Latest / Bloomberg Intelligence / Small Caps Still Have Room To Run: George Young

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Small Caps Still Have Room To Run: George Young · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
0:04
Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast Tech leading the Way today,
0:23
Speaker 1: kind of bringing that discussion point up about you know,
0:26
Speaker 1: as with these markets at our near all time highs,
0:28
Speaker 1: how do you play it from here? Do you stick
0:31
Speaker 1: with some of those tech names that have been the
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Speaker 1: drivers really since into the financial crisis, or are you
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Speaker 1: in that rotation trade. George Young, partner and portfolio manager
0:39
Speaker 1: at Hillary and Company, he joins us. George, give us
0:43
Speaker 1: your thoughts there at the rotation trade into cyclicals into
0:47
Speaker 1: smaller caps that has been a great trade for a
0:50
Speaker 1: lot of investors. Kind Of where do you stand on
0:53
Speaker 1: that portion of the market visa via some of the
0:56
Speaker 1: big growth stocks, but we think the small cap stocks
0:59
Speaker 1: here villery coming still have a good way to run. Um,
1:02
Speaker 1: there's been a huge rotation, as you pointed out in
1:04
Speaker 1: the beginning of the fourth quarter of last year, and
1:06
Speaker 1: it's extended here into the second quarter of this year.
1:10
Speaker 1: We see that people don't have that many options. You've
1:12
Speaker 1: got ten year government bonds at one point six percent,
1:15
Speaker 1: that's not overly attractive in the face of inflation. You've
1:18
Speaker 1: got cash and yields about zero, and you've got real
1:20
Speaker 1: estate that's pretty expensive. You can see that in the
1:22
Speaker 1: news left and right. So we think the stock market,
1:24
Speaker 1: and especially small and MidCap stocks and the way to go.
1:28
Speaker 1: You know, anytime you mentioned bonds, my ears will perk up.
1:31
Speaker 1: You mentioned a one point six doesn't really look attractive,
1:33
Speaker 1: especially in the face face of inflation. We've comments from
1:37
Speaker 1: Ray Dalio coming out as well, saying he'd rather own
1:40
Speaker 1: bitcoin than a bond. Do you agree, Well, that's get
1:45
Speaker 1: a little far afield. I think that coin owners are
1:48
Speaker 1: going to have their day at some point. Um. It's
1:50
Speaker 1: amazing because a lot of questions that we feel are
1:53
Speaker 1: from i'll call them novice investors, and this is very,
1:56
Speaker 1: very reminiscent of the Internet bubble back in two thousand,
1:59
Speaker 1: two thousand one. A lot of people have not been
2:01
Speaker 1: in the market for some time. They say, I want
2:03
Speaker 1: to get invested. How about that dogie coin? How about
2:06
Speaker 1: that bitcoin and that's what everybody wants, and um, you know,
2:10
Speaker 1: you've got to be very careful when you start hearing
2:13
Speaker 1: newly minute investors getting into something they're not really sure.
2:15
Speaker 1: It's sort of like the old adage about poker games.
2:17
Speaker 1: If you don't know who the pats he is at
2:19
Speaker 1: the table, Patsy maybe you George, I was in the
2:23
Speaker 1: market during that UF when the bubble burst, the tech
2:26
Speaker 1: bubble burst in two thousand and it was not fun
2:29
Speaker 1: and that it took a long time for nas nastactor
2:32
Speaker 1: retrace retrace that. But boy, you step back and you
2:35
Speaker 1: take a look at some of the meme stocks. You
2:37
Speaker 1: take a look at spacks and had what a run
2:39
Speaker 1: they had late last year into early this year. And
2:42
Speaker 1: you look at the valuations of the SMP at twenty
2:44
Speaker 1: three times. I mean you could draw some, you know,
2:46
Speaker 1: some very close analogies between now and then. Are you
2:50
Speaker 1: concerned that this market is is frothy? Just to use
2:53
Speaker 1: a technical term, Yeah, that's a good technical term. I
2:56
Speaker 1: like that one. We've got about cash right now for
2:59
Speaker 1: our lines and our two mutual funds of Will Balance
3:02
Speaker 1: Fund and Bill Reequient. It is it is and we're
3:05
Speaker 1: long term investors, so again, measure our long term attitude
3:09
Speaker 1: and the fact that we have discretion to invest wherever
3:12
Speaker 1: we want with the fact that we've got cash. That
3:14
Speaker 1: means that we're not finding that many things we want
3:16
Speaker 1: to buy, and we've got the liberty of not having
3:18
Speaker 1: to invest if we shouldn't invest. We've got loyal clients
3:22
Speaker 1: who's been with us for some time. We were found
3:25
Speaker 1: in nineteen eleven, so the clients we have trust us,
3:29
Speaker 1: and if we don't want to buy something, we don't
3:31
Speaker 1: buy it. So this is more cash and normal. So yes,
3:34
Speaker 1: froth he is entirely appropriate term to use at this moment.
3:37
Speaker 1: I think what would it take for you to put
3:39
Speaker 1: that cash to work? Um, we need to see some
3:43
Speaker 1: cheaper valuations at the end of the day. All stocks
3:46
Speaker 1: should and usually do, but not always on objective metrics,
3:50
Speaker 1: which would be pe ratio. Pe ratios need to come
3:54
Speaker 1: down and often enough their aberrations in the stock market
3:57
Speaker 1: where individual stocks or individual sectors do become cheap, and
4:01
Speaker 1: that's when we're prepared to go ahead and buy. So
4:04
Speaker 1: we have the cash, We've got to be ready. Um.
4:06
Speaker 1: Another I hate to dwell on old adages but when
4:09
Speaker 1: the ducks are quack and you've got to feed them,
4:11
Speaker 1: So buyers want to buy, go ahead and sell. What
4:15
Speaker 1: are some names right now that you guys do like,
4:18
Speaker 1: or you you are doing some work on sure sure, sure, Well,
4:21
Speaker 1: there's something that we own and we buy some more
4:23
Speaker 1: of if they become a little bit cheaper. One of
4:26
Speaker 1: those is e Health. E Health offers Medicare supplement insurance.
4:30
Speaker 1: You may have heard their ten thousand plus Americans turning
4:34
Speaker 1: each day. Each of these will be entitled to Medicare,
4:37
Speaker 1: but they need to get Medicare suppits, which aren't that expensive,
4:40
Speaker 1: but they are fairly complicated. So e health is good
4:43
Speaker 1: at navigating the waters of explaining complicated terms and complicated
4:47
Speaker 1: needs and to make sure that the right package is
4:50
Speaker 1: put together for a resonative Texas versus Idaho, and to
4:54
Speaker 1: make sure that the doctors that you're comfortable with are
4:56
Speaker 1: part of your package. So a little bit complicated, but
4:59
Speaker 1: we think it's a relative really cheap stock. And then
5:01
Speaker 1: as an added interesting point, there are a couple of
5:04
Speaker 1: activist investors who have gotten involved in the company recently,
5:08
Speaker 1: so let should make for an interesting a few months ahead.
5:12
Speaker 1: What about this payments processor. I see here Pie really
5:15
Speaker 1: looking at credit card to Dad and checks right, Pie
5:19
Speaker 1: is probably unknown. And again we buy small MidCap stocks,
5:23
Speaker 1: we buy relatively unknown companies. UH their top twenty processor
5:27
Speaker 1: in the United States, the number six in e commerce.
5:30
Speaker 1: They've got a hundred thousand customers, two thousand different partners,
5:33
Speaker 1: and they process thirty three billion last year. Now, they
5:36
Speaker 1: just make a minimal amount of money on that amount
5:39
Speaker 1: that they process last year. But the fact that they're unknown,
5:42
Speaker 1: we like the fact that they're very well organized, well managed.
5:46
Speaker 1: We'd like we think they can goward something like per year.
5:49
Speaker 1: It remains a cheap stock, but it is, you know,
5:51
Speaker 1: one of the small cap stocks, so it's not for
5:53
Speaker 1: the fearless. There will be some volatility. Hey, George, thanks
5:56
Speaker 1: so much for joining us. We really appreciate getting your
5:59
Speaker 1: thoughts on the mark markets. End on some names here
6:01
Speaker 1: that might be of interest for folks in the small
6:03
Speaker 1: to mid capital world. George Young, partner and portfolio manager
6:07
Speaker 1: at A Villary and Company and UH interesting fifteen percent cash.
6:11
Speaker 1: That's the highest percentage I've heard any you know, money
6:13
Speaker 1: manager come on here and talk about But I've increasingly
6:15
Speaker 1: heard that that there's been a lot of profit taking
6:17
Speaker 1: in the last few weeks, Paul, and you need a
6:20
Speaker 1: better entry point. And he mentioned it's hard with valuations
6:23
Speaker 1: with stocks and bonds one sixty two, how do you
6:26
Speaker 1: buy that after exactly so I'll have to see. But
6:29
Speaker 1: fift cash, that's a big allocation. This is Bloomberg. Well,
6:36
Speaker 1: several weeks ago President Joe Biden pitched the first major
6:39
Speaker 1: set of tax increases since another signs that maybe some
6:44
Speaker 1: anxiety is forming within congressional Democrats, not just on the
6:48
Speaker 1: Republican side. Let's get the latest on that with Laura Davison.
6:50
Speaker 1: She's a congressional tax reporter. Laura, give us a sense
6:54
Speaker 1: here of how this is going. I mean, and it's
6:58
Speaker 1: kind of tied in with infrastructure, but boy, the discussion
7:01
Speaker 1: is really focusing on the tax plan. Where are we
7:04
Speaker 1: right now? So what at the point where Biden has
7:07
Speaker 1: put out basically his plans and then has kicked them
7:09
Speaker 1: over to Congress for them to actually sort of put
7:12
Speaker 1: meat on the bones and and write them out in
7:14
Speaker 1: legislative language. And this is what's starting to cause the
7:16
Speaker 1: angst in Congress because they're looking at sort of the
7:19
Speaker 1: outline that the President put out and are then trying
7:21
Speaker 1: to figure out how do we make this work. So
7:23
Speaker 1: they're going and they're talking with with different members of
7:25
Speaker 1: the committee, they're talking with stakeholders, they're holding public hearings,
7:28
Speaker 1: and they're asking, you know, what if we did this,
7:29
Speaker 1: what if we did that? And some of the ideas
7:32
Speaker 1: they're throwing out there would weaken a little bit what
7:34
Speaker 1: Biden has proposed. So they're kind of looking at what
7:37
Speaker 1: is politically possible, what can get done, and specifically with
7:40
Speaker 1: an eye and members like Joe Manson and Kirsten Cinema
7:43
Speaker 1: knowing that those are going to be critical votes in
7:45
Speaker 1: the Senate. So even in the House where there's a
7:47
Speaker 1: broader majority, they still have to to know that that
7:49
Speaker 1: there's bigger political realities out there. Yeah, Laura, what do
7:52
Speaker 1: you hear about the Republican side. I've heard a few
7:55
Speaker 1: different proposals six hundred billion and nine billion or at
7:58
Speaker 1: one point seven trillion, and where are we on the
8:01
Speaker 1: counter proposals and the realism of that. So infrastructure talks
8:07
Speaker 1: really hit a speed bump late last week where Biden
8:10
Speaker 1: put out a ac counter proposal at one point seven
8:12
Speaker 1: five trillion, down from his original two point to five trillion,
8:15
Speaker 1: and Republicans felt like he that he didn't concede enough,
8:18
Speaker 1: that there wasn't enough of a back and forth negotiation
8:20
Speaker 1: going on. Uh. You know, we're in a kind of
8:22
Speaker 1: the last week before Memorial Day, which is kind of
8:24
Speaker 1: considered the initial informal deadline to reach some sort of
8:28
Speaker 1: uh in you know, high level, top level bipartisan deal.
8:32
Speaker 1: It looks like that could slip and we could still
8:33
Speaker 1: be be kind of where we are in a couple
8:35
Speaker 1: of weeks from now. Biden wants to get a deal,
8:37
Speaker 1: but the two sides are really still far apart. So
8:40
Speaker 1: or is fiscal stimulus and the tax plan? Are they linked?
8:44
Speaker 1: Can one go proceed without the other? Explain to us
8:47
Speaker 1: how that's developing. Well, there's many different permutations of what
8:52
Speaker 1: could happen here. But the thing to know is if
8:54
Speaker 1: there's a bipartisan infrastructure deal, it will not be funded
8:57
Speaker 1: by these tax increases that Biden has laid out. Republicans
9:00
Speaker 1: have said, look, that's a red line for us. So
9:02
Speaker 1: they're looking at other funding mechanisms, whether it's user fees,
9:05
Speaker 1: whether it's looking at bonds, whether it's public private partnerships,
9:08
Speaker 1: you know, other ways to get money that aren't tax increases.
9:10
Speaker 1: But Democrats are either cognizant that one of two things
9:13
Speaker 1: will happen if one these bipartisan talks fall apart, and
9:15
Speaker 1: then they can move forward with the Democrats only bill,
9:17
Speaker 1: which will include bipartisan tax increases, or two they do
9:22
Speaker 1: get some sort of smaller, you know, a couple of
9:23
Speaker 1: hundred billion dollar infrastructure deal with Republicans, and then they
9:27
Speaker 1: go back, uh, and they can do the rest of
9:29
Speaker 1: the Biden four trillion dollar agenda, which also would include
9:32
Speaker 1: um tax increases. So really kind of no matter what happens,
9:35
Speaker 1: tax increases are still on the table. It just depends
9:37
Speaker 1: kind of how quickly they move, how much they they'll need,
9:40
Speaker 1: and what it will be paying for. Interesting, what is
9:42
Speaker 1: the pressure to get it done this year and not
9:45
Speaker 1: next year in a midterm election incredibly high. You know,
9:49
Speaker 1: basically everyone uh, you know is wanting to get a
9:52
Speaker 1: deal done this year. This is sort of informally seen
9:54
Speaker 1: as as a deadline, but you know, you could flip
9:56
Speaker 1: till you know, January, said the wary. But once you
9:58
Speaker 1: start getting to the summer, everyone's in campaign mo and
10:00
Speaker 1: passioning attacks increase would be seen that a political big,
10:04
Speaker 1: big mistake, Laura. I think about President Biden forty years
10:07
Speaker 1: in the Senate branded they were many many years ago,
10:09
Speaker 1: and I think Kamala Harris just coming out of the Senate,
10:13
Speaker 1: are they gonna have any ability to kind of work
10:17
Speaker 1: their magic and trying to get some something through here
10:20
Speaker 1: or is it just too much opposition? Um? You know,
10:23
Speaker 1: they really hope that they can. This is one of
10:25
Speaker 1: the reasons that you know, the Biden you know quote
10:27
Speaker 1: campaigned on one of the reasons he picked you know,
10:28
Speaker 1: Harris as his VP. But you know, there are really
10:32
Speaker 1: you know, just a handful of senators. So it's really
10:34
Speaker 1: not looking at you know, how do we get some
10:35
Speaker 1: you know, a broad coalition together. It's you know, how
10:37
Speaker 1: do we get two or three or four senators who
10:40
Speaker 1: are inclined, who have tough reelections ahead of them, who
10:43
Speaker 1: have states that you know favored Trump or lean red.
10:46
Speaker 1: You know, how do we get them personally on board?
10:48
Speaker 1: So that's looking at for you know, mansion, how do
10:49
Speaker 1: we get coal miners trained into new jobs? How for cinema?
10:52
Speaker 1: You know, how do we sort of moderate some of
10:54
Speaker 1: these these tax increases. It's really specific versus a broad
10:57
Speaker 1: uh cell on these, Laura, what do you season next steps?
11:00
Speaker 1: What can we look forward to? You mention, we're coming
11:02
Speaker 1: up on Memorial Day, when could we start to see
11:05
Speaker 1: a re uh invigoration perhaps of some of these discussions.
11:11
Speaker 1: I expect we'll see some back and forth between Republicans
11:13
Speaker 1: and Democrats this week, uh, you know, on if there's
11:16
Speaker 1: a still momentum behind a deal or if these talks
11:18
Speaker 1: just fall apart. That is also a possibility this year.
11:20
Speaker 1: We're also waiting to see um from the Senate parliamentarian
11:23
Speaker 1: who will basically rule about you know, how Democrats could
11:26
Speaker 1: proceed with it with a partisan bill on their end.
11:28
Speaker 1: Those will be kind of a key point to watch for,
11:30
Speaker 1: if not this week, next week, and then that will
11:32
Speaker 1: really set the course for what the summer rentfall looks like.
11:36
Speaker 1: What else is Congress working on? Me? It's kind of
11:39
Speaker 1: all we hear about is the infrastructure and taxes, not
11:41
Speaker 1: that they're not huge issues, but your Congressional report, are
11:45
Speaker 1: there other little things going on that we should be
11:47
Speaker 1: paying attention to. There are other little things going there,
11:50
Speaker 1: and there's a lot of talk right now, and this
11:51
Speaker 1: is really playing the part of intentions in Congress. Is
11:54
Speaker 1: this um doing a commission to investigate the January six
11:57
Speaker 1: attack on the Capitol. That's narrowly passed the House last week.
12:01
Speaker 1: The Senate is set to pick this up, but Republicans,
12:03
Speaker 1: even who initially said they were on board for supporting US,
12:06
Speaker 1: have have since backed away. Um. This is really setting
12:09
Speaker 1: up a lot of ill will between the two parties
12:11
Speaker 1: and does bode well for doing something on a bipartisan
12:13
Speaker 1: basis when it comes to economic policy. All right, Lauren,
12:16
Speaker 1: thank you so much. We appreciate that getting the update
12:19
Speaker 1: on all things happening in Washington. And we can do
12:21
Speaker 1: that because we have a reporter who focuses on congressional
12:24
Speaker 1: tax issues. I mean, nobody else has that. I can
12:26
Speaker 1: imagine Laura Davison, congressional tax reporter for Bloomberg News. And
12:30
Speaker 1: again it seems like, UM, it's going to be very
12:33
Speaker 1: difficult for President um Biden from what we're hearing from
12:36
Speaker 1: the reporting, UH, to get what he wants here. I'm
12:39
Speaker 1: just gonna have to be a significant compromise. And you
12:42
Speaker 1: think about it, you know, it's the first major set
12:44
Speaker 1: of tax increases since three That tells you something about
12:48
Speaker 1: how difficult, UH, it is to raise taxes for administration.
12:55
Speaker 1: I want to bring in Shannan the Basket. She's a
12:56
Speaker 1: Wall Street reporter for Bloomberg News. She joins US Live,
12:59
Speaker 1: I Live and the Bloomberg Interactive Brokers Studio. Great to
13:03
Speaker 1: have everybody back together again, Sonalie, let's talk spacks here again.
13:07
Speaker 1: You know, I mentioned earlier that Dave Wilson would come
13:09
Speaker 1: in every day for stock reports and have to talk
13:11
Speaker 1: about three or four spacks coming public and things like that.
13:14
Speaker 1: It's kind of petered out a little bit. But they're
13:17
Speaker 1: still out there, aren't they. And they're still doing deals.
13:19
Speaker 1: They're certainly still out there, and there is still a
13:21
Speaker 1: hope that once the rules get clarified, that they'll come
13:25
Speaker 1: back yet again and they'll be a great way for
13:27
Speaker 1: people to go public. But right now there are a
13:29
Speaker 1: lot of questions around how investors are paid in SPACs, uh,
13:33
Speaker 1: the performance of them, and then also all of the
13:36
Speaker 1: disclosures that come around spacks. For new people to really
13:40
Speaker 1: start investing in these companies that are really that are
13:43
Speaker 1: really young, right that they're really not mature companies that
13:47
Speaker 1: are surefire things to succeed in public markets. Is there
13:50
Speaker 1: a sense that the performance will turn around? Was the
13:53
Speaker 1: shakeout of some of the big high flyers that seemed
13:56
Speaker 1: to break down was that, as Paul had said earlier,
14:00
Speaker 1: healthy correction or indicative of something more sinister that we
14:05
Speaker 1: haven't been understanding the way these works. What I can
14:08
Speaker 1: give you, Taylor, is the view from investment bankers. Right.
14:10
Speaker 1: So from investmentkers point of view, it is good that
14:12
Speaker 1: the market has cooled down. Why because it was probably overheated.
14:16
Speaker 1: Companies that shouldn't have gone public have been going public.
14:20
Speaker 1: That brings down the average overall when it comes to performance,
14:23
Speaker 1: and so it cooling down is not a bad thing.
14:26
Speaker 1: So what's happening in Congress today there's actually something kind
14:29
Speaker 1: of tangible here. They're really looking to rewrite the rules
14:33
Speaker 1: regarding to the Securities Act of Exchange Act to add
14:39
Speaker 1: SPACs when it comes to forwardlooking statements in terms of
14:43
Speaker 1: their financial performance. So what they're really trying to do
14:46
Speaker 1: is rewrite the rules here to make it easier for
14:49
Speaker 1: the investor to know how well that company will do
14:52
Speaker 1: when it goes public. All right, But the spects that
14:54
Speaker 1: are still out there, they're out there and they're still
14:56
Speaker 1: able to do deals. Right, Yes, But the sec which
15:00
Speaker 1: is another kind of aspect of this today's Congress, we're
15:02
Speaker 1: looking at the security is an exchange commission is looking
15:05
Speaker 1: at all those backs and saying, okay, wait a minute,
15:07
Speaker 1: maybe we really need to treat you differently in terms
15:11
Speaker 1: of how you've already been doing your accounting. So that
15:14
Speaker 1: is also spooking some people, Right, what does that mean
15:17
Speaker 1: for the supply side? As I think Paul was alluding to,
15:20
Speaker 1: of you create this regulatory overhang. Now, not anyone can
15:24
Speaker 1: come as off the wild West anymore. So if you
15:27
Speaker 1: have skeletons in your closet, you're not going to want
15:29
Speaker 1: to do us back that. If that is the that
15:32
Speaker 1: is the bottom line. If you have financial performance that's iffy,
15:36
Speaker 1: or if you think you're making statements that are probably
15:38
Speaker 1: a little too rosy, Uh, everybody's got an eye on you,
15:41
Speaker 1: from lawmakers to the SEC. So you're probably gonna want
15:44
Speaker 1: to not go public that way. Yeah. But but we
15:47
Speaker 1: still have a whole bunch of these SPACs out there,
15:49
Speaker 1: and they're all sitting there with dry powder, and uh,
15:52
Speaker 1: you know, I guess it was when I guess we
15:53
Speaker 1: saw some of these celebrities and athletes started and it
15:56
Speaker 1: seemed like they were just lending their name to these
15:59
Speaker 1: SPACs maybe create some interest. Maybe on the first day
16:01
Speaker 1: of trading get a pop, and I suspect that might
16:04
Speaker 1: have been one of the things I got regulators attention. Well, yes,
16:07
Speaker 1: and and that's certainly true. But let me give you
16:09
Speaker 1: the flip side of this too, And this is why
16:11
Speaker 1: I think there will be a tone down, but not
16:13
Speaker 1: a complete clampdown. All these famous people are investing in
16:16
Speaker 1: pre i p O stocks anyways, These folks are all
16:19
Speaker 1: already investing in high flying unicorns or starting their own.
16:22
Speaker 1: Think Jessica Albert. Today we wrote a story about Leonardo
16:24
Speaker 1: DiCaprio and Orlando Bloom. What's going on there? Oh, they're
16:27
Speaker 1: they're backing this financial technology company and Neil Bank called
16:31
Speaker 1: Aspiration that is looking to go public either through an
16:34
Speaker 1: I p O R is that's a long story. Short
16:35
Speaker 1: is they're already in the venture market. SPACs are another
16:38
Speaker 1: form of venture capital. Yeah, what is the new cool way? Now?
16:41
Speaker 1: Do we go back to direct listings, we go back
16:43
Speaker 1: to traditional IPO s? Did totally last week? Do an
16:45
Speaker 1: I p O That was one that we've been following exactly,
16:48
Speaker 1: And so to your point, I p O s are
16:50
Speaker 1: still the hottest game in town. There's still tons of
16:52
Speaker 1: I p o s even though we were talking about SPACs. Uh,
16:55
Speaker 1: there were you know, more than twice the average of
16:58
Speaker 1: the last ten years going public and last year all alone.
17:00
Speaker 1: So this is good. Why is this good? Because before
17:04
Speaker 1: we saw so many companies like Uber for example, wait
17:07
Speaker 1: forever to go public, and then by the time a
17:09
Speaker 1: retail investor gets involved, it's very late in the game.
17:12
Speaker 1: So shouldn't they have the opportunity to invest in more
17:15
Speaker 1: young companies? The question is how young? And the question
17:19
Speaker 1: is what kind of information doesn't investor need to have
17:22
Speaker 1: to make an informed decision about that company? Yeah, you can.
17:25
Speaker 1: You compare the disclosure from a SPACK to the disclosure
17:28
Speaker 1: for an I p O. And when I was writing
17:30
Speaker 1: up I peer perspectives is they were about you know,
17:33
Speaker 1: half an inch thick, you know, because I just said
17:36
Speaker 1: to the printers all night and make sure you know
17:38
Speaker 1: everything was perfect. Now they're you know, three or four inches.
17:41
Speaker 1: You get all the disclosures for a company to go
17:44
Speaker 1: public VI an I p O. It makes SPACs and
17:47
Speaker 1: direct listings maybe at from at least from that perspective,
17:49
Speaker 1: a little bit more attractive let's just do a one
17:52
Speaker 1: on one here. You everyone should be picking up. If
17:54
Speaker 1: you're going to invest, if you're a retail investor, you
17:56
Speaker 1: want to invest in I p O. They're hot right now,
17:58
Speaker 1: go to the risk back, go to the risk factors,
18:02
Speaker 1: and go to the financial analysis and see if that
18:05
Speaker 1: company is actually doing any well. I think that one
18:08
Speaker 1: of the earliest piece of advices I got from a
18:11
Speaker 1: really good investor back in the day was when you
18:13
Speaker 1: get a prospectus, the first place you go to is
18:16
Speaker 1: related transactions. That's a good one. Risk factors have gotten
18:20
Speaker 1: so boiler plate the related transactions and and now they're
18:23
Speaker 1: fifty pages long. You know, we may have a pandemic,
18:26
Speaker 1: you know that kind of stuff. But you go to
18:27
Speaker 1: the related transactions, and that where you get to see
18:30
Speaker 1: some if there's anything funky in terms of, oh, we're
18:33
Speaker 1: paying this person, this company, this company that, and there's
18:36
Speaker 1: these off the balance sheet uh or kind of transactions.
18:40
Speaker 1: That's where they pop up. So anyway, that's just a
18:41
Speaker 1: little uh lesson learned. I guess Shanali Bastk thank you
18:46
Speaker 1: so much. We appreciated getting all things Wall Street. We're
18:49
Speaker 1: talking about SPACs today. Congress is holding a hearing on spacks.
18:52
Speaker 1: Things might be changing in that market. Looking on my
18:58
Speaker 1: g LC go that's the Global Commodities page. It brings
19:02
Speaker 1: up everything you need to know about commodities pricing. I
19:04
Speaker 1: look at the metals here, I see double digit gains
19:07
Speaker 1: and most of the metals, with one notable exception spot gold,
19:11
Speaker 1: kind of flat on the year. Let's break it all
19:13
Speaker 1: down as we talk precious metals. We do that with
19:15
Speaker 1: Everett Millman. He's precious metal specialist at Gainesville Coins. Every
19:19
Speaker 1: Thanks so much for joining us here. Love to get
19:21
Speaker 1: your thoughts again. We see a lot of positive momentum
19:25
Speaker 1: in the metal space here. Again the exception is gold.
19:29
Speaker 1: Give us your thoughts on that precious metal. So it
19:33
Speaker 1: does appear that gold has been in this consolidation pattern
19:36
Speaker 1: for a while, but I think it is poised to
19:38
Speaker 1: break out of that and resume a more gradual grind.
19:42
Speaker 1: Higher prices really just climbed too far, too fast in
19:46
Speaker 1: the early part of the pandemic, and so I think
19:48
Speaker 1: we're seeing that kind of shake out and normalize. This
19:52
Speaker 1: is the first time that gold is traded above it's
19:54
Speaker 1: two in day moving average since early January, and the
19:58
Speaker 1: fact that the US dollar is a bit softer today,
20:01
Speaker 1: also helps, but I think much will depend on what
20:04
Speaker 1: we're hearing out of the FED. The rhetoric has certainly
20:07
Speaker 1: turned toward a tapering of asset purchases and the potential
20:12
Speaker 1: that will see interest interest rates rise sooner than anticipated.
20:16
Speaker 1: But I still think it's a reasonable assumption that, given
20:19
Speaker 1: the unprecedented nature of the post pandemic recovery, the FED
20:24
Speaker 1: and other central banks are going to remain accommodative, and
20:27
Speaker 1: so long as rates stay suppressed and inflation continues to rise,
20:31
Speaker 1: ultimately that will be good for gold. Is gold still
20:34
Speaker 1: a negatively correlated asset to bitcoin when it comes to
20:38
Speaker 1: price and flows, It certainly seems that way. Over the
20:42
Speaker 1: past month or so, the two markets have gone opposite directions,
20:47
Speaker 1: and anecdot anecdotally, I have heard quite a bit of
20:52
Speaker 1: um confirmation of that those those flow trends from crypto
20:55
Speaker 1: traders that um, when there is a sell off in
20:58
Speaker 1: the crypto market, that money flows into gold and vice versa.
21:02
Speaker 1: And I think the reasoning behind it is pretty straightforward
21:05
Speaker 1: that these are seen as alternative markets to equities and
21:09
Speaker 1: uh other more traditional assets. So I think that that
21:12
Speaker 1: trend will probably continue until we see greater maturation in
21:16
Speaker 1: the crypto market where there is less of this panic selling.
21:20
Speaker 1: All right, So in terms of the crypto market, and
21:23
Speaker 1: you know, as it relates to the gold here, we've
21:24
Speaker 1: seen to some extraordinary volatility in bitcoin. I mean, you know,
21:28
Speaker 1: an eight decline yesterday, a rebound today. We've seen these
21:32
Speaker 1: double digit moves, you know, almost on a daily basis
21:35
Speaker 1: from this currency. What are your thoughts on bitcoin here?
21:38
Speaker 1: Is is the volatility preventing it from becoming perceived as
21:43
Speaker 1: a real store value? Absolutely? I do think that's the case. Um.
21:48
Speaker 1: Not only of the volatility discouraging to more mainstream investors,
21:53
Speaker 1: but these big price wings create network congestion, they create
21:57
Speaker 1: higher transaction fees when trading crypto, and the fact that
22:01
Speaker 1: so many of these coins, their prices are highly correlated
22:04
Speaker 1: to one another, all of that makes it less attractive
22:09
Speaker 1: to regular investors. There's just a different risk assessment that
22:13
Speaker 1: goes on there. And one of the thing I think
22:15
Speaker 1: that's reveals is that despite all the talk we hear
22:19
Speaker 1: in the crypto space about diamond hands and hoddling um,
22:23
Speaker 1: the behavior of crypto traders does speak to some inexperience
22:27
Speaker 1: that they haven't seen these big up and downs and markets,
22:30
Speaker 1: and the panic selling does remain a feature. I do
22:33
Speaker 1: think that that is one of the major obstacles to
22:36
Speaker 1: more mainstream adoption. Go on over with us to some
22:41
Speaker 1: of the other medals that we've been watching, iron, ore, steel, copper,
22:45
Speaker 1: China coming out with some big comments overnight, seeing that
22:48
Speaker 1: it's trying to target speculators and hoarders. Do you get
22:52
Speaker 1: this sense that within the commodity space, a lot of
22:54
Speaker 1: this has been based on fundamentals and future growth or
22:58
Speaker 1: some of these crackdowns that we see overseas. I think
23:02
Speaker 1: the crackdowns are mainly to blame in this case. UM.
23:06
Speaker 1: We have seen some lack of infrastructure growth and some
23:11
Speaker 1: uneven manufacturing numbers that could speak to the fundamentals starting
23:16
Speaker 1: to shift more to the negative for commodities. But I
23:19
Speaker 1: think it is very telling that Beijing has stepped in UM.
23:24
Speaker 1: Commodity inflation is a big negative for a lot of
23:28
Speaker 1: the consumers. A lot of the countries are importing these things,
23:31
Speaker 1: So I think that the from the policy standpoint, UM
23:35
Speaker 1: that is one of the major factors that's driving this,
23:38
Speaker 1: because as we've seen, inflation has been mostly occurring across
23:42
Speaker 1: the board, but especially in the commodity space. Hey, every
23:46
Speaker 1: let's just talk quickly about gold here. I know there's
23:48
Speaker 1: a scarcity of physical silver buoy on it golds up
23:51
Speaker 1: slightly the year today. What are your thoughts on I'm sorry,
23:54
Speaker 1: on silver all right? Yes, um, what's interesting is that
23:59
Speaker 1: I think silver it's the greatest upside among all the
24:01
Speaker 1: medals because not only does it combine some robust demand
24:05
Speaker 1: from various industries, but it is rising as an alternative
24:09
Speaker 1: to gold in terms of physical bullyon um. The Royal
24:12
Speaker 1: Mint in the UK saw a five increase year on
24:16
Speaker 1: year in its silver bar sales. And it doesn't help
24:19
Speaker 1: that the Loeon Bullion Market Association overstated it's silver inventory
24:23
Speaker 1: recently by over a hundred million ounces. So the idea,
24:27
Speaker 1: the idea isn't that silver itself. The royal resource is scarce.
24:32
Speaker 1: But yes, the refined finished product of silver bullion is
24:35
Speaker 1: rather scarce and it's just difficult to find on the
24:38
Speaker 1: market right now, so that is driving prices higher. Ever,
24:41
Speaker 1: thanks so much for joining us. We lays appreciate getting
24:43
Speaker 1: your thoughts on these precious medals every moment. Precious Medals
24:46
Speaker 1: Specialist for Gainsville Points. Thanks for listening to the Bloomberg
24:50
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
24:54
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
24:59
Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three. I'm
25:03
Speaker 1: Fall Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,
25:06
Speaker 1: you can always catch us worldwide at Bloomberg Radio