YouSaid · the spoken record

David Stein

lines on the record: 67
first: 2023-08-06
most recent: 2023-08-06
sittings or episodes: 1
sources: podcast

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“Sure. So our main website for our free podcast, as well as some investment free investment guides, is money for the rest of us.com. We also have a new website called AssetCamp.com, C-A-M-P.com. And that's really a place that has these tools to analyze stock indexes and index funds, the underlying drivers in a lot of the mathematics that I shared in this episode come from AssetCamp.com.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Fine. And so it's easier to vest that way when the performance drivers are not being successful as investor isn't depending on beating other people in winning.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“No, it's not, which is why I look at my net worth once a month and my portfolio once a month, partly because I share my portfolio on our membership community. But if I didn't do that, I'm not sure. Maybe I would do it once a quarter. But I don't look at it every day. And because life's way more fun not worrying about our investments every day, which is another advantage of investing in index funds and other more diverse fed investments because you don't have to worry about whether NVIDIA is going to hit its number this month or exceed its earnings estimates or miss it and plummet 30%. You do that if you're investing in individual stocks. You have to do that because you're trying, you're competing against the consensus and everyone out there. And I would rather invest in a way that I don't have to compete and win to be successful. That's why we spend so much time on the drivers. I don't have to compete for dividend. I don't have to compete for earnings growth if I am in a diversified fund and index.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“I mean, the economists did a big profile and ad a month or so ago where they were comparing the US economy and how we live and how we work so many hours to the Europe. And the reality is they've made that trade-off. They don't work as much in Europe. They don't produce as much in Europe. Go back to what was our definition of GDP. It was the value of what's produced that's produced by people and it's produced by technology. And they don't produce as much in Europe per person because they take more time off to spend time with family and friends and go hang out at the cafe. And that's their choice. And I actually think that's wonderful. And we can do that in our own lives. We do not have to work 60, 80 hours a week. And maybe you do it for a stretch, but seek to create a life where you don't have to do that because it's way more enjoyable. That's why I say live like you're already retired. How would you live if you're retired and figure out, well, how do I live that today while still working and contributing to society, but not?”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Their time or get maximum productivity, or we're trying to get something done so we can get something else, or we're doing something. Their own sake, not because we're trying to reach some goal or achieve something else. More time just being and doing for the intrinsic value of it.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“One of the things that I, you know, each year I'll have three words that I sort of focus on. So if I'm meditating, walking, whatever. And one of my words this year is when one's breathe. So just breathe. Just take a deep breath. Don't overreact. Just breathe. The other is time. And it's the idea that we have enough time and we spend so much time leaning into the future and we don't do things for their own sake. We do it because we want to get somewhere else. We're having some dinner with some friends tonight. And we don't have to be there anywhere after the dinner. So we're not rushing to get dinner done so we can go somewhere else or we're not using this dinner so we can get a good connection for something else. We're going to dinner to just be with our friends, enjoy the time, connect with them. And that's with time, we can do that. We get into trouble when we're always trying to maximize.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Economy is more than GDP. It doesn't measure well being and happiness. And the things that produce happiness are things you don't buy. It's health. Part of that you can buy. But friendships, you can't buy community. You can't buy friendships. You can simply buy the opportunity to be creative. You have to do that on your own. And so those are the things that make up the good life. It's these basic goods that are oftentimes they don't have a financial price and maybe they're not scarce because it's work we have to do on our own.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Tired. So I left my investment advisory firm 11 years ago. Didn't know what I was going to do. I called myself retired early, but reality is I needed to do something because 50 years is a long time to live off your investments. And my firm owed me money over the next seven years. I wasn't even sure they'd be around to do that. So I eventually launched money for the rest of us and done some other things. It taken me a while, but the whole idea is that I'm living a life now that I don't want to retire from. And I have enough. And so my investments, I'm not a growth investor. I focus on making sure my net worth grows each year after my expenditures. And part of that comes from my business. Part of it comes from the yield or dividends, interest on my investments. But just maintain a sustainable life over the long term, but not focus so much in the future. The good life is just focusing on today and focusing on some of the things that I mentioned on this idea that”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“So the term good life are one of the first individuals who use that term was Aristotle, a Greek philosopher lives several hundred years BC. And he wrote about it in Nicomachean ethics. And he said, the good life was a life of virtue. And virtue back then was very different. So probably the way that we would think of virtue now was if you swing a tennis racket or you swing hit at a baseball, it's hitting this sweet spot. It's really having the right amount at the right time in the right manner for the right reason. And it's often called the golden mean. And so when I think about the good life for me is just have enough. Not to spend my time fretting about the past and worrying about the future. And that can be very difficult to do with investing, but to realize that we have enough. And one of the terms I've used for years on our podcast is live like you're already.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“A little bit of an equity kick in terms of if the company does well. But this is a closed-end fund that's yielding close to 10%. But it's public. So if I'm tired of, if I think the environment for private lending is just getting too sketchy, then I can always sell, which most of the private opportunities, you don't really get a chance to sell once you're in. And you're seeing that in a something like B-RET, which is a real estate, a private real estate investment trust, that Blackstone has sponsored. And it's done well performance-wise, but investors are trying to get out every quarter because they think it won't do as well going forward. But there's a gate. The only limit so many people out are so much funds each month. So bottom line, you have to be careful with alternative investments. See if you can find a public alternative. But if you do the private side, make sure that it's very, very diversified with a number of different deals.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“And so it's a challenging asset class, but there are a number of timber reeds. I think plum trees still around, but there's some timber reits that investors can invest in timber. So it's a publicly traded vehicle that invests in timber. I mean, there's agriculture that you can do on a private basis on something like farm together or acre traders. There's private ways to do that, but you could also invest in Gladstone, which is an ag reit. And so oftentimes there's a public vehicle that's publicly traded as security that we can get investments in alternative investments without having to go to a crowdfunding platform. Another example is a fund that I own is the Bering Corporate Investors Fund. This tickers MCI. This is a closed-end fund, and they lend money to private companies. So that's sort of what's sometimes called mezzanine funding. So they're involved to some extent in the management or they can be or they get.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“It's really challenging because it's like figuring out what's the correct value of gold or the correct value of Bitcoin because there is no cash flow, it's pure speculation. And so when I invest in art antiques, it's maybe 2% of my net worth. I'm just guessing, right? I mean, I've got a masterworks. I think I own three or four paintings. I don't know. I trust their ex, I mean, they sponsor a podcast. I trust their experts that they're picking paintings that they think will appreciate. But we don't know. I mean, we sold one. I had a Monet. I mean, I heard a Monet, so I had about a 9% internal rate of return. But it's, I would prefer cash flow. So timber is a little different. And I have invested in, I mean, there are timber reaches out there that you can invest in timber and timber benefits because the trees keep growing. But the problem with timber that makes it really challenging is the control and power that the mills have to choose from where they can buy.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I have one deal on Crowd Street mainly because, and this was one hotel property, but my hometown, I grew up with Cincinnati, so it was a hotel across the Ohio River in Kentucky. It's a two or three year deal. It seemed very secure. And so I invested. And are those opportunities? But generally it's better to use a fund structure that there's multiple real estate deals in the fund or multiple private and a venture capital deals in the fund. And unfortunately, the fees are just high and it's not easy to do. So most of mine, as I mentioned, is in the institutional funds in my investment of my former investment advisor runs, but they're institutional funds. And so they just made an exception for me because I helped start them. FEG advisors is the name of the firm.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“I personally have invested in deals on Crowd Street. So there's some, the real estate's a little easier. I've mentioned art, which art is more speculative because it is in cash flow, but that's another option. But it's a little more challenging on the private capital space one platform we reviewed on our premium podcast is Moonfare. So that seems better than most in terms of, but the idea is you want as much diversification as you can and you want some screening mechanism on those deals so that and you get enough of them so that hopefully some of them will work out because most won't. And that's where you really, really need the diversification on the alternative investment side.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Alternative investments, they have higher expected return. And by the way, we don't know if it works out for another 10 years. As a board member, I'll do that because I don't have to make hard decisions now. Well, just hopefully it'll work out when I'm not on the board 10 years from now. And so that's why you see pension plans in endowment and foundations move into alternative investments. Now, hopefully they will. I mentioned my investments in the private capitalist space. Like these are the top tier underlying funds. I mean, they have generated a 20% internated return over the past decade. So it's been a very good period. But as individuals, it's hard to do because we can't invest in 100 different startups. So we're trying to select one. And I'm saying don't select one or two. And so maybe you have to step aside, but there are crowdfunding platforms on the alternative investment space that have set up funds where you get more transparency. So I fund Rise is a solid platform.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Well, the institutional investors, so endowments and foundations in pension plans are the largest participants in alternative investments. And the main reason, whether it's two, one is the expected returns are higher than the public market. Now, whether because these are set up as limited partnerships, you don't know for 10 or 12 years whether it's going to work out. But if the consultant that's advising that endowment puts a higher expected return, so let's say they say private equity return 10% and the public market will return 7%. By allocating more to alternative investments, where if you're a board member that you're a volunteer and if we can't figure out a way to get a higher return, I mean, there's that demand to do that. Otherwise, you got to cut how much you're spending on scholarships and operating in the university. So by investing in all...”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Up in a crowdfunding platform, the better way to do it is at least do it in a portfolio. Maybe they're offering a portfolio. Maybe the sponsors are screening it. But you can't do private equity investing, venture capital, and doing two or three deals because the numbers basically don't work against you because most won't work out. That's just the nature of venture capital.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“To IPOs. And so that will cascade through the venture capital space, which is why as investors, this is a very risky place for us to play. A lot of these crowdfunding platforms were to invest in startups. The challenge is in order to be a successful investor in private equities, so venture capital and buyouts, you need dozens, if not hundreds of positions. So I have about 20% of my portfolio is in what we'll call private capital. So it's leveraged buyout funds, it's venture capital, it's real assets, including real estate. So these are fund of funds run by my old advisory firm. And I was just looking at this the other day. So I'm in six of their funds. Just one of their funds is in 30 underlying limited partnerships. And are invested in 500 different deals. And so the model is based on most of them failing, but some doing very, very well. And so if you're investing in a star.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“I think you'll see more of a trend. There are 16,000 private companies that are venture capital-backed. And the competition for capital is ever more intense. The amount of VC funded companies in the past year has gone like the actual capital invested fell 50%. And so in some ways, it's good because suddenly these companies realize, oh, we actually have to figure out how to make money on our own without being subsidized by venture capitalists. Many won't. And so you'll see more clothes. But they're small companies in many regards. So it's not like it's going to crater the economy. But if you are invested in venture capital, the returns will, there's certainly going to be lower than they were because the difficulty to exit. They're not able to sell the private companies or the VC-backed companies at a premium. And the IPO market, at least currently, is not the public market. It's not really receptive.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“And so, but from buying an IPO typically doesn't work out. If you're buying, well, if you can get an early allocation and there's a bump, then that's great. Then you can make money. But if you're a long-term investor in IPO, the exception of it being a profitable investment or the idea that it'll be profitable, it's actually very rare. I mean, there's always the big, well, Google that was popular, Amazon, that went well. Most IPOs fall below whatever their stock price was and even more so today because they don't have profitable business models when they go public and they have to figure it out on the fly.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Build market share, and then eventually either another private company will buy it at a higher valuation or they'll go public. And unfortunately, the public suffers from that. Well, the public benefits like Uber for many years was super cheap to take an Uber or Lyft because it was effectively being subsidized by venture capitalists. Now that Uber is public, they have to be profitable. And so they've had to raise prices. And so it's not as cheap. So from a use perspective, it can be very, very inexpensive for us because the prices don't affect an economic reality because they're being sub.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“That's basically what venture capitalists do in today's environment. They are at least over the past 10 years. They're growing for market share. And so the typical private company will stay private for 12, 13 years. And even when they go public, they still haven't figured out a profitable business model because it's almost like a Ponzi scheme. So they build up these companies, they invest money, and then right before they go public, they'll, let's say it's a personal finance website that makes money from affiliate deals if somebody buys a credit card or whatever. They just advertise like crazy running a deficit, losing money, but growing market share, and then the thing goes public. And then the company has to figure out a profitable business model and more often than not, they don't. And then the share of prices crash. That's what Blitzcaling is. It's this process that we're going to do anything it takes to.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“What is his structure of the investment you're purchasing on a platform? And with the cryptocurrency, it wasn't separate. They commingled it with a corporate assets. And when those platforms went under, people lost their funding or they lost their funds, or most of them.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“And so those assets are custodied separate from the crowdfunding platform's own assets. Or it could be actually registered security. So we think about MasterWorks and Art. Every piece of art sold on MasterWorks is its own security outright custodied. And so you're not exposed to a corporate entity where you don't have any transparency on their viability. And most of these crowdfunding platforms are still early stage. And so they're very dependent on venture capital backing. And that's what happened with Pierce Street. The mortgage market collapsed as interest rates went up. And so they didn't have enough money to operate and they were getting money from venture capital firms, which have been much more reticent to invest in these companies. And so you're seeing it sort of their capital starved. And if these businesses don't have a profitable business model, then they're going under. And that's what happened with Pier Street. But the key then.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“And so when we invest on a crowdfunding platform, we don't get transparency. I'm BlockFi, cryptocurrency lender. We have no transparency as to their financial situation. And it turns out they didn't do so well. They went bankrupt. And so then you have all these unsecured creditors. Pierce Street went bankrupt a month ago. And so after, you know, I warned about this back in early 2018 and I let my loans run off because of the risk of having an unsecured liability. And so when it comes to crowdfunding platforms, there's ways to get around this. So more often than not now, the platforms will set up either a special purpose vehicle. And so that particular investment is shielded from the corporate assets if the corporation goes bankrupt and somebody else will take over. Or it could be a registered fund structure. So it's like a private mutual fund effectively.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“To fix up a house, fix up an apartment, either sell it, or once it's fixed up, they have renters in to go get more traditional type mortgage. So this started in 2013, they've been around. But what most people didn't realize, and frankly, I didn't realize in the first couple years I invested. At one point, I had 2% of my net worth on Pierre Street. And then an attorney that's a member of our Plus member community pointed out that look at the structure that you're investing, you're not investing in the loan. You don't have the collateral. You're investing in a mortgage dependent note. You have an unsecured liability with Pierre Street. And so if Peer Street goes bankrupt, you're going to be in line with all the other unsecured creditors. You don't get the real estate to go sell. That's on the other side of the platform. You're in this unsecured debt. In a venture capital-backed company that doesn't provide any transparency.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Well, they selectively can be beneficial because they can give us access to investments that we typically aren't available in the public market. So it could be a private real estate transaction. It could be a piece of art. It could be a real estate-backed loan. That the key, I mean, a platform basically is bringing in investors and then it is sourcing investments that those investors can invest in, where I don't think investors appreciate as much is what is the structure of that investment. And so we recently did an episode on Pierre Street. So Pier Street was a crowdfunding platform that investors could come in and basically back debt that was collateralized by real estate. And so these were typically the borrowers were home flippers or somebody remodeling. So they're looking for, these are called hard money loans, basically looking for some short-term finance.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Words, we measure the value it's produced, but if what's the cost to the planet? If we're producing in developed countries at a level that if the entire world produced at the same amount of cement and steel and clothing, it would take three to four as many planets to do that. And so maybe technology can solve that, but we ought to be measuring as part of our output calculation what is the cost to the natural system, the ability to produce as a world all these things that we produce.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Somebody realized if you just ate one kernel of corn that your life expectancy could increase by 100 years, the impact of well-being would be amazing. But what would be the price impact of corn? It probably wouldn't change that much because it's so abundant. And so we can't, GDP measures what's produced. It doesn't measure abundance and it doesn't measure wellbeing. And we know that because there are areas of the world that have as high a life expectancy as the US. The people are just as happy, but that country's GDP per person is 20% of what the US is. So just producing more doesn't lead to well-being and happiness. And so I'm fine with how GDP is measured. The part that worries me a little bit that we don't capture adequately in that metric is the cost of producing. In other words,”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“People have to buy this stuff. If they're not going to produce it, and that's, I think that's where you're getting at. If there's a surplus of things and where I don't think GDP is, where there's a flaw, well, we call it a flaw. It's just GDP just measures the dollar value of what's produced. It doesn't measure well-being. It doesn't measure happiness. And there was a Scottish philosopher James Maitland that had a great example. He wrote about this around 1800. And he distinguished what he basically called wealth, which was the exchange value, the monetary value of things, what's basically being measured in GDP. What's the monetary value what's produced? But then he said he talked about abundance. Abundance is things that aren't necessarily scarce. They're useful. They're delightful, but there's not a scarcity of it. The GDP is basically based on scarcity, demand and supply. But the example we gave, if”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“First off, let's define GDP. So, gross domestic product is the monetary value of the goods and services produced. So it's the output. What is produced? That's all it is. That's what's measured. What is the dollar value of what's produced? Now, when the government estimates what that is, you can estimate what's produced based on what people spent on goods and services, but you can also base it on the income received. And GDP grows because the population is increasing or that population of workers is producing more with less. They're getting more efficient and more productive. So if you go back to that software developer, that developer, because of AI, is able to produce more. And that leads to greater productivity. And that would grow GDP if he's actually creating more software. Now, on the other side, there's”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“There's a natural deflation aspect of things getting cheaper or more efficient and more productive. And those work together. And generally, as I see it, it could be disinflationary, which is sort of a combination of two. It means inflation rates are not as high as they would be because of the deflationary impact of AI and other technologies. But because the system itself is built on an ongoing increase in the money supply, that's inflationary. So ideally, we'll just have lower inflation than we would, which is actually good news because we've had 20 years of low inflation up until post-pandemic. And we've already discussed why it was the money creation combined with the capacity constraints having shut down the economy, just taking along to start producing goods and services in the supply chain again.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“But as you mentioned, the economy is naturally inflationary because the money supply keeps increasing because of the banking system. When banks make loans, what does a bank do? It puts money in a checking account if you're a borrower. It doesn't have to go find that money through the magic of accounting. It just puts a loan receivable on its balance sheet. And so there's these inflationary pressures just as the economy grows and as households and businesses borrow more money. And then if you got the government running a budget deficit and the central banks going out and buying bonds, essentially monetizing the debt, that in and of itself creates money, as we saw, going to M2, going from 15 trillion to over 20 trillion. So that you have this inflationary push. But then, as you point out, there's deflation.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“First off, there basically is, I mean, there's turbo tax, right? So you don't have to go to your accountant now. And so why do I pay my accountant? One, I trust him and the taxes are complicated. And so AI is, in my view, not going to replace highly trained professionals who are creative that are trustworthy.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“You're absolutely right. This is not a technology where little tiny startups are benefiting because of the huge cost it takes to train these large language models. It's incredibly expensive. And so it is the bigger cap companies. At least for now that are benefiting, and again, instead of trying to pick out which particular one, if you just own a size weighted or a capitalization weighted index fund, you're participating. Now there's other ways to do it, but that would be the simplest and most direct and just accept the fact that this potentially could be life-changing, at least grow the economy faster because of greater productivity for workers if they're suddenly able to produce twice as much work or output than they did before.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“The economy, and that will benefit all stocks, both US and non U.S., over time. And so that would be by the Vanguard total world stock index fund, ETF, VT. And you can participate in AI that way. And you already have. If you owned it, you benefited with NVIDIA making up roughly 3% to 5% of that particular ETF.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Risky because when you purchase an individual stock, there's a price there and that price is based on the consensus of investors, all the buyers and sellers say that NVIDIA should be worth 300% more than it was a year ago, which means for that stock to go up, NVIDIA has to do better than what everybody expects, the consensus. And that's why I generally prefer to invest in index funds, ETFs. Occasionally an active fund. But the reason why is I want a basket of securities. I don't want to be betting on whether something's going to do better than expected. So an index funds, some will do better, some will do worse and disappoint. But in aggregate, the performance will be driven by those drivers I've already discussed, the dividend yield, the earnings growth, the change in valuations. And AI will proliferate through.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“AI to get information in a clear fashion, and not that there's not issues with AI, but I'm saying, you know, as I see it, it can fundamentally change the creation, particularly professionals. And just something like GPT, which means that they become more productive. Software developers. We have a software developer that's a member of our community. And he said chatGPT has doubled his productivity. It's writing documentation for his code. It's putting scaffolding in place as he builds out code. Now, he has to monitor what it produces, but it's like this virtual assistant that has doubled his productivity. If that goes through the economy, that boosts earnings growth, which means to participate, if we just own the global stock market, we'll participate in AI. Now, if you go out and I say, I want to participate by buying NVIDIA, that's much more.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Well, the primary way, and I recently did an episode on AI, and it's important this is meaningful. And it's only been six months, seven months, eight months ago, since ChatGPT comes out. But to invest in it, first off, invest in yourself, use it. It's eye-opening. When I do a search right now, if it's not something recent, but if I just want to learn something or understand something, I'll ask ChatGPT because I don't have to see ads, at least currently. And I pay for the premium version. And the information is distilled. And so when you talk about AI, there are business models that are going to be positively impacted and negatively impacted. Google, which is one of those top seven companies, they call to code red because of the potential or the threat of AI to their advertising business because people suddenly aren't searching Google and they're just searching.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Over time is over 20. We're at 14.2. So there is that potential boost if small cap value got more expensive. And that's why diversification makes sense. But in understanding sort of where we are, the market temperatures we talked about. What is the dividend yield for the different areas of the market? What is the potential earnings growth? What are analysts expecting? And what are current valuations? Because that's the math that drives investing. And that's what we need to be well schooled in.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Mention in that environment, I think it's appropriate to have some small cap value exposure, which surprisingly actually had higher earnings growth. And I was shocked when I saw this in our data of over 9% over the past decade. But its valuation went from a PE of 19.6 down to 14.2. So even if you just add whatever, 10, 15% of US stock allocation to small cap value. You're basically getting a higher yield.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“I think further diversification in US stock portfolio is prudent now. And so if we look at going back to the drivers of that analysis, those big cap companies are growth companies. The U.S. growth index returned 15.5% annualized over the past decade. It outperformed, it basically performed double the US value index, which returned 8.3%. And if we look at why sure earnings growth were faster for growth stocks, 7.7% versus 4.6% per value. But the biggest component is six and a half percent annual return contribution because U.S. growth stocks got more expensive. The PE a decade ago was $19.8 today. It's 37.2. So think about that. 6.5% of that 50% return. It's just because investors are bidding up those big cap stocks.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Weaken over time consistent with its long term trend, and that would be beneficial to non-dollar assets, including international stocks.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“From the dollar, and people realize that, wow, maybe I would rather invest in Japan where the stocks are much, much cheaper, or some other countries. And so you get capital flows into non-dollar assets, which can put some downward pressure on the dollar. And so the dollar does influence it, but the reserve currency status in and of itself, it's a bottom-up phenomena with flows of dollars and non-dollars going all over the world. But the U.S. has some advantages. It's the deepest market. It's a country where we run massive trade deficits. And if you run a trade deficit, that means there's dollars going all over the world that people can use and spend and borrow from. And so these are sort of the underlying macro mechanisms, but it isn't top-down decisions. It's bottom-up. And it'll be a while before the US dollar is not a reserve currency, but that doesn't mean the dollar can't.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Things that contributed to the US dollar being the reserve currency, but it's sort of something that's going on in the background other than to recognize that over the past decade, the dollar got stronger and that hurt non-U.S. returns. I would just be content if it just held its own. And if we look at where the dollar has been so the US dollar, the long-term trend is actually weak for a weaker dollar. So the US dollar peaked relative to non-dollar currencies. This is the dollar index that Dixie essentially, 167 in 1985. So super, super strong dollar. It hit 133 in 2002. And then the most recent high was last October at 123. And so even though the dollars strengthened 20%, it's not getting to where it was back in the 80s or even the early 2000s. Now we're at 115. And so over time, and as some trade moves away.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Well, nobody elected the U.S. to have the reserve currency. That's a bottom-up phenomena. So most trade is still conducted in U.S. dollars. I mentioned the euro dollar, the sheer amount of borrowing that is done in US dollars. Like nobody is telling these corporations overseas to borrow money in U.S. dollars. In fact, if I was an overseas corporation or at least definitely a household, I would not be borrowing. My mortgage is not in a foreign currency. It's in the currency that I'm earning money. for whatever reason because of attractive interest rates, businesses borrow in US dollars. And as I mentioned, that does have an impact because when economies are slowing, there's often a flight to quality, which tends to be to the U.S. because of the reserve currency status. But it isn't anything special. It's just a bottom-up decision person by person, business by business, how trades conducted. Now, back in the 40s, I mean, there were obviously some structural...”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Your home, probably more home country biased, and believe the US will outperform, which is fine. We can believe that. We just have to understand why. Is it because earnings are going to grow even faster? But it's understanding the drivers so that when we talk about being grounded in investment conditions, we don't want to invest blindly. We want to know what has to happen for our particular investment thesis to work out. And then if that includes overweighting US stocks, then we ought to be very clear that we think the US will grow their earnings much faster than the rest of the world and the other aspects that I discussed.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“Strengthening, it's more expensive for them to pay the interest on that debt in the local currency or to service it. And so we actually see a negative impact not only just because of the pure currency impact, but just from an economic standpoint as companies struggle to service their dollar debt, their foreign companies. And so if we actually saw the currency weaken, that could potentially lead non-US to outperform U.S. over the next decade. And if we see a repricing of non-US stocks where they get closer to what US are paying for, that would be, you would see a positive valuation adjustment. So when we look at the overall global stock market, it's currently 62% U.S. stocks, 48% or 38% non-U.S. stocks. And so at a minimum, if you're just going to be neutral to the market, you should have close to 40% of your stock exposure in non-US stocks. And if you don't, then you're saying.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“2% for non US. If we assume that earnings growth has been in the decade ahead, it'll be the same as it's been in the previous decade. We basically get a very similar return with non-US growing a little slower at 5% earnings growth, with US growing their earnings at 7%, often due to buybacks and more technology. But that gives you a return of roughly eight and a half percent for each. And so I'm overweight non-US in my portfolio are adaptive model portfolio examples are because when we look at expected returns, they're similar to the US. But if we actually had the dollar headwind that we've had with a dollar weakened a little bit, that actually helps non-US stocks because many foreign corporations borrow in US dollars. And so if you have a period where the dollar”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT
“The rest of the world. And so that was a 2.5% drag per year because the dollar got stronger. And we care about why things happen. And when we say, why did non-US lag the U.S. stock market by seven percentage points over the past year? 2% was because of currency, the strengthening dollar, a little bit was because earnings growth were a little slower. The dividend yield was higher for non-US, so that should have helped, but it was the valuation increase for U.S. stocks was really a huge driver, close to four percentage points of additional return because stocks got more expensive. Going forward. And so that's backward looking. We care about where are we today? Well, we're sitting here with U.S. dividends. As I mentioned, half as much as non-U.S., so one and a half percent dividend for the US, 3%, 3.”
2023-08-06 · We Study Billionaires · TIP568: Current Market Conditions, Alternative Assets, & AI w/ David Stein · IDENTIFIED FROM THE TRANSCRIPT