YouSaid · the spoken record

David Hay

lines on the record

91

first

2023-03-09

most recent

2023-03-09

sittings or episodes

1

sources

podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

1. “Absolutely And high interest rates are, they don't really hurt some of these companies, like the Tyson Foods or Bristol Myers, but the high PE stocks are by definition long-duration assets. So long-duration, long maturity assets, even though they're not bonds, but they trade like that because their future earnings are so far out, higher interest rates are kryptonite to these things. So, since I think interest rate, I mean, our interest rates have already, I mean, this is not, I think, interest rates have gone up at one of the fastest rates ever, you could say, well, they're still too low, which means they probably have to go up further. That's not good news for if you're betting on the real nutty stuff that's had a second coming, a bit of a Lazarus-like rise from the dead here recently. But I think they're headed back to the tomb.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

2. “There are businesses that can justify a high multiple if they have very high gross margins, high return on equity, stuff like that. They're growing very rapidly. But if you have a company that is not really that good of a business and it's like, let's say it's a lending business, but suddenly they say, we're not a lending business, we're a technology platform. And then they get 20 times sales. So that's where I think a lot of the pain has been. So, you think there's another down leg in those stocks?”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

3. “The NASDAQ from 2000 to 2003 was down almost 80%, not much different than what happened in the early thirties. So get these enormous bubbles, you get the enormous busts. We've only had partial busts so far given the magnitude of the bubble that inflated and really hit its crescendo in 2021. So to your listeners, I would just be saying be very careful out there. You're not going to lose much money in a Bristol Myers, but if you buy some of these really high multiple names that many of them are still trading over 10 times sales. And 10 times sales, that's classic bubble territory. Be very judicious out there right now.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

4. “And they were a lot of them were profitless technology companies with really sexy stories that were trading at 30, 40, 50 times sales, not earnings sales. And it was just a matter of time before the trapdoor opened up on those things. So yet we've had this echo bubble here recently because, as I said earlier, this is what's been driving the market here recently. And I think that's got another downlink. I went through, I remember vividly, I mean, I was very negative on the tech bubble in the late 90s. In late 2000, early 2001. So the tech mobile really hit its crescendo in the first quarter of 2000. So a little, you know, like nine to 12 months later, there was a massive rally. And it led people to believe the tech bear market was over. And they once again went charging in there and then it went down another 50% or so. I mean, the tech.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

5. “I don't think it's a question. The crowded trade is this. I think I read this the Financial Times the other day that this is the markets are alive with the sound of bubble 2.0, an echo bubble. Echo bubble is actually a term we use. We are at an echo bubble from what I think was, you know, I wrote a book called Bubble 3.0 about the bubble that inflated to immense proportions in 2021. I think 2021 was clearly peak insanity. I mean, that's when the meme stocks and that's when he had game stock that stopped that went from five bucks to 480 at the peak and so many other companies of that nature AMC and Bed Bath and Beyond and Hertz. I mean it was the meme stocks were just in fuego and when they were really the first ones to burst. You still had until kind of the third quarter of 2021 more of what I used to call them the crazy overpriced stocks, the cost.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

6. “Off the table. If it goes up 50% sell at least 30% of what you got, if it goes up another 50%, sell another 30%. Just be methodical on the dollar cost averaging on the sell side. People kind of buy into that on the buy side, but they ignore that on the sell side. And when you get into these bubbled situations, that's a gift if you react properly, if you react improperly and you put more money in into a bubble, you're going to get crushed. And that's what most people do, unfortunately.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

7. “didn't. Most people come in after it's already gone nuts because they hear all the stories and they just can't help it, they can't resist anymore and then they just get crushed and then they get out. And so you're exactly right that if you look, I think Kathy still had really good numbers for when she first started. But at that time, the amount of money she was managing was very small. So as the money flooded in, that's when it became harder to make big profits and then actually became big losses. So you're exactly right. That's a hugely important point. And it really gets to what I was saying earlier is that this tendency to go where all the action is and where the easy money seems to be being made is so powerful. And I think as an investor, you have to look yourself in the mirror and say, do I really have the fortitude to resist that? And I tell people in the cryptos that what you should do is when these things go nuts, when they're just going straight up as they often do, take some money off.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

8. “Well, you're exactly right. And the example I cite, and you can look this up, anybody can look this up, is the number one performing mutual fund of the decade from 2000 to 2009 was the CGM Focus Fund at that time run by Kenneth Huebner. He had great numbers. But they were, I mean, he was up something like 12%, like low double digits at a time when that was the last decade for stocks. So stock's actually lost money over that decade for people who think that can't happen because part of the reason it did, it was so overvalued going into that decade just very similar to what we had happen this decade. But that fund did great, but yet the actual investors in it lost money because of when they bought it. He had high returns but very volatile returns. And that's been one of my big beasts, frankly, I'm going a little bit of field, but it's very relevant with cryptos, is that cryptos, I mean, if you got in early with Bitcoin, you're still way, way, way up. But most people.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

9. “Yes, definitely. And making complex wealth decisions based on something you hear that you don't fully understand, I totally agree with you. David, there's no better example of the phenomenon you just said, performance chasing than three words. Money weighted returns. And this is no comment on the strategy of ARC at all, not at all reviewing that. But if you look at the Arc Innovation ETF, ARKK, I think it was started in 2014, and you compare it to the NASDAQ. a large margin drastically underperformed the NASDAQ, although a year and a half ago it had a drastically outperformed the Nasdaq. However, that is just the actual ETF. Money way to returns, the chart that you don't see, the chart that I don't even know how to make that chart, but I know that chart is way worse. Explain that phenomena and explain how that phenomenon hurt investors, even some of the most successful investors such as Peter Lynch.”

   2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

10. “Just such a powerful human tendency. And that is, I think, the biggest wealth destructor, along with listening to friends, your brother-in-law at a cocktail party, bragging about how well he's doing. And, well, God, I can't stand to have my brother-in-law doing better than me. I better do what he's doing. That's just another big wealth to swear, frankly.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

11. “That's a really bad characteristic. Wrong cycle investing, which we see play out time and time and time again. The way to make money, I mean, you look at the people who are really wealthy, like Warren Buffett, and the way they've made their money as being a contrarian. And it takes patience, it takes fortitude, it takes understanding balance sheets and financial income statements. And that's a very different approach to the way most people do it. Most people don't understand. Really, they understand so little about the financial markets. And they'll admit that if you really ask them, and even smart people, because our business is complex and in many ways it's counterintuitive. I think it's that counterintuitive nature that is especially tough for most people. So what do they do? They default to performance. So you go, well, I really don't understand. But what I know is this account is up 30%. This account's down 10%. I'm going to get out of the one that's down 10 and go into the one that's up 30. And that has...”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

12. “So, one of the things that we do is we track mutual fund inflows because mutual fund and outflows, because mutual fund investors, especially a certain cohort who get picked up in this data, tend to be kind of ADHD. They're really trying to be where the hot money is and get the quick returns. And so you can see that when they're kind of en masse going one way or the other, they'll be right for a while. And that's part of, I think, the deception, part of the ruse is that that near-term performance leads them to put even more. You saw this in the late 90s with tech. You saw this in 2021 with all the crazy meme stocks and things. Is that as this stuff goes vertical? It just sucks in enormous amounts of money. And then these things implode and people, instead of, even if it just goes back to where they first got in because they put more money in, then they have losses. And the latecomers, of course, are the ones that get absolutely nuked. So that's...”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

13. “Excellent setup. I would say one of the things that we've noticed as a team is that clients that are constantly checking their portfolios like every day or multiple times a day, they're the ones that get the worst results. The clients that say, you know, I really don't look very often, you know, kind of occasionally check. And they have faith in us. Now, obviously, you've got to know why you have faith in your advisor, but you see that people jumping around. We call it chasing the hot dot, you know, going to, oh, look at the performance this manager's hat or this asset class has had. And invariably, you know, when they go and make that shift, they're doing it at the wrong time. We call that wrong cycle investing. We actually have an ETF-based strategy called right cycle investing where we're trying to get the cycles to work in your favor rather than against you. Oh, really? You see this all the time?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

14. “Having to pay close to five 4.3, I guess right now, but headed to five almost for sure. So it's costing the government a ton of money to be looking at these higher interest rates. So that's making the deficits worse too. And you've got all the entitlements that are really coming on because the aging of people like me that are, you know, get social security, but I could take it. But, you know, there's like 2.6 trillion dollars of entitlements that are now on budget that have been off budget for so many years with this terrible accounting that we've done. So, yeah, a lot of chicken hills are coming home to Roost, as I said earlier, and they aren't very appetizing chickens, unfortunately.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

15. “Peak inflation. And House still has done that. Now, he's playing a game that he could be right that inflation is going to start falling really rapidly, but we're already seeing that it's hard to get it down when it's been running hot for as long as it has. So does he have to go to 8% on the Fed funds rate? Maybe I don't think so. I think six is probably going to be enough because what Volcker had going for him that Powell doesn't have is the U.S. debt to GDP in 1979 was about 25%. We're, you know, put 100% on top of that. We're about 125, maybe 120 right now. So we are so leveraged that as you raise these interest rates up and the government's paying through the nose is these rate increases start to filter in as their debt rolls over and they have to pay higher and higher rates. Plus you got the Fed, there's about $5 trillion that's on deposit at the Fed that they're”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

16. “Well, another excellent question by you, Jack. And he's apparently told everybody around Merrill Ecklos building the Fed's headquarters that he doesn't want to go down as history books as the second coming of Arthur Burns, who's the one that really let inflation get out of control in the 70s. He wants to be seen as the new Paul Voker. But, you know, it's going to be tough because even Arthur Burns, because he was under a tremendous amount of pressure from Nixon not to raise interest rates, but he at least would get, even when in 1974, when inflation got up 9, 10%, he got the Fed funds rate up above that, not a lot, but a little bit. And you could have argued, well, that was a transitory thing. There was an energy crisis there. It's not going to stay up at that level. Why aren't you looking at what more sustainable inflation is and go to a lower level? But at least you got it above what was.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

17. “August of 2020, when the 10 year treasury note got down to a half a percent. And I remember when it was 15%, and inflation was starting to, by the summer 2020, it was still fairly low, but you could see which way it was trending, and we were doing full-blown MMT. So anyway, that's when I really became a bond market bearer. And that's one reason why our income portfolios have done as well as have done is that we were hiding out in a lot of floating rate securities in short term. Anyway, so very different situation when I first started out. I guess you could say in the early years it was kind of similar, but Volcker came in at 79. So he was already starting to jack rates up. But it was 1981 where he really went ballistic, and that changed everything. But once the rates started coming down in 1982, that's when the great bull market was born both in bonds and stocks. It's been 40 years of riding the wave that he basically put in place, but it's almost like the photographic negative of that now. And I don't think most people quite appreciate it.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

18. “It did dawn on me in 1981. That's when I first became a bond market bull. I said, this guy means business. And he's got these interest rates way above inflation. And even though I was not very skilled macro from a macroeconomic standpoint at that time, I realized this was going to bring inflation down and interest rates down. And the yield curve was inverted, so it was a tough sell. Back then, I wasn't a money manager. I was a smiling, dialing broker. So I had to get people's agreement to do things. It was very hard to get clients to agree to go further out to get less yield. Remember a client bibliography saying, why do I want to take only 14% on a five-year CD? Then I can get 20% on a one-year CD. And that one-year CD is going to mature, and you're not going to be getting anywhere near that. So really, that was the beginning of my bond bull phase of my career, which dominated, you know, again, really the time I threw in the towel and went the other way was in the summer of 2020.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

19. “Yeah, I remember it well. I mean, you know, at that time, because we'd had two energy crises, that's where the first two, oil and gas stock were red hot and gold was hot as well. Gold hit $800 an ounce back then, which was up from $35 an ounce in 1971 when Nixon took us off the gold standard. So it had been the inflation hedges that were really where people wanted to be at that time. And bonds were known as certificates of confiscation because all they did for decades was lose money with a few trading rallies along the way. So it was a very tough time to be a bond investor. And frankly, I didn't really believe that bonds were very attractive either. But by the time you got to where Volcker really was, I mean, you got the prime rate over 20%. I literally remember buying CDs for clients at rates over 20%. Wow. I remember buying tax-free bonds yielding 14%.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

20. “Managed money and made a lot of mistakes and learned what to do and what not to do. And I still make mistakes. But just like I said earlier, one of the things that one takeaway I would tell your listeners that I think is the most critical is pay attention to these breakouts and breakdowns. So when something breaks below a three-year trading range, you better look at that really hard. The odds are you want to get out. You can come back in, but the odds are it's going lower.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

21. “It's writing even more. I published my original newsletter since 2005. It was the housing bubble back then that really motivated me to start writing my newsletters, calling that out. But now we're actually publishing more. And plus I do events like this podcast like this. And so as I look at my schedule, more and more of it is going towards Haymaker, but I'm still very involved with Evergreen. And it gives me, I mean, I think a lot of people that write newsletters, they don't manage money.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

22. “Just a plethora of major money managers are their clients. So that's definitely a benefit to us as a firm. But we basically at Evergreen are old-fashioned money managers. We do the research on individual companies, whether it's their stocks or bonds. I think we have an unusual focus on income generation because we have a lot of older clients, but also a lot of wealthy people that say, hey, I made my money. I don't want to lose it. I want cash flow on it. So that's why we have more assets actually invested for yield than we do for growth. But we do have a lot of growth and we have some aggressive growth strategies and we've got some conservative growth strategies. So it's quite a diverse offering. We've got about $4 billion in assets under management just on the Evergreen side. As far as the haymaker goes, that's kind of my later in life. I've been doing this since 1979, so I started many, many presidents ago. And it's really been my desire to get.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

23. “So, first of all, GovKale, yes, that's our partner firm. Louie Gov was the founder along with his father, Charles Gov and Anato Kaletsky, hence the name GovCal. And Louis is one of my very closest friends. We do a research call almost every week with analysts all over the world. So again, we've got, you know, if you're going to try to be a thinking investor, you better have some great allies and resources. Unfortunately, we do, as you're aware, they're one of the most highly respected macroeconomic research firms on the planet.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

24. “Or three or four times the United States, but they haven't really covered themselves in glory with their long-term earnings performance, but they are getting more profit focused in Japan. So that's a positive. Korea looks pretty attractive. It's really been beat up. Some of these countries, I think, will benefit as people are reluctant to be in China. So they want Asian exposure, but they really don't want to get it through China. I think Singapore, there's a Singapore ETF, I think Singapore is a winner, as people and businesses flee from Hong Kong to Singapore. I think Singapore is becoming kind of the Switzerland of Asia. There's a few ideas that look decent.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

25. “Even the banks were finally reluctantly increasing yields on CDs, so they're losing this very low cost source of funding that they had. And then, of course, their bonds have been crushed, so they've got major losses in their investment portfolio, which they're trying not to recognize, of course. You've also got accelerating loan losses. And we talked about some of these commercial real estate hits that have happened. So I look at that because otherwise there's a fair amount to like about the financials, but I think for right now, I'd be a little bit leery in looking at ones that don't have some of those risks that I just mentioned. But I think the Japanese market's interesting. It's underperformed for decades, obviously, after their huge bubble of the late 80s. And you can get good quality companies at 10, 12, 13 times earnings and deep price to sales. I mean, oftentimes at 0.5 to sales rather than.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

26. “Well, I've been really negative on utilities, but utilities have been underperforming. And the idea was that they were trading at relatively low yields and made a new all-time high despite the fact that interest rates were already up. And as we've already talked about, they've gone down, but come back up once more. So that's been an unattractive area. Haven't liked small cap growth where you tend to have a lot of money losers, very aggressive names. So those have been kind of disfavored areas. As far as other areas that I like, I would say probably more international than U.S. I don't think there's a lot of U.S. sectors that look super attractive right now. I mean, financials would be kind of, would say, well, it's fairly cheap. The rising interest rates are good for them. But an inverted yield curve really isn't. I mean, for banks, that's a challenge. And I also worry that people are finally waking up as we talked about earlier, and they're getting out of these no yield deposits and taking the money directly to the treasury market.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

27. “So that can't happen again. So they own different things. So, yeah, now is the opposite background you're being paid. I think that's a really good point. Okay, so other than energy, you like energy, but nowhere near as much as you like it last year. Are there any other sectors that you like? What's your second favorite sector or favorite sector and what's your least favorite sector going forward?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

28. “Is that especially if you're an index investor who doesn't think you just kind of leave this money on the sidelines, which is unfortunate, there are opportunities. If you're a thinking investor, and especially with so much of the world that doesn't think anymore, there are some extraordinary opportunities that come up from time to time.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

29. “Think they believe there's another big spike coming too, but they can lock in 375 gas in the futures market and do very well. A lot of them do have hedges in place at much higher prices than where we are currently. So that's something to think. Now, oil is very different. Oil is backgradation. So it's like the eel curve. So that means that the current prices are actually higher than the further out prices. Somewhere around $5 to $6 a barrel over a course of a year. If you're going to, if you want to be an investor in crude oil right now, and there are ETFs out there that do that, USO is a way that you, and normally USO is not great. It's kind of like the VIX thing. You just get clobbered by the negative carrier and the roll cost. But in this case, you actually get paid. So that's what oil wasn't up all that much last year, a few percent and the USO returned something like, I think it was 29% really close to that. Again, these are kind of nuanced.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

30. “Not really like them both because of the natural gas stock prices have come down really hard as a result of the prices, not as much as they didn't go up as fast and they didn't come down as much. But one of the things about natural gas is it is, and it's like, I don't want to get too technical, but the curve, the pricing curve, you know Contango and you know backwardation. So Contango is the normal slope. So that's like a normally sloped yield curve Contango. So that means the current price is lower than the futures price. And right now natural gas, it's huge Contango. And I'm doing this a little off the top. I haven't looked real lately, but like the current is 275 and a year out is like 375. The point is that these producers, if they want to, because they can make a lot of money in 375. Now, they can make a lot more money at 575 or $8 or $9, so they're not going to do this completely.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

31. “Right, but the price of natural gas has collapsed because Europe was buying it hand over foot, but now they have the storage, at least for now. And I think last year, natural gas prices exploded higher, oil prices exploded higher. Oil companies, they're called oil and gas for a reason. When you drill oil, you get gas. When you do gas, you get oil. Sometimes it's, you know, and it's a different mix. But I think now there's really a focus on, are you an oil company or are you a gas company? Gas is kind of an unprofitable business for now at $2 for Henry Hubb. It's very hard to make money, whereas oil still is profitable. So are you preferring those kind of oil only names or where it's 70, 80% oil as opposed to those gas names?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

32. “And the opposite of what we thought would be happening with this tremendous natural gas shortage in Europe, which again, I think that shortage is going to flare up again. They were getting almost half of their natural gas from Russia. Most of that's been shut off, and it's not coming back online anytime soon.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

33. “So that's not very critical of energy. As I said, I think the easiest money, the biggest money's already been made. You just have to be realistic that they're not going to report the kind of earnings increases for now. Now, I do think we're going to get another up move in oil. I think oil is going to get triple digits. Wouldn't surprise me at all if it's $120 a barrel. So then you could get another up leg. But with oil kind of bouncing in the 70s to the low 80s and natural gas having been hit as hard as it has, I mean, you're starting to see natural gas producers take rigs offline.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

34. “Well, I don't know. Well, maybe some of the green energy names, although they've been getting hit of late. So I don't know. I don't think you're really going to get too badly beat up on an Exxon or a Chevron, but we actually prefer companies like BP and Shell, which are more European blue chip energy because they trade at a much like half the valuation of the big US oil companies. And the valuation discrepancy is so great. I think you could even see, say, Exxon go after shell. Shell's got a fantastic, probably the best LNG business, liquefied natural gas business in the world.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

35. “Negative. It went negative Q4. I'm almost positive it's going to be negative Q1 of this year. And last year, the only reason the earnings weren't worse is because energy earnings were just huge. And as you know, the energy sector itself was up 60%, not one-sixth, but six-off percent in a year when the S&P was down 18%, reflecting those unbelievably strong earnings that these guys were reporting. But now they've got a high bar. And I'm not nearly as bullish on energy as I was. And I think Apache can go from 40 to 50, 55, but the really big money and energy has been made.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

36. “And so when you say an earnings recession, do you think that means for the fourth quarter of 2022, you think those earnings will be, is it just the rate of growth that's going down or is it literally negative?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

37. “And I think that's a lot what's going on. I think that's why money, when people are bullish, they just go right back to the stuff that was the stars during the, especially during the post-pandemic period when all that free money was created. And also to look at the quality of this rally, it's been a very junky rally, it's been the profitless tech that's been leading the most shorted stocks have been leading. That's not helpful. Exactly”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

38. “So I think you've got another down leg. It could be surprisingly nasty. What's amazing about this one and why I think people are mistaken to think the worst is over is the way retail investors have reacted to the decline. And they've been pouring money in this year at a record rate. So there's absolutely no sign of capitulation. Kathy Wood, despite all of her travails, she's actually had inflows into the arc complex. So that's not what signifies the bottom of air markets. Another thing is that bear markets historically don't bottom until the Fed is about two-thirds of the way through an easing cycle. And we're not even done with the tightening cycle. Oh, it's possible that the market doesn't bottom until next year. I don't know. I think the faster and more it goes down, the more likely it puts in a bottom. But that's not been the history of this market. It fights tooth and nail to get back to the bull market that was so good to people.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

39. “Well, as far as the market overall goes, my overarching view is that we have been going through a bear market rally that started in October. There was a, December was rough, so there was definitely a correction in December, then a very powerful January, and then now another downturn. And so I think we're in the midst of the correction of the most recent bear market rally. I think we're going to go back to the October lows. In fact, I wouldn't be surprised if we break them. And part of it is I think you can debate about an actual recession, but I think the odds of an earnings recession are almost 100%. In fact, I think at the end of this quarter, it'll be acknowledged that we actually did have an earnings recession. And that as a stock investor, that probably matters to you the most. What are earnings doing? Not necessarily what's the stock or what's the economy doing. And I actually think you could have a fairly strong nominal economy because of inflation and a real recession, which is kind of an odd thing. But again, that's a flashback to the 1970s as well.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

40. “Right. I think understanding the fundamental story is so important because if you buy something that you think is cheap and will return capital that is at a good rate, a high quality business, and then it goes down 30%, if you understand the business, you'll have the confidence to stick in that position and maybe even buy more. Whereas if you just bought it because you heard about it from a friend, then you might sell. And yeah, so I think, okay, so the book, I know you said you're not passive index guy necessarily, but what do you generally how do you think stocks will perform? What's your, what's your midterm, three, six, 12 month outlook? And you can either stick with the broad index or you could go sector by sector, or you could say, oh, I like this name. I don't like this name. However, you want to take it.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

41. “And a very promising, very large discovery in Suriname off the north coast of South America. There's a few ideas that I think you can hide out in, and if they go down and buy a little bit, but then if they go down, buy more, I'm a big fan of dollar cost averaging. People would say, oh, I want to, if I like it, I'm going to just go max to begin with. I think that's pretty risky. If you do that, I think you really need to focus on companies that are breaking out of a trading range.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

42. “TSN's down about 40%. Oh, actually, over 40%. It's selling for about seven times trail earnings, but it's been down this year for what I think are just kind of transitory reasons. So it's trading about 13 times what I think are trough earnings. That's a very low multiple for trough earnings. If you look historically, even though earnings are volatile, they have had a very pronounced upward trend over the years, and people need food. And I think kind of to your point earlier, I think we're going to have some recurring food shortages. But there actually was kind of a glut of beef because beef prices got high, consumers backed off, and feed prices went way up. So their margins really got squeezed, but now actually feed prices are coming down pretty significantly. I think Apache and the energy area has had a decent pullback, sells for about five times earnings, six times earnings. It's got a free cash flow yield of mid-teens right now.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

43. “Jones calls range expansions, and we found that three years is kind of the magic timeframe. If something has been in a range for three years and suddenly it breaks out over that, that's a really strong bicycle. But you should also look at the fundamental story. Bristol Meyer sells for about nine times earnings. They've got about nine very potentially blockbuster type drugs in their system, late stage, either approved or close to approval. It yields a little bit over 3%. It keeps making new all-time buys, not just three-year buys, but new all-time highs. It's had a nice little pullback here lately. So that's a name that we like that's got momentum behind it. Tysons, Tyson's Foods is another one Tyson Foods is another one that we would recommend. And I should say that our evergreen clients already own these. In some cases, at lower prices than where they are currently. So just be aware of that. And I do own these names personally as well because I do own what our clients own.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

44. “Well, to be specific, on the bonn, I just recommended that's the bath and body works bonds, which I think one of the reasons they trade is inexpensive they do is people confuse it with bed bath and beyond, which is likely headed to chapter 11. Certainly it's a very fragile situation. So that's a specific name that we like in the bond area. In the soccer area, and again, everybody should be highly diversified. My fear is we throw out names and people put too much money in typically what we recommend is that you start with a maximum position of 1% of your portfolio value and even less in a market like this, which is very volatile, and then be willing to dollar cost average into it. So with that is kind of a caveat, I do think Bristol Myers is quite attractive here. One of the things I like to see is companies that are breaking out over multi-year resistance points. We're a big believer in that. This is what Paul Teter”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

45. “I love macro and I can tell you do too. So I've asked you do you like stocks? Do you not like stocks? I'm asking really about the S&P 500. But I like individual names for my own part. Sometimes it's more tough because the audience doesn't know a partition issue. You don't want to seem like you're pumping or you're bashing it if you're short or something like that. But with the caveat that of course nothing you or I say is investment advice. What are some individual names that you're looking at if you feel comfortable sharing?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

46. “Non responsive way of investing, they're not going to be able to take advantage of this volatility. So I think there's going to be some great opportunities, and there already are some things that look pretty attractive out there right now.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

47. “In kind of an intermediate term maturity, and we think a very strong credit story. So that's one of the things we do in my newsletter on Monday is the making a Monday is that we, because I don't think most newsletters really pay attention to the income side, almost everybody's focused on growth, you know, picking hot stocks. We certainly do that, stocks we like, but we have a number of income recommendations, and particularly for people that are more mature like myself, cash flow is kind of critical. And that's the great news about what we've gone through is these much higher yields give you a chance to get some cash flow you can actually live on. Now, if you say, well, inflation is going to stay at six, admit that even at 8.7% yield is not that great, but I don't think inflation is going to stay at six. I think we are going to have dips and then reaccelerations, and it's just going to be volatile inflation, volatile interest rates, volatile stock market. So I think the problem, I think, that most people are so wedded to indexing. And indexing is such a buy and hold.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

48. “But we are looking at corporates. We actually bought a lot of corporates last fall because you had the combination, which is great for a buyer of rising interest rates and expanding credit spreads. And I know you know what credit spreads are, but a lot of listeners don't. And that's the difference between what corporations pay to borrow money and what the government pays. So that really drove a lot of corporate bonds down severely. So we were getting yields in six, seven, eight, nine percent zone, and many of those because interest rates now they're back up, but they're still down a bit from where they were and credit spreads are definitely narrower, though they too were expanding. But a lot of those bonds have had equity-like returns since last fall. So I think if you're alert and you're dexterious and you know, you go into these areas when they get hit hard, you can create some nice total return situations. But if nothing else, great cash flow. One of our favorite bonds has a yield of 8.6, 8.7% right now.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

49. “Going back to the macro, sounds like a pretty thorny year or two ahead of us. How do you think about investing in this period, about asset allocation? Last year was the worst year since 1871 for the 60, 40, if we have a recession approaching like you think we could, normally you go seek safety in bonds. Now that's not the time you're actually short bonds. So what are you doing besides shorting bonds?”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT

50. “And I think that's why it's important to have the administration now really kind of trying to fast track this. I mean, you saw that in Europe where, I mean, they were so opposed to LNG facilities and the bureaucratic obstacles were enormous. And then last year, they realized they had an existential crisis. And man, they got things built offshore LNG floating facilities almost overnight. So it shows when people kind of wake up and they realize how dire the situation is that you can have some amazing breakthroughs. We haven't gotten to that point at this country yet. I think we're going to.”

    2023-03-09 · Forward Guidance · Does Powell Mean Business? | David Hay · IDENTIFIED FROM THE TRANSCRIPT