This Energy Crisis Could Get Ugly (Arrakis Global)

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Money Miners, JD An absolutely
left field conversation.

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We're about to bring you with a
fund manager who's going to stay

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behind a pseudonym, although we
are calling him Leon.

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His name is Leon, but you're not
going to be able to see his face

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and he's a mystery.
And all you need to know about

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Leon is he's one of the most
interesting guys I've spoken to

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in recent history.
And his performance is

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absolutely off the rails good in
a way, in a way where it's like

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it's, it's up, up and to the
right without the drawdown.

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It's it's one of those
miraculous charts.

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Leon is a fantastic thinker.
He's pretty introspective.

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As you kind of gather from the
conversation.

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He thinks deeply about his sort
of process and he shares a heap

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of that.
We have been itching to do this

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conversation since we spoke to
him a little while ago, so I'm

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very excited to share this one.
Right before we go to our good

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friend Leon JD Money Miners,
many of you probably don't even

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know we have another medium, it
is called the director Special

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and it's a daily concise note
with all of the news that has

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happened in the mining markets
in the last 24 hours you.

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Want to be up to speed just like
Leon is?

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Sign up to the Director Special.
Go to moneyofmine.com, Chuck in

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your e-mail, hit subscribe, then
go to your e-mail, click the

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confirmation.
Got to confirm it.

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You got to confirm it.
Here we go, Danny.

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You know you know how I am.
I'm a big fan of Twitter, you

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know that, right?
You are indeed.

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So every now and again, like
come across an account on

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Twitter that just starts putting
some things on for the best that

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speak a hell of a lot of sense.
And I reckon about 18 months

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ago, an account on there called
Arakis Global started speaking a

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hell of a lot of sense,
particularly around Glencore.

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There was a fair bit going on
with Glencore at the moment.

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And this account and I, we
started talking and we exchanged

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a few messages and I realized
the person behind the account

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was a portfolio manager.
And we've since come to speak

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with this portfolio manager a
couple of times in the past.

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And he's actually an incredibly
interesting, thoughtful,

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independent think out when it
comes to investing in many, many

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ways.
And in particular, he's got, he

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definitely does have a bit of a,
you know, commodities, real

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assets bias, but he's a
generalist.

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He thinks holistically about a
lot of stuff. 100% and since we

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first spoke with Aracus or Leon
as as we can call you we I think

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we turned to each other after
that chat and said got to get

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him on the show.
This is going to be a wicked

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conversation.
And since, you know, everything

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that's, you know, unfolded in
the world started playing out

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over the past month or two, Leon
has been posting some some

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really interesting stuff.
He's positioning and in how he's

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invested in the market is
fascinating.

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So what is the, you know, the
perfect time for us to to have

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him on and, and speak about some
of this?

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So Leon, we're stoked to you.
You've sort of made the call and

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come on the podcast and we're
very eager to chat about how

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you're seeing the world.
Gents, absolutely delighted to

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be on and I have to again
commend both of you.

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I'm a huge fan of the pod and
you know, with obviously the

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obvious exception of today, the
calibre and quality of your

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guests is fantastic.
And so yeah, excited to to chat

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and I think the voice that you
guys now have in the command to

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mining spaces really
interesting.

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So well done to you both for for
building the the money of mine

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pod and yeah, delighted to.
Chat but as us up mate, well,

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you know, we're delighted
because I think this is your

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first ever podcast, Leon, and
you know, we're, we're delighted

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to, to to be part of that
experience with you.

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Can I actually, I think, I think
the audience will be as, you

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know, delighted to hear your
thoughts as as we were since

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we've been, we've been speaking
because you just have like a

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very unique lens on the space
you, you piece together like a

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lot of different, a lot of
different like things that

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aren't just like, you know, the,
the, the very generic things

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that you come across and see.
So I know, I hope, I hope we get

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to display your, your, your type
of thinking on, on a whole host

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of not a whole host of things
right now.

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But I, I'd love to kind of like
just zoom out and, and try and

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get a picture of your, your
investing philosophy, how you,

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how you actually think of, of
compounding capital in general.

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Yeah.
Thanks, Trav.

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So, so you mentioned I have a
slight commodities buy.

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So I started off as an
investment banker in metals and

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mining actually at a illustrious
Aussie shop called Macquarie

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Capital years ago.
And so that was what gave me,

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you know, a start in commods.
But by all intents and purposes

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I will effectively trade and buy
anything that makes money.

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So my philosophy is incredibly
simple.

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You know, when I started my fund
I had the guiding principle of

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don't lose money.
And there is something in me

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physiologically, I don't know
what it is, but I absolutely

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hate losing money.
And whilst that maybe sounds

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very self obvious, as a fund
manager I'm constantly surprised

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by how blase and cavalier many
fund managers are about losing

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money.
So my investment philosophy is

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incredibly simple.
I start off with the guiding

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principle of risk management and
don't lose money.

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And then I will touch
everything.

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I like to say I burnt my
fingertips on every stove.

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So I'll trade currencies,
commodities, equities, credit,

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I'll do anything.
So my philosophy is a

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generalist.
It's go anywhere.

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And what I try and really do is
I always start with price.

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So my guiding philosophy is to
try and listen to what the

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market is telling me and
listening to the market,

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listening to what the whispers
are right, and really

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understanding that narrative,
price, action, fundamentals,

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flows, market structure.
These are not sort of linear

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boxes that add up.
They are fluid systems that all

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interact.
And my philosophy has basically

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been to try and buy things that
go up, cut things really

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quickly.
I am a big fan of resetting your

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book completely.
It can, you know, it can

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sometimes drive some of my
investors a bit nuts who, you

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know, asking me like, what are
your top convictions?

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Tell them something.
Five days later, I've I flatten

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the entire book.
But it's something that I've

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learned to do and I do more and
more.

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I also don't believe in having
this this sort of juncture

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between being a short and a long
term investor, this juncture

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between a trader and an
investor.

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I think that today it is
incumbent upon managers to

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actually exist between this is
going to sound very due now

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between different inter temporal
spaces.

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As you invest, there can be
times when you're thinking long

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term, times when you're thinking
short term parts of the book

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that you're actually comfortable
to sit on.

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Other times you actually maybe a
trading incredibly actively.

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And so you know, what I try and
do is I try and maintain maximum

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cognitive flexibility across
asset classes, across

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geographies to, to make, to make
myself and my investors money.

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But again, my guiding religion
is to not lose money.

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And as I've, as I've grown
older, I've become more and more

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paranoid about risk management,
paranoid about cutting stuff.

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You know, when I started off, I
could take draw downs of 567

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percent.
I'm absolutely miserable now.

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If my book is in a 2% draw down,
it's it's not good.

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And I'm usually cutting
everything.

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If that's happening, I can't.
And I reset.

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I think, what is the market
telling me?

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What am I not listening?
What am I not getting?

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And this is a process I've
developed over years.

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And it's, it's something I
always come back to in, in times

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where maybe I'm not trading
well, or I'm not making money or

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I'm not feeling In Sync and in
flow with the market.

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So look, maybe that's going to
sound way too woo, but that is

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effectively my investment
philosophy.

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That that flexibility that you
you speak about Leon, is that

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kind of inherent?
Is that natural to you or have

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you kind of taught yourself that
aspect?

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Yeah, JD, so I started off like
many do, as a sort of

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fundamental investor, right.
And you know, for long, for a

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long time I used to think, you
know, charts and all that stuff

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was just hocus pocus.
And, and the more time I

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actually spend in the business,
the more I actually find myself

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incorporating lots of different
disciplines, right?

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Technical analysis, momentum,
you know, quant stuff.

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I mean, it, it, what was germane
to me was the fundamental

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analysis, right, the sort of
steeped in Buffett sort of

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stuff.
But you know, the big, I think

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the big problem with a lot of
that stuff is that, and I think

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it's a common mistake that
investors make is they, they on

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board investment philosophies
that are not In Sync with their

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initial conditions, right.
So it's the largest investor in

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my fund and you know, my fee
structure is a very eat what you

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kill structure.
I cannot lose money on a short

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term basis because that's what I
actually need the money from my

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fund to subsist, right.
And so for me, it, the way that

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I invest money is, is out of
necessity more than out of

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anything that's germane or in
line with my philosophy.

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It's that I need my NAV to grow
month on month and you know,

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whatever way and whatever method
I need to use to, to achieve

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that goal, I do.
So, you know, there are times

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where, you know, I'll look at
event, you know, an event type

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of strategy.
There are times where I'm, you

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know, maybe much more momentum
based.

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I do think market structure and
flows that that has become a

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really big part of my process.
I don't like to fight

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narratives.
That's a big no, no for me.

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There's a negative narrative in
the market and I'm swimming

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against the tide.
We're we're going to cut that

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stuff and we're not going to
swim against tide.

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So I'm looking for, you know,
ideas and themes where, you

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know, there's liquidity.
There are lots of different

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market participants that are
going to come in into that.

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You know, the thematic approach
is, is actually a big part of

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what I do.
You know, I'm looking for mega

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themes, whether that's, you
know, Cmods, European defence,

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AI, CapEx, whatever it is, I'm
really looking to catch those

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themes and catch all of the
upside Volt and try and minimise

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the downside Volt.
But you know, to answer your

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question, yes, I started off as
a fundamental investor and I've

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now become this.
You know, if I'd looked 10 years

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ago, what I do now, I'd probably
be horrified.

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But but but we've landed where
we are and I can't really

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imagine doing things
differently.

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But the market always humbles
you.

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And you know I will be forced to
change style as as the market

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forces us all to do.
Tell us more about that, that

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thematic piece.
I find that super fascinating.

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Do you, do you find yourself
just jumping in and learning

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everything you can about, you
know, European defence, mining,

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commodities, these sorts of
things and that sort of sticking

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for a while or how does that
sort of play out?

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Yeah, it's, it's a really
interesting question.

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I mean, we're almost going to
get into a bit of a

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epistemological debate about
like what initiates a theme,

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right?
How does a theme begin?

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And I tend to think that you
have these.

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So I like to think a lot of
paradigm shifts.

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So I like to think about when a
paradigm actually begins.

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And I'm, I'm always really alert
to to that being the spark that

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starts a theme off.
So if we take European defence

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maybe as a good example, you
know, the, the, the very obvious

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time when European defence
became, you know, an, an

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incredible trade.
Ironically, obviously you should

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have bought all the European
defence names as soon as the war

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in Ukraine started, right.
But interestingly for me, for

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me, the paradigm shift really
happened after the Trump

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election.
And it, it happened in

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particular after that it so for
me, it was several moments.

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It was one that famous meeting
with Zelensky at the White House

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and it was JD Vance lecturing,
you know, Frederick Mertz, the

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German Chancellor at the Munich
Security Conference, right?

224
00:13:24,800 --> 00:13:30,880
And I think those two things
just signalled such a huge shift

225
00:13:31,120 --> 00:13:34,080
in I I just felt that that was
going to be something that was

226
00:13:34,080 --> 00:13:35,800
going to become immensely
tradable.

227
00:13:36,000 --> 00:13:39,760
Now, previously you'd had Olaf
Schultz who talked about Zeiten

228
00:13:39,760 --> 00:13:42,920
vendor, which is, you know that
that, but that was years ago.

229
00:13:42,920 --> 00:13:45,760
And so some of the names
actually did start moving, but

230
00:13:45,760 --> 00:13:49,800
they really started moving after
that Munich Security conference

231
00:13:49,800 --> 00:13:53,320
and Zelensky Trump moment.
So for me, that's when the

232
00:13:53,320 --> 00:13:56,360
paradigm shift started, right?
And then it's a question of, OK,

233
00:13:56,360 --> 00:14:00,160
we know this trade is now on.
It's being confirmed by price.

234
00:14:01,240 --> 00:14:03,480
The fundamentals are moving in
the right direction.

235
00:14:03,640 --> 00:14:06,040
What's the best way of
expressing that trade?

236
00:14:06,160 --> 00:14:07,840
So it's almost different phases,
right?

237
00:14:07,840 --> 00:14:11,320
The first phase is we're looking
for the existence of that

238
00:14:11,320 --> 00:14:13,480
paradigm.
People are talking about the

239
00:14:13,480 --> 00:14:15,000
theme.
The narrative now starts to

240
00:14:15,000 --> 00:14:17,840
exist, right?
Then it has to be confirmed in

241
00:14:17,840 --> 00:14:19,880
price.
Super important that it is

242
00:14:19,880 --> 00:14:24,040
confirmed in price and then it's
OK.

243
00:14:24,040 --> 00:14:27,120
What are the positions that
we're going to put on that are

244
00:14:27,120 --> 00:14:29,640
going to allow us to capture
this thing in the most sort of

245
00:14:29,640 --> 00:14:32,400
liquid, profitable way?
And then the theme evolves.

246
00:14:32,600 --> 00:14:34,840
You can start to produce alpha
within the theme.

247
00:14:36,000 --> 00:14:38,520
You know, we could talk about
how, how I think that came about

248
00:14:38,520 --> 00:14:42,040
with, with commodes.
But you know, it's, it's all it,

249
00:14:42,040 --> 00:14:45,560
it's all really about being
aware and just listening to the

250
00:14:45,560 --> 00:14:49,120
market narratives, You know,
memory in AI, that was a huge

251
00:14:49,120 --> 00:14:52,760
one, right?
So I remember listening to guys

252
00:14:52,760 --> 00:14:57,040
like Gavin Baker and Josh Wolf
like almost like 2 years ago

253
00:14:57,040 --> 00:15:00,920
talking about memory, you know,
so I was, I was in Micron like 2

254
00:15:00,920 --> 00:15:04,040
years ago, found out, found out
a way to not make money in it

255
00:15:04,040 --> 00:15:08,520
two years ago.
But when it, when I really

256
00:15:08,520 --> 00:15:12,840
started paying more attention to
it, you know, last year, I said,

257
00:15:12,880 --> 00:15:16,480
OK, this thing that I knew could
become a theme, the memory that

258
00:15:16,480 --> 00:15:19,640
on device shift, this is now
really going to run right.

259
00:15:19,640 --> 00:15:24,160
And so then you have Micron, you
have SanDisk, you have SK Linux

260
00:15:24,760 --> 00:15:27,600
and it, and it's really about
identifying that the paradigm

261
00:15:27,600 --> 00:15:30,120
shift has happened.
And then you've got to sort of

262
00:15:30,120 --> 00:15:33,000
ride that as hard as you can
during the period that it that

263
00:15:33,000 --> 00:15:36,520
it's working, obviously.
There's there's something like

264
00:15:36,520 --> 00:15:39,840
about this that I find so
interesting because I noticed

265
00:15:39,840 --> 00:15:44,360
this in my in myself and, and,
you know, JD and I do it some of

266
00:15:44,360 --> 00:15:46,120
our speculating together, a fair
bit of it.

267
00:15:46,160 --> 00:15:49,000
And, and oftentimes there's a
bit of a tussle, I think like

268
00:15:49,080 --> 00:15:53,400
because there's a bias that that
an event has happened and the

269
00:15:53,400 --> 00:15:56,080
event is priced in and it's
reflected in the prices now.

270
00:15:56,080 --> 00:15:58,800
But you know, but this
philosophy that you have, it's

271
00:15:58,800 --> 00:16:00,760
clearly based on the fact that
even though an event has

272
00:16:00,760 --> 00:16:05,000
happened, this paradigm shift
takes takes duration to play out

273
00:16:05,000 --> 00:16:06,600
where you're going to ride some
sort of wave.

274
00:16:06,600 --> 00:16:08,920
And I think just like
differentiating between the,

275
00:16:09,880 --> 00:16:13,240
the, the beginning and you know,
like, yeah, prices have already

276
00:16:13,240 --> 00:16:14,760
changed, but there's a long way
to go.

277
00:16:15,080 --> 00:16:18,160
It's a really hard thing to do.
You, you never quite know where

278
00:16:18,160 --> 00:16:21,440
you are in the, in the duration
of that, that theme.

279
00:16:21,440 --> 00:16:23,800
So I'm kind of, I'd love to know
how you think about that.

280
00:16:24,880 --> 00:16:26,040
Yeah.
I mean, it's, it's a great

281
00:16:26,040 --> 00:16:30,200
point.
So there's a legendary British

282
00:16:30,200 --> 00:16:35,520
investor called Anthony Bolton
and he actually talked about, he

283
00:16:35,520 --> 00:16:37,960
talked about something similar.
So he talked about really

284
00:16:37,960 --> 00:16:42,640
looking at charts and actually,
you know, wanting to buy a

285
00:16:42,640 --> 00:16:45,880
little bit after the theme had
actually sort of already begun.

286
00:16:45,960 --> 00:16:48,320
Now you know what's really
important.

287
00:16:48,320 --> 00:16:51,800
I think what you're touching on
there, Travis, one thing that's

288
00:16:51,800 --> 00:16:54,520
really dangerous with thematic
investing is you don't want to

289
00:16:54,520 --> 00:16:57,680
be a late convert to a theme.
That's incredibly dangerous,

290
00:16:57,840 --> 00:17:00,320
right?
You don't want to fight a theme

291
00:17:00,320 --> 00:17:05,880
for two or three years and then
finally realise after 2-3 years,

292
00:17:05,880 --> 00:17:09,079
oh, this AI thing's actually
real and I'm going to start

293
00:17:09,079 --> 00:17:11,839
investing in it now.
You may still make money doing

294
00:17:11,839 --> 00:17:13,960
that, right?
Because you may still be able to

295
00:17:13,960 --> 00:17:17,760
squeeze out some of the juice,
but from a behavioural

296
00:17:17,760 --> 00:17:20,160
perspective, and I, I just know
this myself, right?

297
00:17:20,359 --> 00:17:21,880
Because I've lost money doing
this.

298
00:17:22,800 --> 00:17:25,280
From a behavioural perspective,
when you're a late convert to a

299
00:17:25,280 --> 00:17:31,680
theme, you actually tend to get
stuck in that what I call broken

300
00:17:31,680 --> 00:17:38,280
themes, right?
Long after long after the themes

301
00:17:38,280 --> 00:17:40,560
actually no longer interesting
to invest in.

302
00:17:40,760 --> 00:17:42,960
By the way, you have to
differentiate when something can

303
00:17:42,960 --> 00:17:47,160
continually can continue to be
socially valid.

304
00:17:47,240 --> 00:17:50,560
Something like GLPS, I think is
a great example, right?

305
00:17:50,720 --> 00:17:53,480
Like I totally missed the GLP
trade, right?

306
00:17:54,760 --> 00:17:57,760
I was a late convert to it.
And I looked at Nova Nordisk

307
00:17:57,760 --> 00:17:59,640
maybe last year or two years
ago.

308
00:17:59,640 --> 00:18:04,320
I thought, oh, this looks quite
cheap and but the but the chart

309
00:18:04,320 --> 00:18:07,480
and the price was just screaming
that this thing was done right.

310
00:18:08,000 --> 00:18:11,200
So I bought a little bit, saw
how it traded, saw that it

311
00:18:11,200 --> 00:18:13,040
wasn't trading well cut
immediately.

312
00:18:13,240 --> 00:18:15,760
Years ago, I would have lost a
lot of money on that, right?

313
00:18:16,640 --> 00:18:20,560
And so the one key thing is you
have to try and understand

314
00:18:20,560 --> 00:18:22,720
whether you're late or you're
early to a theme.

315
00:18:22,720 --> 00:18:27,720
And there's no hard or fast way
to know whether you're late or

316
00:18:27,840 --> 00:18:32,160
early, but you just have to,
again, the way that I invest is

317
00:18:32,160 --> 00:18:36,920
a very right brain investment
philosophy.

318
00:18:37,040 --> 00:18:40,920
It's a lot on instinct.
And so I look at various

319
00:18:40,920 --> 00:18:45,440
indicators to understand if a
theme is early or if a theme is

320
00:18:45,440 --> 00:18:48,600
late.
And by the way, like valuation

321
00:18:48,600 --> 00:18:51,240
and flows and all that stuff
that's not going to tell you if

322
00:18:51,240 --> 00:18:53,360
a theme is is early or late,
right?

323
00:18:54,840 --> 00:18:57,520
You really want to try and
understand there's the social

324
00:18:57,520 --> 00:19:00,240
aspect of understanding.
Am I early or late in this

325
00:19:00,240 --> 00:19:02,640
theme?
There is the fundamental aspect.

326
00:19:02,640 --> 00:19:05,960
There is the flows aspect, there
is the, the technical aspect and

327
00:19:05,960 --> 00:19:09,120
the chart.
But I, but I would say the more

328
00:19:09,120 --> 00:19:13,080
open minded you can be, the
earlier you can try and catch

329
00:19:13,080 --> 00:19:15,040
these themes.
But the most important thing is

330
00:19:15,040 --> 00:19:19,160
to not be, you want to avoid
being a late convert at all

331
00:19:19,160 --> 00:19:23,320
costs.
And it's always actually a good

332
00:19:23,320 --> 00:19:27,760
thing to sort of visit these
themes early, right?

333
00:19:28,160 --> 00:19:31,920
And and so like Ryan Mattel, I
was messing around in that stock

334
00:19:31,920 --> 00:19:34,880
like years ago when when the
when the Ukraine war first

335
00:19:34,880 --> 00:19:37,720
started.
But I missed like the first huge

336
00:19:37,720 --> 00:19:40,600
move because I punted it because
I just, it just wasn't moving

337
00:19:40,600 --> 00:19:44,760
enough for me, right.
But I had the muscle memory of

338
00:19:44,760 --> 00:19:47,880
knowing, Oh yeah, this is the
company I need to go and buy to,

339
00:19:47,960 --> 00:19:50,960
to benefit off this right now,
that they'll be people that

340
00:19:50,960 --> 00:19:55,520
actually captured the full scope
of that move, not me.

341
00:19:55,720 --> 00:19:57,880
Yeah, I'm not going to capture
the 1st 20%.

342
00:19:57,920 --> 00:20:01,520
I'm ideally not going to.
I'm probably not even going to

343
00:20:01,520 --> 00:20:04,520
capture the last 20.
I'm really looking to capture

344
00:20:04,520 --> 00:20:06,960
that middle 60 from these
themes.

345
00:20:08,240 --> 00:20:12,400
European banks is another theme
that I completely missed, right?

346
00:20:13,000 --> 00:20:19,400
And so I, I tried to trade
European banks and lost money.

347
00:20:19,440 --> 00:20:23,160
So I was like, you know, maybe
I'm late to this theme or I'm a

348
00:20:23,160 --> 00:20:25,480
late convert to this.
The trade's been working for

349
00:20:25,480 --> 00:20:27,280
years.
This is dangerous.

350
00:20:27,280 --> 00:20:32,640
I got to just stay out of this.
So they're safeguards against

351
00:20:33,440 --> 00:20:37,520
being late and losing money.
By the way, European defence,

352
00:20:38,160 --> 00:20:41,120
when you look at how those
stocks are trading now, I could

353
00:20:41,120 --> 00:20:43,960
actually make a strong argument
to say that theme that may have

354
00:20:43,960 --> 00:20:47,240
run its course.
And a key thing that, you know,

355
00:20:47,240 --> 00:20:50,400
when a theme has run its course
is actually when all the

356
00:20:50,400 --> 00:20:54,600
fundamentals are really good.
The earnings estimates are going

357
00:20:54,600 --> 00:20:59,320
up, the brokers are updating and
upgrading, upgrading their price

358
00:20:59,320 --> 00:21:03,640
targets, but the price isn't
moving and it's taking more and

359
00:21:03,640 --> 00:21:06,000
more extreme headlines to move
the price.

360
00:21:07,360 --> 00:21:13,200
And that to me telegraphs that,
you know, we, we, we may be

361
00:21:13,200 --> 00:21:18,440
towards the mature end of that
theme playing out for, for EU

362
00:21:18,440 --> 00:21:22,800
defence at least.
So what about the the

363
00:21:22,800 --> 00:21:25,360
commodities theme?
What we, what we know and what

364
00:21:25,360 --> 00:21:26,840
we love?
What, where are we?

365
00:21:26,840 --> 00:21:31,200
I mean, I think of this as many
different kind of cycles because

366
00:21:31,760 --> 00:21:34,040
each commodity has its own
element, but I'd love to hear

367
00:21:34,040 --> 00:21:36,240
you just sort of riff on on how
you say that.

368
00:21:37,520 --> 00:21:39,120
Yeah, it's a, it's a really
interesting question.

369
00:21:39,120 --> 00:21:43,560
So I totally agree.
I, I, I see, you know, to the,

370
00:21:44,440 --> 00:21:47,040
to the audience that you have
that is sophisticated,

371
00:21:47,080 --> 00:21:50,520
incredibly knowledgeable about
commodities.

372
00:21:51,360 --> 00:21:57,160
You know, it, it can feel can
feel wrong to sort of homogenize

373
00:21:57,160 --> 00:22:00,000
the whole space as one theme,
right, when there's actually

374
00:22:00,000 --> 00:22:03,320
lots of different compartments
that exist within that what

375
00:22:03,360 --> 00:22:07,480
we're talking about base metals
or precious metals or, you know,

376
00:22:07,480 --> 00:22:11,920
bulks or the energy complex.
I think it is important to

377
00:22:11,920 --> 00:22:17,240
understand that, you know,
generalists will tend to sort of

378
00:22:17,240 --> 00:22:19,600
homogenize commodities when
actually, you know, the

379
00:22:19,600 --> 00:22:23,360
specialists that listen to your
pod will be tearing their, their

380
00:22:23,360 --> 00:22:25,800
hair out and saying these guys
have no idea what they're

381
00:22:25,800 --> 00:22:27,960
talking about.
So I want to be very humble and,

382
00:22:27,960 --> 00:22:31,760
and, and try not to, you know,
educate an audience where many

383
00:22:31,760 --> 00:22:33,520
people will actually know more
than me.

384
00:22:33,640 --> 00:22:36,040
But but the way that I've been
thinking about commodities, it

385
00:22:36,040 --> 00:22:40,040
is fairly simple.
So I think 2022 is an incredibly

386
00:22:40,040 --> 00:22:44,560
important year. 2022 was a
Seminole year, at least for me,

387
00:22:44,560 --> 00:22:47,880
because it, it cemented this
notion that I had been thinking

388
00:22:47,880 --> 00:22:50,480
about that buy and hold is
largely dead.

389
00:22:50,800 --> 00:22:52,840
OK.
And that there would be a

390
00:22:52,840 --> 00:22:58,640
generation of fund managers who
had, you know, focused on

391
00:22:58,640 --> 00:23:01,880
certain factors, certain
geographies, a certain style,

392
00:23:01,880 --> 00:23:03,640
and that they were going to
really struggle.

393
00:23:04,480 --> 00:23:06,640
And that they were going to
really struggle because they had

394
00:23:06,760 --> 00:23:10,680
effectively cordoned off
commodities as something that

395
00:23:10,680 --> 00:23:13,720
they didn't need to know about,
they weren't interested in

396
00:23:13,720 --> 00:23:18,720
finding out about.
And you know, 2022 was this

397
00:23:18,720 --> 00:23:22,280
Seminole year because you saw a
lot of fund managers lose a lot

398
00:23:22,280 --> 00:23:25,960
of money.
And so for me, ever since 22

399
00:23:27,400 --> 00:23:31,480
commodities have just formed a
key part of my my investment

400
00:23:31,480 --> 00:23:33,680
strategy, how I think about the
world.

401
00:23:34,720 --> 00:23:39,240
And so you know that that's sort
of the background, right?

402
00:23:39,400 --> 00:23:42,480
So coming into to more recently
and you guys would have seen

403
00:23:42,480 --> 00:23:46,040
that the letter I sent out to my
investors as we closed last year

404
00:23:46,040 --> 00:23:50,880
and we started this year, which
is there started to to appear

405
00:23:50,880 --> 00:23:58,120
different narratives around
dollar debasement ex US, right.

406
00:23:58,120 --> 00:24:01,480
Those were those were the end of
US exceptionalism of some people

407
00:24:01,480 --> 00:24:03,680
have, have, have have referred
to it.

408
00:24:03,680 --> 00:24:09,040
And I think that for me is when
I started getting really

409
00:24:09,040 --> 00:24:13,640
interesting in, in really
upsizing the Cumoles trade in My

410
00:24:13,640 --> 00:24:16,240
Portfolio.
And it's interesting, right,

411
00:24:16,240 --> 00:24:19,040
because it's, it can be great
when you actually have a, a

412
00:24:19,200 --> 00:24:22,000
theme that's working across
several different narratives,

413
00:24:22,120 --> 00:24:26,200
right.
So you have X US, which is, you

414
00:24:26,200 --> 00:24:28,880
know, emerging markets is going
to be a Cumoles heavy type of

415
00:24:28,880 --> 00:24:31,960
trade, and then you have dollar
debasement, which is going to be

416
00:24:31,960 --> 00:24:34,120
hard assets.
And so you actually have a theme

417
00:24:34,120 --> 00:24:37,360
that's working across lots of
different narratives, right?

418
00:24:38,480 --> 00:24:46,200
So for me, that was the that was
the spark that that's really lit

419
00:24:46,200 --> 00:24:49,120
the commands trade on fire.
And that's really when I super

420
00:24:49,120 --> 00:24:53,720
size the trade, you know, in
November, December and coming

421
00:24:53,720 --> 00:24:58,120
into January of of this year.
But I actually think that

422
00:24:58,120 --> 00:25:03,040
commodities since 22 have played
will play and are just an

423
00:25:03,040 --> 00:25:06,480
incredibly important arrow in
the quiver of generalists.

424
00:25:06,680 --> 00:25:09,880
And I'm still shocked by the
number of generalists who just

425
00:25:09,880 --> 00:25:13,080
say like, I'm not touching the
space but don't understand the

426
00:25:13,080 --> 00:25:14,400
space.
And I laugh.

427
00:25:14,400 --> 00:25:17,960
I say what you can understand
the intricacies of like

428
00:25:17,960 --> 00:25:21,880
semiconductors, but you can't
understand like digging coal out

429
00:25:21,880 --> 00:25:23,760
the ground and selling it,
right?

430
00:25:24,240 --> 00:25:28,440
It reminds me of this great
quote by the Israeli Prime

431
00:25:28,440 --> 00:25:31,040
Minister, Golda Meyer.
She said to her cabinet

432
00:25:31,040 --> 00:25:34,560
minister, she said, you guys,
you shouldn't be so humble

433
00:25:34,560 --> 00:25:36,840
because you're not that great,
right?

434
00:25:38,000 --> 00:25:40,640
And so I think, you know,
commodities is something that

435
00:25:40,640 --> 00:25:45,400
many journalists can understand.
And I think actually it's, it's

436
00:25:45,400 --> 00:25:48,720
just going to be a sector that
is so important for people to be

437
00:25:48,720 --> 00:25:52,000
able to trade, incorporate into
their process and just

438
00:25:52,000 --> 00:25:55,480
understand that it's really not
something that I think people

439
00:25:55,480 --> 00:25:57,960
are going to be able to to do
without from an allocation

440
00:25:57,960 --> 00:26:02,280
perspective with the world as it
is since well, since 2020, but

441
00:26:02,280 --> 00:26:06,960
especially since 22.
I want to talk about some some

442
00:26:06,960 --> 00:26:11,560
very recent themes and just like
pace together, you're you're

443
00:26:11,560 --> 00:26:16,920
thinking of these.
The first one is front and

444
00:26:16,920 --> 00:26:18,680
centre of the news every single
day.

445
00:26:18,680 --> 00:26:22,480
And that's the the oil
disruptions from, you know, an

446
00:26:22,480 --> 00:26:26,160
Iran war.
Yeah.

447
00:26:26,560 --> 00:26:31,520
So this is maybe a great example
that highlights the way that I

448
00:26:31,520 --> 00:26:35,120
like to trade and the way that I
like to manage risk, but also

449
00:26:35,120 --> 00:26:37,400
the way in which I try and
interface with the market,

450
00:26:37,640 --> 00:26:41,360
right?
So you know, the first thing I

451
00:26:41,360 --> 00:26:45,080
the first thing I do is I don't
like calling markets names.

452
00:26:46,000 --> 00:26:49,680
I actually never do that right?
Never call markets names, never

453
00:26:49,680 --> 00:26:56,400
label markets as complacent,
bubble, overvalued.

454
00:26:56,920 --> 00:26:59,520
You know, in most cases there's
a very good reason why the

455
00:26:59,520 --> 00:27:03,840
markets doing what it's doing.
It's just you beating me or

456
00:27:03,840 --> 00:27:06,000
whoever.
You just haven't figured it out

457
00:27:06,000 --> 00:27:10,840
yet, right?
So ain't this oil shock?

458
00:27:11,000 --> 00:27:13,520
Energy shock is a really
interesting one because I think

459
00:27:13,520 --> 00:27:19,560
we've got 2 separate camps here.
We've got 1 camp that basically

460
00:27:19,560 --> 00:27:23,600
says that, you know, this is
this is going to be a major

461
00:27:23,600 --> 00:27:27,920
bearish event and equity markets
need to massively reprice lower,

462
00:27:28,120 --> 00:27:29,800
right?
And then we've got another camp

463
00:27:29,800 --> 00:27:32,560
that basically says it's going
to be over pretty quickly.

464
00:27:32,920 --> 00:27:35,800
You know, we as investors can
totally afford to look through

465
00:27:35,800 --> 00:27:40,920
it and you know, it's not worth
punting your entire book because

466
00:27:41,080 --> 00:27:44,400
actually this can act as a big
clearing event and take us

467
00:27:44,400 --> 00:27:46,520
higher, right?
So, so there's sort of several

468
00:27:46,840 --> 00:27:49,480
competing narratives that are
emerging around this.

469
00:27:51,480 --> 00:27:55,040
You know, my personal take,
again, as someone that is hyper

470
00:27:55,360 --> 00:27:59,240
attuned to not losing money has
been to approach this with a

471
00:27:59,240 --> 00:28:02,360
degree of cautiousness and
humility.

472
00:28:04,320 --> 00:28:06,960
And so my answer to a lot of the
questions is probably going to

473
00:28:06,960 --> 00:28:10,840
be I don't know.
And the the not knowing actually

474
00:28:10,840 --> 00:28:14,160
has to be informed in my risk
allocation.

475
00:28:14,480 --> 00:28:18,240
So the way I'm viewing this,
this oil and energy shock is

476
00:28:19,160 --> 00:28:24,800
that the entire topology of the
market across rates, currencies,

477
00:28:25,160 --> 00:28:29,120
margins, earnings could be
shifting under our feet, right?

478
00:28:29,120 --> 00:28:31,200
The tectonic plates of the
market.

479
00:28:31,960 --> 00:28:37,320
And you know, the, the, the
things that govern market

480
00:28:37,320 --> 00:28:41,960
heuristics may be shifting.
And so for me to go out there

481
00:28:41,960 --> 00:28:47,000
and be adding a lot of risk in
this environment is so easy for

482
00:28:47,000 --> 00:28:49,800
me to see how I would lose a lot
of money doing that.

483
00:28:50,320 --> 00:28:52,840
And so at the moment I've
decided to take a really risk

484
00:28:52,840 --> 00:28:57,440
off approach and effectively
just wait and see.

485
00:28:57,560 --> 00:29:00,560
And it's something which can
drive people crazy, right?

486
00:29:00,720 --> 00:29:03,360
And it's something I've learned
to do in my investing

487
00:29:03,360 --> 00:29:06,400
philosophy, which is, you know,
I don't, I don't really care if

488
00:29:06,400 --> 00:29:10,880
I miss a move.
I'm happy to, to buy whatever it

489
00:29:10,880 --> 00:29:15,760
is after an initial move, right?
If I'm being overly cautious and

490
00:29:15,760 --> 00:29:18,040
something goes up 1020%, I don't
care.

491
00:29:18,160 --> 00:29:21,520
I'll find a way of making money
in that tape later, right?

492
00:29:23,280 --> 00:29:27,600
So, so that's my current view of
this, of this, of this oil

493
00:29:27,600 --> 00:29:29,680
shock.
I mean, going into it, I had

494
00:29:29,680 --> 00:29:34,400
been very attuned to the fact
that the market just hadn't, I

495
00:29:34,400 --> 00:29:37,360
mean, across different, you
know, elements, whether that was

496
00:29:37,360 --> 00:29:43,000
cum odds, you know, SNP tech.
I was just very cognizant that

497
00:29:43,000 --> 00:29:46,200
for several months basically
since, you know, tech since

498
00:29:46,200 --> 00:29:49,280
October hasn't really been
trending outside of that memory

499
00:29:49,280 --> 00:29:52,480
space.
And then we had that flush in

500
00:29:52,480 --> 00:29:55,920
commodes in like late Jan.
And, you know, some of the

501
00:29:55,920 --> 00:30:00,400
copper names that I've been in,
you know, just haven't been

502
00:30:00,400 --> 00:30:04,240
trading well.
So I was very mindful going into

503
00:30:04,240 --> 00:30:08,360
this that, you know, the themes
that I've been looking at and

504
00:30:08,360 --> 00:30:11,760
wanting to trade hadn't been
trading particularly well.

505
00:30:12,560 --> 00:30:16,040
So for me it felt like a very
easy thing to to go risk off.

506
00:30:16,040 --> 00:30:22,240
Now, you know, the, the response
from U.S. markets actually is

507
00:30:22,240 --> 00:30:27,840
pretty, pretty logical to me,
right?

508
00:30:28,440 --> 00:30:32,520
A lot of people are wondering
why is SNP not down 20 or 30?

509
00:30:32,520 --> 00:30:35,560
You know, because we're going to
have this huge inflationary

510
00:30:35,560 --> 00:30:37,280
shock.
Well, if you actually think

511
00:30:37,280 --> 00:30:40,520
about positioning going into
this, like a lot of the mag

512
00:30:40,520 --> 00:30:43,960
seven were already in a bear
down 2530%, right?

513
00:30:43,960 --> 00:30:46,920
Like Microsoft was down like 28%
going into this.

514
00:30:46,920 --> 00:30:49,920
SAS has had the living daylights
kicked out of it, right?

515
00:30:53,000 --> 00:30:56,560
So the stuff that really took it
on the chin was like X US,

516
00:30:56,560 --> 00:31:01,840
Europe, Japan, Korea, MSCI world
actually, to be fair, has D

517
00:31:01,840 --> 00:31:04,520
rated and it is in the middle of
like AD rating.

518
00:31:04,520 --> 00:31:10,000
It has these, you know, short
rallies that it inevitably has

519
00:31:10,000 --> 00:31:13,400
been fading.
And so if you look at MDAX in

520
00:31:13,400 --> 00:31:16,160
Germany, like that's down 8-9
percent, right?

521
00:31:16,280 --> 00:31:19,160
And so in fairness, like stuff
has derated, right?

522
00:31:20,040 --> 00:31:25,000
But positioning vis a vis the
USI think people had been very

523
00:31:25,000 --> 00:31:28,840
long, you know, the ex US hard
asset trade, very short the

524
00:31:28,840 --> 00:31:30,920
dollar.
And so that the US wouldn't

525
00:31:30,920 --> 00:31:34,440
collapse immediately on the back
of this is sort of actually

526
00:31:34,440 --> 00:31:36,880
logical to me given where
positioning was.

527
00:31:40,840 --> 00:31:43,760
The big question I have, and I'd
be interested in how you guys

528
00:31:44,680 --> 00:31:47,920
are seeing this, is, you know,
whether or not I would feel

529
00:31:47,920 --> 00:31:53,040
comfortable attacking the tape
on the long side for some areas

530
00:31:53,040 --> 00:31:58,640
like fertilizers, you know,
energy refining parts of the

531
00:31:58,640 --> 00:32:02,640
commode space, like, you know,
aluminium, sulphur, tungsten,

532
00:32:02,640 --> 00:32:05,320
that sort of thing.
And then on the short side, you

533
00:32:05,320 --> 00:32:10,120
know, I have been playing around
in short, you know, UAE shorts

534
00:32:10,120 --> 00:32:12,760
and European chemical
manufacturers, that sort of

535
00:32:12,760 --> 00:32:15,240
thing.
But again, it's been for quite a

536
00:32:15,240 --> 00:32:18,400
small part of the book, you
know, my investment philosophy.

537
00:32:18,400 --> 00:32:20,240
Coming back to that, not losing
money.

538
00:32:20,240 --> 00:32:23,400
You got to earn your way to
trading in these tapes.

539
00:32:24,440 --> 00:32:28,120
So if I can do that and if I can
be profitable with 20 to 30% of

540
00:32:28,120 --> 00:32:31,080
the book, OK, we'll start to
scale that up.

541
00:32:32,880 --> 00:32:36,320
But at the moment, I'm very
cognizant that the spread of

542
00:32:36,320 --> 00:32:42,440
outcomes is wide and we've had a
good start to the year.

543
00:32:43,000 --> 00:32:47,040
And I want to be very humble and
very, very cautious, but very

544
00:32:47,040 --> 00:32:50,560
open minded as well.
So one of the names we, we

545
00:32:50,560 --> 00:32:54,640
traded a few messages on is
Glencore within that space.

546
00:32:54,640 --> 00:32:57,280
And you've, you've written about
Glencore to name you've had a

547
00:32:57,280 --> 00:33:00,280
bit of an association with.
So let's kick off a bit of a

548
00:33:00,600 --> 00:33:03,080
kind of cold chat with hearing
your thoughts.

549
00:33:03,120 --> 00:33:05,960
I think you'd written that it
was your, your biggest position,

550
00:33:05,960 --> 00:33:07,840
although that that might have
since changed.

551
00:33:07,840 --> 00:33:09,160
But how are you thinking about
it right now?

552
00:33:11,120 --> 00:33:12,880
Yeah.
It, it is my biggest position

553
00:33:12,880 --> 00:33:16,680
and it's one that I actually
feel fairly comfortable in

554
00:33:16,920 --> 00:33:22,680
holding in reasonable size.
So I think Glencore is a really

555
00:33:22,680 --> 00:33:27,120
interesting one because, you
know, I think the management

556
00:33:27,120 --> 00:33:30,760
team has, you know, had taken
quite a lot of criticism,

557
00:33:31,200 --> 00:33:39,520
including from me in the past
few years over a variety of

558
00:33:39,520 --> 00:33:41,400
things.
But effectively, I think what,

559
00:33:41,400 --> 00:33:44,880
what makes Glencore so
interesting here is, you know,

560
00:33:44,880 --> 00:33:47,600
there may be a vindication of
how the management team has

561
00:33:47,600 --> 00:33:53,040
actually wanted to position that
company with the coal business,

562
00:33:53,040 --> 00:33:55,120
the trading business and the
copper business.

563
00:33:55,120 --> 00:33:58,040
I see Glencore as being fairly
asymmetric here.

564
00:33:58,800 --> 00:34:01,640
And it's one of those
interesting situations where,

565
00:34:02,560 --> 00:34:05,160
you know, my feeling when the
stock goes down is I'm very

566
00:34:05,160 --> 00:34:07,440
happy to add.
It's it's what I call good

567
00:34:07,440 --> 00:34:12,719
volatility where, you know, I'm
comfortable adding because if

568
00:34:12,719 --> 00:34:16,360
this situation gets resolved, I
think it can trade much higher

569
00:34:16,360 --> 00:34:21,639
on copper beta And at the same
time, if it wants to go lower

570
00:34:21,639 --> 00:34:25,400
because, you know, the this this
sort of inflationary shock

571
00:34:26,400 --> 00:34:30,199
continues.
I think when you look at the

572
00:34:30,280 --> 00:34:33,960
coal to gas substitution,
especially in Asia and you look

573
00:34:33,960 --> 00:34:37,360
at where you know, Brent has
run, you look away European,

574
00:34:37,360 --> 00:34:41,440
that gas has run, but you look
where Newcastle is, you'd, you'd

575
00:34:41,440 --> 00:34:45,679
probably think that if this all
gets worse and gets, you know,

576
00:34:45,679 --> 00:34:51,159
extended that, you know, the at
least on the thermal side that

577
00:34:51,159 --> 00:34:54,760
has room to run, right.
And on the trading side, they've

578
00:34:54,760 --> 00:34:58,680
been flexing up their energy
trading and that gas trading

579
00:34:58,680 --> 00:35:02,320
business over the last 12
months, which I think it is

580
00:35:02,320 --> 00:35:04,600
going to prove to be a very,
very clever decision.

581
00:35:05,400 --> 00:35:09,040
And you would assume that their
marketing business will also

582
00:35:09,040 --> 00:35:12,160
print.
And so I think the management

583
00:35:12,160 --> 00:35:15,960
team is aggressive, clever and
thoughtful.

584
00:35:16,000 --> 00:35:19,280
They really think like owners
and I think the way they

585
00:35:19,280 --> 00:35:22,640
position that company in
contrast to maybe many of the

586
00:35:22,640 --> 00:35:27,520
other majors, they are uniquely
positioned to actually be a a

587
00:35:27,520 --> 00:35:29,560
beneficiary of this type of
environment.

588
00:35:29,560 --> 00:35:33,800
And so I would love for them in
April to give us an update on

589
00:35:33,800 --> 00:35:35,520
that.
On those marketing numbers.

590
00:35:38,160 --> 00:35:40,760
You know, I think by by way of
memory, they printed something

591
00:35:40,760 --> 00:35:45,560
like 22 billion of coal EBITDA
in 2022, something like 7

592
00:35:45,560 --> 00:35:49,480
billion of marketing revenue.
And the copper price is still

593
00:35:49,480 --> 00:35:51,160
higher than where it was back
then.

594
00:35:51,520 --> 00:35:54,560
And so you're looking at an
environment where Glencore could

595
00:35:54,560 --> 00:35:57,960
really surprise to the upside in
this type of tape.

596
00:35:58,640 --> 00:36:02,200
And it's ironic and funny that,
you know, we may be in the type

597
00:36:02,200 --> 00:36:04,560
of tape where the Glencore
management just needs to remind

598
00:36:04,560 --> 00:36:07,480
everyone that they are also a
coal company in addition to a

599
00:36:07,480 --> 00:36:11,400
copper company, although they
went through great, great

600
00:36:11,400 --> 00:36:14,200
lengths to, to tell us all that
they're a copper company during

601
00:36:14,200 --> 00:36:17,240
their investor day.
But so look, so Glencoe, I feel

602
00:36:17,240 --> 00:36:20,320
very good about.
I think it's, I think it's, it's

603
00:36:20,320 --> 00:36:24,720
well positioned to do well in
many different scenarios.

604
00:36:25,720 --> 00:36:32,920
And again, you know, that could
change, but that was a name that

605
00:36:32,920 --> 00:36:36,880
sort of came to mind quite
quickly as this scenario started

606
00:36:37,600 --> 00:36:41,040
playing out.
I, I personally, I may be in the

607
00:36:41,040 --> 00:36:44,000
minority here.
I would love for them to not

608
00:36:44,000 --> 00:36:49,760
fold into Rio because I think
there's a unique culture and a

609
00:36:49,760 --> 00:36:52,960
unique sort of Glencore way of
doing things that I think

610
00:36:53,720 --> 00:36:57,560
investors like.
I like owning a pureplay into

611
00:36:57,560 --> 00:37:01,560
that culture, which would I
think be diluted if they merge

612
00:37:01,560 --> 00:37:06,240
with Rio.
So, you know, I was actually

613
00:37:06,240 --> 00:37:10,120
very happy when the the merger
got called off and actually

614
00:37:10,120 --> 00:37:12,760
started adding back to the
shares then.

615
00:37:13,320 --> 00:37:16,000
But again, you know, I may be
well in the minority there.

616
00:37:16,480 --> 00:37:20,920
But yeah, Glencore is the name I
feel pretty comfortable owning

617
00:37:20,920 --> 00:37:25,960
here.
You mentioned 2022 again and I

618
00:37:25,960 --> 00:37:31,000
remember 2023 because that was
when all of the, the private

619
00:37:31,000 --> 00:37:34,360
traders had to post their full
year results and disclose how

620
00:37:34,360 --> 00:37:38,000
many billions in in profit
they'd they'd they'd made.

621
00:37:38,000 --> 00:37:40,320
And in the case of some of the
traders, you know, where they're

622
00:37:40,320 --> 00:37:44,520
all owned by the traders with,
with a set number of, yeah, a

623
00:37:44,640 --> 00:37:47,360
very finite number of, of
traders that just you could, you

624
00:37:47,360 --> 00:37:49,480
could calculate the on a per
head basis.

625
00:37:49,480 --> 00:37:52,200
What, what these business, what
these businesses were actually,

626
00:37:52,320 --> 00:37:54,160
you know, making and
distributing.

627
00:37:54,480 --> 00:37:59,000
And it's the volatility, it's
the extreme volatility that,

628
00:37:59,000 --> 00:38:03,240
that, that that just isn't
absolute gasoline to, to the

629
00:38:03,240 --> 00:38:04,800
profitability of these trading
businesses.

630
00:38:04,800 --> 00:38:07,840
And Clink or, you know, one of
the best publicly listed

631
00:38:07,840 --> 00:38:10,000
exposures to that overlaid with
the coal.

632
00:38:10,000 --> 00:38:12,920
I love your thinking on it.
Yeah.

633
00:38:12,920 --> 00:38:18,160
And again, I think it's, you
know that there are other ways

634
00:38:18,160 --> 00:38:20,320
that you could try and express
that view.

635
00:38:20,320 --> 00:38:25,680
There's a, there's a company
listed in the US called BGC,

636
00:38:26,800 --> 00:38:30,720
which I think used to be
majority owned by Howard

637
00:38:30,720 --> 00:38:33,360
Lutnick.
And they are one of the, if not

638
00:38:33,360 --> 00:38:39,040
the largest energy commodities
and shipping brokers in the

639
00:38:39,040 --> 00:38:41,160
world.
You know, that's another name

640
00:38:41,160 --> 00:38:45,320
that I have in, in small size.
But yeah, I think you want to

641
00:38:45,320 --> 00:38:53,400
own the names that can give you,
you know, upside to the chaos,

642
00:38:53,400 --> 00:38:54,880
for lack of a better word,
right.

643
00:38:55,920 --> 00:38:59,840
And again, I want, I want to
stress this because we're, we're

644
00:38:59,840 --> 00:39:02,000
doing this at a particular
moment in time.

645
00:39:03,080 --> 00:39:06,240
You know, I'm unclear whether in
a we're in a predator prey

646
00:39:06,240 --> 00:39:10,080
dynamic, which is sort of where
the Glen coals can really go up,

647
00:39:10,080 --> 00:39:15,440
the BGCS can really go up and
you know, the coal names, moon,

648
00:39:15,440 --> 00:39:18,200
some of the sulphur and
fertilizer names do really well,

649
00:39:18,200 --> 00:39:21,000
while everything else, you know,
may struggle.

650
00:39:21,000 --> 00:39:27,360
Or we're in a more sort of
correlation of one type of set

651
00:39:27,360 --> 00:39:30,720
up where just everything is
going to potentially de rate.

652
00:39:30,720 --> 00:39:34,400
So, you know, I'm I'm still
waiting to see what the market

653
00:39:34,400 --> 00:39:38,400
is telling me and I'm still
waiting to see what market

654
00:39:38,400 --> 00:39:40,760
heuristic and what market
dynamic we're in.

655
00:39:40,960 --> 00:39:44,360
But if we are in this sort of
predator prey dynamic, they're

656
00:39:44,360 --> 00:39:46,440
so good.
We're going to be so much stuff

657
00:39:46,440 --> 00:39:50,920
that you can short, especially
going into the the earning

658
00:39:50,920 --> 00:39:53,360
season here in the USI think
there's going to be a lot of pre

659
00:39:53,360 --> 00:39:57,680
announcements coming out that
are going to be interesting.

660
00:39:57,680 --> 00:39:59,160
And I think they'll be paying
them.

661
00:40:00,040 --> 00:40:03,280
But as I said, at the moment I'm
trying to earn the right to

662
00:40:03,280 --> 00:40:07,320
trade big in this tape.
And so, you know, I'm, I'm

663
00:40:07,320 --> 00:40:12,600
seeing how I feel owning the the
Glen Caws, the BGCS and then I'm

664
00:40:12,680 --> 00:40:16,040
trying to look at names on the
short side where I think the

665
00:40:16,040 --> 00:40:21,880
names are crowded complacent
longs that maybe are, you know,

666
00:40:21,880 --> 00:40:26,200
not fully internalizing some of
that shifting market topology

667
00:40:26,200 --> 00:40:29,280
that that we spoke about before.
You explain that earning the

668
00:40:29,320 --> 00:40:32,920
right to try the tape is that is
that your parlance for for

669
00:40:32,920 --> 00:40:36,320
getting a good grip on what this
trade is and building your

670
00:40:36,320 --> 00:40:40,640
confidence, expressing it and
and subsequently, you know,

671
00:40:40,640 --> 00:40:44,640
having more, more positions.
That's exactly it, Trav.

672
00:40:44,640 --> 00:40:47,680
So it it's really about so it's
it's several things.

673
00:40:47,680 --> 00:40:50,920
It's that sensory feeling of
when I wake up in the morning

674
00:40:50,920 --> 00:40:54,160
and I look at my book, how do I
actually feel owning this stuff?

675
00:40:54,280 --> 00:40:57,360
How do I feel when it's moving?
How do I feel when it's moving

676
00:40:57,360 --> 00:40:58,800
up?
How do I feel when it's moving

677
00:40:58,800 --> 00:41:02,920
slightly against me?
I'm really attuned to what is my

678
00:41:02,920 --> 00:41:08,720
instinctive reaction to looking
at the tape and am I making

679
00:41:08,720 --> 00:41:10,560
money?
That's incredibly important.

680
00:41:10,560 --> 00:41:13,520
It comes back to is the
allocation that I've built

681
00:41:13,520 --> 00:41:16,160
making me money.
How am I managing my currency

682
00:41:16,160 --> 00:41:19,400
exposure right?
How am I managing my cash

683
00:41:19,400 --> 00:41:22,520
exposure?
And if that system is working

684
00:41:23,120 --> 00:41:26,720
everyday and I'm feeling good
about it, then I can size up.

685
00:41:26,720 --> 00:41:30,280
If it's not working and I'm
losing money, then we can't.

686
00:41:30,280 --> 00:41:32,840
And we go back to what am I not
listening to?

687
00:41:32,960 --> 00:41:36,080
What it, what is the market
telling me that I'm not being

688
00:41:36,080 --> 00:41:38,040
receptive to?
That's really what I mean.

689
00:41:38,360 --> 00:41:41,720
So, you know, when you go
through potential paradigm

690
00:41:41,720 --> 00:41:46,720
shifts and we we may be in one
now, you know, you have to be

691
00:41:46,720 --> 00:41:50,960
really careful and not be too
cavalier about putting on a ton

692
00:41:50,960 --> 00:41:55,000
of risk and being a bit of a
deer in the headlights and

693
00:41:55,000 --> 00:41:58,560
actually finding out like, oh,
you know, actually I'm not

694
00:41:58,560 --> 00:42:00,480
comfortable with the level of
risk I'm running.

695
00:42:00,480 --> 00:42:03,600
And by the way, I say all of
this because in 2022, I did this

696
00:42:03,600 --> 00:42:06,400
all wrong.
OK, So I'm actually giving you

697
00:42:06,400 --> 00:42:11,760
the perspective of someone that
had a really tough time on the

698
00:42:11,760 --> 00:42:19,400
onset of the Russia Ukraine war.
I was not receptive to to some

699
00:42:19,400 --> 00:42:23,160
really basic market heuristics
that in hindsight were really

700
00:42:23,160 --> 00:42:26,520
obvious.
But you know, I shut my brain

701
00:42:26,520 --> 00:42:30,400
off to them and I caused myself
more pain than I actually needed

702
00:42:30,400 --> 00:42:32,280
to endure.
And digging myself out of that

703
00:42:32,280 --> 00:42:36,120
was was painful.
So I'm very cognizant that I

704
00:42:36,120 --> 00:42:37,880
don't want to repeat the same
mistake.

705
00:42:37,880 --> 00:42:40,840
And if it means I miss out on
some upside by having too much

706
00:42:40,840 --> 00:42:43,880
cash on the sidelines, so be it.
I'm playing an infinite game in

707
00:42:43,880 --> 00:42:46,840
the markets and there will
always be times and setups to

708
00:42:46,840 --> 00:42:50,240
make money, right?
So I reset my book.

709
00:42:51,800 --> 00:42:55,000
I'm earning the right to trade
through this tape areas to

710
00:42:55,000 --> 00:42:57,520
attack areas.
I think you always want to be on

711
00:42:57,520 --> 00:42:59,040
the attack in the markets as
well.

712
00:42:59,040 --> 00:43:01,080
You want to have that aggressive
mindset.

713
00:43:01,200 --> 00:43:04,200
You never want to be defending
parts of your book.

714
00:43:04,200 --> 00:43:06,880
You never want to be in a
defensive position justifying

715
00:43:06,880 --> 00:43:08,320
why I own this name.
Now.

716
00:43:08,320 --> 00:43:10,400
If you're justifying why you're
owning a name and you're

717
00:43:10,400 --> 00:43:13,880
fighting a narrative the way
that I manage money, you cut,

718
00:43:13,920 --> 00:43:17,760
you cut and then if you want to
own that stuff again tomorrow,

719
00:43:17,760 --> 00:43:20,520
you can.
But it's so that that's really

720
00:43:20,520 --> 00:43:25,280
what I mean.
It's, you know, in I'm a big fan

721
00:43:25,280 --> 00:43:30,560
of tennis and you know, when,
when, when you're playing tennis

722
00:43:30,560 --> 00:43:36,640
against an opponent and there is
a paradigm shift in the middle

723
00:43:36,640 --> 00:43:38,000
of the match.
I don't know if you guys are

724
00:43:38,000 --> 00:43:41,440
tennis players, but you, you,
you may start to to try

725
00:43:41,440 --> 00:43:45,640
different things and you don't
want to shift your strategy all

726
00:43:45,640 --> 00:43:47,800
of a sudden.
You want to work your way into

727
00:43:47,800 --> 00:43:51,360
the match, right, trying certain
things, seeing how the opponent

728
00:43:51,360 --> 00:43:55,440
responds to certain shops,
certain, you know, shifts in

729
00:43:55,440 --> 00:43:58,480
pace.
And I think it's incredibly

730
00:43:58,480 --> 00:44:01,640
important to to do the same in
the markets, right, especially

731
00:44:01,640 --> 00:44:07,640
when you're in a potentially
dangerous set up like like what

732
00:44:07,640 --> 00:44:10,400
we may be in now.
I think that's a fantastic

733
00:44:10,400 --> 00:44:12,720
analogy that that makes so much
sense to me and really, really

734
00:44:12,720 --> 00:44:15,280
speaks to me.
Leon, I'm really curious when

735
00:44:15,280 --> 00:44:17,280
you you measure how you're
feeling right now.

736
00:44:17,600 --> 00:44:20,720
You mentioned Ukraine, Russia,
but the other big events in

737
00:44:20,720 --> 00:44:25,480
recent history, COVID, if we go
back a few years and obviously

738
00:44:25,480 --> 00:44:28,520
Liberation Day last year.
So how do how do the senses you

739
00:44:28,520 --> 00:44:30,160
have right now contrast with
those moments?

740
00:44:31,320 --> 00:44:36,160
So that that's that similarities
and and across across all three

741
00:44:36,280 --> 00:44:39,560
JDI think you're you're totally
right to point them out.

742
00:44:39,560 --> 00:44:49,160
So I think a big so I think as
investors, we take on a lot of

743
00:44:49,160 --> 00:44:56,400
truisms that are ill fitting for
how to trade today.

744
00:44:57,040 --> 00:45:01,040
So I think we, we embody truisms
like, well, it's very hard to

745
00:45:01,040 --> 00:45:03,480
time the market, right?
You've all, you've heard that,

746
00:45:03,480 --> 00:45:05,080
right, Don't try and time the
market.

747
00:45:06,000 --> 00:45:11,200
It's, it's really hard to do and
you just shouldn't do it, right.

748
00:45:11,880 --> 00:45:14,960
But actually, in most of the
examples that you've just given

749
00:45:14,960 --> 00:45:18,160
there, the bad event was
actually known ahead of time.

750
00:45:18,160 --> 00:45:22,880
And we were all told about
Liberation Day for weeks.

751
00:45:23,760 --> 00:45:29,400
And so COVID is similar in that
I remember I was working a

752
00:45:29,400 --> 00:45:33,280
mutual fund at the time and I
had colleagues around the world

753
00:45:33,720 --> 00:45:35,920
who were telling me about stuff
that was happening.

754
00:45:35,920 --> 00:45:38,560
You know, New York, they'd
mobilized the National Guard in

755
00:45:38,560 --> 00:45:40,600
China.
You know, liquor shops had run

756
00:45:40,600 --> 00:45:45,160
out of, you know, bottles of of
whiskey and vodka.

757
00:45:46,240 --> 00:45:48,200
You know, hospitals in Italy
were full.

758
00:45:48,200 --> 00:45:52,360
But at the same time, you know,
the market was making sort of

759
00:45:52,360 --> 00:45:56,640
new highs in in the face of all
that, of all that news.

760
00:45:57,480 --> 00:45:59,320
And similarly for for Liberation
Day.

761
00:45:59,320 --> 00:46:02,400
And actually similarly in the
Russia Ukraine thing, something

762
00:46:02,400 --> 00:46:06,160
that really got me in trouble
was that, yeah, I think the

763
00:46:06,160 --> 00:46:09,720
NASDAQ actually rallied into
that event.

764
00:46:10,240 --> 00:46:14,160
And shortly after the the first
few days of the invasion, I

765
00:46:14,160 --> 00:46:20,440
think the NASDAQ was up.
And So what you're pointing out

766
00:46:20,440 --> 00:46:23,440
is very interesting.
And it's a question mark rather

767
00:46:23,440 --> 00:46:26,600
than any solution I have, which
is in the face of potentially

768
00:46:26,600 --> 00:46:30,560
very negative events, there can
just be this lag time where the

769
00:46:30,560 --> 00:46:34,920
market doesn't react or doesn't
decide that it wants to price in

770
00:46:34,920 --> 00:46:38,240
the bad event immediately,
right.

771
00:46:39,280 --> 00:46:43,600
So it's what I call the sort of
don't be a hero phase of, of

772
00:46:43,600 --> 00:46:46,280
managing money, which is you
have a potentially very negative

773
00:46:46,280 --> 00:46:49,520
event.
The market is for one reason or

774
00:46:49,520 --> 00:46:51,800
not, it's not pricing that
negative event.

775
00:46:52,400 --> 00:46:56,880
And you know, for one, for one
that is focused really on don't

776
00:46:56,880 --> 00:47:00,840
lose money.
There is no reason for me to run

777
00:47:00,880 --> 00:47:04,000
excess levels of risk.
Now COVID, it's very interesting

778
00:47:04,000 --> 00:47:15,320
because you know, COVID at the
time, you know, I was in a much

779
00:47:15,320 --> 00:47:20,000
better position to attack that
tape because, you know, I had

780
00:47:20,000 --> 00:47:24,600
spent a lot of time on companies
like Zoom, Slack, Amazon, you,

781
00:47:24,640 --> 00:47:27,720
you remember actually back when
SAS was actually fashionable

782
00:47:27,720 --> 00:47:31,440
back then, right?
And so when, when that event

783
00:47:31,440 --> 00:47:35,840
happened, I had a pretty good
idea of the type of names that

784
00:47:35,840 --> 00:47:39,520
were going to work well.
And so I was able to attack that

785
00:47:39,520 --> 00:47:42,480
tape and actually trade pretty
well through that.

786
00:47:43,440 --> 00:47:47,880
As I mentioned to you that the
Ukraine war, I was very ill

787
00:47:47,880 --> 00:47:50,800
equipped in that in that
particular circumstance.

788
00:47:50,800 --> 00:47:53,960
And in Liberation Day,
interestingly enough, I was also

789
00:47:53,960 --> 00:47:59,360
very heavily cashed up.
And I say this to to other

790
00:47:59,360 --> 00:48:04,000
portfolio managers, I say, you
know, I didn't buy any of the

791
00:48:04,000 --> 00:48:07,720
Liberation Day dips, but I still
had an incredibly good year last

792
00:48:07,720 --> 00:48:10,240
year.
And it's something that there's

793
00:48:10,240 --> 00:48:13,440
a great trader called Michael
Platt who runs a phone called

794
00:48:13,440 --> 00:48:16,600
get what the phone is called, I
think it's called Blue Crest

795
00:48:16,600 --> 00:48:18,760
Capital.
But he basically says that you

796
00:48:18,760 --> 00:48:21,800
don't actually make that much
money in the crisis.

797
00:48:22,280 --> 00:48:25,000
You make money as you come out
of the crisis.

798
00:48:25,880 --> 00:48:31,600
So that that my learning across
COVID, Ukraine liberation day,

799
00:48:31,600 --> 00:48:34,920
having traded each one slightly
differently, some well, some not

800
00:48:34,920 --> 00:48:40,280
well, is the best thing to do is
actually to do less.

801
00:48:41,640 --> 00:48:47,080
And when the tape actually
screams, this is an obvious buy

802
00:48:47,080 --> 00:48:49,280
or this is an obvious, then I'll
get involved.

803
00:48:50,120 --> 00:48:54,480
And so I think across all three,
my, my guiding philosophy now is

804
00:48:54,480 --> 00:48:59,280
I don't try and buy dips.
I try and wait until the tape is

805
00:48:59,280 --> 00:49:01,640
stable.
I try and wait until the fog of

806
00:49:01,640 --> 00:49:05,000
the war is lifted and then I'll
get involved because then I

807
00:49:05,000 --> 00:49:07,040
still will be able to make
money.

808
00:49:08,920 --> 00:49:11,320
There's other stuff to do now.
You know I've been.

809
00:49:12,640 --> 00:49:15,640
You're getting cash rates in
across different currencies.

810
00:49:15,640 --> 00:49:19,240
That is very attractive, right?
Especially as a euro denominated

811
00:49:19,240 --> 00:49:23,600
investor.
I found areas to park capital

812
00:49:23,600 --> 00:49:28,440
and chill out in, for lack of a
better word, and actually earn a

813
00:49:28,440 --> 00:49:32,480
decent return on cash without
having to pull my hair out too

814
00:49:32,480 --> 00:49:35,040
much about guessing when the
Strait of all moves is going to

815
00:49:35,040 --> 00:49:38,640
open or not.
I think I'm really trying to

816
00:49:38,640 --> 00:49:42,000
treat this event like, you know,
the, the, the COVID event, the

817
00:49:42,000 --> 00:49:48,760
Russia war, the April liberation
time, as let's just wait until

818
00:49:48,760 --> 00:49:50,400
the trade becomes really
obvious.

819
00:49:52,640 --> 00:49:56,960
If I, if I pull you towards
commodes again, Leon, like how

820
00:49:56,960 --> 00:50:01,760
do you think about Precious?
It's it's history in the last

821
00:50:01,760 --> 00:50:02,920
few years of where it is right
now.

822
00:50:05,200 --> 00:50:09,800
Yes, I was very long the gold
streamers, by the way, great pod

823
00:50:09,800 --> 00:50:12,520
that you guys did with with
Randy at Wheaton.

824
00:50:12,520 --> 00:50:16,240
I thought that was a really
great conversation.

825
00:50:16,760 --> 00:50:22,520
So, you know, I think that the,
the, the gold and silver trade

826
00:50:22,520 --> 00:50:28,040
was really interesting last year
and especially into the close of

827
00:50:28,040 --> 00:50:29,840
last year and coming into
January.

828
00:50:29,840 --> 00:50:35,360
I was very long names like, you
know, Franco, Elemental Royalty,

829
00:50:36,600 --> 00:50:40,640
Royal Gold and traded those
pretty well.

830
00:50:41,760 --> 00:50:44,760
Where I think, and I think we've
spoken about this in the past

831
00:50:44,760 --> 00:50:50,480
where I've struggled just in
terms of conceptualisation is

832
00:50:50,480 --> 00:50:56,000
the, the sort of implied market
cap of gold versus, let's say

833
00:50:56,000 --> 00:51:00,000
SNP or versus, you know, other
markets.

834
00:51:01,000 --> 00:51:05,640
Now it, there have been times in
the past where you know, the,

835
00:51:05,680 --> 00:51:09,760
the total market cap of gold may
have exceeded, you know, U.S.

836
00:51:09,760 --> 00:51:14,200
stocks.
But as as of now, I haven't

837
00:51:14,200 --> 00:51:17,640
checked the numbers recently,
but call it 3540 trillion,

838
00:51:17,760 --> 00:51:20,160
right?
And looking at all other U.S.

839
00:51:20,160 --> 00:51:24,240
stocks, call it 60 trillion.
If gold were to double here

840
00:51:24,240 --> 00:51:31,280
would be worth more than all
U.S. stocks again possible and I

841
00:51:31,280 --> 00:51:33,960
want to be very open minded to
that as an outcome.

842
00:51:34,760 --> 00:51:43,040
But to me, gold has lost some of
the convexity that it had over

843
00:51:43,040 --> 00:51:45,280
the last few years.
And so whilst I think it's

844
00:51:45,320 --> 00:51:52,560
interesting and it plays a role
in portfolio construction, that

845
00:51:52,560 --> 00:51:58,200
lack of potential convexity just
means that, you know, if I were

846
00:51:58,200 --> 00:52:02,200
to revisit, I would, I would
size it's in a, in a, in a much

847
00:52:02,200 --> 00:52:05,800
smaller portion of my, of my
wrist buckets.

848
00:52:08,400 --> 00:52:12,400
So that's kind of how I think
about precious now silver.

849
00:52:12,400 --> 00:52:16,160
I think it's really interesting
because one key thing that I do

850
00:52:16,160 --> 00:52:19,080
look at when I'm, when I'm
trading themes, as I look at

851
00:52:19,080 --> 00:52:24,720
things that are breaking like 30
year price regimes and that

852
00:52:24,720 --> 00:52:27,400
that's sort of something that
started to actually happen with

853
00:52:27,400 --> 00:52:29,560
silver.
And so that actually got me

854
00:52:29,600 --> 00:52:33,040
really interested.
Same kind of reason why I

855
00:52:33,040 --> 00:52:37,560
started getting interested in,
in the in the Nikkei as the year

856
00:52:37,560 --> 00:52:39,880
started, right?
I'm looking and now you people

857
00:52:39,880 --> 00:52:41,840
say, well, the what's he talking
about?

858
00:52:41,840 --> 00:52:43,560
He's talking about silver and
the Nikkei.

859
00:52:43,560 --> 00:52:46,360
Well, the common thing is
they're breaking like multi

860
00:52:46,360 --> 00:52:50,360
decade pricing regimes and the
charts are actually screaming

861
00:52:50,360 --> 00:52:53,360
that there's something
fundamentally happening and I

862
00:52:53,360 --> 00:52:56,240
want to be involved in those
type of trades right now.

863
00:52:56,680 --> 00:53:02,520
Nikkei again, have to be really
careful because this energy

864
00:53:02,520 --> 00:53:06,440
shock may have actually derailed
that, right?

865
00:53:06,440 --> 00:53:09,160
So, so that's something I don't
have on at the moment.

866
00:53:10,080 --> 00:53:12,560
So that's a big, that's really
important if we're in this

867
00:53:12,560 --> 00:53:16,000
paradigm shift where you know,
we're going into this

868
00:53:16,000 --> 00:53:20,160
inflationary input cost regime.
I probably don't want to be long

869
00:53:20,160 --> 00:53:21,960
some of those Japanese names
anymore.

870
00:53:22,080 --> 00:53:23,760
So I want to be very attuned to
that.

871
00:53:24,800 --> 00:53:27,120
But so to answer your question,
yeah, I think the precious thing

872
00:53:27,120 --> 00:53:32,320
is very interesting, but I want
to see that convexity to get

873
00:53:32,320 --> 00:53:35,680
really excited and and
interested in, in in the trade

874
00:53:35,880 --> 00:53:39,800
Trav.
You, you shared a chat with us

875
00:53:40,240 --> 00:53:41,640
when we were when we were
messaging.

876
00:53:41,640 --> 00:53:45,000
I think over over the weekend it
might have been and again,

877
00:53:45,000 --> 00:53:48,040
pulling the conversation kind of
to the, the nearer term with,

878
00:53:48,200 --> 00:53:52,800
with commodities, but looking
beyond precious bulks, these

879
00:53:52,800 --> 00:53:55,560
sorts of things where a lot of
the metal was coming out of

880
00:53:55,560 --> 00:53:58,200
Russia, Ukraine, as you've
spoken about, they performed

881
00:53:58,560 --> 00:54:00,640
very well in the first couple
months.

882
00:54:01,400 --> 00:54:06,480
And then if you jump forward one
year, the all the outperformance

883
00:54:06,480 --> 00:54:08,960
had dissipated and a lot of them
had trended down.

884
00:54:08,960 --> 00:54:13,240
So how's that kind of informing
your your view on commodities

885
00:54:13,240 --> 00:54:17,720
right now?
Yeah, it's a great question, JD.

886
00:54:17,720 --> 00:54:23,800
So I took off a lot of my cumods
trade as I had mentioned to you

887
00:54:23,800 --> 00:54:27,800
guys when we spoke in January,
the the hairs at the back of my

888
00:54:27,800 --> 00:54:31,880
neck had started to go up and
indicators like how many times

889
00:54:31,880 --> 00:54:35,600
have people checking their naves
in the fund, How many times am I

890
00:54:35,600 --> 00:54:38,920
looking?
My account had started going up.

891
00:54:38,960 --> 00:54:42,360
And so it actually started
taking off a lot of the cumods

892
00:54:42,360 --> 00:54:47,200
at that point in time.
So it's it's important.

893
00:54:47,200 --> 00:54:49,280
And by the way, there was that
big flush, right?

894
00:54:49,280 --> 00:54:52,360
And some of the names like, you
know, your copper names,

895
00:54:54,520 --> 00:55:02,200
platinum, they'd actually
started to trade less well, even

896
00:55:02,200 --> 00:55:07,600
before the war started a few
weeks ago.

897
00:55:08,120 --> 00:55:11,400
So I'm very mindful of the fact
that that there was a little bit

898
00:55:11,400 --> 00:55:16,200
of a shift and these things
didn't that, that they had

899
00:55:16,280 --> 00:55:18,600
actually started to trade a
little bit less well.

900
00:55:19,600 --> 00:55:24,720
So, so then you have this this
war and and they trade even less

901
00:55:24,720 --> 00:55:26,320
well.
And I think that's, that makes a

902
00:55:26,320 --> 00:55:28,200
lot of sense.
You had a lot of hot money that

903
00:55:28,200 --> 00:55:33,280
chased commodes and positioning
short term was a little bit

904
00:55:33,280 --> 00:55:37,640
fuller.
I actually think at the margin I

905
00:55:37,640 --> 00:55:43,360
would be a buyer of weakness in
some of that stuff here because

906
00:55:43,360 --> 00:55:46,520
I think the, the big difference
between now and and the Ukraine

907
00:55:47,880 --> 00:55:51,440
conflict is yes, I mean, if we
go into this doomsday scenario

908
00:55:51,480 --> 00:55:57,840
of huge inflationary market
paradigm where central banks are

909
00:55:57,840 --> 00:56:01,160
having to raise rates, you know,
it's not going to be good for

910
00:56:01,600 --> 00:56:06,400
some of these metals, right.
But against that, we've had a

911
00:56:06,400 --> 00:56:13,360
reconfirmation of this recurring
problem that nations have, which

912
00:56:13,360 --> 00:56:18,280
is, you know, it's less of a
it's less of a supply issue, but

913
00:56:18,280 --> 00:56:21,800
a problem of access and who has
the commodity.

914
00:56:22,600 --> 00:56:25,760
And again, that this this
Iranian war has just highlighted

915
00:56:25,760 --> 00:56:30,560
the fact that many countries are
just short their own

916
00:56:30,560 --> 00:56:34,880
sovereignty.
And so I actually think we are

917
00:56:34,880 --> 00:56:38,400
in a multi year bull market for
commodities.

918
00:56:38,720 --> 00:56:44,280
And if they want to weaken
significantly on this Iranian

919
00:56:44,480 --> 00:56:47,760
conflict, I'd actually be a
buyer of a lot of that stuff.

920
00:56:47,760 --> 00:56:53,240
Again, whether that's platinum,
copper, gold, silver, I just buy

921
00:56:53,240 --> 00:56:58,120
the whole thing.
But I'm also very mindful, as

922
00:56:58,120 --> 00:57:01,040
you mentioned that they had an
initial rally after Ukraine,

923
00:57:01,040 --> 00:57:03,840
Russia and then they, they, then
they, then they collapsed.

924
00:57:03,840 --> 00:57:06,840
I mean, you have to also bear in
mind we had like 14 rate hikes

925
00:57:08,480 --> 00:57:12,800
over that period of time.
That is something that you know,

926
00:57:12,800 --> 00:57:15,120
we haven't discussed, but I
think it's going to be very

927
00:57:15,120 --> 00:57:19,480
important is looking at central
bank reaction functions to this

928
00:57:19,480 --> 00:57:21,920
thing.
And so, you know, before I get

929
00:57:21,920 --> 00:57:24,520
very aggressive on the metals,
I'm going to want to look at

930
00:57:24,520 --> 00:57:27,120
that, right?
Because if look, if we're having

931
00:57:27,120 --> 00:57:31,200
this conversation about like
dollar debasement, but actually

932
00:57:31,200 --> 00:57:34,480
central bank start tightening
and protecting the currencies, I

933
00:57:34,480 --> 00:57:38,120
mean, let's see how that theme
does right.

934
00:57:38,960 --> 00:57:43,760
So I stay very open minded.
I'm long term very bullish on

935
00:57:43,760 --> 00:57:48,320
commodities and instinctively I
probably want to be a buyer of

936
00:57:48,320 --> 00:57:50,000
that stuff if it goes down a
lot.

937
00:57:50,800 --> 00:57:54,040
But I do think looking at
central bank reaction functions

938
00:57:54,040 --> 00:57:58,960
is is going to be pretty
important the.

939
00:57:59,760 --> 00:58:04,360
The, the part of the equation
that you, you spoke to before

940
00:58:04,360 --> 00:58:07,640
of, of toying around, there's
the 2022 playbook, you know,

941
00:58:07,880 --> 00:58:13,320
fits a big, a big part of that.
Like I, I just remember, I

942
00:58:13,320 --> 00:58:17,760
remember those stocks just like
were dribbling in, in some

943
00:58:17,760 --> 00:58:23,080
instances in 2022.
And it, it, it feels like a, a

944
00:58:23,880 --> 00:58:26,200
very realistic possibility.
I'm just kind of curious, like,

945
00:58:26,200 --> 00:58:29,000
what does it take for you to
build confidence and express a

946
00:58:29,000 --> 00:58:31,280
trade like that?
What do you have to say to to

947
00:58:31,280 --> 00:58:35,440
get comfortable?
So I think the, the one thing

948
00:58:35,440 --> 00:58:39,560
that's prevented me from going
absolutely huge in this stuff is

949
00:58:39,560 --> 00:58:42,600
really the improvisational
quality of the US

950
00:58:42,600 --> 00:58:47,160
administration.
And maybe I'm being generous by

951
00:58:47,160 --> 00:58:55,880
saying improvisational quality,
but it is effectively that, you

952
00:58:55,880 --> 00:58:58,960
know, some of this stuff is not
going to some of this stuff is

953
00:58:58,960 --> 00:59:03,400
going to trade badly if they
find a quick off ramp to this

954
00:59:03,400 --> 00:59:06,240
scenario.
And again, you know, I'm not a

955
00:59:06,240 --> 00:59:09,440
geopolitical expert and so
there's no real value adding me,

956
00:59:10,000 --> 00:59:12,960
you know, waxing lyrical about
the, the different probability

957
00:59:12,960 --> 00:59:15,920
trees that could happen with off
ramps and on ramps and how they

958
00:59:15,920 --> 00:59:19,400
negotiate with Iran.
And you know what, what Nash

959
00:59:19,400 --> 00:59:23,800
equilibrium exists or doesn't
exist between the US and Iran.

960
00:59:24,160 --> 00:59:27,800
But you know what I, what I can
tell you is if, if there is a,

961
00:59:28,480 --> 00:59:30,120
if there is an off ramp to the
conflict.

962
00:59:30,120 --> 00:59:33,160
And that happens quickly, like
the diesel refiners, the

963
00:59:33,160 --> 00:59:35,800
fertilizers, the, the energy
names.

964
00:59:35,800 --> 00:59:39,680
I'd be very surprised if they
trade well into that sort of

965
00:59:39,680 --> 00:59:44,000
headline risk.
And so the, the difference

966
00:59:44,000 --> 00:59:51,440
between now and that Ukraine
2022 scenario is that you, you

967
00:59:51,440 --> 00:59:55,560
know that just the geopolitical
set up of and the more

968
00:59:55,560 --> 00:59:58,600
predictive nature of how the,
the Biden administration was

969
00:59:58,600 --> 01:00:02,560
approaching the problem.
The European response and what

970
01:00:02,560 --> 01:00:06,440
was happening with Russia was
just just felt like something, I

971
01:00:06,440 --> 01:00:11,240
can't quite put it into words,
but it just felt like the spread

972
01:00:11,240 --> 01:00:14,840
of probabilities was more narrow
than what we face now, right,

973
01:00:14,960 --> 01:00:17,920
Especially from a headline
perspective, OK.

974
01:00:17,920 --> 01:00:21,080
And again, some of your
listeners who are very

975
01:00:21,080 --> 01:00:23,960
knowledgeable about the physical
side of commodities will say,

976
01:00:23,960 --> 01:00:27,160
you know, this is what we're
seeing on the physical side.

977
01:00:27,160 --> 01:00:31,080
It's not reflected on screen and
my response is that that's fine,

978
01:00:31,080 --> 01:00:33,000
but I'm trading the stuff on
screen.

979
01:00:33,400 --> 01:00:37,320
So if there's a tweet that comes
out and I'm long oil and oil

980
01:00:37,320 --> 01:00:41,000
goes down 15% and that's 10% of
my nap, that's not good.

981
01:00:41,480 --> 01:00:44,000
So I have to respect that.
I have to respect the headline

982
01:00:44,000 --> 01:00:49,320
risk and that is the reason why
I'm not huge in that stuff.

983
01:00:49,360 --> 01:00:53,040
Now playing the other side, what
is really interesting is if you

984
01:00:53,040 --> 01:00:57,200
look at every differential
between the crude price on the

985
01:00:57,200 --> 01:01:00,200
screen and what you're actually
paying at the pump, right?

986
01:01:01,040 --> 01:01:04,840
Every single one of those
differentials has totally blown

987
01:01:04,840 --> 01:01:09,080
out, right?
And I think to me that there is

988
01:01:09,080 --> 01:01:15,000
an opportunity there because I
think as more generalists start

989
01:01:15,000 --> 01:01:18,760
to pay attention to the blow out
of all of those differentials,

990
01:01:19,200 --> 01:01:25,000
it's obviously you're not
paying, you know, crude futures

991
01:01:25,000 --> 01:01:28,400
when you go to the pump, right?
It goes without saying there's a

992
01:01:28,400 --> 01:01:30,120
big difference between that and
diesel.

993
01:01:30,120 --> 01:01:33,040
But I think that as more
generalists actually start

994
01:01:33,040 --> 01:01:38,120
internalising that and as the
market may start to internalise

995
01:01:38,120 --> 01:01:46,520
that, that 2022 playbook may
actually start to may actually

996
01:01:46,520 --> 01:01:48,560
start to be something I feel
more comfortable in.

997
01:01:48,560 --> 01:01:52,960
So, you know, I have been
playing around in, you know,

998
01:01:52,960 --> 01:01:58,200
your Archer Daniel Midlands,
your Sasols Glenn calls, you

999
01:01:58,200 --> 01:02:01,280
know, there are interesting
names that I'm attacking from

1000
01:02:01,280 --> 01:02:05,680
the long side, but it's, you
know, 2 three, 4% of Navmax,

1001
01:02:05,760 --> 01:02:09,400
right?
But again, the reason I'm not

1002
01:02:09,600 --> 01:02:15,760
maxing out that trade is simply
because, you know, I respect the

1003
01:02:16,040 --> 01:02:19,040
headlines.
Couldn't can send us much lower

1004
01:02:19,040 --> 01:02:21,000
and as I mentioned to you guys
at the start of our

1005
01:02:21,000 --> 01:02:25,000
conversation, I have no appetite
to take like an intraday 4% draw

1006
01:02:25,000 --> 01:02:29,560
down in NAV and that can happen
if you're massively long that

1007
01:02:29,560 --> 01:02:31,320
stuff.
Look, if you're super convicted

1008
01:02:31,320 --> 01:02:35,440
and you have a very strong view
of where this is all going to

1009
01:02:35,440 --> 01:02:38,360
go, fine, you can run that type
of book.

1010
01:02:38,560 --> 01:02:42,080
I don't have that conviction.
And so for me, it's about

1011
01:02:42,080 --> 01:02:45,680
getting little wins, earning the
right to trade.

1012
01:02:45,680 --> 01:02:51,200
And if the regime really cement
itself that we are in that

1013
01:02:51,200 --> 01:02:54,200
world, then I will.
I'll boost position sizes and

1014
01:02:54,520 --> 01:02:58,760
I'll go bigger in that stuff.
Your comments on diesel there,

1015
01:02:58,760 --> 01:03:01,280
Leon, they make me think of that
fantastic meme of the, the

1016
01:03:01,280 --> 01:03:05,000
person at the pump trying to
pump paper into into the car to

1017
01:03:05,000 --> 01:03:07,360
get it cranking.
It's a it's a real problem

1018
01:03:07,360 --> 01:03:11,400
people are facing around around
the world right now as we as we

1019
01:03:11,400 --> 01:03:13,560
kind of come to a bit of a close
certainly.

1020
01:03:13,560 --> 01:03:17,280
And I, I'm very curious.
You wrote this fantastic thread

1021
01:03:17,320 --> 01:03:20,880
on, on embracing life as a
trader, I think is the best way

1022
01:03:20,880 --> 01:03:24,080
to kind of encapsulate it.
And it might have been 9 or 10

1023
01:03:24,080 --> 01:03:27,160
kind of parts to it, but I'd
love to know what kind of

1024
01:03:27,240 --> 01:03:32,680
spurred you put in pen to to
paper on on encapsulating how

1025
01:03:32,680 --> 01:03:39,360
you view the world in a sense.
Thanks, JD, I'm glad I'm glad it

1026
01:03:39,360 --> 01:03:41,400
it resonated it it's an
interesting one.

1027
01:03:41,400 --> 01:03:46,000
I think that when you live and
breathe markets, the

1028
01:03:46,000 --> 01:03:50,400
neuroplasticity of your brain
actually starts to change when

1029
01:03:50,400 --> 01:03:53,560
you do this every day for years
and years.

1030
01:03:53,840 --> 01:04:01,080
And, you know, I was on a long
haul flight and I just decided I

1031
01:04:01,080 --> 01:04:03,720
was just thinking about it.
And I thought to myself, I'll

1032
01:04:03,720 --> 01:04:07,800
just write down the various ways
that I've noticed that it's

1033
01:04:07,800 --> 01:04:10,440
actually changed me as a, as a
person.

1034
01:04:10,600 --> 01:04:14,920
And mostly for, I'd actually say
mostly for the, for the better.

1035
01:04:15,240 --> 01:04:20,360
I'm very, very interested in,
you know, the inner game of

1036
01:04:21,680 --> 01:04:27,840
trading and learning how to
listen to that inner voice.

1037
01:04:28,120 --> 01:04:31,000
What is that inner voice
actually telling you, right?

1038
01:04:31,000 --> 01:04:33,320
You, you guys know it right,
Because you, you trade your

1039
01:04:33,320 --> 01:04:38,240
books and it's something which
actually in the, in the

1040
01:04:38,240 --> 01:04:42,080
investment management business,
it's a bit of a taboo subject,

1041
01:04:42,080 --> 01:04:45,120
I'd say.
Like we want to present

1042
01:04:45,120 --> 01:04:50,000
ourselves in an incredibly sort
of, you know, left brained

1043
01:04:51,080 --> 01:04:56,880
analytical Cartesian profession.
When I actually think a lot of

1044
01:04:56,880 --> 01:05:02,240
the edge is how we rewire our
neuroplasticity, how we lean

1045
01:05:02,240 --> 01:05:07,800
into our instinctive abilities,
our ability to sort of take in

1046
01:05:07,800 --> 01:05:12,120
all of these empirical data
points and then learn how to act

1047
01:05:12,120 --> 01:05:14,680
on them.
And, and as you live and breathe

1048
01:05:14,680 --> 01:05:17,480
this stuff as a trader, it
affects other areas of your

1049
01:05:17,480 --> 01:05:20,400
life.
It in my case, it's made me much

1050
01:05:20,400 --> 01:05:25,400
more open minded to other ways
of thinking, other people's

1051
01:05:25,400 --> 01:05:30,640
viewpoints, simply because in
markets, if I'm not super open

1052
01:05:30,640 --> 01:05:36,360
minded, more often than not, I
either lose money or I miss out

1053
01:05:36,360 --> 01:05:39,120
on great trades because I'm
close minded to stuff.

1054
01:05:39,120 --> 01:05:43,200
And so, you know, if that's
happening in markets and I have

1055
01:05:43,200 --> 01:05:45,560
to force myself to think
differently in markets, I

1056
01:05:45,560 --> 01:05:49,680
actually find that it, it's
reflected in life, you know, the

1057
01:05:49,680 --> 01:05:55,560
volatility of life.
And, you know, having been

1058
01:05:55,560 --> 01:05:58,400
someone that was, you know,
earning a salary for many years.

1059
01:05:58,400 --> 01:06:03,200
And now I basically live off of
what I make on on, on my PNL,

1060
01:06:05,040 --> 01:06:07,680
you know, it's allowed me to
embrace the volatility and the

1061
01:06:07,680 --> 01:06:11,400
vicissitude of life in a much
more relaxed way.

1062
01:06:12,200 --> 01:06:15,640
I think, you know, and you guys
are entrepreneurs, so you know

1063
01:06:15,640 --> 01:06:18,000
this, right?
But you know, I think the

1064
01:06:18,000 --> 01:06:23,880
various ways that people seek to
suppress life, volatility and

1065
01:06:23,880 --> 01:06:29,240
stuff hits them out of nowhere
and it can become really

1066
01:06:29,240 --> 01:06:31,360
traumatic and difficult for them
to cope with.

1067
01:06:31,360 --> 01:06:33,760
I think when you live in the
markets as an investor or

1068
01:06:33,760 --> 01:06:38,960
especially a trader, you develop
good muscle memory on how to

1069
01:06:38,960 --> 01:06:45,280
deal with that stuff.
And I think it's, it's something

1070
01:06:45,280 --> 01:06:48,520
that trading has really taught
me is learning how to embrace

1071
01:06:48,520 --> 01:06:51,480
risk, learning how to be really
open minded, learning how to

1072
01:06:51,480 --> 01:06:55,960
take chances on stuff.
And if you're willing to take

1073
01:06:55,960 --> 01:06:58,960
chances on the screen and with
your book, take, take chances in

1074
01:06:58,960 --> 01:07:01,560
your life and try stuff out,
right.

1075
01:07:02,400 --> 01:07:07,880
So my approach to risk, how I
deal with people being open

1076
01:07:07,880 --> 01:07:13,400
minded, investing and trading
has really helped me a lot to,

1077
01:07:15,600 --> 01:07:18,520
to, to deal with that stuff.
And that's, and that's an

1078
01:07:18,520 --> 01:07:22,080
ongoing process, by the way.
So that thread was really sort

1079
01:07:22,080 --> 01:07:25,240
of me just putting pen to paper
on some of those thoughts that

1080
01:07:25,640 --> 01:07:29,000
had been sort of bubbling to the
surface.

1081
01:07:29,760 --> 01:07:32,200
Look, it's not a, and again, I
say this to people, it's not a

1082
01:07:32,200 --> 01:07:36,440
life for everyone, right?
You have to live and breathe

1083
01:07:36,440 --> 01:07:38,560
this stuff.
But for those of us that do live

1084
01:07:38,560 --> 01:07:43,000
and breathe this stuff, that are
never switching off, you know,

1085
01:07:43,000 --> 01:07:46,400
those are some of the things
that actually came to mind.

1086
01:07:48,080 --> 01:07:52,120
It's one last, last tweet.
I wanted to bring up Leon

1087
01:07:52,280 --> 01:07:54,640
because I think it'll, you might
even be able to tie in some of

1088
01:07:54,640 --> 01:07:57,320
these like reflections.
And I want to bring it up

1089
01:07:57,320 --> 01:08:00,840
because you put this out there
and you gave no explanation.

1090
01:08:02,760 --> 01:08:05,600
You said Illumina was the
biggest loser of my entire

1091
01:08:05,600 --> 01:08:09,520
career, cost me 7 figures
personally, was one line and no

1092
01:08:09,520 --> 01:08:12,800
elaboration.
So tell me, tell me the story.

1093
01:08:14,320 --> 01:08:19,319
So one thing that I live and
breathe by, and it might drive

1094
01:08:19,319 --> 01:08:24,800
some people nuts when I say this
is a key red flag for me, is

1095
01:08:24,800 --> 01:08:28,240
when I start to learn too much
about an industry or a single

1096
01:08:28,240 --> 01:08:31,479
name.
Ideally I don't.

1097
01:08:31,479 --> 01:08:35,000
I want to know actually not that
much about the name of the

1098
01:08:35,000 --> 01:08:37,800
industry because that means I'm
usually making money and I'm not

1099
01:08:37,800 --> 01:08:42,359
worried about it.
When I start to learn a lot

1100
01:08:42,359 --> 01:08:45,880
about a name or, or a particular
industry, it's usually because

1101
01:08:45,880 --> 01:08:49,920
I've had to figure out why I'm
losing money.

1102
01:08:51,080 --> 01:08:55,279
And so the sad thing about
Illumina is I actually know a

1103
01:08:55,279 --> 01:08:57,399
lot about the business.
I know a lot about gene

1104
01:08:57,399 --> 01:09:00,319
sequencing because I lost so
much money on it.

1105
01:09:01,479 --> 01:09:07,319
So look, I'm, I'm probably the
worst biotech life scientist

1106
01:09:07,319 --> 01:09:13,319
investor out there.
So anytime I tweet or I talk to

1107
01:09:13,319 --> 01:09:17,080
you guys about a biotech name,
you have 100% guarantee that you

1108
01:09:17,080 --> 01:09:21,399
guys can go short because I'm,
I'm the ultra Contra indicator

1109
01:09:21,399 --> 01:09:24,359
for that industry.
But it hasn't stopped me from

1110
01:09:24,359 --> 01:09:29,880
trying, right?
So Illumina is a, such a great

1111
01:09:29,880 --> 01:09:33,960
lesson on many, many fronts.
So it's a great lesson in

1112
01:09:33,960 --> 01:09:38,840
borrowed conviction.
It's a great lesson in thesis

1113
01:09:38,840 --> 01:09:42,200
creep.
It's a great lesson in not

1114
01:09:42,200 --> 01:09:51,399
obeying strong price signals.
It's a great lesson in, you

1115
01:09:51,399 --> 01:09:53,800
know, coming back to that
Glencore example of actually

1116
01:09:53,800 --> 01:09:59,000
liking and respecting
management, not paying attention

1117
01:09:59,000 --> 01:10:03,160
to that stuff.
So yeah, Illumina was an

1118
01:10:03,160 --> 01:10:06,000
incredibly painful loss.
I don't know where you want me

1119
01:10:06,000 --> 01:10:09,640
to start, but effectively that
idea came about through this

1120
01:10:09,640 --> 01:10:14,440
incredible growth investor
called James Anderson, who ran a

1121
01:10:14,440 --> 01:10:17,560
fund called the Scottish
Mortgage Trust at Bailey

1122
01:10:17,560 --> 01:10:20,800
Gifford.
I really recommend if you're,

1123
01:10:20,880 --> 01:10:23,920
you're mining listeners are not
familiar with, with, with him,

1124
01:10:23,920 --> 01:10:26,400
they should actually go and look
him up because I think he's an

1125
01:10:26,400 --> 01:10:31,200
incredible investor who's made
money in everything from, you

1126
01:10:31,200 --> 01:10:38,600
know, Amazon, Tencent, Tesla,
SpaceX, valet, Fiat Chrysler,

1127
01:10:38,600 --> 01:10:41,400
Barclays, like he's an
incredible generalist.

1128
01:10:43,320 --> 01:10:47,280
And, you know, he had started
talking about gene sequencing

1129
01:10:47,280 --> 01:10:53,080
and Illumina as a really
interesting company that could,

1130
01:10:53,480 --> 01:10:57,640
you know, cause revolutionary
changes to, you know,

1131
01:10:57,640 --> 01:11:03,640
diagnostics for for cancer.
And that would actually start to

1132
01:11:05,200 --> 01:11:10,080
have this sort of amazing
Rubicon crossing of data with

1133
01:11:10,120 --> 01:11:17,840
synthetic biology and
potentially being sort of, you

1134
01:11:17,840 --> 01:11:21,680
know, the first sort of trillion
dollar life sciences company.

1135
01:11:21,880 --> 01:11:24,280
So he, he had started talking a
lot about the company.

1136
01:11:24,280 --> 01:11:28,200
I'd started reading about it and
I put the position on, this was

1137
01:11:28,200 --> 01:11:33,360
in, I think it was in late 2020
or early 21, I started putting

1138
01:11:33,360 --> 01:11:35,320
the position on.
They had an incredibly

1139
01:11:35,320 --> 01:11:40,640
interesting company called
Grail, which was it's actually a

1140
01:11:40,640 --> 01:11:47,480
public company now.
And Grail effectively is is what

1141
01:11:47,480 --> 01:11:51,560
we call a multi cancer early
detection company where you take

1142
01:11:51,560 --> 01:11:56,440
basically take a blood draw and
you're able from the blood draw

1143
01:11:58,120 --> 01:12:04,240
to start to diagnose certain
cancers much early on.

1144
01:12:05,400 --> 01:12:08,160
So things like, you know,
pancreas cancer we don't have

1145
01:12:08,160 --> 01:12:13,360
standard screens for, but the
promise of Grail that, you know,

1146
01:12:13,880 --> 01:12:17,120
a lot of us got really excited
about was that you were actually

1147
01:12:17,120 --> 01:12:20,920
going to be able to start
detecting some of these cancers

1148
01:12:20,920 --> 01:12:22,920
much earlier.
And if you can detect these

1149
01:12:22,920 --> 01:12:26,360
cancers at stage 1 or stage 2,
it does make a big difference in

1150
01:12:26,360 --> 01:12:31,920
the survival rate.
OK, so Illumina had spun off

1151
01:12:31,920 --> 01:12:41,560
Grail and in late 21, I believe
they bought back Grail for like

1152
01:12:41,560 --> 01:12:43,520
4 times the amount that they'd
spun it off.

1153
01:12:43,520 --> 01:12:47,200
So OK, first red flag, not great
capital allocation.

1154
01:12:48,560 --> 01:12:51,280
But this is where the borrowed
conviction comes in, which is,

1155
01:12:51,520 --> 01:12:53,960
you know, James Anderson
actually started talking about

1156
01:12:53,960 --> 01:12:59,120
how promising it would be to to
mix the, the cancer detection

1157
01:12:59,120 --> 01:13:03,320
with all the sequencing data
that Illumina gets right.

1158
01:13:04,000 --> 01:13:06,600
And Illumina at the time had a
global monopoly on gene

1159
01:13:06,600 --> 01:13:09,280
sequencing.
And so it had been this

1160
01:13:09,280 --> 01:13:12,120
incredible business.
And the promise of Grail and

1161
01:13:12,120 --> 01:13:16,840
Illumina was incredibly enticing
and appealing to me.

1162
01:13:16,880 --> 01:13:18,840
So I made that a really big
position.

1163
01:13:20,680 --> 01:13:25,240
And I had outsourced some of my
thinking to, you know, other

1164
01:13:25,240 --> 01:13:27,360
very smart investors that I
trusted.

1165
01:13:29,160 --> 01:13:33,000
Big mistake.
Then what happened is, you know,

1166
01:13:33,000 --> 01:13:36,920
the EU Commission actually
blocked the Grail Illumina deal,

1167
01:13:37,840 --> 01:13:40,520
right?
Another red flag, something that

1168
01:13:40,520 --> 01:13:44,280
wasn't confirming the thesis.
And that management team decided

1169
01:13:44,280 --> 01:13:48,000
to do the deal anyway, despite
the fact that the EU had told

1170
01:13:48,000 --> 01:13:50,920
them we're blocking the deal.
So then they got involved in a

1171
01:13:50,920 --> 01:13:52,920
huge amount of regulatory
morass.

1172
01:13:52,920 --> 01:13:55,640
It was a massive distraction to
the management team.

1173
01:13:56,280 --> 01:13:59,280
Then you have the Chinese market
that started slowing down a lot

1174
01:13:59,280 --> 01:14:03,160
for sequencing.
And then we collided with sort

1175
01:14:03,160 --> 01:14:07,400
of the, the, the paradigm shift
of, you know, an inflationary

1176
01:14:07,400 --> 01:14:10,720
rate hiking environment.
And that stock went from like

1177
01:14:11,000 --> 01:14:16,240
$500 to sub 100, right?
And I think I finally cut the

1178
01:14:16,240 --> 01:14:24,880
name in the one 20s.
And you know, the way that I

1179
01:14:24,880 --> 01:14:29,000
manage money now is if I was
holding that thing in the $500

1180
01:14:29,000 --> 01:14:32,840
and it, you know, and it went to
like 450, I would cut that name

1181
01:14:32,840 --> 01:14:35,720
immediately now.
And I'd have it on my radar and

1182
01:14:35,720 --> 01:14:39,040
I'd be ready to revisit it.
But I'd be cutting it

1183
01:14:39,040 --> 01:14:43,360
aggressively to 0, revisit.
Maybe I'd start it again.

1184
01:14:43,360 --> 01:14:47,680
If it falls down again, I cut it
again as the thesis gets

1185
01:14:47,680 --> 01:14:51,160
disconfirmed, as the price
action screams, as what's

1186
01:14:51,160 --> 01:14:55,120
happening in the fundamental
world is screaming that you know

1187
01:14:55,120 --> 01:14:57,920
you are wrong.
If I'm sorry, if you own

1188
01:14:57,920 --> 01:15:01,600
something at $500 and it goes to
sub 100, you, you got it wrong,

1189
01:15:01,760 --> 01:15:03,040
right?
Right.

1190
01:15:03,560 --> 01:15:07,000
And that company's actually
never come back.

1191
01:15:08,480 --> 01:15:10,360
So look, it was a painful
lesson.

1192
01:15:11,320 --> 01:15:15,120
Don't borrow conviction.
If you instinctively don't trust

1193
01:15:15,120 --> 01:15:18,040
management and they're doing
things that don't make sense,

1194
01:15:19,240 --> 01:15:23,640
sell.
If price is screaming that

1195
01:15:23,640 --> 01:15:25,880
you're wrong, you're probably
wrong.

1196
01:15:26,080 --> 01:15:28,320
A great exercise.
If you're along something and

1197
01:15:28,320 --> 01:15:32,240
the price isn't confirming your
thesis, it's just just selling.

1198
01:15:32,240 --> 01:15:34,960
Try and go short and see what?
See how you feel, see what

1199
01:15:34,960 --> 01:15:37,240
happens.
So all these tools in the

1200
01:15:37,240 --> 01:15:39,040
toolbox I've developed since
then.

1201
01:15:39,080 --> 01:15:42,000
But yeah, that was my most
painful loss.

1202
01:15:42,000 --> 01:15:46,080
And Touchwood, we don't repeat
that again.

1203
01:15:46,080 --> 01:15:51,120
If I ever pitch you guys a
biotech long, you're buying me

1204
01:15:51,120 --> 01:15:54,840
beers next time I'm in Perth
because I would have, I would

1205
01:15:54,840 --> 01:15:57,000
have given you guys a great
short candidate.

1206
01:15:57,200 --> 01:16:00,040
I'm not, I'm not tempted to buy
a biotech, but your your

1207
01:16:00,040 --> 01:16:02,760
heuristics have went to cut.
I feel like I've got a cut most

1208
01:16:02,760 --> 01:16:08,320
of My Portfolio now.
Lay on a short and see how we

1209
01:16:08,320 --> 01:16:11,560
feel about some of those names.
Leon this has been fantastic.

1210
01:16:11,680 --> 01:16:15,240
I, I really, you know, have
enjoyed hearing how you see the

1211
01:16:15,240 --> 01:16:19,800
world, how you, how you trade,
how you constantly look to

1212
01:16:19,800 --> 01:16:22,800
improve.
And yeah, thank you for making

1213
01:16:22,800 --> 01:16:25,480
your podcast debut with us.
It's been hugely enjoyable.

1214
01:16:26,840 --> 01:16:29,760
Gents, thanks so much.
Keep up the great work.

1215
01:16:29,760 --> 01:16:37,120
I think money of mine is going
to continue in its ascendancy as

1216
01:16:37,120 --> 01:16:40,200
more generalist flock to
commodities.

1217
01:16:40,200 --> 01:16:43,480
And I think again, as I said, I
think you guys have have created

1218
01:16:43,480 --> 01:16:46,280
a really interesting and
exciting platform.

1219
01:16:48,240 --> 01:16:53,440
Kudos to you both.
And yeah, excited for where you

1220
01:16:53,440 --> 01:16:57,960
guys take this.
And and again, thanks for having

1221
01:16:57,960 --> 01:16:59,440
me on.
Absolute pleasure.

1222
01:16:59,440 --> 01:17:03,120
Big fan of the show.
This conversation has been great

1223
01:17:03,120 --> 01:17:04,280
fun.
Thanks so much.

1224
01:17:04,600 --> 01:17:05,600
Thank you.
Thanks, Leon.

1225
01:17:05,640 --> 01:17:07,800
Appreciate it.
Huge thank you to Sandvik Ground

1226
01:17:07,800 --> 01:17:11,320
support, Nat Gen. interlinks and
focus the platform by market

1227
01:17:11,320 --> 01:17:12,320
tech.
Uduru.

1228
01:17:12,520 --> 01:17:16,040
Uduru.
Now remember, I'm an idiot.

1229
01:17:16,360 --> 01:17:18,800
JD is an idiot.
If you thought any of this was

1230
01:17:18,800 --> 01:17:21,320
anything other than
entertainment, you're an idiot

1231
01:17:21,680 --> 01:17:22,800
and you need to read out
disclaimer.