Talk Your Book: Live at FARMCON

26:14The last three years has proved it all wrong. When Larry Summers is wrong, it sort of confuses you. But I do think that we're in KC. We're in KC, and the KC Fed issued a report, a really interesting report that basically said every 100 basis point increase in the Fed fund rate reduces allocation towards technology investment venture by 25%. And they went on to say from a policy standpoint that the increases are good, and it happened, dramatic decrease in venture, and that there's a long-term policy impact of that reduction in investment. And so we've talked a little bit near-term, long-term. I think one of the reasons we're more resilient today is because of total factor productivity, which basically means that you can use Google to solve your problems.

27:02You can use AI to solve your problems. And it's essentially free. and it increases your productivity. I can do more marketing today with chat GPT quicker than something else. So we have consistently increased total factor productivity over the last several years. And as a result, when we run into a problem, someone can say, I don't need to buy a car. I can just use Uber. I still transport and I don't have to go spend $38 ,000 or$40 ,000 on a car. So my concern long term is what we're going through right now will give us a technology deficit. I don't know if it's enough, but we will have a technology deficit over the next seven or eight years because ChatGBT, which is successful now, was created really, I don't know if that was a little quicker, call it seven, ten years ago, so that we're not putting the technology into production.

27:56You don't think there's enough overfunding in 2020 and 2021 to make up for the deficit last year? Well, that's what the KC Fed asked. And so it's new thought. But there isn't anybody at the federal level. There's nobody at the Fed that understands the coupling of total factor productivity to GDP to the time duration. And most people, it's a tough subject. And I don't even know how to give anybody guidance other than the fact that we will see technology reduction. Andy, go ahead. I kind of had a question to go along with that for Carter. And I think it's relative to this room and the audience. You know, Carter, I got involved with I Select Your Firm back in 2014 or 15.

28:41That was the same year that Dow and DuPont marged. And then 17, you had Syngenta and AgChem. And then in 18, 19, you had Bear and Monsanto. And when those mergers all occurred, They were busy streamlining themselves into new entities and absorbing. And so they stopped the R &D process. And that opened the door for entrepreneurs and startups across the ag industry. And we saw that flourish. Tons of startup companies, ag tech started growing out. of the out and you guys have certainly represented a lot of those as they've if they've gone through the you know the seed a b and c rounds but very few if you look forward and where we are today have made it out of that startup environment and into the public markets and the few that have frankly haven't done worth a darn so i guess the question is what advice do you have i mean it's Kevin, you've said this for so long.

29:41Getting across the farm gate, getting adoption by the ag world is virtually as tough of a thing as you can do. And with the big boys, they have the access, they have the trust, the confidence of the farmer. But how do these startup companies cross that moat? How do they get to the other side? Do they do it through JVs? Do they do it through partner shipping? What's the secret formula? Yeah, I don't know if it's secret, but we're at a – it's a good book that everyone should read called The Fourth Turning that sort of explains these dynamics of demographics and time periods and socialism, all that kind of stuff.

30:21And I think we're at a point, Kevin, your chart of – if I look at what we do in the venture world, we have been trading share with about 3 million acres. All the startups in ag tech have been going out and working on the same 3 million acres or so of row crop. And when I sit down and talk to Matt Moreland, he's that guy listening to all these new technologies and figuring out how to. The thing we haven't done, and now is the time to do it, it's in the down stroke that is the best time to shift productivity. is we're moving into what's referred to technically as the early majority phase. So we've got 3 million acres.

31:06You had the chart. You got the cross and the chasm thing. And then there's probably 40 million acres of people that if they list to another farm or producer are going to adopt the technology. And when we look at like biologics and we look at a lot of technology that we've developed, I'll say from a venture standpoint, Craig Heron, ask Craig Heron later on. He may have a different opinion. where technology-wise, I think we generally understand the technology and the risk around biologics and how to get them adopted, or how to make them work. What we don't have is the adoption. And we've gotta not get the first guys that have been adopting to get it, we gotta get the next wave of people to adopt it.

31:42And in this room, this room probably has more power to affect that decision in this industry than any group in the country. And right in this room, what do you think, we got a million acres. Oh yeah, sure. So the decisions you make, there are people in this room that listen to those early adopters. And I think if you're trying to figure out how to invest, there's a little bit, I'll say how I'm changing my investment when the downstroke, I downsize, I change, you know, I improved my own productivity. I think right now, what I think is important, the guidance we're giving to our startups is you got to change your sales team, hire kids from FFA or higher kids understand what the hell's going on on a farm.

32:26And, you know, I hear this out of the farm credit banks that they're working with farmers to help them understand how to use technology. But right now is a really interesting opportunity while everyone's sort of stumbling around to really take another look at some of these technologies and open up that next wave. And the next wave, I'll go off a little bit of a rant here. How many people have started taking Wachovir or Ozempic? I'm not. I'm not. You're not yet? You ready? So there are drugs coming online that are going to cause weight reduction. So is everyone going to just stop eating corn? No.

33:06What's going to start happening is we're going to shift a little bit of nutrition. And one of the debates that's going on is like, are we going to start making crops that have more nutritional density? Are we worried more about protein? And so there's a shift going on. And so there's a point of confusion. It's at these moments in time when everything is going crazy and the planets align. That's the fourth turning part. The planets start to align. And all of a sudden people are saying, I've seen a bunch of, have you seen the three million acres use the technology? It's starting to make sense. I've got people explaining to it on my terms.

33:41I'm talking to farm kids instead of some guy from MIT about how to use this on my farm. I'm starting to see the productivity of it. Nestle is starting to pay a premium. The climate stuff, as Tom Willis said, the climate stuff is starting to line up that people are willing to pay a premium. The whole sort of shift of how that works and how business works is, I think, going to change in 2024 and 23 and may jump over to the next wave. I want to explain one thing to you guys, maybe that the crowd knows and And Carter, I'm not sure, knows, maybe. But human psychology still plays a big role in everything.

34:19And so everyone always asks me, why is the farmer so slow to adopt? We have the few that are just early adopters, and they'll try anything and try it or whatever. But the masses are slow to adopt because of this. Somewhere along your line, five generations ago, someone headed west. And homesteaded and worked their ass off and did the unthinkable and took your family to where you're at. And now you're steering the wheel. You've got the wagon. The last thing you want to do is what? Run the wagon off into the ditch. Run the wheels off the wagon. You're not going to wreck the family farm. Well, someone comes to me with this or this.

35:00Sure, shit, I'll try it. This ain't going to wreck my family. This ain't going to wreck my life. This is where you were born, your kids were born, your grandkids were born. All down the line. Last thing you want to do is somebody come to you and tell you, hey, I got a biological You don't have to buy any more real fertilizer or anything. Just throw it out there and your crops will be fine Yeah, sure I'm not taking that risk on my family on where I grew up And where my dad and his dad and his dad grew up That's why you're slow to adopt. I mean a lot of people will all sit up here and say oh a farmer needs to adopt faster Well bullshit.

35:34I'm no one's going to do that They're not going to do it because your family's at risk your history's at risk and there's a lot more to it just like when I went to Chicago and everyone Andy we were talking last night well nothing more uh nothing more bearish than a bullish farmer right and I don't want to make anyone pissed but I went to when I first showed up in Chicago I didn't know a damn thing about Trey I was just big and tall they wanted to hire me on the floor because people could see me and I like to fight I remember them asking if I cared about fighting I said shit I love to fight so you know they hired me I didn't know anything they said kid you're going to do great.

36:07Your family and everyone's farming and your friends are like, just do the opposite of what they do. You're going to do awesome. And I thought, man, that's a shitty thing to say. And I thought about it through the years. And like I've always told you guys, it isn't that you're bad traders. It's just different. You're trading your life. I mean, you're trading your family's heritage, your life. So you're going to hesitate a little bit more. You're going to be a little more certain. You're going to be slower to adopt to new technology. your secondary loop observers we all want to see someone do it make sure it's okay and then that shit's not going to wreck my family over here like i said we'll all get on this or do that but these big things i think it's a lot more difficult than people think and uh you know i commend everyone that that makes the leap of faith and i know you got a lot of pressure suicide rates are high and farming everything else and there's so much pressure to not be the one to sell the farm or to wreck it.

36:59So I want to make sure there's a lot more to it than just adopt. I want to make sure that we get to some of the exciting stuff that Carter's looking at. But Kevin, you spoke so much about family and obviously farming is a very family-oriented business. We do a lot of family planning and estate planning and generational stuff for our clients. But I'm curious, how are some of the needs for planning different from farmers than somebody that doesn't own this type of a business? How are there? What was that? But just what are some of the planning things that farmers deal with that most Americans that are not farming deal with?

37:34So like we have clients like the sexy stuff to talk about here is the trading and what's going to go up and what's going to go down. And people who come to us for wealth management think they need that stuff too. It's like, what stocks should I buy? What, you know, what am I going to change my allocation this year? When 95 % of them just need the financial planning stuff. They need to know, am I going to be okay? Transferring assets, things like that. Yeah, estate planning and tax planning, insurance planning. I'm sure that people in this room have all those lawyers and tax consultants and stuff, but how do you deal with the psychology that you mentioned of passing it on to the next generation?

38:03And maybe the next generation wants to do something different. That's the stuff that can, especially within family, can be very tricky to deal with. Yeah, and that's what a lot of families here face. I mean, are the kids going to come back to the farm? Do they want to carry on and do what you've done and your fathers and forefathers have done before you? And how's that going to play out? I tell everyone, farmers are the biggest risk takers of anyone I know. we're all gamblers i mean everybody out here you're gambling on the weather you're gambling on the crop you're gambling on the price at the end of the crop i mean everything's a huge gamble and so i think the farmer's a big risk taker but i like but i also think the farmer the common thread amongst everybody in the room is their family i mean leaving the farm to a better family and i think that's where we're at you know and that's what everyone's trying to do so i think that's you know everyone faces every farm's different everybody faces their own trials and tribulations.

38:54But like I said, I think it all comes down to trying to leave it a little better for your kids and the grandkids. Carter, this morning we were talking about some of the Olympic stuff that you're talking about. So every year I look at a long-term chart of the S &P 500. And as Andy was discussing, the world is a scary place today. I don't know if it's scarier than it's ever been, but it feels that way. But the world's always been a scary place. And there are always really compelling reasons why you should take less risk. why you should hold more cash and less risk assets. There are always a million.

39:24I mean, think of it right now. You could come off 20 at the top of your head. And as I was putting this together, I thought, what about the flip side? Like, what are some reasons to buy? And I thought, like, oh, my God. It's really hard. It's really hard because bad news are like events, right? It's headline stuff. And all of the progress that we see, most of the time, it's snail's pace. It's very, very, very slow. and progress is not a headline, which is one of the many reasons why we tend to have a bearish bias as investors. But thinking about some of the Ozempic stuff and the AI stuff that we're about to live through, it's not too often that you have actual catalysts, like reasons to buy.

40:07And I'm not saying that Ozempic is bullish for the S &P 500 specifically, but just generally, there was a ton of magical things happening. And Carter, you see them every day. So can you give us maybe some reasons to be optimistic about the future? Yeah, I think what it takes to develop new technology is a fraction of what it took. You'll learn when JJ's talking this afternoon, he flew the F-18. I worked on the F-18 for 10 years, really, to first flight. Now people are developing new aircraft in like a year and a half or less. When we're looking at drugs, they're accelerating. When we're looking at crop genetics, Spensen is able to do the work that Monsanto takes seven, 15 years, 10 years to do.

40:52They do it in four. So all that's speeding up. And then if you really start looking at what AI is doing, it just makes it so that you can get the job done a lot faster. And once that starts happening, some data analysts were like, you can't give normal humans like AI tools to be able to do data analysts. You need a data analyst to do that. like, no, the subject matter experts need these tools. And even if they make some errors, you're going to get a lot more subject matter experts digging in on it. So I think I'm very bullish on the fact that technology is going to continue to correct all the stupid errors that our people in Washington are executing.

41:34Every single thing I hear in Washington that bugs me, I'm like, I don't really care because AI and this other technology will fix it before they screw it up too bad. So maybe Washington is Kadarius Toney, but Venture is Patrick Mahomes? I didn't hear that. He's been trying to squeeze in a chief's joke all day. That's right. If you look around and there's a lot of people who are very unhappy with a lot of our institutions in this country. And I think the one that has basically come away unscathed, especially these past few years and probably gotten stronger, is something like the stock market and the corporations.

42:11And I think it's because they have this singular goal, which some people may say that's a really crappy way to look at life, but they really do. It's like, we're going to innovate. We're going to have progress. We're going to get better. And I think obviously that starts real early with the companies you're investing in. And then it morphs into the public markets. Microsoft is a machine. I mean, and I know we had hired for a weird project to do some AI stuff. The guy who's now the head AI guy on LinkedIn and I've spent some time closer to Microsoft recently and they they really are an honest machine of productivity that I think is good you know and people can come and Amazon as much as people can bitch about it I mean they they just plow through problems and deliver scale and I it's just awesome um in agriculture I'm not why don't we have that yet which is sort of you know to some degree we've invested in 75 companies and I see those 75 companies as a piece in that puzzle um but we don't really have an Amazon or Microsoft per se and nutrition like what this is is a very horizontally integrated disparate system and my guess is at some point in the future i don't know what the date is we'll solve the nutrition problem and we won't have diabetes diabetes will be cured uh cardiovascular disease will be cured through nutrition and better food within the next 50 years if not sooner so are we possibly not making a big enough deal out of these kind of drugs is my takeaway so that again are we not making a big enough deal out of these drugs that could oh I think that there's a lot of all right the other problem we have you think technology adoption is hard in agriculture think about in CPGs that this is funny I mean we see this so those epic is a 25 % reduction in calorie and a 45 % reduction in in processed food the CPGs who make processed food say we don't think it's gonna affect our business that of Morgan Stanley's CPG business says I don't think it's gonna affect our business.

44:25The people I know that are working at Nestle, like everybody in the C-suite is on Wachovie, like getting, losing weight. So they're like, oh, we don't, and even at ADM, same thing, they're all on these rugs and they're all losing weight. And then they're saying, we don't think it'll affect our business. And it, I don't know, it just seems a little weird. People are getting ready for retirement. And I think that they're as unwilling to adopt new technology. And I still think you remember when I caused a little bit of trouble talking about ADM and and cargo getting in trouble maybe in the future I still think that their business has got some few years ago I raised I think their business has got some shuffling going on yeah I think like Carter says I think you know don't listen to what people say watch what people do so speak and like Carter's saying there are a lot of people taking the shot and taking the drugs and I think they're going to continue to get cheaper and cheaper and you're going to see more and more people probably take them unless there's some blowback medically but you know it has to matter at some point it has to make some type of dent i don't know how far out in the weeds that's getting but i think it has to change some things so then we just to find a point there there are like 10 more of those kinds of things that we're going to start showing up faster like if we think about it for us many people in this room might have been the pc or maybe i'm a little dating myself there or or you know we've had some of the iphone i think those pacing of things are like oh i got to rethink how i'm running my business dramatically.

45:48It just feels like whether it's drugs or treatment or food or technology, that that's going to speed up. Your sense is that a lot of these established businesses are going to be very slow to change because their cash cows still are making money. So they're going to be the last ones to get on the train, basically. It's a lot of reason for them to be slow. And when the Gen Z steps in, again, this is something JJ may cover is it's really hard to get good talent. I just don't know between talent and the mix of people. And I don't know, it's really getting confusing. But I think technology's got winning at speed.

46:25So the next generation thing is interesting. You in the last panel, we're talking about Bitcoin a little bit. Andy, I think it was you who said you're a gold bug. And what did you say? You've pissed more money away in gold than you're worth or something? Is that the quote? Michael and I like that one. Is the best case for Bitcoin at this point, because the narrative changes on it every year. Is the best case, though, just millennial or Gen Z gold? Is that the best hope, that it's just this store of value and we put more faith in this technology and this code than we do in a yellow bar? That's what I believe.

46:58I believe the world moves around the stories it loves and believes in. I mean, and that's what moves the world. And I think the younger people, you know, just like you said, I think they believe they like the Bitcoin better than the gold story. Let's put it that way. On the younger side, they just, they see more built in value or they sense that there's more value there. I don't know if that's true or if it's not true. Like I said, I'm just trading it. Did you immediately recognize Bitcoin as trading? I mean, it's so volatile that this is a, it acts like a commodity. Did you sense that immediately?

47:30Well, yeah, I think anything to trade, any trader trades anything. Hell, I trade baseball cards to Pokemon cards to trade Bitcoin, you know, I trade Bitcoin and I just see it at scale. And like I said, I, at this period in time of the time window, I, I, I don't see a big, big seller in, in, in the space at the moment. So, you know, that's why we're staying bullish through here. I think it could stay bullish for quite a while and, uh, until you suck a lot more people back in. And I think you have, you gotta understand it's not just buyers from here in the United States or America. I mean, you have a lot of global buying as well.

48:04You got a new president in Argentina that's going to change and try and peg the peso, try and flip the dollar and peg to the dollar, get out of the peso. I think you have people there that are going to be interested in putting money into Bitcoin as a safe harbor or gold or whatever it may be. But I'm dead. I'm with you guys. 85 % of crypto transactions are outside of the United States. And I view crypto sort of as a commodity. Obviously, it's not consumed or used like it is. but just in the sense of supply and demand. For sure. And to your point about who are the sellers, the crypto maniacs will never sell.

48:37It's a religion. They will never sell. 60 % of Bitcoin today has been held for over a year. And a lot of it has been held for a lot longer than that. So do you think that the marginal buyer will outstrip the marginal seller? And I think that's a pretty easy decision not to say that it's going to go up in a straight line. But I think that's why you do have crashes though is because the prices are set on the margin because all those religious people who hold it no matter what, they're just never going to touch it. So I think that's why you have these air pockets because if someone just steps away for a little bit, it crashes immediately.

49:12Yeah, the float is effectively you cut out all the people that are just not trading. Well, that's why I say it's so dangerous of a market. It's not for the faint of heart, and it's massive air pockets. I mean, it's just like the rice market or some of our trade just like a commodity. So a billion dollars of leverage come out of it this morning. I mean, crazy, crazy numbers. Speaking of investing in ETFs, there's an ETF for everything, like effectively everything. Not Bitcoin yet, but it's coming. Farmland is one of the oldest asset classes. Investors, even normal people that are not farmers, not saying that farmers are not normal people, no offense, but everybody wants to invest in farmland.

49:51The problem is it's difficult because it's all private placements. You have to go through private companies. most people do not know how to do diligence on the managers on the underlying assets the farms themselves now maybe maybe we don't want cheap beta for farms like maybe beta in farms is a terrible idea but i'd be curious to hear your all thoughts on how investors can should will get access to farmland in the future will there ever be an etf for farmland let me take it yeah i you You know, you guys know mine. I'm bullish farm ground. I've been bullish the last, hell, I don't know, 20 years and followed up many people on stage that were bearish and said we're in a bubble and we're in a bubble and we're in a bubble.

50:33And again, it trades like a commodity. I'll ask you this. How many people in the room are waiting on a pullback to buy land? Yeah, I know. Don't raise your hand because it's everyone. So it's everyone. Well, that's not how it happens in a bubble. in a bubble, there's no buyers underneath the market. If the market breaks, there are no buyers. I'm promising you there's a lot of buyers still in farmland. I'm curious, what is the reason people think that farmland is in a bubble for? Shit, because it's higher than it's ever been. Okay. Just like the housing market. It's psychology. It's say a piece of ground comes up contiguous to a farm or our farm or whatever.

51:13and my dad could have bought it at$3 ,000 an acre and it sells for 4 ,000. That's it. We'll never pry everybody because the next time it's going to trade for six or seven and he's going to be pissed that he didn't buy it for three or four. Well, that's the question I always have for people who say, you know, housing prices are unaffordable and if I buy now, I'm looking like an idiot, right? Do you think housing prices are going to be higher or lower in 20 years? It's probably the same with farmland, right? For sure farmland because there's new utilities every day coming up for farmland. New utilities, meaning where are you going to get all the solar?

51:44Where are you going to get all the electricity? You guys are seeing it happen. You're taking away good prime farm ground and putting in solar farms. And the cost of solar is coming way down. The price to buy the land they're paying is going up. There's going to be new utilities for farm ground. And that new utilities is bringing on more buyers, not more sellers, more buyers. And when you have a market where you have more buyers than sellers, it's not in a bubble at any time. And, you know, let's be realistic. For rich people now, it's cool to own a farm. And we've seen it. And now you've got rich people that think it's cool to own a farm.

52:21You've got all kinds of other investors who are buying ground for different utilities. Look at Amazon. Look at Google. Where are they putting their data centers? How many of you call me and told me that, hey, you ain't believe in this shit. They sold a piece of ground right down the street from me, prime farm ground to Amazon or one to host their data. just like we keep the crude in Cushing. They're going to keep the data in the middle of the United States for military, for all kinds of reasons. And that's where it's going to, Carter. You can tell them you've seen it. I mean, we've seen it come across the pipe.

52:52So I'm bullish farm ground. I couldn't believe myself. We saw interest rates spike to where they spiked and we've had our highest sales of farm ground. I mean, think about that. That's crazy because everybody, every brainiac academia that I spoke behind, it had every damn PhD letter behind, you know behind their name they all said we're in a bubble and prices won't sustain here and yet we've continued to move higher and higher and they said oh if interest rates go up just a little bit it'll crack the hell out of these land prices not the case didn't happen so i think you may be in a land cycle that surprises the hell out of a lot of people this may just be the beginning and you know and i know a few other people that are thinking something similar to so like the Michael and I have been talking for weeks and months now that if mortgage rates, which got to 8%, if they get down to 5%, we're going to see a flood of activity in the housing market.

53:47I don't know if it means that housing prices are going to go up again like they did for a few years there, but we think that there's enough, the demographic wave that you talked about, Carter, there's enough young people these days that have been waiting and they're sitting on the sidelines waiting. Is the same thing, is that a similar dynamic here? I think for sure, and everyone has to keep in mind, farming where you have an extra buyer is, is if the ground's continuous or somewhat close to your proximity of your farm, you may get one, maybe two shots your entire lifetime or your kid's lifetime to buy it.

54:17Well, guess what? You're going to buy it. If you've got the means and you got to read, you're going to do everything in your power to get it bought. And I'm thinking demand is outweighing supply and it may continue for a while as we see this shift in transition to clean and green and everything else. So there's going to be people. We're seeing a lot of ag people wanting to go backwards into the channels and buy farms from an ag business standpoint. One thing that sort of came up was if you had equity, where would you apply it if you're a farmer? And it was a conversation like, would you apply it to technology?

54:52Would you apply it to your farmland? Would you apply it to the co-op to help the co-op be more efficient? Every single person was like, I'd buy more land, which then says there's a new way to corporatize co-ops and maybe change that. There are other parts of infrastructure. So there's another element of this is if everybody wants to, everybody who's got equity capital invest wants to buy that farmland, the other parts of the supply chain, how that gets funded and how that changes its productivity to make the farmland more productive is a question. And then we're getting to the point between some of our portfolio companies, and I think Carter Malloy's doing this, is like, how do we understand the real productivity of the land?

55:34Right now, the land's sort of, you've got these things like, hey, it's contiguous, I'm going to buy it. That's a reason. But then the other thing that's going to start coming up is the productivity of this is a bit higher. We know it's higher. I can more easily get long-term contracts. Those kinds of information flows are going to increase and differentiate the price of those. if we get into more marginal questions about price and performance. But sort of a net operating cost type of perspective is going to start showing up in the valuation on that land, like it does with commercial property. Sorry for the non sequitur, but as we wrap up, I just wanted to ask you, Carter, you invested in a company called Bond Pet Foods.

56:12Why is my pet food so expensive? I feel like I'm paying 30 % more than I was like two years ago. Why is what so expensive? Why is pet food so damn expensive all of a sudden? I have no idea. We invested in bond pet food because we were looking at synthetic biology to create proteins. And that was a good early adopter market. So dogs are less discerning and synthetic proteins. My dog is an early adopter. What? My dog is an early adopter of five protein. No, I did. I was with some friends recently like, how can I buy a whole cow to feed my dog? I was like, what? It's like, yeah, I just want to buy like a whole cow and then freeze it because I want to feed my pet better.

56:52And so that is part of the market we haven't fully explored, but people are, we treat our dog pretty well. But in the particular case of Bond, it's the early adopter market. Please, pet food expert, please stand up. The reason pet food is so expensive is because you've done shit for pet food. That's what I said. Because people love their dogs. I like that. Yeah, have you been like into tractor supply and that whole culture? I mean, it's a really, they sort of, why is there a tractor supply in Westchester, New York? I mean, like there is a certain culture of like, I need to have chickens and everything for no good reason that people do.

57:34That was a good answer. You basically just explained capitalism because you dumb shits will pay for it. Yeah. All right. Well, it's two o 'clock. It's been an hour. This is so much fun. Kevin, Carter, Andy, Van Trump family, thank you so much for having us. We really appreciate it. I don't know if we have time for questions or if we're wrapping up. Yeah. We got any questions? Anybody have anything? What's your guys' favorite trade? I was telling you before we started, I take pride in the fact that I've made some horrendous trades, just absolutely horrendous. I shorted, I spent a decade ago, I shorted Amazon a bunch of times.

58:06That was a good one. Three weeks ago. So I have Moderna on my watch list. Anytime like a monster stock falls 70%, I keep it on my watch list and I just, I pay attention to it. And I saw Moderna stopped falling. Just stopped falling. Stopped going down. Stopped crashing. Actually caught a downgrade, I think had a decent day. I said, you know what? It's time to buy. But I also, I keep these names on a short list. If something's down 70%, I don't, like I don't mess around. I keep it on a short list. I'm not trying to get cut in half again. So I bought Moderna. Two days later, it was down like, I don't know, 8%, 9%.

58:36I said, eh, punt. Three weeks later, it's up like 70%. So I don't know if you want to listen to me about my trading advice. Ben's a target date fund guy. This guy's the most boring investor in the entire world. Listen, I'm a probability-based guy. The stock market is up 75 % of the time. Three out of every four years on average, the stock market is up. And a lot of people come to us and say, listen, the stock market was up almost 30 % last year. It has to crash, right? And it could, of course, because there's a lot of times when you have a good year and then a bad year. But there are so many instances where you have a 20 % up year and a 20 % up year.

59:09My favorite statistic I'll leave you with, the stock market over the last 100 years, in a given any calendar year, is up 20 % or more, more often than it's down. So pick any year. It's up more than 20%, more often than you have a negative year. And I think a lot of people, it's hard to wrap your head around the fact that most of the time the stock market goes up, but sometimes it goes down. Yeah, I totally agree. I think the odds we saw a number the other day, the odds of it going up 30 % are about 19%, and the odds of it going down 10 % are like 13%. So like you said, yeah, I mean, it's for next year.

59:40It's skewed to the upside. It goes back to the psychology. I'm going to steal. This is a take from Ben, so credit to Ben. There's no Zempick for decision-making with your money. There just isn't, and people were so risk-averse. You can't possibly buy now, right, after a 30 % rally. I can't buy now because you're so afraid of getting rugged. High prices are not bearish, at least in the S &P 500, maybe in commodities. No, I agree. Totally different. But an overwhelming amount of demand for improvement, for lives to get better, for corporates to earn more money. It's a one-way street. And yeah, there's painful pullbacks and recessions and risk and scary shit.

1:00:14But you just got to find out some way to force yourself to take risk and to mitigate you being your own worst enemy. And it's hard. It's easy to say. It's really hard to do. Well, we always said, and Andy would agree with me. All the traitors. If you're bullish, you're like a cheerleader. You sound dumb and you're just a cheerleader. And if you're bearish, you know, notoriously you sound really smart. That guy knows what he's talking about. The bear. The bear always knows what he's talking about because he's reciting all kinds of things. It just sounds smarter. Work for John Mulder. There you go.

1:00:47I agree. Fear sells. Any questions? Anybody got anything? Jordan, anybody got any questions? I think a couple of people had some questions on interest rates. Where do we think rates are going? Yeah, rates, 2024. Well, the panel before us, it's funny because it was so bearish on commodity prices. That actually made me bullish on things like stocks and bonds. Because I think if commodity prices are going to continue going down, that means rates are probably going to go down and inflation is going to keep going down. And I think for interest rates, that's probably a decent thing that the Fed's probably going to cut, I don't know, three, four, five times this year.

1:01:22uh yeah i you know andy and i were debating last night in the room you know fed could cut but that doesn't necessarily mean real rates are gonna drop aggressively i i wonder that andy's worried that you know we have to we have to sell treasuries and if china and japan aren't in being big buyers and we're gonna drop rates and rates are gonna go lower where are you going to who's gonna be the buyer of the treasuries correct a lot of goddamn cash out there well there is but there's there's more debt than there is cash. I mean, just money supply is way too high. Oh, it's crazy. Yeah, money supply is strong.

1:01:57So yeah, I guess consensus is what? Three to five rate cuts next year? Quarter points? Well, one of the tailwinds that we had going into 2023, as I mentioned in hands earlier, like everybody was bearish. Nobody was expecting anything. And we didn't really get much from the S &P 500 in terms of earnings growth. It was basically flat, up one to two percent. But multiple expansion was responsible for all of the gains. It doesn't mean the gains are fake, but less bad news is now priced in. And so if we don't get a soft landing and if we don't get the rate cuts, then stocks will fall, I think. So we'll see.

1:02:31Yeah, I agree. Well, cool. Any more? Is that it? Yeah. Will we see an open AI IPO this year? And how do we think it will perform? What are you guys? Open AI IPO. I mean, their corporate governance is obviously a little screwed up. They tried to push out the founder and CEO there. What is it? A hundred billion dollar valuation. I mean, some people seem to think that AI was the thing that kind of saved the stock market this year because it was a lot of those big tech stocks that really led the way. NVIDIA was up, I don't know, 250 percent last year or something. I don't know if they want to take that thing public yet.

1:03:07Yeah, I don't I don't want to pretend to be an expert on that, but it is going to be interesting what happens with the IPO market in general. So last year, obviously, was just a really shit year by any measures, especially compared to the bubble years of 2021. The AI stuff is going to get silly. Michael and I had someone reach out yesterday, and it was this email saying, hey, here's my resume. I'd love to work with you guys. And then below it said, P.S., that entire email was written by ChetGPT, which I don't know if it was lazy or inventive. But I think it's going to get weird out there with some of this stuff.

1:03:37and I don't think we're quite, our minds are prepared for it. With the videos and the stuff that's going to come along, I think it's going to screw with us. Yeah, all the deep fakes and everything. Yes. Especially with the election coming up, that's going to get nuts. Yes, my assumption is everything is fake until proven otherwise. I think you're right. Yeah, I would agree. What do you think, Carter? I'm waiting for a candidate to run who doesn't exist. I can imagine the whole, you should be able to do it. Yeah, probably. Just make the whole thing up. Yeah, that could be for sure. Sort of feels that way, doesn't it?

1:04:09That way sort of. Definitely. What's the consensus out there where you guys are at? Who's going to be right? What's it? Trump, Biden? And what do we think? I am. I stay very far away. I think our only thing that we tell clients is because you see these sentiment indicators, right? Depending on who's in the White House, who's controlling Congress or Senate, you see one group, their sentiment goes way up when their people win and one group there goes down. And we always say just you can have whatever political feelings you want, but do not allow those feelings to enter your portfolio. Because that's a lot of time when people make the biggest decisions because a lot of it is so counterintuitive too about the stuff that they promise in their campaign speeches is really what happens in terms of getting stuff pushed through and creating laws and making changes.

1:04:50Nobody wants to hear this, but politics does not matter to the stock market. It might matter in the short term in some cases, but the Fed tried to slow the economy down and they couldn't. And the Fed is much more influential on the economy than whoever's in the White House. So market goes up, market goes down, presidents come and they go. You cannot find any back-tested way to make money off who's - If there were levers you could pull, if the president could pull a lever and say, I'm going to make gas prices go down and the stock market go up, they would do it. Right? And it's just, it's almost a$30 trillion economy now.

1:05:27And it's kind of like turning a battleship. And it's really hard to control at this point. I think the best analogy I ever heard is a long time ago. I was over at the Fed and Esther George. We were talking and, you know, the Fed's like a 10-speed bike. I know some of you heard me use the analogy. I explained it to my kids and I think it's, you take something complex, you make it simple, it's usually the best. I think it's like a 10-speed bike. The Fed's going to make, you know, the gears harder to pedal when they want to slow the economy down or decrease the money flow. And then they're going to make it easier to pedal, shift the gears down when they want to expand or get more dubbish.

1:06:00but the one thing to watch is the guy driving the bike which is the u.s consumer if they put their hand on the brake it don't make a shit of difference what the fed does i'm telling you if they put their hand on the brake and squeeze no matter what gear you're in just remember that and if you look the last year if you want to look back we were all looking at the economy and all like they were saying and talking economy and politics didn't make a shit difference the consumer didn't put their hands on the brakes and didn't squeeze the brakes hardly at all is anybody making their vacation decisions based on who they think is going to be in the White House?

1:06:32Well, yeah. To your point, consumer makes up 70 % of the economy. That's the thing. That's it. People are going to keep spending money. And if there was an Olympics of what we do best, obviously, we're going to win a lot of sports in the Summer Olympics. Spending money is the thing that we do best out of any other country. For sure. This relates a little bit back to the technology strategy stuff. So the more that someone can enable their own productivity gain through these tools, the less macro has an effect. And it's sort of an open topic. Somebody sent me a note saying, like, can you answer the question how, in my firm, how much I should allocate to new technology?

1:07:11And that's been bugging me for the last few days, and I'd love for people to give me feedback on how they make that decision. But I think that to equip yourself in today's economy, you have to be better at making the business decision about how you leverage technology to improve productivity. And if you master that, and when I look at like generational change, I normally find the next generation is really, that's a thing. Like they're better at like Brayden, I think there's some story, maybe is Brayden here? Like when he's 13, he was like fully blown with blackberries and everything running the farm.

1:07:51And Ben was sort of like, what are you doing? But the next generation's ability to do that, and I think for everybody who's running farm with all the technology coming down, if there's something we can do to help you better make that decision, we want to be doing it. I'm not sure how you're making that decision now. And that's something that we're going to work on this year is make it easier for people to make a better decision on technology adoption. Cool. I want to do one thing. Andy, what's your favorite trade going in? Not rice. I bought some natural gas this morning, not to ease it out, but tell the audience why you're bullish natural gas now.

1:08:27Well, I'm bullish natural gas. It reminds me of uranium in 2019 when we were trading at 20 bucks and it was below the cost of mining. And now today it's 65 bucks and it's profitable. And so it's kind of found a balance. Can it go higher? Sure. but the big move's been made. Natural gas is a completely similar beast. You know, big picture, it's way too cheap. In the U.S., we're sitting here at$2.50 futures. Europe's at$8.00 and parts of Asia are at$20.00. You know, on a molecule basis, U.S. natural gas is the cheapest supply of energy on the planet. It's the equivalent of$18 a bushel of crude and, you know, crude oil in natural gas in Asia is$100 plus.

1:09:10So I think that the problem is that you have a finite amount of demand locally, and it varies as you go into colder winter seasons. But you also have a limited amount of export through LNG. Right now, there's 11 billion BTUs that are exported a year. We had a snafu last year that took one of the plants down. This year, or in the next three years, in North America alone, there's going to be 13 billion million BTUs of new capacity coming online. And that's a game changer. I mean, you can buy it for$2.50, you put a dollar into converting it to liquefy it and ship it, you can turn on the printing precedents and let them roll.

1:10:03You know, I think that we're not really increasing our supply of natural gas. We're just, you know, prices reflect, we have an overabundance, but we're not prepared for that kind of new demand that's going to come on with these new plans over the next, starting in the next eight months, all the way through the next 36 months of up to, you know, doubling our current capacity. So, you know, if you get a cold winter this winter, and there are forecasts out there for the eastern Corbell to be above, or eastern U.S. to be above normal temps in Europe as well, and there are others against that. But if that were to occur, by the spring, you could be looking at six, seven, eight dollar natural gas.

1:10:42And I can't think of a commodity out there that has the capacity to double, triple, or quadruple from here. This does. And if it doesn't happen and we have another, you know, normal or, you know, warm winter, then it's just being delayed, but eventually we're going to go a lot higher because of this new capacity that's coming online. And at a minimum, as a producer, I'd be a big buyer of covering all my natural gas needs out as far as I can. The downside has very limited potential to it. That's the way I see it. Andy, for that trade, would you be in futures or some of the public equities or what exactly?

1:11:18How would you trade that? I pretty much stick with futures. So that's the way I look at it. but I think there are going to be plenty of equity companies that are going to benefit dramatically from this. And, you know, I leave it to guys like you to figure that one out. Cool. Thanks, everybody. Appreciate it. Thank you, guys. Take a break, and we'll be back. Thanks again to Kevin for having us on the stage. It was really fun. The coolest part about the stage is he had this huge desk fit for a king, I guess, or I don't know what it was, but it was a very cool setup. Everyone there was super nice.

1:11:50We even got some free swag from the Ag Swag store, which is a store that they run like this stuff. So thanks all for having us there.