#270 How to Build Real Wealth (w/ Clem Chambers)

0:00It's just a plod. It's a plod, a long-term plod. But if you were 23 and you go on it, by the time you're 40, you'll have capital. You'll have serious capital. Serious, serious capital. You'll probably be better off than anybody else of the crew that left school with you, by far. As I say, it's the only way that I know of that the normal person, Mr. Average, can build up proper large-scale wealth.

0:36Hi, folks. Today we have a very special guest on the podcast, Clem Chambers. Clem is an author, journalist. He's the founder of ADVFN, one of Europe's leading stock websites. He is the general partner of Yulem Capital. He's penned a number of books, including Letters to My Broker, The Death of Wealth, 100 Ways to Pick Stock Market Winners, and A Beginner's Guide to Value Investing. Not only that, but he's actually branched into fiction-sided things. He's even been described as the John Grisham of the financial world. He's appeared on CNBC, Al Jazeera, BBC, and now he's here on Little Old Stock Club.

1:08Clem, welcome to the show. Thanks for coming on. Great to be on. I mean, I love coming on these sort of podcasts because, you know, I discovered recently, well, not a couple of years ago, people started to stop me and say, you're the guy on Kitco. You're the guy on blah, blah, blah. What podcast, aren't you? And I used to do CNBC like every month for a couple of times for like 10 years. And I only got a funny look on the street once. Like 10 years. and I used to do, I even hosted Christmas Eve for them once in Europe. Nothing, zero, zippo. And these days I do podcasts with people who have a thousand subscribers or, you know, a handful, and I go to a show and people say, oh, you were on that thing on YouTube.

1:57So these things punch really hard because your viewer, you there, you're a very serious person. You're not just got the screen on and you're doing the crossword or whatever or you're in a lift and then someone going, on the screen in the lift you have no idea what they're saying you know most um tvs don't even have the sound on but when someone's watching youtube they are fully engaged and and that makes them a very very good viewer and that's something i'm very happy to to talk yes well i'm delighted to have you on and i've got a bunch of questions but i guess we'll start off we'll jump straight into it so you just you describe yourself as a contrarian when it comes to investing and on top of that, you're a value investor, which probably doesn't really match with the current state of the market, especially in the US right now.

2:42So have you been on the sidelines? Are you involved in the most recent rally? Where is your kind of investing sentiment right now? Okay. Let me tell you, I got out before the roof came in. I saw that coming. I saw that the wild man of the White House was going to say some things, and it was all going to come down. So I was out before it the roof came in and then it crashed and i thought clever me and then it turned around and went up like a rocket like i've never seen and never in history has a market bounce like that but at the bottom i rotated some of my capital into defense stocks and precious metals so i sat there going this is incredible i thought you know what is this i don't i don't get this i mean it turns out in my book that basically the u.s treasury pumped a load of money into the market to prop it up yeah and you can't back um those sorts of things you can't imagine that a they'll do it b they'll get you they'll get away with it and see it'll work yeah and it did all three things up it went like like a homesick angel um but i was sat on a large chunk of of these defense stocks and a large chunk of precious metal so i kind of made half of what i would have made from this incredible rally now what's happened since which was no predicting of is that people are running away from the dollar in the states and they're doing it by flipping out of of stocks in the in the us and flipping into ones that are very similar but denominated in other people's currencies like the euro like the pound so you've seen value and contrarian stocks do really really well i mean unbelievable if i kept hold of my portfolio um that i bailed out of i i would have made a very large fortune as opposed to the small fortune i've made instead but you know zero risk of the downside and then half the upside that i'm i'm happy with that i mean i i get less happy as i look at this of the extra bit that i would have made i would have made twice as much as i made from my positions in defences and precious metals.

4:50But I basically had none of the risk of a further collapse. So, you know, I made a bit of money happy with that. But these are very, very volatile and difficult to predict times. And my positioning is deep value, very, very deep value, which is going up because there's this dollar trade. We don't want to be in the dollar. The dollar's going down. We don't want to be out of stocks. We need to be in stocks. So let's get into some dividend paying, high quality, non-American stocks. And that's inflating, it's pushing up those things. And that's where I live. I live in high dividend paying, contrarian value stocks.

5:29And they've done brilliantly. I mean, they've absolutely spectacularly risen since the miracle on Wall Street a few weeks ago. And so I'm perfectly placed for that. So what regions have you been looking at? because we talk a lot about the importance of international diversification and we concentrate on areas with really strong stock markets and really strong local investing culture. Sweden, we always talk about of how strong the investing culture is there. So what regions have you been looking at? Well, I have to say that my specialty is the UK. And I love the UK. It's the world's dullest, worst performing market.

6:07I was going to say, yeah. And it's so awful. It's just horribly awful. But that means it's also incredibly inefficient market. So you can buy Babcock and make 400 % on your money. And you can buy Rolls-Royce and do a 10X on Rolls-Royce. I mean, it's just like, I love that. As a contrarian, I love that because the market isn't working properly. And therefore, you can go and you can buy a stock and go, I'll have that. I'll sit on it for three or four years. and I'll get an X factor, not just a percentage return. And there's so much value in the market. It's been asset stripped by international investors, without a doubt.

6:47And the market is down from 2 ,200 shares to 1 ,600 now. They've lost a quarter of the shares on the British stock market. It is so rubbish, but it also means it's so cheap. And, you know, somebody shows up, America says, hey, I can get this at a third of the price of my earnings in the US. So I can get it at the third of the price. So I'm going to earnings enhance myself and expand my international footprint. I love that. Thank you very much. Ka-ching. Which is why there's no tech companies in the UK anymore. Well, not many because they keep getting assets stripped. Hey, good boy. This is what I was going to.

7:21You know, hey, whole load of a list. Goodbye. We got bought. See ya. This is what I was going to ask is why do you think, I don't think you've kind of half explained it there that the London Stock Exchange is in decline compared to not only the US because I think the US is this whole encompassing thing and two-thirds of public stocks are now in the US, two-thirds of market cap are now encompassed in the US but even like trailing other stock markets like Australia or like Sweden like we mentioned already, why is the UK falling so far behind? Because once upon a time in a galaxy far away after the dot-com crash the british government said hey pension funds you're not going to invest in equities anymore stop that it's naughty you're gonna you're gonna invest in our bonds because we want to borrow money and we don't want you wasting it on on funding british industry and and our tax base you need to give it to us because we need to spend it or rather we want to and so you're not going to be doing any of this um you know they're putting your money in equities you're going to be putting it in bonds and we're going to come up with some matching uh matching your liabilities with your asset and gobbledygook but basically you've got to buy government bonds stop it with the equities and so the institutions did there you go no institutions in british equities and funnily enough the prices don't go up do they because the most important investor of your in your equity market has been told to stop it and they stopped it and now they've government spotted this and they've went oh oh you institutions your pension funds you're not buying british equities you've got to do that now and and the institutions go well we'll stop buying your government bonds then and they go oh hold on a minute no no no no we need that money you've got to carry on investing in our bonds and and and the rest which doesn't exist you've got to put into british equities that doesn't work does it no no but please don't stop buying a government bonds because we're bust I mean, you've got no money.

9:21We need you to put all those pensions into our bond confetti, not into investing in the tax base of British industry. No, no, no. Now, whatever you do, don't stop giving us the money. So they're in a catch 22. Now, the way around it that I'll probably try to do some footwork on is they will say, actually, by the way, you don't have to have you can lever yourself up now. you know we told you to stop levering yourself up because that means you go bust in a financial crisis well maybe we change our minds now so you can keep sending us money for the bonds and do a bit of investing into the into into the tax base of british industry now and of course is that going to work maybe oh oh we've had a great idea stop putting your money in cash isis stop doing that i know you like to do that because every time you put it in the british stock market which we heavily regulate but regulate badly you lose your money so you go i might as well keep it in cash then yeah oh no let's put it in stocks now let's put it in stocks oh why oh we're going to shut that cash um isis thing down so you have to put it there and of course what people will do is they'll just put it into property one they won't put it into into it 100 we have this issue in ireland as well and it's unfortunate the retail investor is completely forgotten about in ireland and i wouldn't say the same in the uk but speaking of retail in general have you seen um this kind of retail sentiment before i suppose resilience because especially in the us more so than the uk and ireland anyways the resilience of the retail investors have been propping up the entire market for a while they've been the net buyers while institutional have been getting out over the Liberation Day stuff and everything that's happened since?

11:09I'm not so sure about that. That's what they say. But in reality, I'm pretty certain that the market was supported by liquidity actions of the Fed and particularly the Treasury. Because the way that markets generally work on money flows. So forget the narrative, oh, Fred did this, Bilbo did that, Someone blew up this there and somebody's boat sank. That's really not what it's about. It's about money. It's about big, large chunks of money flowing about the place. So when the Fed pushes money onto the banks, the banks go, oh, we're going to do this then. Oh, give it to our traders. Oh, they put it into stocks.

11:49Oh, okay. And they do all that highly technical money flow stuff. And the Treasury has been doing some monkey business. As soon as this market collapsed, the Treasury started doing monkey business with issuing liquidity. I hadn't done it before. It's the first time. And I guess Jay Powell was saying, you're being nasty to me. You're just being nasty. You're telling me I'm an idiot. OK, well, maybe I am. Oh, so how can we inject money into the system then? Ah, Treasury, we control that. Come on, Treasury, pump some money into the system. And that's why, you know, Mr. The Wildman said, hey, today is a good day to buy stocks.

12:25because he knew they were going to pull the lever on money supply at the Treasury. And they did. So that's what pushed up the U.S. But in the U.S., they've got a market where the private investor is well served. And I tell you, if you go and you do any monkey business in the American market, they'll throw you in the penitentiary just like that. You know, they will – and put you there for years for stuff in the U.K. that they wouldn't even notice you would you you'd done and that's why a load of american scamsters came to um the uk market back at you know about 15 years ago and carried on doing their stuff over here but because there's not the environment of for private investors and there's really not much meat on the bone for them to nor on but in the us you know you start you start um doing monkey business in the us they they are they bust you and it's it's not the fca getting angry at you it's a homeland security it's the feds they will and they will you know they turn you upside down and inside out so you know that it's a different environment in the us and it's an environment where the private investor has been well served in the uk the regulator don't want the private investor it gives them too much much anguish they've been shutting down small cap brokers regulars clockwork for the last 15 years oh you're a small cap broker oh we're gonna put you out of business oh you're goodbye they just put the one of the leading custodians out of business jarvis yeah and they were the ones serving all the small cap brokers and they they shut them down and there's a whole long record of of pretty much a large proportion of the private investor serving brokers being shut down by the regulator who comes out and said no no no you didn't get the name and address right oh no no you've got to stop now oh oh you haven't got your paperwork working the right shape oh you're gone because they don't want the private investor the regulator doesn't and and and miss serves them terribly there's all sorts of monkey business going on hurting the private investor and they turn a blind eye to that big time takeovers for example is a is something i had some recent experience with and um no it doesn't matter you can break all sorts of rules they don't care and it happens all the time you know foreign people come in and do all sorts of nasty things to small caps in the UK.

14:48And they just say, well, come and get us. We're not in the UK. And the regulator says, oh, we can't see this. Oh, we're working from home. Oh, no, it doesn't apply. So on both ends, you've got the regulator not wanting the private investor to be around at all because it causes them too much heartache. and then you've got when that what they do regulate they regulate badly so you know wonder you've lost 25 percent of your stocks you don't have a stock market and the government says give us all the money for the bonds no don't don't invest it in um in british industry no no that would be silly wouldn't it we need it we need to spend it in our really capital efficient way okay and you know then you've got that problem just have a look at the in fact you could say look it's about america it's it's it's not that we're doing badly it's america's doing so well But all you've got to do is put the DAX against that.

15:44And then once you put the DAX against the FTSE 100, you see the DAX is massively outperforming with the Americans over the UK market. But now the asset stripping is happening, and the market is going to get what is being asset stripped. Of course, if you've got positions in companies that are going to be asset stripped, you'll do very well. And that's my positioning. It's no good me crying about it. The government is trying to fix it now. they've realized it but they're in this this double bind so i think they will be doing something shortly something either this year or next year to try to spice up the market and it will be about um allowing the pension funds to take on more risk with the eye to look at um british and big caps as a place for them to put that that risk in and who knows well it can't be bad it can't be bad it's going good it could go a lot better a lot lot better a lot better in fact if you look at the french market the french market has similar behavior to the uk market because you've got the similar sort of government behavior in france of you know making life difficult for for the stock market because remember shares stocks and shares are evil they used to be evil only reserved for the rich and you know you know it's oh they're evil i mean it's against it's against all principles was that you should be able to buy shares in a company that speculation that's evil right it was only really the 70s and and more so the 80s where the um you know investing in stocks and shares was not considered to be some sort of evil pursuit of the rich yeah i think that sentiment still might be in ireland for a lot of people but uh let's let's zoom out so and we'll talk in general because you've written an awful lot of books um kind of uh investing guides nearly as much as books And I'd love to hear some of your advice to say someone just starting out in their investing journey.

17:33What would be kind of three tips you'd give, say, someone who's just out of college, 23, 24, and they want to begin their journey? Oh, that's a great time to start your journey. That's the perfect time. Because if you are sensible and serious and diligent, it's one of the few ways a normal person can actually build proper wealth. i mean you know the big money wealth the the million or of or 10. um if you start early enough and in the early 20s you can do it and you know one one of the things to to do if you all you ever did was listen to warren buffett and and didn't take any notice of anything else you'd do just fine and and you'd go well and and all warren buffett says it's easy all you've got to do is this.

18:23It's easy. There's nothing difficult. It's simple, but it's not easy. Wasn't that one of his lines? It's very straightforward. What you have to do to do it for 40 years is the difficult part. I exactly so it is very simple. It is very easy, but people are dragged off the purple path really easily by all sorts of factors. I mean, you know, at some point your wife's going to say, I need a new kitchen. You've got all that money in your in your stock market account. Please spend it on my kitchen. and it's very difficult not to but you know that 25 000 when you're 28 is going to be a million when you're 60 and you know you you bought kitchen you went on holiday yeah and there it was that thing because you know it's something that that people need to think about if you could get 25 percent a year which is what buffet has got over the years yeah you you multiply your money you double your money every three years so in 10 in 10 years you 10x that's a 25 25 a year if some guy out of college is doing that i don't think he'd be uh i think if he's snapped well you'd be surprised companies straight away no no no no that's not right that's not right at all people don't make those sort of returns because they start gambling they don't start buying dull stocks because i mean it goes something like this there's a market crash and if you get in at the bottom of the market crash you'll make 70 that year next year you'll make 40 then you'll make 25 and then you'll make 15 and then the market will crash again yeah and if you average it out if if you're smart enough to get out before the roof comes in which is which is my specialty then then you will get those sort of returns and you you can if you study diligently very basic sensible warren buffett style investing you will get you will start off by getting seven or eight percent then you'll you'll start and getting reasonable at it and you'll get 10 or 12 and then you'll start getting good at it you'll get 50 and then you'll get expert at it after maybe 10 years of study and you'll be getting 20 and and there'll be no speculation in it there'll be no listening to people in the pub telling you about the latest crazy thing.

20:38There'll be no small caps. There'll be no mucking about. You'll have a diversified portfolio of large and solid companies that are very sensible. And you will get a fabulous return. And if it's under a tax envelope, which is where you have to put it, the equivalent of an ISA or a SIP, that becomes very, very large money in 20 years. In 30 years or 40 years, it's massive money. massive, massive money. As I say, if you just sit down with a spreadsheet and say, I'm going to make 7%, I'm going to make 12, 50, I'm going to put drip, drip, drip, drip. You start to get numbers that make you go, wow. And, and, and that's real.

21:21That's a real thing. But along the way, everybody will be trying to part you with your sack of treasure. You'll be like checking the beanstalk. They'll be all trying to scam you out of it. Left, right. Well, let's touch on that because you wrote a book called Letters to My Broker, which is about this fellow Joe who makes every investing mistake possible. So what are the pitfalls you see retail investors fall into? And what's your advice on identifying them and avoiding them? First of all, Letters to My Broker is a book that was written in the 1920s. And I've annotated it. So it's actually, it's 100 years old.

22:03It's the same story. And there's another wonderful book called Where Are the Customers Yachts? Which is another book about all the pitfalls of the stock market, which was written in the 1930s. And it's the same old, same old, same old, same old. The point is, it's a skill game. And you wouldn't decide to go play tennis against Federer and expect to win, would you? so don't don't you it's not a battle it's it's a farm yeah it's not a gamble it's a farm so you you you start off by investing at in with an idea of it being a long-term thing and and taking it easy and being sensible being slow and and you know studying up and so for example you know every now and again someone says to me oh you know will you help me and I say sure and they say what what what stocks should i pick and i say i'm not gonna tell you and they go oh that's no help then i say yes it is go pick three stocks and then we'll discuss them yeah so they pick three stocks and i say oh that one's that's the spicy version of that one so if you want to go spicy it's that one if you want to be a little bit more and less risky you go with that one so they go and they pick the spicy one um and but it's not that spicy because these are dull dull shares but there's dull and there's very dull this is extremely dull so that and then the next month they come up with another three and we discuss them and they pick it and then the third month it will be another oil company like the first one and i'll say we've got an oil company you don't want to don't need another one do you oh i see okay maybe we'll be talking i don't know people that chop down trees companies or whatever or or or a or a a water company or something like that and every month they put a nut in and they're going to build up to 30 different companies and then when they've got 30s that'll be like three years yeah and then they're getting some profits and some dividends and they can pick some more and blah blah blah blah slowly but surely and you know if you want to get rich quick you're going to get poor fast and you just build this stuff up slowly slowly slowly slowly after five years look at that's a lot of money that is oh wow i mean simple simple story is like if you put a pound in a jar every day you know in three years that's a thousand pounds and nobody can't put a pound in a jar every day but if you are somebody can i borrow a thousand pound off you they go yeah so you know with the market not only are you putting a pound in a jar every day but it's growing and you know companies are paying five six seven percent dividends and it's and it's tax-free because you've got it in a tax wrapper and there it is it drops the letterbox they can't take that back and so on and so forth and the thing is in the short term most people i talk to they go oh i just read this thing and oh everybody's making money oh crypto bar and i go what do you know about that and they go nothing i want i need to put money in and make it like my next door over well you're gonna be you're gonna be put to the sword aren't you 100 keep it up with the joneses is probably one of the one of the worst um one of the worst fallacies you can kind of fall into especially i remember ben carlson wrote a piece and it was talking about how comparing yourself to others is kind of the number one way to basically lose money fast but back in the day it used to be you know your boss lived on the nicest street one over and had a slightly nicer car and a slightly bigger house and now people are comparing themselves to millionaires and billionaire influencers on social media instead of the person down the road it's the person online and and the scale has just gotten so much wider as well i i i think there's an element of truth for that but when i was a kid i used to read books about billionaires and want to be one and I was a kid quite a long time ago and so I think people have always looked at the big house and said how I wish I could live in the big house and they've always watched some TV show where there are princes and kings and bulls and always read books about the upper classes so I think it's just an accelerated trend but I think what you do see a lot of is that people lie a lot more about you know the guy the guy next door with his new car was up to his ears in hock and wouldn't tell you that he was struggling to pay his mortgage but he'd have a nice car so there's always that element going on but now people just lie that they rent a um a stage that looks like you're in a private jet so i'm gonna fall for a jet and that they're not they pay 20 quid to film themselves in a private jet for 10 minutes so there's a lot of lying going on and and people are quite naive and you know people i mean if you went through the billionaires list in the world i think you'd lose half of them as non-billionaires in reality it's like the times sunday times list i believe i might be wrong here i might be doing someone a disservice they they add up all your assets but they don't add up all your liabilities okay yeah you're a billionaire on paper but actually you've got 950 million pounds for the liabilities to counteract it so you know there's there's all those sort of things you know that that that go on but if you want to live in the big house you won't get it working for the man you'll get it from things that are parallel to that and and the easiest most sensible but the only way that i can say that i know that a normal person can build up big house wealth over 30 20 or 30 years is by sensible warren buffett like investing in the stock market not day trading and i've made a fairly large amount of money doing that but i can tell you i don't do it anymore because i no longer have a stomach lining yeah so you know there's all these other ways but the ways to do it without consuming your your life and your stomach lining is to actually just invest like warren buffett and there's books by warren buff about warren buffett by his family about how warren buffett is warren buffett and how warren buffett does warren buffett and all you've got to do is read those books and then all you've got to do is plod through this you know the the goby desert of life and being sensible with your investments to to wake up one morning with with a very large amount of money um and not have dissipated it by being frivolous so you've got to be a bit of a mindset really because you know when you start seeing large amounts of money i mean over the years i've scaled my investing and i've had to re-engineer my nerve endings because you know when you're a kid you're doing you know positions of five grand and that's pretty scary but then all of a sudden you're building up and you're doing 50 grand positions and that is really scary and then all of a sudden it's half a million power positions you know you've got to adjust to all those things a normal person he can't he can't he wouldn't sleep overnight if he had 500 grand in the market so you've got to it's just a plod it's a plod a long-term plod but if you if you're 23 and you go on it by the time you're 40 you'll have you'll have capital you'll have serious capital serious serious capital you'll you'll probably be better off than anybody else in the of the crew that left school with you by far as i say it's the only way that i know of um that the normal person mr average can build up proper large-scale wealth yeah i don't talk about someone that starts a is an entrepreneur and starts a business or whatever always a you can get on stage and sing or anything like that just you know well i bought some bridge telecom today yeah or i sold some motor phone today you know and i've got my my six books of warren buffett and i you know i keep them in the golden frame and i i i will not be dragged off the path of righteousness.

30:10It's the not getting dragged off the path of righteousness that is really, really, really, really. Exactly. And I suppose that's the hardest thing to imagine when you're starting out as well is to think in that kind of time frame from the jump. It's so unnatural for people to be able to kind of be there. If I was only going to make 25 % a year, I wouldn't be doing this. It's like, okay do you know you're going to double your money every three years for the next 30 years so you're gonna gonna you're gonna double your money 10 times 2 4 8 16 32 6 428 2 5 6 5 12 1024 times your money and that's not good enough yeah and you know even if you just sit down with that spreadsheet and go compounded by seven compounded by 10 compounded by 15 and look at the numbers you'll go oh that can't be right my spreadsheet eighth wonder of the world compound interests yeah absolutely eighth wonder of the world as long as you've got a tax shelter for it absolutely okay well if you haven't got a tax shelter for it you get you get top sliced all the time well let's talk uh probably an investment that would suit the kind of warren buffett uh the warren buffett psyche he likes to find these great american companies on a on a bargain and that's Intel.

31:33So you wrote a piece about Intel about the start of the year, was it? Well, I'm not a Buffett. I am. I am a contrarian. You see, FOMO kills you, but contrarian is the opposite of FOMO. Yeah, yeah, because you don't think missing out. You know, if everyone's into something you want, if someone wants to sell you something, you don't want to buy it. Yeah. Right. If somebody wants to buy something off you, you don't want to sell it. and that's FOMO right is everyone comes out and says oh this is great this is great you need to buy this this is great because actually they're trying to sell it to you yeah but if you go nobody wants that one oh what's what's wrong with that one then oh it's not I can't see anything wrong with that I love that so Buffett used to be a contrarian in as much as he would buy shares which nobody else wanted to buy but basically he would just say what's the value of it and what price am I paying?

32:27Whereas I go, everybody hates that company. Is that right? Why do they hate that company? Everybody's scared of being in that company because of this happened to them. But isn't that all fixed now? So it's to find things that everybody hates and then pick it up. I mean, Rolls-Royce is a classic example of that because they had one of the best engine, or the best engine technology, and everybody was hating on them. Oh, Rolls-Royce who are British engineers, it must be rubbish. Yeah, that's brilliant. These guys are brilliant. They're strapped on all the planes. They're brilliant. Oh, they must be rubbish, the British.

33:00Oh, no. What's a jet engine? Oh, it's English. It's rubbish. You know, and it was, I mean, it's gone up 10 times, I think, in the last five years. It's unforgivable that any company who's with a massive sales, with a fabulous brand and the leading technology, should be able to go up 10x. it just shows that the market in the uk is is horribly horribly broken but as a contrarian i i don't fear that i don't fear the reaper i want to own that i go well you know which american jet company's going to come in and buy them and steal that because that's going to happen so as a contrarian i look for value and that everybody hates for no you know there's value there huge value and everybody hates it that's that's my dream okay so one particular contrarian investment you wrote about was intel i'd like to hear your thoughts on this and why you believe well intel's intel's classic oh they're rubbish they are oh yeah intel can't get rusty they're rubbish oh totally rubbish uh oh really why is that then oh well you know they only make the most clever pieces of engineering that humanity has ever created but they're not nvidia so they must be rubbish so under underpinning all this there's something that is going on which is kind of interesting and and difficult actually because um a lot of funds hedge funds in particular what they do is they go long one thing and they go short another so they're hedged it doesn't matter where the market goes up and down um they buy the strong company in a sector and they sell the weaker one now what happens is the weaker one gets gets better and better value because they're artificially being sold to create this pair right and the one that's long gets artificially expensive like nvidia so when the invidities of this world go ridiculously high there's a whole load of shares being stomped on and because they've been shorted to death and intel is one of those examples so you see that and you go okay i understand that and then they get ridiculously cheap and then you look at that you go okay ridiculously cheap and then you look for something that's changed well if you've got the madman of the white house is is trying to you know pick a toe-to-toe fight with china particularly over taiwan and and and it's all about chips and ai and ai chips and the ability to make chips if you can't make chips you can't make missiles if you can't make steel you can't make ships yeah and that's what's going on so who owns all the fabs either the the bakeries for silicon chips well they've outsourced them all they've handed them off all these companies said oh we don't need to manufacture chips let the chinese do that we just make iphones we're software companies really so people like um nvidia don't make their own chips and people like amd they took their fab and they sold it put it as a different company and said go away get get The only people who didn't was Intel.

36:02AMD, this is a global foundries. Global foundries. And there's another one that escapes me right now. But Intel, they are the fabs. All the American fabs, most of them are Intel. All the European fabs, most of them are Intel. So if you've got the Chinese about, you know, the Chinese got these boats that go on legs because the only way they can invade Taiwan is for boats that can go up cliffs because Taiwan's one big cliff and three beaches. And obviously you can look after the beaches. There's only three of them. The rest of it's cliffs. So they've got these boats on legs. They're like more of the world's fighting machines.

36:39So they come in and they go up on the legs and then go on to the cliffs. So, and that's where all your chips are being made. All your NVIDIA chips are being made in Taiwan. So they've got to bring them on board, haven't they? Got to bring them back to the US. Well, who's got all the fabs already there? Intel. Right. And and they're as cheap as chips. So with the, you know, make American chips a greater game. You're going to be looking at people with fabs because Nvidia could go, hold on a minute. Let me look down the back of my sofa. Here's the money. I just bought you Intel. Yeah, because they're a four trillion dollar company and Intel is 200 billion or something like that.

37:19So they have been pushed down so far. they're basically pocket change for anybody that wants to have a whole load of of chip making equipment in america in europe and so you know that that's your classic contrarian because i'm saying oh they're rubbish they are into a rubbish they're rubbish what are you talking about oh their chips are out of date and it's 47 nanometer squares rather than the six nanometer squares and all that stuff but actually intel's about to break into the the game of the best hottest latest greatest and smallest transistor market that's happening this year early next year so they are actually on the wall path to catch up and they will catch up and and their fabs will not be in china god forbid and won't be in taiwan which is a little bit sticky and anybody that wants to um you know cozy up to people that can actually make chips in america somebody like it might happen to be in washington or in the pentagon um they've got to go to intel because intel's got all that stuff on shore okay it's good it's good encapsulation of kind of what are you looking for as a contrarian as well uh i want i'm looking for people that go that's rubbish that is that's rubbish and i go is it rubbish let's have a look oh yeah it is rubbish oh yeah no or that doesn't look like rubbish to me oh that looks like it might be quite a good thing oh they looks like that yeah what's going on there that's stuff okay i want to talk about another um another type of investment that you've talked about a lot in your writings and that's gold how we doing folks i hope you're enjoying the conversation we're having with clem um just wanted to pop in to make sure you know that we are still running one of the best uh one of the best offers we've had on on stock club so far so that is you've all heard about investicon we've interviewed some of the amazing speakers that are going to be there in dublin in august you can get a ticket for absolutely free that's if you are a new horizon member so if you sign up for horizon within the next few days with this offer you're going to go to investicon absolutely free you don't have to pay a cent for a ticket which will be one of the hottest investing conferences this summer uh look you know about horizon but just a quick reminder that is investing side by side with one of the greats and emmett savage this is a brilliant offer and that's it i'll go back to the pod with clem it's probably something retail investors wouldn't consider too uh too strongly and i i just really want to think about how would you would do you think that all retail investors should own gold do you think it's a timely thing there are certain periods in certain markets where it uh it kind of should be an acquirable asset or is it kind of look i put five percent of my portfolio on gold and forget about it well this is where my contrarian comes in because i go i hate gold i mean why would you want gold for i mean gold was you know good for teeth they don't use it for teeth anymore um you know it's good for jewelry bangles and stuff and it's good for electronics you know fair enough there's a demand for that but you know all this mania about gold oh gold it's the real money oh the dollar's gonna collapse all that all that stuff you've heard ever since you were a child you know um but then it wasn't long ago i thought well that's i mean i love gold as a metal i love it it's a lovely thing you know i've got gold watches i've got gold coins i love it i love i love gold but as an investment thing i don't see the point of it and then it dawned on me why do governments keep rooms of gold why they're not going to be minting sovereigns again why have they got you know billions of dollars worth of gold stashed why do they stash gold what why don't they i don't know stash something else why don't they stash swiss francs why do they stash gold and then it dawned on me governments stash gold for only one reason gold is for war it's the currency of war yeah you know there's battleships full of gold that sunk to the bottom of the sea that they go dive down and try to get it back out again because if you're going to pay for whatever it is you're going to buy off a country you ship it in a battleship in gold yeah because they don't take your government bonds they don't take anything they take gold okay so if you're going to want to fight a war or feel you might have to at some point in sometime in the future you've got to have a reserve of gold because that is bullets yeah so when somebody like gordon brown flogs off the gold it's because he's a pacifist he doesn't think we should be encouraged to go to war and if we if we if we sell off the gold we won't have the money to go to war which sounds quite sensible really when you think of the way the british go to war in random places for apparently semi-random reasons but gold is for war that's why countries have gold reserves okay guess who's been buying lots of gold china why because of a certain gentleman in the white house who's going rah rah rah rah and really you're looking at this never ending increase in global tension well if you are the indian um chancellor of in charge of financing you've got to be laying in gold if you're any country with tension going up you've got to be laying in gold because gold is bullets yeah and i wonder if the uk government is laying in more gold because the damn world should be with with all the stress going on in europe right now but certainly russia's not short of laying in gold china's laying in gold all these countries are laying in gold so guess what the price of gold is going up the more tension goes up the more of the price of gold will go up not because everyone's getting stressed out not because you know mr miggins is buying an extra sovereign because governments are buying it and when governments buy it all those bankers that that play the private investor like a violin they have to get out of the way because governments are buying buy it by the you know they're going to take delivery of that gold they're not going to be messed about by a load of investment bankers trying to do a you know pull a flanker on them get out the way gold's going up because governments are buying it that's why silver hasn't really carried on with it because silver isn't for war gold is for war and bitcoin is for flight if you want to get out if you had to leave dublin with all your millions of pounds you'd put it in in bitcoin and you'd get on the next plane can't do that in gold because you can't get it in your luggage you can't fit it on the carry-on but let's let's talk yeah let's talk bitcoin so because you wrote a book back in it's 2017 i think on about trading cryptocurrencies yeah you are well ahead of the curve here i think uh the blurb of the book says uh from zero dollars to six thousand and the wealth you could have created in that space and think now when it's at 110 000 so what have you seen since then in the whatever it is eight years since how the industry has developed I think I'm really, really not in crypto anymore because I can't really walk down the street in certain countries and risk getting hit on the back of the head with a hammer.

44:32So, you know, at a certain amount of crypto, you become vulnerable. Not in the same way with equities because no one can steal your equities. In fact, with your bank account, it's very difficult to, you know, once your Bitcoin's gone, it's gone. Right. and and i've been in and out of it i was in in it 17 did very very well i was in it in 20 did very very well i was in it this cycle very very well but i was out 100 100k goodbye that's the top of the cycle as far as i'm concerned that's quite a long time ago now when it first hit 100 and it's still around 100 now for me i just always pay a little bit of attention to the weight of an asset Now, when I say the weight, I mean, what's the market cap?

45:13Now, the market cap of Bitcoin is three trillion. It's about a third of gold. Yeah. And it's a secular thing. Yeah, cyclical, cyclical, secular, cyclical thing. It's a four year cycle. And we're in we're in crazy town at the moment, as far as I'm concerned. All the crypto bar Bitcoin has gone onto the back foot and has fallen really heavily. Bitcoin is up there because this idea, Mr. Saylor's idea of having a treasury and somehow people will pay more for Bitcoins in his company than they can buy Bitcoins at. And I think it's the end. It's the mad, crazy end of this particular crypto run. And I don't think it's going to go to 250, although that's what people are saying you could do.

46:02If there's another reason for people to do a runner, then it could go up quite a bit. And you've seen the pop that you get every time one country bombs another. And so you've seen that people go, oh, it's getting a bit sticky here. I might have to go to the airport. Up goes Bitcoin. Oh, it's all sorted itself up. Down goes Bitcoin. So there's an element of that. And you saw what happened to Bitcoin when Iran had to turn off its Bitcoin miners. So there's a lot of of that funkiness in Bitcoin, which makes it quite hard to predict. but i would i would say that it's had its had its moment this cycle around give or take 10 or 20 and there's so much more upside in equities so that's where i am and and you know the the pestilential levels of criminality in crypto it takes away you know i've lost i've lost taste for it because of that and i and i mean that that if all over the place there's people trying to steal your crypto this is just every day somebody there's never been bigger robberies than there's been robberies of of crypto you know butch casting the sundance kid and ronnie biggs they've never done robberies that anywhere near the sort of scales that goes on in crypto with all these blooming north koreans robbing everybody and it's a very very very difficult place to to inhabit without having a high risk of loss of your crypto and you know you can go on to google and click on an ad paid advert and and lose all your crypto yeah and you know it's just everywhere you look there's beyond cocking up your your your your wallet and losing it because you you drop your computer in the pond or something you know there's just a million and one ways to come unstuck with crypto so at some point it for me it's just it's not it's not worth the bother or the risk um Because, you know, it's been very, very, very, very good to me.

47:59But now it's not the crazy new thing that's not connected to the financial markets. It's not the unregulated thing which nobody knows about that I can call because I'm good at it and nobody knows what they're doing. It's matured. It's now part of the financial system. It's now basically dollar denominated through stable coins. and it's now connected to all the vampire squids of wall street so you know what what's what's going to go right and the government's got their hands on it now so that's not good is it really not when you think about what it was meant to be it was meant to be this um you know uh libertarian anarcho-capitalist thing that was going to show these corrupt governments how to run finances properly well now it's part of them so it's it's not it's not the dream that it's out to be it's now just another asset and it's just another asset i'll have some but you know nothing nothing not on the scale that i'm hijackable anymore and um you know i i don't it's purely security aspects of crypto that that put me off it and you know one one click one false click and all your all your crypto's gone oh you can put it in a cold wallet no there's no such thing as cold wallet oh but no there isn't no no such thing as a cold wallet and and it's and all this reserve um bitcoin reserve stuff that's going on in the markets right now that's clearly mad yeah so let get this straight i can i can show michael saylor where his bitcoin is 180 of the bitcoin price and i can go long bitcoin how can how can if you can buy the real bitcoin i'm going to buy michael say the shares which is bitcoin and his is 80 more expensive why why would i not short that and go along that that's the that's the most biggest brain dead trade of all time if you can last long enough for it to actually make sense well you know it's a diversified portfolio of risk it's no brainer right because ultimately he can't be even if it's seven years in the future he can't be worth more than his bitcoin can he because that's what he is and if i go to some naughty company in in the british british stock market who came who used to do i don't know inflatable widgets and now says it's a bitcoin treasury company because it's just decided he could get some money that way well i mean why wouldn't i short that my bitcoin absolutely it's a very strange phenomenon going on of this uh bitcoin premium just because you can buy it as a part of a stock instead of a an actual because because it doesn't make sense it might have made sense back in the day when bitcoin was hard to access do you know it makes perfect sense it makes perfect sense and this is the perfect sense i am a gambler and i get i don't gamble on horses i don't go down the casino i don't gamble on fruit machines i don't buy the national lottery i go and i buy gamble shares and i gamble on crypto and i gamble on shares and there's this company that's doing it i read this is a big thing and someone in america did it and it worked so it's going to work here i'll have some of that thank you very much yeah there you go it's just it's just a i it's like you bet on horses oh yeah i like horse racing but horses don't do anything anymore they used to pull carts and used to go into battle on the back of one and now all they do is they run up and down a piece of grass what's the sense of that then well it's fun just like the stock market but it costs you it costs you you you the market will pay you in the coin that you want to be paid in and if you want to be paid in excitement it'll pay you in excitement it won't pay you in cash if you want it to pay you in cash it'll pay you in cash very good okay uh clem i'm gonna finish this we put all our guests on the spot to end out the show so i'm gonna ask you now your top three favorite investments this very minute it can be any asset class anything you like just what what what are you kind of fancying now now i'm going to recommend the the least sensible parts of what i own on the basis that that obviously they haven't gone through the roof yet and therefore they're their their will in due course so i absolutely adore palladium the price of metal okay yeah palladium platinum and palladium now once upon a time cars were going to go out of fashion remember them internal combustion engines and we weren't going to have any more of them well that's all gone away now you're going to have internal combustion engines and you're going to have them burning boiling the oceans they're going to be boiling the oceans because of ai and the only some of the things that are ameliorate the absolutely apocalyptic amounts of energy that are going to be generating is platinum because it's a catalyst that can take exhaust fumes and make them less lethal in a nutshell and they're going to be there's going to be a massive energy boom ramp.

53:10They're going to be burning peat. They're going to be burning everything to get energy to do AI because there's no second place in AI. If you're second place in AI to someone else who's up against you, you are lost. So America is going to boil the oceans to be smarter AI than China. And China is going to be boiling the oceans to be smarter than america with ai and of course europe's gonna have a go and india's gonna have a go and russia's gonna have a go and they are going to be boiling the oceans and one of the and they're going to be burning coal coal was going to go away wasn't it once oh no they're going to be right the way down right the way down the cop the the hydrocarbon chain and all the all the windmills and all the solar panels and everything all the neutral power they're going to be running it all flat out for ai okay and one of the things that ameliorates that is palladium and platinum because they will break exhaust fumes up and turn them into less lethal gases and less polluting gases now the key thing is they only make and i this is just ridiculous 200 tons of platinum a year 200 tons of played in a year that's all they produce 3200 tons of gold 200 tons of platinum platinum i've got the number 100 in my head but let's call it 200 who cares it's like you know it's like three suitcases they're like none yeah so that's gonna just go nuts at some point because people haven't worked out yet that all this um you know no coal um net zero that's all going away that's all going away because of ai because ai is energy and the more energy you've got the more ai you've got well you're not going to stop when your windmills have run out of gas, are you?

55:03Because there's no second place. There is no second place. There is no limit to how much AI you need and can have if you've got the energy. So you're not going to say, oh, I'll give up now. I'll be conquered by the Chinese because they're smarter than us. There's no limit. Absolutely no limit. It's like there's going to be need to be something like a nuclear proliferation treaty if anyone gets sensible about it because there's no limit. to how much intelligence you need if you're if the people you're competing against are going to get smart be smarter than you how can you possibly win if if your competition's smarter than you you've got to be as smart as them and you've actually got to be smarter haven't you so you've got to burn the energy so it's all all all bets are off on on getting rid of a carb hydrocarbons and the only way you can ameliorate that damage is with um platinum and palladium and they only make 200 tons of it a year.

56:03Okay. Very interesting. Okay. I'll, I'll rush you now for two more. If you have them, if you don't, palladium was a very good, I mean, I like Intel. It's back to this. I'm back to, I like Intel because Intel's got this situation with, um, uh, you know, the fabs is one of the place for fabs is Intel. So that, so that's interesting. And let me think of another one. I, people hate this company with a vengeance which is probably the reason why it's got a good buy I quite like Capita Capita Capita I Capita IRG as it used to be called it's a government services business I mean they they kind of you know they'll run your prisons for you they'll um track your paperwork they'll do all sorts of you know government services they'll clean your toilets it's it's um was a highly valued company and it bought anything you could lay its hands on you know got it up to its ears in debt share price collapsed and they've sorted out a lot of it now and and it's due for a comeback I think okay okay that's probably the three most diverse um investments we've got on stock club so far but I'm very interested they're all contra they're all contrarian right capital's contrarian everybody will tell you what a rubbish company that is yeah Intel they'll tell you how rubbish Intel is which which they're not and then you know to say that they're going to be you know boiling the oceans because of ai that they haven't people haven't worked that one out yet they've worked if you go looking for that information you'll find it you'll see people doing like that's why trump's reopened the coal mines in virginia that's why they're building nuclear power plants remember nuclear power plants were were like anathema were like the spawn of the devil only you know for most of my lifetime oh no no don't do that ah and all of a sudden oh we need lots of that now please let's have nuclear power oh yes put it on your rice crisps it's wonderful yeah why do you think that is yeah yeah no it's true absolutely uh well sure if nuclear power they can do clean it would be amazing if they just need the energy if you come second in ai you are toast okay okay clem that was a really interesting conversation i think i learned an awful lot from you uh tell uh tell our listeners where they can find you and if there's anything you'd like to uh well i'll be opening a new uh new information stocks and shares information site uh coming up in in almost a few weeks which probably means a month or two but we're getting pretty close to it it's called a new fn and so if you go to a new as in a new fn as in financialnetwork.com um if you put your email down you'll be in the early group of testers who get all our glorious stuff which is going to make a few people's eyes bug out.

58:43Okay, I'm excited to see it. Clem, who's it now? UFN.com Clem, it was a pleasure to have you on. If anyone wants to learn more, UFN.com. Everyone else, thank you very much for listening. We'll talk to you next week.