← Bald Ambition
Loading summary
Transcript56 lines
- [00:01]
A
Hello and welcome to the Bald Ambition Podcast. I'm your very bald host, Mookie Smithson. The one with all the Ambition today is Dr. Adam Link. Welcome aboard, Doc.
- [00:16]
B
All right, thank you for having me.
- [00:19]
A
From what I understand, you are the doctor here to make some sense of the patient, which is a crazy, apparently chaotic investment situation. The Dow, the S and P, Nasdaq, everything is going nuts. Seems to have no reflection on actual reality. Or maybe it does. And my listeners and viewers are eager to hear from someone who's got some pretty good advice, from what I can tell. Welcome.
- [00:59]
B
Thank you very much for having me. Yes, you are very correct. The last few weeks here, as we record this here at the end of June, the last few weeks have been very interesting for the market. In fact, last few months, if you remember, we started a war and then kind of kept doing stuff at the Strait of Hormuz and manipulating oil prices. And now here we are at the end of June, maybe ending a war, maybe continuing a war, maybe having oil come back down, maybe not. And the economy seems to not quite know which way is up.
- [01:33]
A
This is not a political podcast. It is right now focused on investment opportunities and financial wisdom. You had. Trump's tariffs sent the global markets in all objective fairness, into a tailspin. Supply chains and inability for businesses really to plan too far ahead because it was this country and that country and that amount and this amount. And eventually SCOTUS said, cut that out, Donald. That is all about trade and taxation and it's in the good old Constitution. That's the purview of Congress. Remember that, to me, seemed the beginning of this particularly chaotic cycle, one where, as I'm mentioning, the markets don't really mirror the business reality. So as an investor, what are we supposed to look at? How do we make sense of what's going on exactly?
- [02:38]
B
Well, you are right that I think you can trace back the beginning of some of this chaos to the Liberation Day tariffs. I'd actually even say you can go a little bit further back than that when we saw kind of the. And again, politics drives a lot of the economy, but the economy is not politics. The economy doesn't care who you voted for. All it cares about is what's happening. So that's how I approach politics. Much the same way. I don't care who you voted for, I don't care what you back. But the reality is, here we are today. So what does that mean for your money, Right? When you look at the switch that happened between the Biden administration and the Trump administration. When it was confirmed that Trump was going to be the new president, you saw the crypto economy start to take off. Exactly. And so everyone thought that the second presidency of Donald Trump was going to be very crypto forward, going to be very growth forward, very positive for the economy. And so I think you can start to trace the markets, I'd say almost irrational exuberance back to that point where crypto started to take off. And generally what we've seen since COVID going back even further now is people like to gamble in the markets and they just choose the asset class they gamble in. So crypto took off, people started gambling in crypto, and then the Liberation Day tariffs happened and the entire economy basically got a shock back to reality and how economics actually works, which is supply and demand. And all of a sudden we cut off all of our low cost supp supply coming from outside the U.S. and so we had this lurch in the markets where everyone said, hey, wait a minute, this actually has business implications. And the professional investors kind of won for a little bit over the speculative retail investors. And as you fast forward now, what we've seen really is kind of what I would say a long term speculative bubble continuing where we have investors who are on the retail side who are basically driving prices higher and higher, where you have institutional investors who are taking almost the opposite side of the trade. And you kind of see this happening around the Iran war as well. Right. We had a huge shock in oil and you had a lot of institutional investors starting to flee the markets and readjust their portfolio for the price of oil changing. And yet on that backdrop, we had the, the macroeconomic AI trade happen. And a lot of retail investors want to get on AI. And so you're bidding up the price of companies and so the indices are still going up despite the fact that oil is going chaotic. And I think it's even been exacerbated more in the last few weeks when you start looking at SpaceX IPO. SpaceX is the beginning of these multi billion dollar trillion dollar companies that are ipoing. Now, when you look at the recent unicorn darlings that retail investors had wanted to be a part of and now they're ipoing. And so I think you're going to see this irrational exuberance almost continue for the next few months as you might get an OpenAI and Anthropic IPO happening, retail investors are going to be chasing that. And again, you add those into the indices, indices continue to go higher. But I think under all that irrational Exuberance is a structural weakness almost happening in the market where the professional players are starting to prep for what is likely to be the end of irrational exuberance. And that's where the real money is.
- [06:06]
A
Sam Altman already senses some of that. He has apparently delayed OpenAI's IPO. He saw what happened with SpaceX, which is up and then quickly back down, which is surprised nobody, I think. And he's like, oh, wait, wait a second, I want my trillion out of the gate. And coming right off the fumes of that starship launch, he's like, nah, we're reaching burnout even for the speculative investor. Let's wait. Put the brakes Anthropic, you guys go ahead, fill that space. And they also need to pull their pants up a little bit. OpenAI has had some issues and Anthropic clearly kicked their ass in the agency technology front and they literally exponentially exceeded their own estimates for profitability. So what used to be entirely speculative with ridiculous capex, with an ebitda, which made no sense, now Anthropic is almost a legitimate company. Almost. So there's a lot going on with AI, especially with that upfront investment. And to your point, everyone is wondering, well, the bubble might not burst, but there's got to be a ceiling here. So now what, Doc? What are my listeners and viewers supposed to do? On the one hand, there's two. It's like an infinite force meeting an immovable body, right? That infinite force is all the momentum and excitement that you're talking about. All these new AI companies, IPO of SpaceX, it's like when Google first cranked out back in the day, Facebook, it's like a next gen investor frenzy. Everyone wants to get in at the bottom and ride that wave generationally, right? But at the same time, it's so overhyped right out of the gate. What do we do?
- [08:20]
B
Right, Exactly. So there's a couple things. If you are a retail Investor looking at SpaceX or Anthropic or OpenAI or any of these next gen companies that are going to be IPOing, you have to look at them from a very different lens than the people working at the company. The idea of taking 20 bucks and turning it into a million dollars has been what attracts speculative investors to every asset class. Back in the early days of Bitcoin, you could put 20 bucks in and come out a millionaire. Five years later, in the early days of Anthropic, you could put 20 bucks in and come out a millionaire. The reality is the riches have Already been made. And if you are buying into the IPO now, your money is going to turn someone else's riches from shares into US dollars, right? If you are buying into the IPO, you are the exit plan for a SpaceX employee. You are funding their retirement. They are going to go buy a nice car, a nice house and they're doing that on the shares they are selling to you. So what does that mean for you as the investor who's buying the ipo? It means you have to have a view, a long term view of the company you are buying because you are not buying an IPO to flip it quick and make money. That's not how IPO investing works as a retail investor. It works that way as an investment bank. If you are underwriting the offering, which if you do not know what those words mean, you are not doing that. If you do not work at Goldman Sachs, you are not underwriting the offering. You do not make your money flipping an ipo. I actually had a client write to me and say, what do you think about SpaceX? Should I invest? And I said, here's my take on SpaceX. If you believe the future of humanity is multi planetary and you believe that private space exploration is coming and you believe in a Star wars style future where people will own their own spacecraft, then I think SpaceX is a great play to bet on that future. But that is very different than is SpaceX going to go up in value next week, right? If you've got a 10 year horizon and you think SpaceX is the one who's going to launch the first orbital data center, awesome. That is right now the best avenue potentially for that bet. Right? But that's not making millions, it's not a speculative asset class. That is you have bought into the vision of space and private space exploration and all that. And that is very different than saying we've got a great opportunity here for AI to take over the world. So I think that is the biggest word of caution on these IPOs I can possibly give your listeners is just realize you are the exit plan. Your money is the exit plan for an existing employee. You got to be buying it for another reason because you're not going to find another investor to exit and sell your shares to. That's just not how this works.
- [11:21]
A
There's an upper and lower boundary, right? Which is where's the top and where's the bottom. So to your point, the top is pretty much sky's the limit, right? In this case, Mars isn't even the limit. So if you're long hauling it, just like back in the Google days, the Google IPO, the Facebook IPO, if you're in it to win it for five years, 10 years, look at Amazon where Bezos was basically sending a letter to his investors that you're not going to make anything off this for another decade, so keep your pants on. Then it probably makes some sense, barring Elon ODing on K or joining some radical party and really blowing his reputation. But it seems he's Teflon as long as, as long as he keeps making people money. He says and does whatever he wants. But there are a lot of variables here. They're going to do manned rockets. The second one of them blows up with a full crew aboard. You know where that stock is going, at least in the short to medium term. So hang on to your hats and go for the long ride. That's that upper boundary. But the other question is, am I, if I'm buying in, is there a chance that the whole market can tank? What about this AI boom? What if the Chinese develop AGI? I mean, there's even risk when it comes to just the basic investment. Would you consider AI and space medium to high risk? Or do you see it as more of a Hershey bars and tampons kind of play?
- [13:10]
B
Yes, AI and space are definitely frontier speculative investment risks. And speculative investment is almost an oxymoron. But essentially you're playing a future that may or may not exist. Again, you've got to put on your venture capital hat. You're going to make bets. Most of them won't pan out, one or two of them will and that's going to return the entire portfolio. Now, it's a very different risk tolerance than the way most investors approach their portfolio. So when you look at the overall market right now, what's basically fueling the rally, and I do think we are seeing space and AI are heavily fueling the rally now, all of our indicators right now point to a almost historically expensive market where we are touching never before seen records on how expensive the market is.
- [14:04]
A
It's nuts.
- [14:05]
B
Oh yeah.
- [14:06]
A
It's literally insane. Maynard Keys would have, you know, lost his shit. Looking at, looking at the market now, I mean, it seems actually impossible. Doesn't it seem like science fiction compared to even a 20th century view of things?
- [14:23]
B
Yeah. Where we are right now, just for folks who are not necessarily following as closely as someone whose job it is to, we are basically seeing valuations that the only time we saw higher valuations was the 99.com bubble right before it burst. And if you weren't alive at that point in time because there are investors out there who were not alive, then basically everything went very pear shaped very quickly and people lost their shirts. The idea was you take any business model, slap a dot com at the end, you raise a bunch of money, you are now rich, the investors pay for everything and we'll figure out how to make money later. And what happened was it shook out all of the people who had a business model that could operate in the new regime of the Internet. From those who had no idea what they were doing and just trying to be something dot com. And what happened was those who came in late lost their shirts and those who were left became things like Amazon and Yahoo and Microsoft and Google. And you'll notice in there I said some winners and some losers because Yahoo was at one point the darling of the tech industry and Yahoo. Now for those who don't know, Yahoo was a search engine. It's what you used to do before you googled everything. You could go to Yahoo and Search, you could go to AltaVista and search, you could go to Ask Jeeves and Search. But nobody's jeeving anything, right? We all just Google it. Which tells you there was a winner. And that winner took a few years, right?
- [15:58]
A
Yahoo was actually, before it was even a search engine, was a portal. And this is inconceivable to the digital Native. But when www.com first appeared, most folks did not know what the hell that was. So even navigating to a website was tough. So Yahoo was your one stop shop. It had little blue links that said sports and mail and investing. And then you didn't navigate the web. You went to yahoo.com and you clicked a link and search was just kind of in the upper right hand corner is the Gee whiz. You know, if you're really bold and you want to take that plunge, maybe type something into that box, that's literally what it was like back then. And then here we are with that box now. A dynamic chatty bro that has revolutionized everything we think. And the analog is striking and that's what's concerning a lot of people. So even if you are willing to go long term, and by that I mean five years, this whole thing can tank like it did in 1999. So what's safe, Doc? It's usually spreading it out. Let's say I've got $100 in my portfolio, okay, so we'll keep it easy. And then let's say I put what, 20, 25 bucks into AI, into robotics, into space, and that 75. What's reasonable in this spaghetti bowl mess of NASDAQ right now?
- [17:52]
B
Yeah, it's a great question, because there's a question you should be asking before that, which most investors don't ask. So the assumption in your question is, I have $100, I must be invested in the market with $100. Where do I put it? And that is the view that most financial advisors will give you. And that is the view of passive investing. It says it's not timing the market, but time in the market. And therefore, we must be in the market in order to take advantage of the market. Now, when I look at my investment philosophy and what we do with our firm, we actually disagree with that. So I agree you cannot time the market. But you can also look at the indicators and warning signs and other metrics to determine how overvalued the market is and what may happen in the future. This is all a probability play, right? But at a certain point, you can say, look, I think the market is headed for a crash, therefore, we are going to position ourselves accordingly. And that's what professional investors do. If you are looking at $100 and saying, where do I put it in the market? You are not acting like a professional. What professionals do is they ask the first question, which is, I have $100, should I be in the market? And if yes, where in the market? So our investing philosophy is we do the same thing. Cash is a defensive position and is just a valid investment opportunity as being in the market. So when we look at our portfolio right now that we run for our clients, we run multiple different trading strategies, and actually one of them right now is in cash. Because we are looking at indicators. And that particular strategy has flipped from an offensive in the market position to a defensive exit the market hold cash position. And really our entire investment philosophy is either we're in the market offensively, we're holding cash cash defensively, or we are inverse the market offensively. That's it. It's one of three positions. Now, the underlying assets we use obviously vary depending on the strategy. But to answer your question, if I've got 100 bucks, where do I put it? Well, our model says 14 of those hundred dollars should be sitting in cash right now. And I think that is the question most investors are not actually asking that they should be. And if your financial advisor is not sitting there telling you, well, here's your defensive position right now. You've got a financial advisor that's all they're going to do is put you in the market and when you come to them saying I'm down, they're going to tell you to hold on. And we don't. We don't.
- [20:23]
A
Yeah, I was happy to lead you into that with my own ignorance, which is just the knee jerk reaction, and I think most people have, is that you're investing and where are you going to invest? You're going to invest, obviously, because you've got these dangling fruit right in front of you, big juicy bite. You want to take out of SpaceX Anthropic, the long list of IPOs which will make you rich. Maybe not next month, hopefully next year. Maybe like you're saying five years from now. But I like where you're headed, which is don't necessarily head in that direction. What I do want to learn more about is what kind of return can I get on my $14 of cash? I understand if I'm taking dollar bills and I'm shoving it under my mattress, that could be useful for the zombie apocalypse, which could very well happen. But where's my return, Doc? I'm investing to make money, not just cover my ass.
- [21:33]
B
Exactly. And so this is where you have to take a slightly different view than what most people have been exposed to when it comes to investing in the market. You are right that your 14% sitting in cash today is not earning the return that a invested portfolio would. And that's by design. So when you look at the way that professional investors work, the number one way to not lose money in the market is just to not be in the market. Right. So that's almost tautological. Right. But the idea behind it is essentially kind of what underpins our investing philosophy as well, which is if you don't lose money in a downturn, you start from a higher base the next time we start going up. And mathematically, the way it works, if you look over, let's say three years, from 2022 to 2024. So 22, 23, 24. If you didn't hit the downturn in 22, you can get incredibly normal returns in 23 and 24 and still outperform simply by not losing when the market went down in 22. So the way that we look at investing, that defensive position is there, so you don't hit the downturn as much as possible that other investors hit when you are fully invested. Because if you don't take that ride down, you don't have as much of a hill to climb. When you start climbing up the next time. So really it's a fundamentally different way of looking at investing. Right. Because otherwise what you're saying is, okay, Well, I lost 20%, so now I've got to get back to even and then I've got to go up from there. If you never lose that initial amount, you can climb at a slower rate and still end up at the same end, period. Right? So yes, you are not earning money in that 14% the way that a fully invested portfolio is, but the point of that money is to not lose money on that 14%. So we have a larger base to compound from when the market starts to go up.
- [23:31]
A
So I'm hearing two benefits. The first benefit is it's an antidote to volatility. So if you're riding the roller coaster, chances are you're going to go down. Then you got to make up for going down and it's going to take some time and effort just to get it baseline. And the other one is you've got the $14 for that rainy day. If the zombie apocalypse does hit, then woohoo, you've got that as a resource. And then lastly, and I think you're leading into this, there's stuff you can do with that 14 bucks which won't get you a zero return, but it'll get you enough of a return to make it worth your. Why?
- [24:18]
B
Yeah, so you can certainly do that, right? You can certainly take that 14% and say go to a money market or something like that. Frankly, the way that we invest, we just hold cash. We don't actually try to get any excess eke out return out of that money. And the reason for that is we basically don't want to have to sit there and try to exit a position in order to get back into the market. Honestly, it's just a keep it simple investing philosophy where we're going to hold cash, just straight cash, and when the signals suggest we either go inverse back in or long, we invest back in, then we have that cash there, we can just execute immediately. So for us, it's a speed of execution thing.
- [25:03]
A
Okay, let's just focus on that 14 for now and then we'll talk about the 86 in a second, the remainder. The market's been really volatile, but I know what listeners and viewers are thinking right now, which is, come on, Doc, look at the market overall. Even with the dips, it's been an investor's paradise, especially Nasdaq and especially these speculative companies. You could throw what I call darts in a dark room at midnight and Just hit the center every fricking time. It doesn't even matter which way you're facing. Just keep throwing darts at the Nasdaq and you're bound to get a decent return, sometimes exponentially. Big juicy return. So what do you say to skeptics who are this? Sounds to me like you're living in the 90s that this is a post Reaganomics approach to conservative investing.
- [26:07]
B
Yeah. So I think there are a number of different types of investors in the market. For folks who are in a high risk tolerance accumulation phase, what I'm talking about where I say we're holding cash in a certain sleeve may not make sense to you because you are all risk on and you may have either the income or the portfolio size to recover from a loss. Right. If your risk tolerance and risk capacity are incredibly high, talking about taking anything out of the market at this point makes no sense to you. Now let's switch hats a little bit and talk about someone who's five years from retirement. Yeah, it's great that I can get 20% in the last couple years in the stock market. That's amazing. Now when the crash comes and we end up losing 20, 30%, you better hope that's not the year before your retirement because that can wipe out all your gains in the last few years. The risk tolerance for different investors is very different. I think that's where we look at our strategy and we say, okay, we are not always going to apply to the person who is 100% risk on and wants to bet their entire portfolio and keep doing that and they want speculation and gambling, not invest. That's fine. We're not for everyone. Now for the person who's looking at a difference between investing in the market and hoping I don't go down a couple of years before retirement or talking to a financial advisor with a strategy that says, well, we'll take you out of the market when we start to see the froth and we'll go to cash and we'll hold that. That's a very different risk profile. And while I can't guarantee we're always going to hit it right on, I've got a philosophy that says we're at least going to try to go to cash as a defensive play to protect that nest egg that you've built. And so it's a different path through the markets. Rather than taking the roller coaster ride all the way up and down, we're going to try to have a path through the markets where it's a little bit less volatile. And the objective is to not go down and try to capture as much of the upside as we can.
- [28:13]
A
That sounds reasonable. Segmentation, targeted audience. So you're looking at an investor who might be at the brink of retirement, might already be retired, doesn't want to blow it all right. Does not necessarily have a source of income or a second source of income and doesn't want to take the risk. And a lot of the yellow lights are already spinning for a 1999 style renormalization that could very well happen. There's also other variables. You brought up the war. You know, there are meteorites and comets out there. There's super volcanoes that are brewing below the surface. There's a lot of things that can go wrong and they can go wrong very, very rapidly. So if you're an investor and you don't have a YOLO approach, you're more like, I want to hang on to what I got. $14 in cash at your liquid disposal might be a good idea. So, okay, I got 14 bucks in cash, in a sense, underneath the mattress. What's up with that other 86 bucks?
- [29:31]
B
Yes, exactly. So, yeah, where do we put the remainder? Right now, in our investment philosophy, we don't believe in looking at individual companies. We invest in somatic sectors in the market. So we'll do stuff over a broad index or we'll do stuff over a particular healthcare subsector or consumer durable subsector, stuff like that. When we look at our risk profile as a company, there's just too much risk at going in an individual company. So if I say, okay, look, I think manufacturing is going to come back to America and this may or may not happen, but let's say manufacturing is going to come back to America in response to some of the tariff threats. Now, which manufacturing company is going to win? Is it going to be Ford that suddenly produces the next great vehicle? Is it going to be a U.S. steel that the raw goods is what takes off? Honestly, I don't know. Even in steel mining, is it US Steel or Cleveland Cliffs? No one knows. No one knows which exact company is going to take off. Nippon Steel just invested in U.S. steel. Is that going to be the thing? When we look at our investment philosophy, going into an individual company is actually an unnecessary risk. We don't need to take on individual company risk. If we believe that there is profit in the manufacturing sector, we can make a sector based bet. We can say we think manufacturing onshore is going to take off. Right. And so that's how we look at our investing, which Is why bet on an individual company when I can take the basket of companies and take a directional bet? Right.
- [31:14]
A
Well, that makes sense. And it's common practice, right, Doc? I mean, the index funds, you go to any of the major players, they'll always issue a block like this. You'll get your portfolio of companies which are risk averse, and you get to pick your sector, pick your industry, and they'll spread the love to minimize the risk. So what's new here? You got $14 in my mattress and then you've got 86 bucks. How's it different than if I went to the H and R blocks of the world?
- [31:55]
B
Yeah, exactly. So the difference in our investment philosophy is going to be the levers that we are looking at behind the sc. So when we look at each of our individual trading strategies, like I mentioned, we've got eight trading strategies that are all going to take one of three positions, either invested in the market in cash defensively or inverse the market as an offensive position. And so when you look at the way that we're investing right now, I can't give you individual funds that we're in because frankly, that changes frequently. And that is one of the upsides of having algorithmic trading strategies is that any position that we have today, end of June, by the time you hear this, people have changed out of those positions. It's all rules based, it's all algorithmic. And that tells us where we are going in the market based on the signals that we're seeing. And so again, how is that different than going out to your routine advisor and saying, well, I want to buy this index fund? Well, the answer is we're doing it based on rules and signals coming in, not based on a hunch or a gut feeling. And so, yeah, we can buy the same index fund, but we're going to have an entry and exit point that is based on rules and based on multiple economic signals coming in that tells us when to get in and get out of that individual position. And that's going to be the difference between a regular investor and a sophisticated investor. We're coming in and we've already got our exit position mapped out. We know our numbers, we're there. It could be for as short as a day, could be months, could be a quarter, could be a year. But it's all driven by rules and algorithms. Whereas every normal investor who's coming in and buying the S&P 500, they're buying it until they feel like selling. And if you feel like selling, that's the wrong time. Right.
- [33:43]
A
Just to play devil's advocate, I would make the assumption that all of these index fund managers say they've got an algorithm or they're not just guessing. Right. They base it on, they base it on some, some quantitative assessment. They might not have your algorithms, but they're basing it on something. Right. The other, the other pushback is a friendly question, is you're citing, let's say, a sector like manufacturing. Okay. And I know you can't give specifics just because everything's changing. And if they want advice, they should hit the link below, do contact, you understand that. But all of these come with risk. So you could say that, well, AI is the CapEx is through the roof and it's overvalued. And then if you go to a different sector like manufacturing, it comes with its own host of risks, which is what if this tariff business backfires? And what if China resupplies, chains itself and doesn't end run? And what if it just doesn't work, it doesn't stick? Then you're back to square one. Right? So is that part of your algorithm? Is that part of your quantitative analysis? Risk, reward, opportunity, boom, bust. Is that part of the equation?
- [35:12]
B
Yeah. So I guess before I address that, I do want to go back to one thing that you did say, which is why assume all of these other management managers have rules. That's not just their feeling, not just their gut feeling. And I can tell you from at least one anecdotal story, when I used to work at Merrill lynch, we had an actively managed portfolio. The team that I was on had an actively managed portfolio. They offered to people and the active management sometimes looked like four guys sitting in the conference room around a box of donuts, looking at a list of stocks and saying, well, what do you think about Ford? I don't really like Ford. What do you think about GM? Well, we should look at GM. You think GM's gonna do well? Yeah, I think GM's gonna do well. All right, how much Ford should we sell? I don't know. Let's take our position down by half. Where should we put it? Gm? Yeah, let's do that. Let's put it in gm and they go out and they'd sell a couple million dollars of Ford and buy a couple million dollars of gm. That is what some people call active management. That is not rules based, algorithmic active management. That is a bunch of guys with a bunch with a bucket.
- [36:14]
A
I've been in mid tier executive management and a lot of decisions frankly, are made like that. There is a lot of donut eating.
- [36:22]
B
Yeah, exactly right. So that's not necessarily active management. That's a box of donuts and a couple of guys in a conference room. It's not algorithmic. That is the key difference there where you look at sophisticated players and some of the ways that we invest and some of the active, some of the positions that we take, quite frankly, the tickers we are buying in some cases are not open to regular investors. They're institutional class investments. So you have to be an institution to buy them. You have to have, in some of our cases, 20 to $50 million to even begin to operate the strategy that we're running. There are very real monetary gates that keep everyday investors out of some of these more sophisticated sides of the market. I think that that is also something that most people don't know is that as a retail investor, the answer to some of these is, well, I can do that myself. The answer is, no, you can't. You literally don't have the amount of money, you literally don't have the right connections. You are not the right level of licensure and sophistication to get into that same thing that we are doing, right? And so it's like, well, then how do I get in? Well, the answer is you come to us, right? There you go. Welcome to the whole Wall street game. At a certain point in time, when you're big enough, you make the rules and the answer is you have to go find the middleman and pay the fee, right? And that's how the game is played. That's why there's the entire investing industry. Now to your point about manufacturing, other stuff like that, like, yes, there are industry specific risks, right? And so that's why when you look at a sector based bet, you have different indicators coming in for that sector that are telling you when to enter or exit, right? And so one of our strategies is more of a rotational strategy, rotating through sectors, right? And so where we see a sector is likely going to be beneficial, right? We are entering into that sector with our exit plan, basically our exit metrics already in place. And when we see one of our indicators trip around, you know, along that metric, we then start shifting into the next sector coming along, right? So that's, you know, again, at a very high level. One of our sector rotation strategies, well,
- [38:39]
A
makes sense to me. As the adage goes, money talks and bullshit walks. So let me ask you, and I know you can't really go into detail, but enough to titillate Us, tantalize us and tease us into reaching out to you for your good advice. What's under the hood? You talk about algorithms and you talk about some fintech, is it AI, is it machine learning base? What's your secret sauce that you're applying that most, if not all of these other folks are not? And then the other part of that equation is again, you can't share specifics. But what kind of returns are you looking at statistically with investors giving you their 86 bucks? How's it shaking?
- [39:34]
B
Yeah, exactly. So what is our secret sauce under the hood? So some of these strategies, when you think of AI, many of these strategies existed prior to anthropic and OpenAI. So it's not like we're just sitting there with the Opus 4.8 model and asking it questions that you're not and getting better answers. It is algorithm. There is a component of machine learning in some of it. In terms of when you think of machine learning, are we adjusting based on what we've seen before? Yes. And so it is a model that continues to evolve as the mark continues to move. And it is algorithmic and rules based. And so what that basically means is we'll say, okay, for this particular signal, we're looking at a number here and a number here. This number means sell, this number means buy. Right. And it is very much rules based like that. Each individual strategy operates on its its own separate set of indicators. Right. And so we've got about eight strategies that we're running in terms of returns. Because we are a registered investment advisory firm who is offering a product to the public and because this is available to everyone, not just accredited investors. Right. Anyone can buy in. What that means is the SEC says I can't give you a return number like this. Why? Because our tear sheet, which is our information sheet that we send to people that has that return number in it, by the way, that number I can give you on a written down sheet of paper that comes with four pages of disclosures that say things like hypothetical performance and not actual client results. Because if you were to invest this week versus next week, your 2026 returns will be different. Why? Because this week is going to change what your returns are.
- [41:25]
A
I work for the pharmaceutical industry. One of my day jobs is a strategist, analyst, marketer, communications expert for life science. So fda, opdp. It's probably a close first to the financial industry in terms of disclosure disclosures. So I guess.
- [41:47]
B
Exactly. Yep, exactly. This, this drug will make you better or kill you. Here are the 19 different ways it will kill you. And the one way it'll make you better. Right, Exactly.
- [41:55]
A
Do you see bubble gum and ginger ale afternoons can cause stroke, heart attack, erectile dysfunction.
- [42:05]
B
Exactly. Yep, yep. Yeah. So look, I, I can't, I can't tell you that return number, but I can tell you where to find it is quite frankly, you, you email me and I will send you that tear sheet because it's updated every quarter and that the latest thinking. Now what can I tell you directionally to make it interesting enough for you to email me to get that tear sheet? I can tell you, hey, I'm invested in this stuff myself, so I truly believe in what we are doing. In fact, I love what my portfolio has done. I will leave it to your imagination as to what I love what my portfolio has done means. But let's put it this way, I'm not in the broad market. I love what we're doing in active risk management. I believe in it very strongly. Secondly, what can you as a listener take away? Well, a couple things. One, there's a tear sheet with a number out there. I'm happy to send it to you. Two, we are 100% liquid, which means we don't lock up your money, which means you can get in and get out if you don't like what you see. And three, do it the way that I did it. When you get in, not financial advice, you can certainly jump in with both feet. But do what I did, which is bring a little bit of money first and see how you like. The trading strategy is working and if you go, oh wow, this works really well and it's accomplishing what I want with my money and it's helping me reach my goals faster. Let's talk about bringing more in if that is what you want to do, because that's what I did and it worked for me, which is a n of 1 and it is not financial advice and it will not apply to you, guaranteed. Because that is what the SEC wants me to say.
- [43:34]
A
You're keeping me from having to put a little disclaimer at the bottom of that podcast.
- [43:41]
B
Not financial advice. Everything will go pear shaped and you'll, you can and probably will lose it all. Thank you FINRA and the sec. And if you still want to get involved in our great American markets with that disclaimer, right, here's how you can invest.
- [43:58]
A
I'm channeling. I can actually hear. There's no, there's a little microphone here. I'm channeling some of our listeners right now and they're saying, okay, Doc, you know, do you have any crypto in your portfolio? So what's your attitude toward crypto? Just to give a little backstory, it went up to about 120. What, 122,000 for a Bitcoin at its highest, it's hovering at about 60 now, which is literally half of its value before the big crypto winner that struck this year. And as you mentioned, right, with Trump 2.0, there was a lot of regulation that was removed, there was a lot of hocus pocus that went on and boom, bitcoin exploded and now it's deflated. What's your attitude about the big blockchain in the sky?
- [44:55]
B
Yes. So if you notice me, if you're seeing this on camera, you're noticing me looking behind my screen right now. I've got a ticker that actually has this. So Bitcoin, as of 15ish minutes ago, is trading below 60,000 at 59. What do I think about crypto now? I worked in the crypto industry for about nine years for various companies, so I've been in crypto for a long, long time. You will not become a millionaire in crypto anymore, almost guaranteed. And I hesitate to say that word, but basically the idea is, look, if you want to be a millionaire in crypto right now, you got to put in a lot of money in order to have it increase. Right? You can't put a thousand bucks into bitcoin and wake up and buy a Lamborghini next week. Those days are gone. Exactly. Yep. But you'd be surprised, though, how many people still talk to me about crypto as like, well, I'm going to put in a thousand bucks. And how quickly can that become $100,000? And the answer is, those days are gone. I was there for those days. I was a part of those days. Those days are gone. It is no longer that. It is now a bet on. Do you believe in blockchain technology or do you believe in bitcoin as a store of value? And here's what I'll say. From a speculative market standpoint, I think what you've seen over the past year is the speculative money has moved from crypto into places like Kalshi and polymarket with betting on these prediction market contracts, which we can go talk about, whether or not that's betting or investing. But that's where the speculative money is. And where the speculative money is going to be moving, I believe, is perpetual futures, which are now coming online in the US More and more. So do I think bitcoin is going to see the rebound to 120 because people are just sitting on the sidelines waiting to buy back in. No, I think actually that speculative pot of money has moved away from crypto and is now in other asset classes. So I think what we're going to see is a continued depression in the price of crypto until crypto can prove out its utility. And at that point I think the question is what blockchain is being used for that utility.
- [47:03]
A
Right to your point. Blockchain as its own architecture has amazing strengths and it's a powerful way to store and communicate information. Those revolutionary independent of all the bitcoin stuff. So you make a great point there. I have true confession. I was on the Mount Gox website back in. Oh my God, it was like 2009, 2010 and I remember the little blinky light on it, you know, the shitty graphics. Buy, buy bitcoin. I remember it was like $5.55. In 2011 I wrote a sci fi novel that projects my failure to buy at that point. It's a fun story to tell. Coulda, woulda, shoulda, but I don't know. I think a lot of viewers and listeners are probably keeping their fingers crossed that bitcoin will come back with a frenzy if, if for no other reason that it's a huge Ponzi scheme. I mean it can go down, it'll go up. Fuck different.
- [48:17]
B
Exactly.
- [48:17]
A
It's literally nothing, folks. You can say that the US dollar is no longer tied to gold in Fort Knox, but you need to use the dollar and you'll probably need to use the dollar indefinitely into the future. Nobody needs crypto for anything.
- [48:36]
B
Yes, I think what you're going to see coming up is blockchain technology will take off. The fundamental plumbing of the financial industry is going to get changed to near instantaneous settlement for many different types of asset classes. That is super awesome. I am so excited about that. It's going to make us a lot more efficient. It's going to facilitate cross border transactions. It's going to do a lot of really cool things.
- [48:59]
A
Decentralization. It's like a libertarian dream come true of, of governmentless money. That's governmentless transactions for that.
- [49:09]
B
Yeah. And so the question is, okay, well if I believe in this future, what do I bet on? Well, you bet on the consortium of Goldman Sachs, JP Morgan Chase and all the other big banks to build their own blockchain network. You bet on Moneygram and Western Union to build a cross border transaction network. You bet on everyone who's a libertarian is suddenly tearing their hair out saying, well, that doesn't. That doesn't sound like the future I was promised. And the answer is, no, it's not. Sorry, I hate to break it to
- [49:38]
A
you, but somebody's gotta do it. Somebody's gotta do it. Right? It's like the communist ideal in reverse. It's like communism brings freedom to everyone. No, it doesn't. It just centralizes authority like never before. Same thing with blockchain. Someone's gotta build the servers and.
- [49:59]
B
And control them.
- [50:00]
A
Right. I mean, someone's got to build the infrastructure.
- [50:03]
B
Yep. So, yeah, you will see the benefit. You just may not see it directly through your investment going back up. Right. So there you go. That's. That's my take on crypto. And honestly, look, if you've got crypto in your portfolio today, that's great. That's okay. Just make a plan for what happens if it doesn't go back to 100,000.
- [50:22]
A
You know, if you've got it and it goes to 100, I don't know. Don't take my advice, but that, you know, just pick a number to get the hell out.
- [50:31]
B
Exactly.
- [50:32]
A
That's always a good strategy. Right?
- [50:35]
B
Well, if you bought in as an investment, you should have bought in with your exit planned. You should know what your numbers are.
- [50:43]
A
That is the point. That's a great way to put a cap around. I want to be sensitive to your time. I know you got a lot of people to give advice to. I want to thank you so much for offering up some of the goods. Dr. Adam Link. See the link in the description below to reach out to Adam. He'll be happy to give you the tear sheet and you can tear down. Think about your portfolio. Think about your investing strategy. Think about pulling up and pushing out. Think about being aggressive and maybe not so much. And think about spreading the love with the help of your secret sauce algorithms. And good luck to you and thank you for sharing. I appreciate you coming on the Bald Ambition podcast. Like, comment, share, buy, sell. Only do it. Do it with your head, not on impulse. Thanks, Adam. Appreciate it.
- [51:42]
B
Thank you.