Grant's Current Yield Podcast: "INNER WORKINGS" Episode Date: May 8, 2024

Overview

This special "Grants Only" episode of Current Yield is an inside look at the workings, philosophy, and personalities behind Grant’s Interest Rate Observer. Host Jim Grant is joined by deputy editor Evan Lorenz and Phil Grant (editor of Almost Daily Grants) to discuss the roots and craft of the publication, their investment process and track record, lessons from financial history, and the ethos of craftsmanship that guides the Grants team. With characteristic wit and a focus on both historical context and the current investment climate, they share success stories, analytical methods, and the unique culture that defines Grant’s.

Main Topics & Key Insights

1. The Genesis & Craft of Grant’s (00:00–08:09)

• Why This Episode?
  The team wanted to highlight that Grant’s isn’t just a podcast but a longstanding, respected publisher in financial journalism.

  "We've been doing this for over 40 years... it's high time to remind them that we do so. We actually publish something." — Jim Grant [01:16]

• Craftsmanship over Genius:
  Grant reads a recent talk he gave, touching on the importance of craft in journalism and investing:

  "Craftsmanship can in no way be confused with genius. But geniuses can be craftsmen. ... Perfect it must be." — Jim Grant [05:18]

• Values & Mission:
  Grant’s covers the value (or lack thereof) in securities, integrity in currency, and keeps an eye on central bank activity.

  "Money is work. Work is heartbeats, and heartbeats are finite. Hence our affinity for gold, the legacy monetary asset..." — Jim Grant [07:17]

2. The Investment Process & Grant’s Edge (08:09–12:03)

• Evan Lorenz’s Security Selection:

  • Screens for mispriced securities, draws on broad information sources (Bloomberg, investor forums, conversations with readers).
  • Deep dive begins with companies’ own reports and extends to “softer” info like sentiment and reputation.

  "You never know where inspiration is going to strike. So casting a very wide net is kind of the name of the game." — Evan Lorenz [08:41]

• What Sets Grant’s Apart?

  • Depth of experience through multiple market cycles.
  • Access to a highly sophisticated subscriber base, often used as sounding boards for ideas.

  "Successful investing is about having everyone agree with you later." — Our motto." — Jim Grant [11:28]

3. Contrarian Thinking & Specific Successes (12:03–15:51)

• Not Always Contrarian, But Often:

  • Aim to be early when others dissent.

  "We try to be [contrarian], but not for the sake of it... sometimes good businesses are just temporarily marked down." — Evan Lorenz [12:06]

• Memorable Picks:

  • Meta Platforms (Facebook):
    Turned bullish at a period of pessimism (July 2022) after years of correct bearishness.

    "Since we wrote about it, the stock's up 188%, which ain't nothing." — Evan Lorenz [14:11]

  • Fidelity National Information Services (FIS):
    Identified turnaround when the company spun off a mismanaged acquisition, resulting in a 38% gain [14:29].

  • COVID-19 Era Calls:

    • Recommended Lennar, a homebuilder, at the COVID bottom (up 386%).
    • Recommended Puerto Rican bank Popular, up 275%.

    "Those are typical success stories, are they not?" — Jim Grant [14:53]

• Bearish Calls:

  • Early warnings on failing banks like Signature (2020) and Silicon Valley Bank (2019), both of which folded later.

  _"Neither of those banks exist today." — Evan Lorenz [15:15] _"Did they go down right away?" — Jim Grant [15:19] _"No, they took the scenic route." — Phil Grant [15:22]

4. Customer Service & the Human Touch (15:51–17:18)

• Old-School Service:
  • All calls are answered by real people, not AI.
  • Physical printed editions every two weeks in a classic typeface.

  "We value the human touch of customer service... When you call Grant you get a human being." — Jim Grant [15:51]

5. The Role of ‘Almost Daily Grants’ & Thematic Work (17:18–20:03)

• Phil Grant’s Daily Mission:

  • Draws news connections to ongoing major themes.
  • Intends to stay ahead of stories that will become tomorrow’s headlines.

  "I’m looking for stories informed by the news of the day that supplement the themes of Grant’s Interest Rate Observer." — Phil Grant [17:39]

• Big Thematic Calls:

  • Early focus on non-transitory inflation (2020-21).
  • Forecasting long-term secular bear market in bonds, based on generation-length interest rate cycles.

  "Interest rates will be higher for much, much, much longer... perhaps we're embarked on something more than a mere flirtation with higher rates." — Jim Grant [19:24]

6. Macro & Micro Insights; Herding and Historical Lessons (20:03–26:18)

• Investment Philosophy:

  • Skeptical of macroeconomic forecasting; instead focus on how the market handicaps the future and look for extremes.

    "The future is a closed book... But in Nature’s infinite book of Secrecy, a little I can read." — Jim Grant [20:10]

• Historical Analogies:

  • Story of the PFIX ETF (Instrument to profit from rising interest rates):

    "We were the first to write about it and then it... went instantly down before it went up." — Evan Lorenz [22:21]

  • 2021 Speculative Excess—Mr. Carwash IPO:

    "They pitched it as a 'service as a service' company... The stock's down 66%." — Evan Lorenz [23:04]

• Recurring Human Biases:

  • Crowd behavior, cycles of fear and greed, following the herd.

    "The weakness to buy high and sell low... is recurrent cycle to cycle." — Jim Grant [25:10]

• Historical Calls:

  • Early (and correct) skepticism of junk bonds (late '80s), Japanese equities (late '80s), US housing (early 2000s, long before the crisis).

    "The elapsed time between that speculative, journalistic venture of 2001 and the payoff of 2008–09... was about 50 years in journalistic time." — Jim Grant [25:48]

7. Closing Invites and Offers (26:18–28:09)

• Engagement Invitation:

  • Listeners are encouraged to read Grant’s articles, access the digital 40th anniversary anthology, and take advantage of a subscription offer.

  "Read what we got to say, savor it because we take so much time in making it saver worthy and then subscribe." — Jim Grant [26:55]

  • Special offer: $1,425/year plus two free issues, digital access to anthology, and free Almost Daily Grants.

  "If you invest irresponsibly, it’s a fraction of the price of a bitcoin." — Evan Lorenz [27:56] "For subscribing to ADG, the price... is unbeatably nothing—although the value greatly surpasses that almost derisory price point." — Jim Grant [28:07]

Notable Quotes & Memorable Moments

• On Craft:

  "By craft in the journalistic sense, I mean the production of ordered, rhythmic, pleasing sentences... Perfect it must be." — Jim Grant [05:08]

• On Edge in Markets:

  "Successful investing is about having everyone agree with you later." — Jim Grant [11:28]

• On Meta/Facebook Call:

  "Since we wrote about it, the stock's up 188%, which ain't nothing." — Evan Lorenz [14:11]

• On Bearish Bank Calls:

  "Neither of those banks exist today." — Evan Lorenz [15:15]

• On Market Cycles & Human Behavior:

  "The weakness to buy high and sell low...that is recurrent, cycle to cycle." — Jim Grant [25:10]

• On Value for Money:

  "If you invest irresponsibly, it’s a fraction of the price of a bitcoin." — Evan Lorenz [27:56] "Makes bitcoin look like Microsoft." — Phil Grant [28:07]

Timestamps for Key Segments

• 00:00–08:09: Jim Grant’s story, craftsmanship, and ethos
• 08:09–12:03: Evan Lorenz explains security selection & Grant’s edge
• 12:03–15:51: Contrarian investing, memorable long/short picks
• 15:51–17:18: The human touch and customer service at Grant’s
• 17:18–20:03: Phil Grant on Almost Daily Grants & daily thematic work
• 20:03–26:18: Macro themes, history, behavioral cycles
• 26:18–28:09: Membership offer and closing remarks

Summary Tone

The episode balances wit, humility, and deep industry expertise. The discourse is peppered with self-effacing humor (“anything below 200% is just…”), historical analogies, and a clear sense of mission (“we apply the investment precept of buying low and selling high to what we do journalistically”). The camaraderie among Jim, Evan, and Phil is evident, making deep financial topics accessible and engaging.

For Further Exploration

• To access their work and the special offers quoted, visit: grantspub.com/currentyield
• For free access to Almost Daily Grants or to try the digital anniversary anthology, see the website above.

In sum:
This episode is a master class in financial journalism, investing discipline, and the quirky, committed culture of Grant’s Interest Rate Observer. It’s recommended listening (or reading) for anyone serious about markets, cycles, and the craft behind great market commentary.