowing as well. And so financial conditions have actually eased up quite a bit here recently, which is despite all these Fed increases and the fact that they’re also doing QT.

[00:09:03] David Hay: We really should talk about quantitative tightening because that’s rare. It’s only happened one other time and that was back in 2018. And J Powell pretty quickly reversed course and started cutting interest rates in, in 2019 and stopped QT but now we’ve got these monster rate increases, one of the fastest and most significant rate hiking cycles ever.

[00:09:23] David Hay: And we’re, the Fed is shrinking its balance sheet, which is QT quantitative tightening the opposite of quantitative easing. They’re, you know, they’re much more militant than they’ve ever been, at least going back as far as Paul Volcker in the early 1980s. And as long as the market keeps ignoring them, and the market does that repeatedly, you know, Powell will say, you know, we’re going to go higher, we’re going to stay higher, longer.

[00:09:46] David Hay: And the market, you know, sells off, and then it comes roaring back. There’s just so much hope that the Fed’s going to pivot. And I think that’s frankly a big. 

[00:09:55] Rebecca Hotsko: Yeah. And you also talk about something in your newsletter, how you think the market is being very complacent about pricing in the risk of all of the debt that the federal government has to roll over.

[00:10:06] Rebecca Hotsko: And so what would be the implications of that? 

[00:10:10] David Hay: Well, that’s a great point because you would normally think that in a recession interest rates would fall, government bonds would go up in price because yields and bond prices move opposite their like two ends of a teeter totter, and that is the normal scenario.

[00:10:23] David Hay: It could happen. But I do think what is different this time, those are always dangerous words when it comes to the financial markets, is that the federal government’s deficits are just exploding. I mean, they did obviously during the pandemic, but then because of the tremendous revenues that came in, I mean, record-breaking revenues came into the federal government in 2021 and 2022, and the deficit came down to a mere trillion dollars.

[00:10:48] David Hay: But now it’s exploding again. And if we have a full-blown recession, we know what happens, right? Because your revenues go down and your title of payments go up. And so you could easily have a two to two and a half trillion dollar deficit. And then you’ve got the Feds selling basically a trillion dollars a year, a year worth of bonds instead of buying a trillion.

[00:11:06] David Hay: So that’s a 2 trillion swing. So you can, and you’ve got the bank in Japan that’s selling treasuries. You’ve got the Bank of China that’s selling treasuries. Even the Social Security Trust fund is being forced to sell treasuries. . So you could just have an enormous amount of government debt that needs to be newly issued.

[00:11:22] David Hay: As far as the rollover, there’s about 9 trillion between this year and next year. That needs to be rolled over out of the government’s roughly 30 trillion debt. So there’s just a tsunami of debt issuance and debt rollover that needs to happen, which might mean that interest rates actually go up in a recession.

[00:11:40] David Hay: That would be a very, very unusual situation. But it did happen in the UK here recently, you know, last year with their big l d I blew up, which caused the long-term gilt rates, long-term British treasury rates to go through the roof. The Bank of England’s been able to get that under control with you know, by buying longer bonds.

[00:11:57] David Hay: And I think ultimately that’s what we’re going to be looking at with the  Fed. I think the Fed’s going to be put back in a position where it needs to restart. Qe quantitative easing its magical money machine, and that’s one of the reasons why I think that while inflation is likely to cool near term, it is cooling and I think it will continue to do so.

[00:12:14] David Hay: I think it will re- accelerate even, you know, later this year, but especially in 2024. 

[00:12:20] Rebecca Hotsko: I want to get to your views on inflation in a second, but before that, on the yields, because to your point, if the 10 year yield in fact increases instead of decreases as inflation and GDP growth slows, then the yield curve would turn positive, which typically is a sign that, I suppose, that it’s a positive sign for markets historically, but that would almost be a false positive then in this case.

[00:12:49] David Hay: It could be. I mean, this is just such a radically different set of circumstances that we’ve ever seen, so I’m not sure that, you know, kind of some of the old patterns really still apply, but it’s whatever. What we do know for sure is that this is not the same feed that we’ve been dealing with over the last 20 or 30 years.

[00:13:06] David Hay: This is much more. Concern fed about inflation. So really there’s just little question that their number one job at this point is to try to destroy inflation or at least get inflation down to their mythical 2% or elusive 2%, which I think they could do briefly. But, you know, I think the big question is, are we in a structural inflationary period?

[00:13:25] David Hay: And I think we likely are, I don’t think we’re going to revert back to. You know, kind of a stagnation period. Slow growth and, and inflation in the, you know, one and a half to two and a half percent zone. I think that’s, I just, I think people that are expecting us to return to that are going to be disappointed.

[00:13:41] Rebecca Hotsko: So what’s driving your thesis on that? I’ve heard from a few guests similar views, and one was just the de-globalization and such things like that are putting us in this new era where inflation, like you mentioned, just might not go back to those low ranges that have been targeted by  central banks. So what’s your thesis behind why that could be the case?

[00:14:05] David Hay: Well, one of my kind of unique views and I, I think that I, I sort of came up with this term green inflation, and I know you know about that. This idea that our great green energy transition is actually quite inflationary, and we’ve been seeing a lot of evidence of that, particularly in Europe. You know, fortunately Europe’s getting warm weather so that storage levels are staying a lot higher than most people believed.

[00:14:27] David Hay: It’s, it’s really quite fortunate how warm it’s been over there. But of course, the weather can change on a dime. But I, I just believe that when you move from these highly dense energy sources, and the most dense, of course is nuclear. I know we’re going to talk about nuclear in a bit, but even coal and natural gas and oil are a lot denser sources of energy, a lot more potent than solar and wind.

[00:14:49] David Hay: And of course they’re intermittent, they’re unpredictable. It’s like 30% of the UK’s energy now comes from wind. And when the wind doesn’t blow, which has been a downside of this winter for them, they’ve, they’ve had a low level of wind. So you know, 30% of your energy is at risk. And as a result, energy prices over there are just astronomical.

[00:15:10] David Hay: So the New York Times ran a piece here recently that 61% of Scottish residents are basically in energy poverty this winter. And that’s frankly, a problem for all of the UK and much of Europe. And as a result, one of the things that’s happening is they’re burning a lot of coal. They’re burning a lot of wood, and that’s obviously not great for the environment.

[00:15:27] David Hay: Just this idea that either trying to make this shift and you know, if you think about EVs, which are obviously a huge part of the great green energy transition, the amount of rare earth minerals that they use and metals and other critical components for electric vehicle manufacturing are in short supply.

[00:15:44] David Hay: Lithium is up, you know, a thousand percent over the last couple of years. You know, copper prices are now starting to run, which that’s kind of another thing you’d say, well, in a recession, copper prices should be going down. And they did for a while. This kind of realization is setting in as to the extreme need for things like copper to build all these EVs.

[00:16:03] David Hay: The EVs are way more copper intensive than traditional internal combustion engine vehicles, but that’s just one. There’s also the issue of de-globalization, getting back to this theme of why inflation is likely to be more. Enduringly higher than it has been in the past, and the fact that we’re bringing supply chains back closer to home and almost everybody is, I mean, Europe’s doing kind of the same thing, and that is inherently inflationary.

[00:16:27] David Hay: You’ve also got the aging of the workforce so that you know there’s not going to be as many workers relative to the overall population that tends to drive inflation up. And I think the government situation that we talked about, where the debt levels are just so high that there’s really only one way for a country like the United States, which can’t default because it has issues debt in its own currency, and it is the world’s reserve currency still.

[00:16:51] David Hay: So the much easier option is to gradually inflate it away. And then try to make it look like it’s not as high as it really is, which they’re working  pretty hard at doing these days. Yeah. A lot of people, I think, would’ve believe that inflation is much higher than the official statistics, and I think that’s the way it’s likely to be.

[00:17:08] David Hay: So we’re going to do pretty much what we did after World War II, where inflation, you know, ran quite a bit higher than interest rates. In 1948, I believe it was, inflation was running in the teens and the interest rates were in the, you know, 2%. So that gets your debt to GDP down in a hurry. We’ve seen some of that here recently in the United States, and I think we’re going to see more of it.

[00:17:28] David Hay: But if they don’t, if they don’t inflate away, then you know, then you’re probably going to have to look at just massive entitlement cuts, which, you know, politically that’s almost impossible. So I, I really do think that ultimate inflationary driver besides green inflation, is going to be the Fed, restarting its magical money machine.

[00:17:45] Rebecca Hotsko: Okay. And then I guess another near term risk to think about is China reopening. And so I’m wondering what your thoughts are on that and how big of a source of inflationary pressure that could be for the Fed to kind of meet their near term target of reaching a soft landing. 

[00:18:05] David Hay: Yeah, great point. And give kudos to my partner Louie gov because he’s been on that theme.

[00:18:11] David Hay: You know, he’s, a few months ago, he’s saying everybody’s focused on the PAL Pivot and like me, he believes that’s not happening anytime soon. But he said the Pivots really watches for X and China to pivot away from zero covid, and that’s what’s happening. In fact, I think it’s been even more dramatic and faster than he thought it would.

[00:18:28] David Hay: And as a result China is going to need to import a lot of commodities because they’ve been in lockdown mode for, you know, on and off for the last almost three years. And if you think about oil alone, that’s dropped the demand for oil by about a million and a half barrels per day. That’s huge. So, to put it in context during the Great Recession, which was, you know, really the worst economic downturn since the 1930s.

[00:18:52] David Hay: Oil demand went down about a million and a half barrels a day, coincidentally, about what the dropoff in China has been. So, oil, as you know, has been under a lot of downward pressure lately because of fears of a recession and demand destruction. And as I mentioned earlier, copper went through that as well.

[00:19:06] David Hay: And natural gas is also going down too. Yeah, I do think China reopening is a big deal and I think it is going to put definite pressure, especially on commodity price. 

[00:19:17] Rebecca Hotsko: Okay, so I want to get into your commodity outlook right now because you write a fantastic newsletter, Haymaker and it comes out every Monday and Friday.

[00:19:27] Rebecca Hotsko: For our listeners who haven’t signed up yet, it’s so fantastic. On Mondays you write about, Your equity buys, holds and trims, and then a great analysis with every article. And so I want to start with the oil and gas sector, because that’s one that you write about often. And so can you just touch on your outlook for the sector?

[00:19:47] Rebecca Hotsko: Some people think we might see a third year of our performance, but what is your view on this? 

[00:19:53] David Hay: Well, I agree with that. I think we will see a third year of outperformance, but I think realistically it’s not going to be like what we’ve seen the last couple of years. I mean, the S&P energy sector from the beginning of 2021 is up about 155%.

[00:20:07] David Hay: The overall market is up just a few percent, so enormous outperformance. So that’s not likely to continue. And the stock prices are not nearly as fire sale as they were a year ago, and especially two years ago. So, as you kind of pointed out, this is a theme that I’ve been on for a long time in our former newsletter, which was called the Evergreen Virtual Advisor, but that was really the predecessor to the Haymaker Publications.

[00:20:30] David Hay: We wrote a piece in December of 2020 called Totally Toxic, which was because at that time there was just such negativity toward investing in energy. It was considered to be reinvested. And, you know, very politically incorrect. So, you know, with ESG mandates proliferating the idea was, you know, just divest and, and cut off the funding for, you know, new oil and gas production and to, to us that just seemed absolutely insane.

[00:20:56] David Hay: It’s turned out to be that way. I mean, just look at what Europe is doing because they have cut off. I mean, they shut down nuclear reactors. They didn’t do any fracking. So they became incredibly beholden to Russia, which, you know, fortunately the United States has this incredibly vibrant domestic oil industry.

[00:21:13] David Hay: So we’re now the largest natural gas exporter on the planet, which nobody would’ve thought. 15 years ago we were building these facilities, these LNG facilities on the Gulf Coast to bring in natural gas. And here we flew up. The fact, I just saw that S&P Global is saying that they expect our natural gas exports to double over the next few years.

[00:21:31] David Hay: So the, and we’ve got one of our major export facilities, l and g facilities, offline, which will be coming back online again, the Freeport facility down in Texas, which took off somewhere around 20% of US natural gas exports. So yes, I remain very bullish on that area. I think the price for getting natural gas, which is now under $4, per million British thermal units is way too cheap.

[00:21:53] David Hay: But you know, as I said, warm weather is. We’ve got even somewhat warm weather in the United States after the big coal snap in December. But the weather is very changeable and the demand for natural gas is just going to continue to rise. And you know, you just think about Russia. Russia was providing 40% of European natural gas.

[00:22:10] David Hay: I mean, even if there’s miraculously peace overnight in Ukraine, which we all hope and pray for, but even if it happens, it’s going to be an unreliable energy supplier for years to come. So the US is going to need to step up and I think we will. We’ve got that ability and we’ve done a great job, frankly, in bailing out Europe as it was refilling its storage facilities to get ready for this.

[00:22:32] David Hay: And for oil, I already talked about China, but I do believe that you’re going to continue to see fuel switching in Europe. And that’s something I think we talked about last time, a pretty unusual development where typically coal is cheaper, natural gas is cheaper than oil, so they burn coal and, and natural gas versus oil to produce electricity.

[00:22:51] David Hay: But the price of call and outro gas went ballistic. So it was a. US oil as you know, $75 a barrel is an incredible bargain. And so they’re actually importing US oil, and creating electricity by burning US oil, which I don’t think has ever happened since the 1970s. So it’s a brave new world out there.

[00:23:12] Rebecca Hotsko: Okay. So then on your outlook for oil, because I think what I’ve been hearing from a lot of people is they think that it could get worse in the near term, but is that thinking wrong then because of what you were just talking about, how China reopening would be very positive to bring back on that 1.2 million barrels per day of oil, and so this could be perhaps the lowest oil price we see.

[00:23:38] David Hay: As you know, we are in our making game Monday, which is the one where we have more market actionable ideas. Last month we put a buyout on the US Oil uso, which is the oil etf. And it’s actually done pretty well from that time because oil had been beaten down and. For those fears that you’re mentioning and kind of ignoring the China reopening, you know, positive lift to prices and ignoring the fuel switching aspect, and ignoring the fact that, you know, Russian oil is probably going to be impaired Russian oil production and, and either voluntarily or involuntarily, I mean, it’s quite possible.

[00:24:10] David Hay: Putin decides to cut production by 20%. Try to drive the price up drastically. If that happens Katie bar the door. And I, I did see Pier Andron, who’s one of the, he’s a billionaire, one of the best oil traders the world’s ever known. And he thinks there’s about a 4 million barrel a day swing coming.

[00:24:27] David Hay: And again, in the great recession, demand fell by one and a half million barrels a day. So 4 million barrels is a huge number. So yes, I, I think that this, the market gets onto a theme and the theme has been demand destruction because of recession. I think there’s an awful lot of commodity trading advisors and hedge funds out there that when they believe there’s going to be a recession, one of the things they do to protect their portfolio is to short oil, and it becomes kind of a simplistic knee jerk reaction.

[00:24:52] David Hay: And I think in this case it’s wrong. And I, you know, I do know that people like Felix Zoloft and his brilliant said oil could go in the fifties or sixties temporarily, but then he thinks it’s going to $200 a barrel next year. Well, I mean, so he got a little bit of downside, but a tremendous amount of upside.

[00:25:08] David Hay: And I don’t think so, especially with the Biden administration saying that they’re willing to refill the SPR somewhere around $70 a barrel that will go much below. And I also don’t think OPEC wants to see that they could cut again. And that’s another thing that really hasn’t filtered through quite yet is the OPEC cut, which is probably another million a half barrels a day.

[00:25:26] David Hay: Some of that’s happened, but not a lot. So when I look at it, I see a very bullish setup for particularly oil, but I think natural gas as well. 

[00:25:35] Rebecca Hotsko: And then your other equity buy on that list is Shell. And so can you just give us, I guess, a couple sentences on why you think that is the top performer? 

[00:25:47] David Hay: Well, yeah, one, I think the most compelling factoid, the bull story for Shell is that it’s free cash flow yield right now.

[00:25:53] David Hay: So the amount of excess cash that it generates, so gross cash flow, less capital spending is about 18%. So just enormous free cash flow yields. And that’s with oil prices that are not exactly lofty. You know, especially if you have inflation adjusted oil prices, they’re actually very reasonable. So if you get a hundred, $150 price of oil, that free cash flow is just going to go through the.

[00:26:16] David Hay: So that’s one reason. But the other thing is they have a huge LNG, but they’re, they have, they’re the biggest L N G liquified natural gas operator in the world. And so they tremendously benefit from this shift away from Russian Natural Gas to Western LNG. And, you know, stock’s cheap. It’s a, it’s a lot less expensive than say, a Shell or Chevron.

[00:26:36] David Hay: US large supermajor producers tend to trade at a premium valuation, whereas the European ones tend to be not as well liked. Part of it is because they’re making more of a commitment to renewable energy, which I don’t think is bad. I think, you know, we need renewable energy. That’s great. And, but they get a little bit of a discount because the returns on renewable arts are high, they are the traditional fossil fuel business.

[00:26:56] David Hay: But again, their LNG operation is just world class. 

[00:27:00] Rebecca Hotsko: That’s been the biggest question that I’ve got from listeners is energy companies have already appreciated so much over the past couple years, so are they now overvalued? And I guess in the context, and I think just people, a lot of investors aren’t used to investing in commodity businesses.

[00:27:17] Rebecca Hotsko: And so it’s a different way of thinking too. So what are some tips then you would give our listeners on how they should think about, I guess, analyzing which company? So to look at the free cash flow yields, Is one you mentioned, 

[00:27:31] David Hay: right? Because that, that’s kind of the ultimate tell that something’s not overpriced if it’s generating, I mean, if they, if you think the commodity price is unsustainably high, would I try to make a very strong case that it’s not, I, I’d actually argue the other way around.

[00:27:45] David Hay: It kind of takes that away and then, you know, when you’re looking at 18% free cash flow yield, it’s hard to say that the price is, you know, extended and dangerous. To you, you’re framing that in an excellent way. And I think to respond to that is that one of the best ways I’ve found to make money is to own something you know, an asset class or a sector, whatever it is that’s in an uptrend, but where it’s had a fairly significant pullback within that uptrend.

[00:28:09] David Hay: Because even though something’s going up and likely to continue to go up for a number of years, which I would say is the case with energy, there are going to be some big time pullbacks and energy’s extremely volatile. The price themselves, the price of the commodities themselves is highly volatile. One reason is that there, it’s something like 30 to one financial or derivative trading relative to the physical market.

[00:28:32] David Hay: In most commodities, it’s more like four to five times. But in the oil market in particular, it’s, you know, somewhere in the 30 to one vicinity. So that you kinda get this tail wagging to the dog phenomenon with energy, and particularly oil that you don’t get with other commodities. So that just enhances the volatility.

[00:28:48] David Hay: That’s one reason people get scared to buy it too, because they typically come in when they’re running, right? When they’re going up and it’s like, oh man, this thing’s really working. Or they buy a little bit of goes up, oh, I want to own more. And then it gets clobbered and on. I don’t want to touch that again.

[00:29:00] David Hay: So I think you have to be disciplined. And frankly, what we do is when we, you know, are fortunate enough to get in early in a move like we have with energy and it has a big run, we trim, we’ll take profits, we’ll get, you know, we’ll reduce our exposure and wait for that correction to come. And then you, you know, you feel actually good about it rather than, you know, say, oh geez, I blew it.

[00:29:19] David Hay: I didn’t, I should have taken profits or gotten out. So if you do kind of discipline, profit taking during these big up moves, then take advantage of the corrections that come along. Just look at any chart and clearly oil’s in an up trend. Clearly the oil sector’s in an uptrend, and you just look for those periodic pullbacks to increase your exposure.

[00:29:35] David Hay: Or for a lot of people add exposure. They don’t, you know, that’s one of the, the other thing is that energy is so under owned, you know, across the board. And a lot of that is due to e s G considerations, though I think that’s fading. Like people are realizing we can’t run the planet without fossil fuel.

[00:29:51] Rebecca Hotsko: And then I guess on the USO stock. So that one is buying, yeah. WTI futures. And so what advice would you give listeners on that one? Because there can be some things that happen whether the future’s curve is in contango or backwardation. And so I know you’ve written about this extensively too. 

[00:30:12] David Hay: Right, probably time for futures 101 because you brought up two terms that most people aren’t familiar with.

[00:30:17] David Hay: So contango is the normal slope. So this would be kind of, I guess to use in a maybe an explanatory analogy, it’s kinda like the yield curve. The normal slope of the yield curve is for short-term interest rates to be lower than long-term interest rates. But today, of course, we have an inverted yield curve where short rates are higher than long rates, which is, by the way, a classic recession warning.

[00:30:38] David Hay: But we’ll put that aside for now. So in the commodity market, when you get that inversion, it’s called backwardation. So that’s where near term prices are higher than longer term prices. And typically that’s what’s telling you that a market is acutely undersupplied, that there’s really a shortage situation.

[00:30:55] David Hay: That’s really been the condition of the oil market for most of the last couple of years, is to be in backwardation. That backwardation really eased up here recently, but it is still, it’s still there. It’s just not as dramatic as it was. So that’s an important point because if you buy something like u s o and if the market is in a typical contango, there’s a cost that you’re incurring.

[00:31:20] David Hay: It’s kind of an invisible or stealth cost that you’re incurring whenever these contracts roll over. In backwardation, it’s the offices you’re actually getting paid. So that’s one reason why USO actually returned a lot more last year than oil did, because it was in a very deep backwardation to begin the year, and that backwardation gradually went away.

[00:31:37] David Hay: So that’s, that’s a positive. It gets a little complicated, I realize a little tricky that’s why I think most people are better off hiring somebody that does this full-time as opposed to trying to, you know, as a little bit of a dalliance. But it’s a very, very important point and it does make us more comfortable recommending something like a uso because you’re right now it’s kind of a, maybe a very small carry cost, but small, negligible.

[00:32:01] David Hay: Not something that would be a disincentive, but as I mentioned since we wrote it up last month, it’s actually where it’s up six or 7% in a relatively short period of time. 

[00:32:11] Rebecca Hotsko: So I guess my question to you is, if we see, because forward curves change all the time for natural gas, they’ve been revised down significantly over the year actually.

[00:32:21] Rebecca Hotsko: And so for oil, if we see that flip, then would that change your thesis on owning this investment or it wouldn’t outdo, I guess the positive price appreciation. 

[00:32:32] David Hay: Sure if, if oil went back into a, a severe contango type of structure, that would make this not a very good way to play it. There is another one, us l which holds longer term contracts that kind of mitigates that.

[00:32:45] David Hay: So, and we’ve had some of our readers respond that that’s a better way to play it. I really think it depends on the slope of the curve and also, The price. So what we found is that when the oil market gets hit hard as it has recently, well, until the last few weeks, oil fell from 120 down to 70 at below, and now it’s bouncing back into kind of the 76, 77 range.

[00:33:07] David Hay: But generally, when the market’s really beaten down, you want to play the spot market because that’s the one that recovers the fastest. So you could have, if you had a 20% move in, in the near term spot contract, that the further out contracts might only move. So it’s, you know, there’s a, I, think there’s a, you just have to put it in context where, where are you in the market cycle and, and what’s the slope of the curve?

[00:33:30] Rebecca Hotsko: Okay. That makes sense. And I think that’s all I want to do on energy. I guess we could touch on your buy for natural gas so quickly, because I know you mentioned one in the Monday article. 

[00:33:42] David Hay: Right. Kotera is one of the largest independent natural gas producers, and it has just what I was saying earlier, it’s been in a very definite uptrend for the last year and a half or so, but it’s had a pretty severe correction.

[00:33:54] David Hay: It’s down about a third or where it traded last summer, and that’s because, you know, natural gas prices were $9 per million red-ish thermal units. And I always tell people it’s kind of like a gallon of gasoline. It’s not really the perfect analogy, but it kind of gives you the rough idea. And now they’re.

[00:34:10] David Hay: So come from nine to four, that’s a big decline. And obviously iara down 36% hasn’t gone down as much as the price of natural gas. I think natural gas is attractive too, as a commodity. And I do. In fact, I just bought another features contract in my personal account today, so I like that. But that market does have more of a contango.

[00:34:28] David Hay: So there is a decent cost of rolling over, and then you’ve got, you know, the stock price down on Cutera by a third. It’s got a dividend yield, actually, if, if it continues to pay the dividend yield it’s been paying recently, I’d pay over 10%, but most of that dividend yield is a special bonus dividend.

[00:34:44] David Hay: And if the price of natural gas stays depressed, it could well be cut. So I wouldn’t. Rely on that too much by any means. But I, I just, I do believe that we are into an energy short world, and I think we’re going to be in an energy short world for a long time to come. And natural gas has got some significant environmental benefits to it.

[00:35:03] David Hay: You’re seeing a move towards developing countries importing more natural gas and propane, replacing heating in their homes, which unfortunately a lot of times is almost like just a HU or a Hubble, where they have been in the past burning dung or wood or coal. And the World Health Organization says two to 3 million people die every year from inhaling polluted air from their own homes.

[00:35:22] David Hay: And so there is a big push to shift that to propane or other, you know, Forbes of natural gas. So I just think the US natural gas industry has a huge tailwind for years to come. 

[00:35:33] Rebecca Hotsko: And I think that’s an important point you made at the end where it’s years plural, and it’s not perhaps this short term tactical move because I think often that is what commodity investing was thought of was a very short term inflation hedge or a small part of the portfolio.

[00:35:50] Rebecca Hotsko: And I think what I’ve heard, at least from guests that I’ve spoken to, is that you might have to think of it as a more important part of your portfolio going forward. 

[00:36:00] David Hay: Yes, I think that’s true, and it gets back to what I was saying earlier, that most people are so light on energy and at one time energy was 20% of the S&P.

[00:36:07] David Hay: It’s about 5% right now, got down to about two and a half percent at the low. So it’s definitely come up a lot off the bottom, but it’s still very modest when you consider how essential it is for human flourishing. 

[00:36:18] Rebecca Hotsko: Yeah, absolutely. And I also want to chat with you about uranium because this is a sector you got me very interested in.

[00:36:25] Rebecca Hotsko: And I’ve really enjoyed reading your analysis in this, in your haymaker articles. And so can you talk to us a little bit about your outlook for the sector and why you’re interested in it? 

[00:36:38] David Hay: Well, first of all, I’ll be the first to say that I’m not an expert in that area. I don’t feel nearly as knowledgeable with uranium as I do with oil and gas.

[00:36:47] David Hay: I’ve got a great friend, Grant Williams who has a friend of his Rick Rule and I know you know Rick’s background. He was one of the founders of Spra and he’s now retired, but he does this uranium 101 training course and is just a brilliant guy in this field. And Rick is convinced and I think very.

[00:37:04] David Hay: Very persuasive logic that the price of uranium anywhere around 40 is just way too cheap. That heat believes that an all-in break even cost is more like $60 per uranium. And there also is this Sprat ETF, which we recommend. It’s a physical uranium ETF. S -R -U -U- F is the symbol of the us.

[00:37:24] David Hay: And it’s part of the bull story because they actively buy uranium whenever it sells off hard, they’ll actually go out, issue more units and buy it. And so it’s put like a floor under the price. So that’s a positive, but also the fact that you’re getting this nuclear renaissance around the world where even a number of environmental groups are saying, yeah, we really need it.

[00:37:41] David Hay: And I’m particularly bullish on small modular nuclear reactors and batteries, which is an area that has basically an extension of the same kind of technology that the US Navy’s been using successfully for 60 years. Provide propulsion for aircraft periods and submarines. And there is, in fact, an old disclosure: I just recently invested in one called micro-nuclear.

[00:38:02] David Hay: It’s not publicly trans private. So I’m not in any way recommending it. It’s just a personal investment that I’ve made. But I think they are the closest to the first vision. There’s a lot of risk. It’s, you know, it’s not, not something I would uh, you know, ever recommend in our newsletter. I think it’s going to be a game changer for humanity, but even if they fail, I think there’s going to be another company along these lines.

[00:38:22] David Hay: Bill Gates has been working on this very hard. There’s another company that’s pretty far along too, but I don’t think anybody is as close as micro nuclear partially because they’re all ex navy Duke guys. But anyway, that’s you know, there’s, I just think you’re, you’ve got not enough supply. This is true of so many commodities where The Investor’s Podcastestor’s Podcastestor’s Podcastestment in producing new resources has been so starved for so long.

[00:38:43] David Hay: And the, and the demand, which in the case of uranium really fell off there for a while for Fukushima and there was all the decommissioning of nuclear warheads outta the old USSR. . So there was a glu of uranium for years and years and years. It was a terrible place to invest, but all that’s reversing and changing, and I [00:39:00] think you’re going to see demand just greatly outstrip supply over the next five years.

[00:39:04] David Hay: And that’s going to mean one thing for prices, which is that they’re going to go a lot higher. Yeah. 

[00:39:09] Rebecca Hotsko: Talk to us a little bit more about that, those demand drivers, because I know you wrote about that in your article where there’s a lot of nuclear installations happening. So can you just paint us a little color on that?

[00:39:22] David Hay: Well, even Japan is restarting nuclear facilities. Germany was going to shut down all their nukes and now they’ve, they’re having second thoughts as well. They should. France was talking. Shutting down some of their nuclear facilities. They’re like 60 to 70% nuclear for their electricity production. You know, there are obviously with every form of energy, there’s some kind of risk, right?

[00:39:42] David Hay: There’s no risk reform of energy. People think hydroelectric is, you know, it’s like perfect, but not if you’re salmon. There’s a definite drawback with even hydro. And when it comes to things like wind and solar and the fact that the solar industry is so heavily reliant on the Chinese, the Chinese have such a strangle hold on.

[00:39:58] David Hay: So many of the critical components, and I mean all these things have risks, including nuclear power, but there’s ways to, to mitigate the risks. And I think the small modular is critical to that. These light, huge light water reactor facilities, which are so expensive to build, they’re going to happen in other parts of the world.

[00:40:15] David Hay: Asia is building a lot of ’em, and France is probably going to build a few more. But I think in general, that’s not the future, I think. But particularly in the West, I think the future is with small modular nuclear power plants. So that’s, there’s just a, seems to be growing, a growing consensus that nuclear power needs to be part of the solution and that.

[00:40:33] David Hay: Not the case 10 years ago. It’s been a pretty radical 180 in that regard. So again, I think that’s bullish uranium in the long term. 

[00:40:41] Rebecca Hotsko: Yeah, and I guess just to that last point, this is a very long-term thesis then, because these plants still take a long time to get going. It’s not something that could happen in the next year or so.

[00:40:53] Rebecca Hotsko: We are thinking. 

[00:40:55] David Hay: Well, there’s more nuclear facilities coming online all the time, particularly in China, so I don’t think it’s way down the road. And the uranium shortage has been building for years and years already, so a lot of this is already in place. As I said, there’s kind of a floor under that.

[00:41:09] David Hay: Under the price of uranium around 40, there’s just not much physical uranium around. So it’s, and a lot of it comes from, you know, places that are either Russia or, or Russian controlled. And so that’s not the most secure form of uranium supply. But I, I, yeah, I think in general it’s going to be a long term thesis.

[00:41:25] David Hay: One of the problems with it is, and, and why I would look at S -R- U -U -F versus. The uranium producers. It’s not like with natural gas and with oil where there’s some obvious, you know, obviously very strong companies with great free cash flow, big dividend yields in many cases. There’s very few high quality ways to play.

[00:41:42] David Hay: Uranium Cameco, you know, in your country is the best. And that trades in the US under the ticker simple C C J. But it’s had a big run and sells at a very high PE, no dividend yield. And I think that’s one to buy when it goes through a big shakeout. But at this. I think the actual physical uranium looks like a better play.

[00:42:01] Rebecca Hotsko: Okay. That’s super helpful. And then I guess also, I want to get your thoughts on gold because I know that you recently wrote in one of your articles, you sold out of your two equity positions, or you wrote, was it hold or sell on Barrick and Alamos? 

[00:42:19] David Hay: So what we did with Barrick is it went down after I recommended it and it was summer, fall, something like that.

[00:42:27] David Hay: And so we wanted it, we’d taken a lot of gains this year. So this really what I try to do in our newsletter is reflect what we’re doing for our client portfolios, you know, with real money. Try to be consistent. So we basically recommended a tax swap out of Barrick into Alamos AGI. and, but it was not just for that reason, it was also because AGI, I has some particularly attractive fundamentals to it, and it’s a favorite of Fred Hickey who used to be on the parent’s round table.

[00:42:53] David Hay: Brilliant guy in the gold area. It was his table powder at the time. Unfortunately, it turned out to be true. It’s, it’s had a very good performance since we bought it, so we didn’t get out when I ran, we just trimmed it. And it’s actually very close to making a multi-year breakout, which is the way we look at things.

[00:43:11] David Hay: A multi-year breakout, you know, above a let’s say a three year trading range is a very bullish development, and it’s right on the cusp of doing that, but still has had a big run. Get back to what I was saying earlier. One of these things moves, especially things that are highly volatile and gold stocks, like only gas stocks, are very volatile.

[00:43:26] David Hay: So to make the volatility work in your favor, be willing to take some of the money off the table when they have a bet. And they invariably get hit and you can come back. And I think in general on that point, you look at gdx, which is the leading gold etf, it’s up a lot. I mean, it’s up 40%, close to 40% in a few months.

[00:43:42] David Hay: So you know, we’re, we actually are backing off a little bit on some of our precious metals holding, given the run that they’ve had. And also because what we talked about earlier, I do believe that Mark’s making a mistake. And reading in a Fed pivot too soon, I think this guy means business. This guy, J Powell, wants to try to get inflation down somewhere around 2%, even if it’s a little massaged, even if it’s just for a short period of time where he can declare victory and he’s not there yet.

[00:44:07] David Hay: So that’s not great for gold if, you know, fed funds at five and a half, and if you get the treasury tenure, treasury selling. And price driving the yield back up to say 4.3 0.4 0.5, even 5%. Then that’s going to be tough on gold. So basically, I’d say take some profits. In fact, I’d say that about everything right now.

[00:44:24] David Hay: I think that to the extent that you’ve benefited from this latest rally this is not a bad time to raise some cash. I think it’s a very good time to do so. 

[00:44:32] Rebecca Hotsko: Okay. And then I guess just on that point, when the Fed does pivot, we don’t know when that’s going to be. I’ve heard some people talk about how they believe that’ll be very bullish for precious metals, commodities again, and gold.

[00:44:45] Rebecca Hotsko: Do you think, is that a view that you share or do you think about that differently? 

[00:44:50] David Hay: Well, I think certainly if it comes to restarting qe, which I think is going to happen eventually, and it could even, eventually, could even be later this year, I wouldn’t think about the first half. I think it’d be toward the end of the year.

[00:45:00] David Hay: But that would be very bullish for precious metals, for all hard assets and probably even for Bitcoin, which certainly could use the help. But I don’t see that. I think it’s going to get worse before it gets better. I think it’s going to be more fed tightening before we get a handle, as you know. One of the challenges with that as a bull thesis, particularly for the overall equity market, is that the stock market doesn’t typically bottom, you know, in a, in a major bear market.

[00:45:25] David Hay: And we’ve gotta say, and we’ve seen some of the stats. I mean, NASDAQ was down 32% last year. As I mentioned. Individual investors overall, were down about 38. So it’s been a serious bear market. Those don’t end until the Fed is most of the way through a cutting cycle. That means stocks keep going down, even as the Fed’s cutting.

[00:45:42] David Hay: So this all this enthusiasm over when is the Fed going to stop? And then when is the Fed going to start cutting? I think it was misplaced. You just look at what happened back in 2000, 2002 during that very tough bear market where the Nasdaq went down almost 80%. The S&P was cut  basically in half. The Fed cut and cut and cut and cut, and it took years really for the market at least over two years for the market to turn around.

[00:46:07] David Hay: So, you know, I just think people need to be realistic. It was actually kind of, it was a shorter time cycle. The Fed cut a lot back in oh 7, 0 8. I mean, they started cutting in the summer of 2007 and the market didn’t bottom ’em until March of 2009. So be realistic in this, these Fed expectations.

[00:46:25] Rebecca Hotsko: That is such a good point. And I also read that typically, the stock market historically doesn’t bottom until the yield curve is back into positive territory around 140 basis points. And so we’re still around negative 60 and that’s why I kind of wanted to ask you about the long-term treasuries because like you mentioned before, if long-term treasuries increase and so we get back into positive territory, that doesn’t mean that the domain gloom is all over perhaps.

[00:46:54] David Hay: Correct. No, that’s why I just think that there’s not really a full appreciation of history going on right now. I think it’s, it’s just way too simplistic. Mm-hmm. . So I agree with what said, and I do think there could be another fairly powerful up leg to yield. I wouldn’t be surprised if we do go from three and a half to four and a half and relatively short order, and the market’s not prepared for that.

[00:47:14] Rebecca Hotsko: So then on one hand we were talking about commodities, how you think that prices are still going to be strong and you’re quite bullish on prices and these investments going forward. But then you’re also talking about being a bit more defensive right now. So what is your game plan for this year? Then would you kind of suggest waiting things out for a bit or just not try and market time at all?

[00:47:39] David Hay: Well, to me, market timing is I’m in or I’m out. It’s a binary kind of thing, which I don’t think makes any sense. We don’t do that, but I think there is, within a largely invested portfolio approach, which is what we follow, you can still make some pretty big adjustments. And I mean, for example, at the end of last year, in December, we stepped in and bought a number of stocks that have been hammered because of tax loss selling.

[00:48:01] David Hay: You know, that’s one of the kinds of gifts out there that seems to happen every year. Go in and buy the names that are really crushing. We obviously want to have a good fundamental story to them as well. And that’s worked out really well so far. But I mean, today, right before I got on this podcast with you, we had our research meeting.

[00:48:18] David Hay: We were identifying a number of stocks that we’re actually going to either take profits on or get out of completely, mostly taking profits. So I think that’s what you want to be doing here is raising cash. It’s been a great run. And if you, obviously December was rough, but if you look from the low around mid-October, I think it was October 13th when the S&P bottomed out, it’s been a really nice run.

[00:48:38] David Hay: It’s been a really good run for corporate bonds. As you know, we don’t just recommend equities. We also have, we call our, well, it’s an income portfolio, meaning, but it’s not just bonds, it’s also things. Pipelines that have, in many cases, better yields of bonds, eight, 9% type of yields. So we’re, we’ve moved a number of our bond holdings to hold, you know, saying, don’t buy ’em at this price, because  they’ve, they’ve actually appreciated in some cases, as much as the S&P has.

[00:49:04] David Hay: So I think at this very specific point in time, it makes sense to be getting defensive again and again. I’m not saying get out, but reduce exposure, get some cash on the sidelines. You can get, you know, 4% plus on very short term treasury bonds, which are a great parking place. Certainly don’t leave it in a sweep account at your broker where they pay you virtually nothing.

[00:49:25] David Hay: So there are money market accounts out there that do have yields of 4% or more, but you gotta be choosy about your money.

[00:49:32] Rebecca Hotsko: And I guess the last thing I’ll ask you is what will change your views then and get you into an offensive mode for this year? 

[00:49:43] David Hay: Good point. I think it would be a major decline in the market, even if the Fed is still tightening.

[00:49:48] David Hay: And, and I guess, you know, the thing about bear market rallies is they can be very rewarding. They come out of the blue, they can be 20% almost overnight, so that’s great, you know, take advantage of those. And, but when they happen, I think you also have to do the, you know, the opposite, which is sell into.

[00:50:06] David Hay: Again, not completely, but reducing exposure when you get these, these powerful bear market rallies. So I do think that if we have you know, people wake up and say, gee we’re probably going to have a recession and or you going to get hit and the Fed is not doing what they typically do. Usually when things are looking as alarming as they are right now, the Fed is at least on hold, not continuing to raise.

[00:50:26] David Hay: I mean, you mentioned housing. I mean, housing is unquestionably in a bear. And one of my biggest fears is, I think you’d know if this is a global phenomena. We had a global housing bubble that was greater than it was in oh seven. So these prices in places like your home country in Canada, Got way above where they were in oh seven and they’re now coming down.

[00:50:44] David Hay: And it’s not just candidates, it’s also a lot of Northern Europe. It’s New Zealand, it’s Australia. So you mean just think about the mayhem that that caused 15 years ago when that first bubble in housing popped. So this idea that we’re going to have some kind of immaculate correction in the [00:51:00] housing markets when the prices go up, is absolutely insane.

[00:51:03] David Hay: They, they did. I think it is again, kind of a triumph of hope over experience. So a lot of, a lot of reasons why I think this is not the end of the bear market, that we’ve got another down leg. So raising cash after this nice move that we’ve had, I think is, you can’t really go wrong because if you’re going to maintain exposure, and let’s say you’ve, you know, you’ve raised 10% cash, so now you’ve got even more bi bi power than you had before.

[00:51:28] David Hay: So, I mean, you weren’t fully invested. The market keeps going up, you’re going to be happy. But if the market gets hit, instead of, you know, going to the fetal position, actually go on offense and buy it at deeply discounted prices, and that’s how you really make money in the long run. 

[00:51:42] Rebecca Hotsko: I Full Heartedly agree.

[00:51:44] Rebecca Hotsko: Thank you so much, David. I think that was a perfect way to end the episode, but before I let you go, where can the listeners go to learn more about you and read all of the work that you do? 

[00:51:56] David Hay: Well, one thing I want to highlight is that it’s free. So it’s kinda hard to say that we’re overcharging at that.

[00:52:03] David Hay: And you just go to Substack and the Haymaker, we’re the only Haymaker on Substack. So once you get to Substack, it’s pretty easy to find us. And again, we do a Monday, Market actionable piece. And then on Fridays it’s the Haymaker, which tends to be a little bit more macro, kind of big picture stuff, a little bit more philosophical.

[00:52:21] David Hay: And in fact, we’ve got one running this week on AI, artificial intelligence that I didn’t write about. It’s written by one of our colleagues, and I think it’s really good. And so yeah, that’s a good way to follow us. And you can order our book coming up here on Book Baby pretty soon. It’s not up there quite yet, but the audio book is available giving all your listeners a 33%.

[00:52:41] David Hay: That’s on Awesound, awesound.com and so you put in Rebecca 33 and you get the discount on the audiobook. 

[00:52:50] Rebecca Hotsko: Awesome. Right now I have the audio, but I would love a hard copy as well. It was such an incredible book. I highly recommend it for all the listeners and so I want to thank you again so much for coming on today, David.

[00:53:03] David Hay: Well thank you Rebecca, and we will get you a hard copy For sure. 

[00:53:07] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you never miss a new episode. And if you’ve been enjoying the podcast, I would really appreciate it if you left a rating or review.

[00:53:25] Rebecca Hotsko: This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter. We Study Markets which go out daily and we’ll help you understand what’s going on in the markets in just a few minutes. So with that all said, I will see you again next time. 

[00:53:51] Outro: Thank you for listening to TIP, Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin and every Saturday We Study Billionaires, and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decision, consult a professional, this show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.


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