Whenever you see a financial crisis, I

can assure you negative convexity is

lurking in the shadows. The capital

markets like those wy coyote moment.

They keep going off the cliff. Don't

look down. I suspect the credit markets

are in that phase. We have seen what the

government will do when they get their

back up against the wall. They will put

that Fed funds rate at zero. They will

start buying treasuries. Do I think

that'll happen again? Not likely, but it

could happen. And if everything goes

haywire, you're going to want something

to protect yourself.

>> Welcome to Monetary Matters. I am joined

today by Harley Bassman, managing

partner at Simplify Asset Management.

He's also known as the convexity maven.

Harley, thank you so much for joining me

today.

>> Thank you. Good morning.

>> I've been reading your stocking stuffers

every year since I came across them. I

think it's probably been over five years

now. It's one of my favorite things that

comes about in December because you you

give your macro view and then you also

give some trades. Uh you are the

convexity maven. So many of them are are

usually bond trades. So they're outside

of the sort of equity calls that a lot

of managers and research providers are

making for their 2026 predictions. Uh

why don't we just start out with the

macro view? The main thing that I would

take away from from reading your

stocking stuffers this year is higher

for longer and that despite the cooling

of inflation, you are not buying it.

>> I've been pushing back on uh you know,

team transitory for for for quite a

while now. I I think inflation is is

here I won't say it's here to well, it's

here to stay um at, you know, 3%ish

somewhere in that zip code. Uh I don't

see 2% coming back anytime soon. I don't

see 9%. But I think that there's an

underlying core that's going to keep

pressure on prices, on wages. Um, won't

get out of hand, but ain't going to 2%.

The key drivers really are demographics

as always. Boomers are retiring. Um, and

thus you're pulling uh skilled labor,

experienced labor out of the market, uh,

efficient labor, and replacing it with

less experienced labor. So, it's more

expensive. The thing that um is tricky

that some of my cohorts have pushed, you

know, the idea that when you retire, you

spend less. And there are some academic

papers that show that as you get older

and you retire, you spend less. That and

I'm sure that's true for the cohort they

looked at, which was my parents'

generation, the depression generation,

the less wealthy generation, the

boomers.

We took all the money, man. I'm sorry to

say. I mean, we got the stock market, we

got we got got the housing, and we have

plenty of wealth, and there's all this

talk of this transition of wealth from

the boomers to the millennials that,

yeah, it's going to happen, but we're

going to spend a bit of it on the way. I

think you're going to see um continued

spending, maybe even more spending by

the boomers as they retire and have more

free time. And of course, the

millennials, they're in the in the in in

the uh home household formation stage.

And you did see household formation lag

about 10 years ago. All the talk of, you

know, the the boomer guys sitting in the

basement of mom's house, which was true.

Um but what's different is they just get

they get married later. You know, um

average um first child in New York is 31

and San France 32. And what you've seen

is household formation picking up and

catching back to trend. And so I think

those two things are going to underpin

it. And then finally, immigration. I

really don't care what you think about

immigration as a good policy or a bad

policy.

You're welcome to think whatever you

like,

but GDP is people times hours times

productivity, right? People hours

productivity. If we reduce the number of

people, we reduce GDP growth and that's

it. And if you think it's a worthwhile

venture to have fewer people in the

country and also suffer the cost of less

GDP, that's your opinion. You could do

that. I'm fine with that. Let's remember

when you push out people, you're going

to go and push out growth. The reason

why one of the reasons why the US has

done so much better than Western Europe

and Japan and everywhere else is we've

had significant population growth and

they haven't and and that's just the

pure bond math of how it works out. So,

I think all these things kind of underly

a slow uh rising of prices. And then

finally, of course, uh fiscal policy. I

we're spending what six six and a half%

fiscal deficit. This is utterly insane

to happen during a time of, you know,

almost full employment and we're not at

war. Um, and I don't foresee any change

in that. There's no there's no support

for cutting back on fiscal policy from

the Democrats or the Republicans. And

so, if we're pumping out that kind of

money into the system, fine for the

stock market, fine for GDP, but also,

you know, fine for uh uh for inflation.

So, you're saying you don't see a world

of 9% inflation. Do you see GDP being

above this 3% inflation? Are we going to

enter into stagflation, or is this going

to be just sort of running it hot um

with high growth as well as stubbornly

high inflation?

>> If the government is running a six and

change percent fiscal deficit, that's

good for the economy. Um it's not good

long run for the US dollar uh or things

like that but you know I mean that kind

of comeuppance takes uh takes decades. I

mean Japan took them 30 years for them

to blow up the currency. Um so uh I I

think it could take quite a while for us

to you know have have a downside there.

But it it it will happen. It's just it's

just a matter of time. My big prediction

in in in bond land is um 4.35%

tenure rate. Uh, that's what I said last

year. That's what I say this year. And I

get that from I think the funds rate

goes to call it 2 and 78s, 288. You slap

on 147, which is the 30 40 year

long-term funds to uh to tens. I think I

think that's the level. Well, can we go

up and down around that? Of course we

will. But I mean, I think I think that's

the center of gravity. If we have a a 5%

five and a half percent nominal GDP,

okay, then that kind of lines up. You

know, you Chicago, the thought is that

you have rates somewhat near nominal GDP

because rates are the cost of capital

and therefore if you can't make a

profit, you're not going to borrow

money, right? So it should be there

should be a small profit there, right?

So you have a five and a half nominal.

Five and a half nominal is what? It's

two and a half real 3% inflation. There

you go. Um so I mean day trading around

that ridiculous but as a long-term

profile I think the front end comes

down. I think the Fed will reduce rates

um maybe politically driven maybe

otherwise maybe it's just to go and slow

down the growth of the interest

payments. So right now most bonds

issuance new bond issuance is front end

and we're uh we're borrowing front end.

The Fed can pull it down to reduce uh

the the interest cost. That's fine. um

back end back end the Fed can't control

unless they go to QE and I think they're

not going to do that again. They they

already had enough problems with that.

So a curve steepens which we'll probably

hit to on page five or six. The usual is

funds at a level plus 50 for twos plus

100 from that for tens. That's kind of

the old you know old wives tail for bond

traders. And uh so that's how it all

lines up for me.

>> Okay. So we're at what 4.12

right now. So you're calling for the

tenure actually to sell off despite the

expectations that people have for rate

cuts. Do you think that is because of

this fiscal profleacy? What what is it

that has you other than just your

historic fair value for bonds that has

you thinking that the long end of the

curve is not going to farewell in 26?

This massive supply of bonds. I mean,

we're we're just pumping them out there

and um the US currency um is being uh

you know, harmed by by what we're doing

and we see it with the price of gold uh

and housing and everything else.

Everything that's not fiat currency and

of course that's the last thing we're

going to talk about is gold. I'm not a

gold bug, but I I I do think that you

want to own gold, man. Um but we'll get

to that later on.

>> Yes, we certainly will. So, do you think

that the weakening of the dollar is a

policy goal of the current

administration or just a consequence of

of their actions thus far?

>> I think they're probably happy with it

uh for the trade deficit, but I I I I

think the main driver is um they just

want to flush money in the system to get

votes and they don't have the stomach to

go. I mean, they can't cut back on

social security or Medicare. Well, they

can. I mean, I'll tell you what's going

to happen is they're going to means test

the big programs. Um, so if you make

over a certain amount of money, um, you

don't get it or you get less of it. Um,

and maybe they'll go and uncap FICA,

Social Security, uh, so bring in more

money that way. But I I I just don't

foresee,

you know, general uh, destruction of the

big uh, social benefit programs being

changed for the vast middle class. and

that absorbs, you know, so much of the

economy already of the budget. Um, and

since they can't cut that, I'm not sure

where else they're gonna go and cut. So,

we're gonna be running a deficit for

quite a while. Um, and that's what they

want to do. I mean, who wants to go and

be the guy who go takes away the punch

bowl and and cuts benefits to people? No

one wants to do that. They should do it.

They've had opportunities for decades. I

mean, Simpson Bulls was a beautiful

policy that would have solved this

thing. The last person to go and take

the song was Bill Clinton, warts and

all. And uh that was the last time we

had a fiscal surplus. I'll tell you a

story that in 1998 999 2000 the Maril

Lynch government bond trading desk was

worried for our jobs because we thought

they're going to stop issuing treasuries

because we actually had a surplus,

right? Um sounds insane now, but I mean

we actually thought that was that was a

possibility. and and if Bush too had

not, you know, gone the tax cut policies

back then, we might still be in that

kind of flight plan.

>> So, it's interesting you talk about

means testing. We can somewhat have a

mashup here of your work and the work of

your uh your colleague Mike Green. Where

do you think they draw the line for that

means testing?

>> Oh,

140,000. I I don't know. Probably

probably higher than that. Probably

higher than that. Um but it'll be it'll

be somewhere. I mean, they they'll

figure it out. Uh it there'll be a

number. Um it'll be top 10% of income

people as a good starting place.

>> I saw a stat recently that said like

onethird of social security receivers

are making over $100,000. And I imagine

that's mostly dividends and income from

investment portfolios, not that we have

a bunch of retirees working high-paying

jobs. Um, I'm sure there's certainly

some some high-paying members of the

Social Security receiving uh

demographic, but I imagine a lot of that

is just if you have a big enough

portfolio, you're going to be spitting

off six figures in in income from

dividends and and coupons.

>> It's called Social Security, but the

original is a old age and survivor

benefit. I mean, this was for people who

were, you know, desperate uh back in the

30s. I mean 65 years old in 1936

demographically it's 83 years old now.

Can you imagine having people work to

their age 82? Kind of crazy, isn't it?

That's what it was. And we never moved

it. We should have been advancing it

slowly over time, but we didn't. Um and

and and thus here we are. And people

have become to rely upon social security

as a um as a core means of retirement as

opposed to being a backs stop versus

their savings. Um, once again, a public

policy mistake. Um, which is

understandable because who wants to go

and um, you know, make people work

longer or things like that. I mean, we

we backed ourselves into a corner. And

then, of course, the pig in the python

is the baby boomers. We also did not

expect 1936 to have this giant bulge of

population

in the late 50s, early 60s. And that is

the real problem is this demographic

bubble bursting on through. If we

somehow find a way to survive to, you

know, 2050, we'll actually be okay

because there'll be a massive drop in

that population as, you know, people

like me kind of go off into the sunset

uh or under the sunset, I suppose. Um

but but I mean I mean that that is the

how these projections all work.

Demographics is baked in the cake. The

people who really are in trouble ain't

us and we're in pretty big trouble right

now. Um it's China. Uh their 1.3 1.4 4

billion will be 800 million in like 40

years as the one child policy perish for

the system. And I'm not sure how you can

take that population down by a third and

not have real problems there. U but

that's their problem, not our problem.

I'm I'm focused on the US and what we're

doing. Um and and you know, we're the

cleanest dirty shirt as as as as Bill

Gross said. Um as big a problem as we

have, other places have have worse

problems. And so you don't see the

dollar really declining versus the yen,

the euro, the other stuff because that

stuff's even worse than we are. But we

are declining. Fiat currency is

declining versus assets. And that's just

bond math. And I'm a you Chicago guy.

I'm Milton Friedman. I know my partner

Mike Green pushes back on me all the

time with that. And look, he's smarter

than me. He's better looking than me,

but he has been wrong on rates.

>> I'm going to ask you to to go into his

realm a little bit. And first before we

get into bonds and rates, let's talk

about equities. The other way people

save for retirement beyond relying on

these the social safety net is

increasingly 401ks and that ever uh

everpresent passive flow continues to be

on. It seems to me from reading your

work you believe that until that stops

the equity market is going to go up. So,

is your call for 2026 that th those

trends reverse or that we continue to

have passive flows pushing equity

markets higher?

>> I think Mike is dead right on this. He's

the world's expert on this. He started

10 years ago. He knows it better than

anybody out there and tells the story

very well. And in my uh uh stocking

stuffers, I do have a link to his like a

30-minute presentation he gives a

condensed version which is terrific. And

everyone should understand what's going

on here. Look, I have four kids. What do

I tell them to do? I say, "You have

jobs. You you're corporate America and

they have a 401k plan and they'll give

you matching of some percentage and and

invest almost immediately. Um, just max

that thing out. take the free money and

go like, you know, what 70 80% um SPX

and the balance in some five-year, you

know, high-grade bond fund and uh

reinvest is call me in 30 years. And

that's the advice I've given them and I

don't see what's wrong with it. And so

if everyone's doing that, then you have

money every month or every quarter,

whatever it may be, going into um these

401k plans. And they are all basically

they're going index. There's no reason

not to. They're going index. And when

they go index, they go proportional to

the market cap, good, bad, or ill. And

the market cap of the top, you know,

eight companies is a third or so of the

market. And so they get most of the

money. And the trick here, as Mike will

detail and prove, uh I is that these

large companies are kind of inelastic,

meaning that um a company that's that's

hundred times bigger than the smallest

company, um 100 dollars going into them

will move that stock much more than only

a dollar of the smallest company. And

that's why you get this kind of

repeating pattern of money coming in,

stocks going up, and the biggest guys

getting bigger and bigger. Um, and until

we get a recession and in my piece I

posted 5% unemployment rate, basically

being idea being that you will you'll

stop putting money into your 401k when

you have no job. Kind of makes sense.

Um, why 5%? I made it up. I made it up.

Um, but it's some number higher than

this where people start losing their

jobs. They stop putting in 401ks and the

flow of money does not doesn't go in

anymore. And then you have the boomers

taking money out because they have to.

Um, and that will turn the tide. Um,

will that cause a crash? Uh, not right

away. But if we start getting six

unemployment, then yeah, you're gonna

have a problem there. Um, so I I I I I

think the whole thing makes sense to me.

And as long as we're running a six and

change uh fiscal deficit, I don't see

why the economy can't keep doing well.

We just had a shockingly strong fourth

quarter, I I guess the answer is yeah,

gun to my head, I'm bullish still, or at

least not be.

>> You made it pretty clear you don't think

that we're going to reach that 5% level.

Certainly with the immigration policy

providing some uh protection for the

labor market as well as the deficit

spending, is there anything that would

concern you that we could hit that 5%

unemployment level or perhaps higher?

>> It would be a recession causing the need

to fire people and yeah, I if we really

deport, you know, millions of people,

that's going to impact the economy.

There's plenty of papers out there

talking about the uh different levels of

of immigration deportation um and the

the theoretical the Peterson Institute

has a nice paper on that you can go and

read that would certainly uh cause

problems there.

>> Let's get into more of your forte and

that is the mortgage market. So I

remember last year and it seems to be in

the stocking stuffers again this year

newly issued mortgage back securities.

So, can you talk to me a little bit

about why you you like mortgage back

securities and specifically the new

issues?

>> There's a lot of stories right now

about, you know, bankruptcies and how

that has not bled yet into the credit

markets, the public credit markets. Um,

a lot of the reason for that is that so

much is going private now and there's no

marktomarket on that. Um, so you have a

a bit of a disconnect between the quoted

CDX uh junk bond spreads, credit

spreads, and bankruptcies. Um, will that

play out? Unclear. But what I do know is

that if I can get a fancy yield uh a

higher yield uh with zero credit risk uh

by buying mortgage bonds than by buying,

you know, investment grade credit bonds,

I'll take that trade. And you still

have, you know, IG credit is plus 50ish

and mortgage bonds are plus 100ish.

Okay, I'm picking up 50 bips um for with

much less risk. What is the risk? A

mortgage bond is kind of like a covered

call on a treasury. It's not that, but

it looks like that. Um and so you get a

high if if we stay in the same area, you

get a higher yield because you sold that

call and get the income from that. How

do you lose in owning a mortgage bond?

If rates drop tremendously,

um mortgage bonds will not go up that

much. They'll stop going up at like, you

know, 103, 104. Um they're effectively

being called away, uh as people

refinance. Um so if you think rates are

going to drop hard, mortgage bonds ain't

for you. But if you're in the idea that

we're going to be in this three and a

half to four and a half, 5% area, um I'd

prefer to own mortgage bonds than

something else. Um, and what's

interesting about the product I created

is that it only buys the newly issued

mortgage bonds trading near 100. The

index

includes maybe 60% of these old bonds

created in 2020 2021 22 which have like

two two and a half 3% coupons. Much

lower coupons, much longer durations. Um

if you compare the newly issued mortgage

bonds versus the index uh the returns

have been about the same yet the

volatility of the index is 50% more

because of the longer duration. Um, I

think everyone needs to have some kind

of anchor of

I guess bonds, but really safe money.

And newly issued mortgages have a

duration of like the five-year, maybe a

little less than that. They pay five and

change coupon. Um, and you can get that

money quickly and easily. Trades like

water and there's no credit risk. U

these these are government guaranteed

Fanny Freddy bonds. They're bulletproof.

I mean, if you think Fanny and Freddy

are going to go bankrupt, you should get

a gun cans of tuna and and gold coins

because that's where we're going to be.

>> How do these newer issued mortgage back

securities have less duration?

>> Well, let's structure a mortgage bond as

you buy a 10-year Treasury at 100 and

sell a three-year call option against it

struck at 105. We can go down one for

one, but it can only go to 105 before it

stops out. um that 105 strike has a lot

of negative duration to it because it's

it's it stops you from going up in

price. So the package together might be

a four to fiveyear security. An older

mortgage bond like a Fanny 2, it's

trading a dollar price of 80 yet the

call feature on it is still 105. Well, a

105 strike call on an $80 price bond is

worth like zippers. uh has no impact on

the duration. So these low coupon two

two and a half percent 3% bonds they

traded like you know like almost like

10ear securities because the call

feature is almost worthless and that's

why they have lower yields is because

the call feature is so uh so slim. Um

but also you have I mean if rates go

down they will they will move in price

on the way up. So once again, the story

is if you think you're going to have um

rates dropping tremendously, you're

supposed to buy, you know, low coupon

mortgages. But you know what? If you

think rates are going to go down, just

buy 10ear treasuries or something else

by by TLT. You know, if you really if

you really think rates are going to

power windows down, you should not be

fooled with mortgage bonds at all. You

should be buying long duration assets.

>> And so I'm looking at the year-to- date

return. I'm seeing that the mortgage

back security index actually

outperformed. And this was as of the end

of November as well. The investment

grade index and the bond aggregate

compared to those newly issued MBS as

you pointed out with much lower

volatility, you know, uh lower sharp

ratios, lower yield to duration. Um is

that related to the market pricing in

those rate cuts? Is is that why you

think those particular uh indexes and

asset classes outperformed newly issued

MBS?

>> No, it's because rates went down from

December 31st last year to now. It's

just that simple. If you take the

snapshot, if rates back back up 50 from

here, then uh new mortgage bonds will do

better. It's strictly a duration thing.

That's the whole point here is if you

want duration, this ain't the thing for

you. But if you look at the interest

you've earned, the coup either either

the dividend you get paid or the total

return and divide that by the volatility

of the asset, this is by far the best

one out there. So on a risk return

basis, it's good. Um, and I think that

anyone has has a need for low duration

uh high coupon. Look, you buy mortgage

bonds, you're not getting rich. Okay, go

and buy Nvidia for that. Uh, but you

will need some money put aside where

it's easy, safe, quick to get to if you

need it for some reason, so you're not

forced to go and sell your uh your your

equities uh at a low point. So, you

always should have some money in cash,

cash equivalents. uh and bonds uh just

as a matter of pure portfolio

management. Well,

>> let's move on then to uh some of the

trades that might have some embedded

leverage into them. Uh you like ultra

longdated bond options uh for capital

efficiency both on the long and short

side. Why don't we start with the uh

interest rate hedge?

>> This was the the first product that I

came out with when I joined my firm.

It's basically a the reason why I came

out of retirement to kind of get working

such as it is again um was there was an

SEC rule change that allowed people to

put derivatives futures option swaps

into ETFs. That's the magic and we got

an ISDA so we can trade professionally

like PIMCO state of California

credential security. I mean we're mo you

know even footing with all of them. we

were able to put a seven-year put option

on the 30-year Treasury. Well, the

equivalent of that into an ETF, a

duration of like negative -40. I think

it was the highest return ETF um in 2023

up like I don't know 100 and change

percent. Uh because rates went up and

bond prices went down. If you want to

get a hedge where you win if rates go

up, bond prices go down, this is it. You

need very few dollars. Remember the the

the A is like a duration of six um

positive six. So if rates go down by

100, this thing will go up by 6%. Um

this hedge has a duration of negative

-40. So you don't need that much to go

and hedge out the risk in your

portfolio. Um am I advocating it you

should do it? Well, not really because

I'm not sure rates are going to go up to

6%. But there are people that do think

that and there people are very concerned

about a lot of stuff. There's nothing on

the planet like this. My goal is to

build very fancy fast sports cars and

have you drive it. I'm not going to

drive the car for you. You can have your

own opinion, but if you want to go and

make money if rates go up, this is it.

>> Given the deficit spending that you're

talking about, do you see a world where

we do cut rates and the long end

continues to rise?

>> Oh, yeah. I think I think if that's

going to happen, you know, clearly I

think tens are going to 435, right? So,

and I've always said it's coming down.

So clearly I think of a curve steepener

of twos coming down and 10's bonds going

up. Are they going to go escape

velocity? Are we going to have a Liz

trust moment like they had in England a

few years ago? No. But could it happen?

Yeah. I mean there are no zeros uh in uh

in the world. There's always a

probability of something happening. Um,

and um, buying insurance, I mean, look,

when when when you buy car insurance,

you don't expect to crash your car. You

have it so you can you can drive your

car and feel safe. When you buy life

insurance, you don't hope to die, but

you have it for other reasons. U, this

is an insurance product, plain and

simple. And you don't need that much of

it to go and buy insurance for yourself.

Um, so that's how I view it. I I'm not

going to convince you to buy it. I'll

just say if you have that view, this is

what you want to own. So, it is

effectively a put option on the 30-year

that expires in June of 2032 with a

strike at 5.45%.

So, does it

>> effectively

>> do does the 30-year need to hit 5.45%

for it to make money or would it make

money on the way there?

>> Oh, it'll make money all the way there.

I I have a profile uh in my commentary

of how it'll perform instantaneously. I

mean it's a negative 40 duration so it

it'll move you know 40% rates go up by

100 um more or less and you we will

never get to expiry when we get two

years from now uh three years from now I

will take that 2032 option and roll it

out to 2035 so it's it's it's not going

to go away I'll keep rolling it and

[snorts] and and the reason for that um

is more technical than we care to talk

about right here uh but but this thing

will not be will not not be going to the

grave uh at expiry. Uh it'll it'll it'll

be managed over time.

>> And then as you say in your piece that

perhaps the more interesting trade is

the other side, the bond bull uh which

is owning calls on not the 30-year but

the 10-year but still at that similar

expiration timeline of 2032. Why do you

think that that's the more interesting

side?

>> We have seen what the government will do

when they get their back up against the

wall. They will put that Fed funds rate

at zero. they will start buying

treasuries. Um, do I think that'll

happen again? Not likely, but it could

happen. Um, and and and if everything

goes haywire, um, you're going to want

something to protect yourself. Uh, when

we saw the big COVID crash, stocks,

bonds, gold, everything went down. And

it went down because people were

levered, they needed cash, and they sold

whatever they had, they sold. Um,

this will go the opposite direction. If

we get rates down uh hard and fast, this

thing will go up hard and fast. And so

what you can do is you take this thing,

you buy a little bit of it, 10 15% and

put the rest into

a a junk bond vehicle or um closed end

fund uh loan vehicle, some some high

yield thing like that which has a very

low duration. And this basically buys

back all the duration. But better than

that, it buys back the convexity.

Remember, if you own a treasury, that's

zero risk. They're actually positively

convex. Let's ignore that. There's zero

convexity.

Uh everything else that yields more than

treasuries. You are short an option.

You're short a duration option, a credit

option, a timing option, some kind of

thing. You're some you're short some

risk. That's why you're getting paid

more than treasuries. Okay. Um there is

massive positive convexity in the bond

bull and that massively offsets the

short convexity you have in these other

various instruments. So combining um the

bond bull with um well with with our you

know uh credit product which is great.

Uh Mike Green manages that is

unbelievable. Um but combining those two

together is a very clever trade. um

because you're buying back all the

convexity, you get a high coupon right

now and if things go haywire, what

you're going to see happen with um lack

of a better word, junk bond products is

they might say they have a three, four,

five year duration, but if all hell

breaks loose, they're going to go down

in price. They go down in price because

that credit option is gonna embedded

credit that you're short is going to

widen faster than the five or 10 year

rate comes down. And so you the price

actually go down. So what I recommend is

you over buy the bond bull to the index

if you buy it with credit products and

that will basically self-insure yourself

against you know haywire. And then of

course things really go down and you can

see this from the profile that I have on

my commentary. This thing really goes to

town. I like this one a lot. It has a

lot of interesting features that are too

much detail now to go into along the V

and the curve and everything else, but

um it's a it's a it's a it's a clever

idea. And overall, both these products

are happier now than they were a year

ago. And the reason for that is implied

volatility has come down substantially.

I mean, the move index was trading 120

140 a year ago. Now it's in the in the

70s. You've seen implied volatility on

options that expire in five, six, 10

years, which no one else sees it to be a

professional to see that. Um, but that

volatility has come down by a lot for a

lot of reasons. And thus, you've seen

those two as a package together. We're

trading like 105 to 110

this summer. They're trading like 90

right now. And the reason for that is

not rate, it's not curve, it's implied

balls come down. Well, when you buy

either one of these two, you are buying

implied volatility. You're buying Vega.

You're buying something where the price

goes up. If volatility, if if the move

or the VIX goes up, these these can both

go up together. Um, I'm not advocating

that you buy them as a package. I'm just

saying that either way, you'll get an

extra boost if things go haywire. Either

higher much higher rates or much lower

rates because VSS will rise as

uncertainty rises. So, you'll get a

double a double banger for both of

these.

>> And I see in your um in your profile,

you also compare to just owning the

30-year and strips zero coupon bonds.

Why do you like this profile compared to

owning those other high duration uh bets

that would be also very sensitive to a

to a downward move in interest rates?

>> They both have much longer durations. So

they will go up this it will go the bond

bill will go up in price much faster for

a given rate move. But the bigger deal

is the convexity. Um the because it's an

option and not a treasury. And you can

if you look at this thing you can see

the the convexity in there. Strips also

have pretty good convexity compared to

treasuries. Um but the the the bond

bulls massively more positively convex.

And so, you know, up and down 50, they

kind of are they're both they're kind of

similar, but you start going down a 100,

down 150, then things really explode on

the bond bull. And so, you need to buy

less of it to get the same bang for your

buck. So, anyone that's buying any of

these um long duration ETFs and they're

buying it for the duration for the for

the the uh the safety idea that rates

will go down if bad things happen to the

stock market, the bond bull's a much

better trade for you. uh just because

you could put many fewer dollars um into

the product to get the same performance

uh profile. Uh which basically frees up

that capital to do other things, make

other investments. Uh and and and that's

the um uh capital arbitrage of is is you

need fewer dollars to get what you want,

giving you other dollars to do more

things.

>> Now, you say both pay a dividend since

longdated options decay slowly. help me

understand that. I I think of uh being

long an option, you're you're going to

have to pay a premium. So, are you

getting positive carry somehow with

these?

>> Believe it or not, you are. The reason

why is that um the options we buy is a

little complicated. I apologize. They're

set up to where we don't buy the option

today, but we give the suitcase full of

cash to Goldman or Mel or Morgan Stanley

in seven years. We agree to do that.

There's reasons why that happens.

doesn't matter. So basically all the

cash that I have from people who buy the

product, I have to invest this in

treasury bills or other very safe

instruments that are kicking off a yield

of, you know, three and a half, four,

four and a quarter percent. The option

is a seven-year option. Options decay at

the square root of time. Square seven to

square six is a very small number.

Square one year to square half a year is

a very big number. That's why you see

people generally sell one to three-month

options because they decay very quickly.

If massive was called theta, uh massive

income, people like that. Seven-year

option does not decay that quickly. And

so the combination of that very slow

decay for a long day at option plus the

income I'm picking up from owning uh the

cash investment that actually creates a

small positive carry uh for the um for

these investments. It's not a lot, but

it's not negative, which what you would

expect ordinarily when you buy an option

security. So, this is basically a

futures type contract where we've agreed

to a price. We're not going to pay it

until expiry.

So, that's the difference. So, the price

is already known, the date's already

known, and so I'll pay you in the

future. So, I have all the cash. Same

with my buy pork bellies now or gold

futures contracts or anything else. It's

a futures contract. Um, you agree to the

price today, but you don't pay till a

settlement. Is this feature of them

having positive carry always true or is

it something about this moment in time?

>> It's this moment in time. Um, if rates

went down by a lot, so the front end

went back down to 1%. And the back end

was up at like, you know, 5%. There

would probably be negative carry then.

Um, so it it was the shape of the curve.

And when the curve was inverted, uh,

there was significant positive carry. I

mean, we're talking three I mean,

threeish percent um returns on these

things because I was earning five on the

cash and and the back end was decaying

very slowly. So, yeah, there's a there's

a huge curve component there. That's a a

very clever observation there.

>> And so, was this a feature when you

first came out with the product and you

said, "Hey, I have this idea. I I want

to put a product together for this." Was

this feature present at that time and it

has been present ever since? for truly

like this moment right now.

>> When I first came out with it, rates

were at zero. I mean, so I mean, there

was there was no income on the on on the

cash. Um, so over as rates went up, it

became a it became a goodie. But the

concept's always been I want long, I

want big duration, positive or negative,

and I want positive convexity each move.

Um, either way, I make a dollar, then I

make a$150, then make $2 for each move

along the way. That's the convexity.

Convexity means um unbalanced return

that it's not linear. Uh it's nonlinear

in your favor like this, right? Shorten

option looks like that, right? You lose

money at a at an increasing rate. Uh

which is why we had, you know, various

financial crises over over time is

whenever you see a financial crisis, I

can assure you negative convexity is

lurking in the shadows. Um, this is a

one of the few places you can go in the

investment world and get significant

positive convexity that's not a one or

two-month option.

>> So, are you over overweight one or the

other personally right now, the bond

bull and the interest rate hedge?

>> I'm actually I'm actually long the uh

the hedge uh because I own um a lot of

longdated callable mun bonds, so I'm

kind of buying that risk back. Um, but I

I I I do own other long instruments that

make money. So, I'm I'm kind of balanced

in the whole process over here. Um, I

mean, I I am a personal ISDA, so I do

some pretty fancy trades that civilians

can't do. My goal is to go and take a

lot of the trades I do personally and

professionally and put them into ETFs so

we can offer professional products to

civilians. Um, and so far, these are the

ones that we've figured out we should

do. Most people can't buy mortgage bonds

by the way. Um it is very very difficult

for a civilian to buy a mortgage bond.

In fact, it's very difficult for um most

uh professional managers to buy um TBAs,

mortgage futures that we do. Um you need

to have a lot of documentation for that.

It's hard to get and we have everything

uh which gives which is our structural

advantage in the market is that we have

all all the documentation to trade like

the professionals do. are an

institutional entity that basically

passes along that value to civilians.

>> What's an example of a trade that you

either you don't think it's suitable for

civilians in whatever rapper or you just

haven't been able to figure it out that

you would do in your personal account.

>> In theory, you could do some of the

trades I do on the futures exchange, but

they're kind of dirty. Um, it's been

basically making a bet that the front

end is like like the two-year the

one-year rate, the two-year rate are not

going up

and they're and they're not going down

that much. They're kind of gonna glide

on in um to to where they are. Um, and

so I put on basically a uh uh

for I put on put spread, a levered put

ladder, right? I'm I'm I'm long a 3%

put. I'm short a three and a quarter put

and I'm short a 360

percent put. Um, and that got put off

for one year that got put on for zero

cost. You could do it on the futures

exchange theoretically, but there's then

you got a postlaw margin and it's it's

very dirty that way, but a lot of stuff

it can be done there. It could be done

in theory. And with a trade like that,

are you um like fully covered on the

risk profile because you're long the Fed

rose if the Fed took rates up by by 100,

I'd be I'd be a sorry camper,

>> but I also own my interest rate hedge

behind this. Uh so I'm kind of I'm kind

of long the front end and short the back

end. U I mean, you're getting down the

road here. I mean, people might like to

hear me what I'm doing. Uh but that's

what I have on is basically um uh long

long twos and short 20s.

>> Let's move to a different area of the

bond market. We talked a little bit

about the the move towards private

credit. Um you have as one of your

trades highquality front-end leverage

funds. Now not all of these are credit

vehicles, but one of them is is business

development companies which participate

uh very heavily in the private credit

market. So, what is it about BDC's right

now as well as some of these other

front-end leverage funds that uh makes

them attractive to you?

>> The whole idea is the Fed's going to

take rates down, not not to 1%, but take

it down. And as they take it down,

they're going to steepen the curve out.

They're going to get the short-term

borrowing rate less than the five and 10

year investment rate. The problem you've

had with a lot of funds in the last

three years has been the cost of

borrowing has been above the investment.

So the leverage is actually detracted

from your investment. I think that the

Fed's going to take rates down maybe

crazy, but probably not. And as that

curve steepens out and you get the

one-year rate and the three-month rate

under the investment rate, having

leverage 2, 5:1, 7:1 is going to be

advantageous. This is why you see a lot

of the uh the mortgage REITs that do the

simple trade of buying Fanny and Freddy

and Jenny bonds and they lever them

seven to one. That's why they're trading

over book value in anticipation of the

curve steepening and their income going

up. A lot of the BDC's are the I'm

talking about the quality BDC's, not the

junky ones. The quality ones that buy

top of the capital structure, you know,

first lean, capitalized loans,

you see them trading under book, maybe

15%. The reason why is they kind of know

the book is fake, right? This is the

problem we have with private credit. And

you saw this with the uh uh Black

Blackstone, Black Rockck, whatever fund

it was uh two months ago where they had

loan in there that went from 100 to zero

in one day. I can assure you that didn't

happen. It was trading at 90 and 80

before it got to zero. Uh but no one

marks it.

>> So people are very suspect about what's

in these books. So the market's pricing

these loans in at 80 85 cents for the

dollar. If I'm buying, you know, into a

high quality fund with a 15% discount

already built into it and they're gonna

start, you know, lowering the the

borrowing cost, I kind of like that. Um,

but I I I like it for for lots mortgage

rates, if you want the leverage, I like

I like that, too. Mun bonds, mun closed

down MUN funds are trading negative 8 to

12%. Um, as that front end comes down,

you're going to see these bonds trade

over NAV because the the yield will pick

up. The leverage works for you in a

steep curve and against you in an

inverted curve. Um, we have a product uh

where we do um 5x the two-year and 3x

the seven-year futures contract. those

those products right now are looking

more interesting because the front end

rates coming down and making it so the

borrow the cost of borrow is soon to be

less than the investment you're getting

the investment yield the the the

seven-year one's already there uh cost

to borrow is already underneath um the

seven-year rate two years is not quite

there yet but one more Fed cut it will

be

>> so how do you determine what is a high

quality BDC

>> it's pretty well known what credit

quality. The BDC's go into I mean that

they advertise that uh a lot of the

large ones uh basically say have pricing

power and they have first look on a lot

of stuff uh and they have pretty solid

management. I'm not going to start

naming names over here but um they're

the same names you always see in Barons

uh coming up and they t tend to buy high

qu there are a few large ones that

invest in second tier paper. um they

have a higher yield.

I [snorts] wouldn't touch them. I mean,

they'll probably be fine, but I don't

want that. I I I'm I'm I'm happier to

take the lower yield, a little lower

yield. Uh and you can get nine 10% now

with some of these things, and you're

you're you're first in line to get get

your money back. Um I'll I I'll do that

right now. Uh I I'm nervous about credit

for a lot of reasons. Um uh immigration

being being the primary one. I'm not

taking credit risk right now. I I I I

want that to play out. uh before the the

bank the the the number of bankruptcies

we have right now, actual bankruptcies

uh has risen significantly in the last

year. Um that's a real number. Uh the

fact that the market hasn't priced it in

yet um doesn't mean a whole lot. I mean

the same thing in the mortgage crisis.

We we saw the mortgage market kind of

blowing up and mortgage bonds didn't

blow for quite a while. A lot of the uh

capital markets are like this wy coyote

moment. They keep going off the cliff.

Don't look down. Uh I suspect the credit

markets are in that phase. Uh but the

higher quality paper is fine. Um uh the

low quality stuff different story.

>> Now when I go through your your stocking

stuffers, there are certain trades that

as I said I recognize from the year

before some of them like I know that

these seven-year options like you

believe that there's you know a

structural overupp of them just in

general. It seems like the type of thing

that perpetually is going to be on your

radar. Certainly BDC's have gotten a lot

more attention this year and have sold

off more recently. At what point in time

did that trade start to get on your

radar and and how do you think about

your stocking stuffers in terms of these

are ones that are happening right now

and these are things that I just I like

the riskreward potential almost

perpetually.

>> As the Fed started cutting rates, that's

what it was. Once once you got the front

end rate down enough to where leverage

was not a hindrance, it became more

interesting.

>> Do you see the credit concern then as

just gravy making the the entry price

more attractive specifically for the

high quality paper that you're talking

about?

>> Look at the price of like uh you know

ARCC. I mean it's gone from 22 to a 19

and change. I mean the they're the

biggest and the best one out there.

That's your signal that the market is

pricing it in. It's become more

interesting. These would not have been

interesting to me you know six months

ago. um agency Annaly uh you're seeing

the front end come down um versus the

mortgage rate. Uh so the coupon is

looking like it's it's pretty solid now

uh versus before it was kind of

squishier. And so and so these are all

basically look that whole section is

about I'm saying to you it's okay to buy

financial leverage because the curve's

steepening and it's probably going to

steepen a little more. not 2% but they

get down to three and a quarter three

and a half um that's fine and I've

already told you my long-term number is

2 288 so not this year not next year but

that's the idea so I don't mind owning

leverage there and I think the back end

is going to keep going up um uh not not

a lot but all these leverage plays all

make sense when the curve gets steep and

so that's kind of the prediction

>> so you said a lot of this private credit

stuff you're not seeing it in CDX

pricing as you said you have a personal

ISTA You get to look at things that

other people don't. Are people trying to

price some of this risk in off the

market products that maybe you get to

see that we don't?

>> I am seeing people have interest and and

we are putting some of our funds of

taking the other side of this trade of

of of of I guess I guess buying CDX

whatever you want to call you win if

spreads widen.

>> Yeah. um you know low 50s for for for

for IG and you know high twos low threes

for for HY those are like you know

record lows or in that zip code of being

you know 10th decile or 90th decile of

of price um that your your risk return

is kind of in your favor and the actual

bankruptcies are are rising. So, I I

think I think we're going the right way

on this. And it doesn't cost you that

much to go put these hedges on right

now. Um, so I I I kind of think that am

I predicting a credit crash? No. But

would I rather be short than long

credit? Yes. That's why I like owning

mortgage bonds.

>> Let's move on to one of your next

trades, which is big oil and MLPS. So, I

know a lot of people avoid MLPS just

because of the structure and not

everybody is used to or enjoys getting

K1s every year, but you like MLPS. Uh,

what is it about them right now that

that has you interested?

>> MLPs are I mean, they're they're for for

a problem of riches, okay, it's it's for

high income people in high tax brackets.

there there's a massive tax advantage to

a K1 um because basically your taxes get

deferred till the day you get out. Um so

if you buy a $20, you know, MLP and it

makes a $2 distribution dividend, um you

pay zero on the $2, but your cost basis

goes to 18. So if you then sell it

someday at 20, you take a $2 capital

gain. So it's very tax advantaged, but

it's also dirty. Um, the bigger concept

is I just like oil and I like, frankly,

I'm thinking about coal. I just don't

see how we're going to go and satiate

the demand for energy in the next

decade. Um, it ain't happening by wind

and solar. On board with global warming,

all good with that, but you c you need

baseline power. You can't just turn

these toys off at night or when it's

raining or when the wind's not going.

you need baseline power and that's going

to be nuclear, gas, oil, maybe coal. Um,

I mean, China's doing coal. Um,

and so I kind of think this notion of of

of oil going with the dinosaurs away. I

I I don't think that's going to happen

in the near future. Um, and so I

basically the whole energy complex, uh,

I like nuclear. Uh, that's a very

long-term trade. Um but um you know

that's that's the basic idea and and

MLPS are a fine way to go and have a uh

an income vehicle. Um if you're younger

you probably want to buy you know some

kind of oils outright buy the equity get

the get the get the longer term capital

gain longer term profile. Um but for

gizers MLPS are a fine way because I I'm

more interested in income than I am in

capital gains right now. Obviously, the

price of oil has been under pressure.

When you think about the entry point and

the price that you can get right now,

have they been trading down? And is it

maybe more attractive than it was at the

beginning of the year?

>> They're not cheap anymore, but they're

reasonable. MLPS got absolutely

obliterated 2013, 14, 15. Uh they went

up when the oil spiked up and and they

started misallocating capital to put it

nicely and basically burn themselves to

the ground. Um, and I actually wrote

about this a number of years ago, uh,

one of my commentaries where I advocated

buying MLPS. Um, uh, and which it did

work eventually, but I will say it took

a while. Um, and they've basically

they've come back from their lows a lot,

but they're a lot of them are still well

below where they were a number of years

ago. And you know, if you're getting a

tax preferred eight, nine, 10% yield,

um, what's wrong with that? I mean,

we're talking not the last five years,

but over horizon, you're talking nearly

long-term equity returns for an income

vehicle uh based upon the notion that I

like oil. If you don't like oil or if

you feel that it's not a business you

care to personally support politically,

that's okay. But I mean, you go look at

um the Philip Morris Altria bust up

what, 15, 20 years ago. I mean, Altria

stock since the settlement has beaten

the S&P even with Google and Alphabet

and everyone else inside of it. Okay.

Um, since that bust up, I mean, no one

wanted to buy smoking. Okay, that's your

politics. That's your view. Um, I'm

talking strictly as a investment

professional. Uh, and um,

uh, I I I think oil is as as a as a

relative percent of the index. All

everything else I I I think is a place

I'm I'm happy to be uh invested in.

>> When things start to become

uninvestable, that is a sign that you

should maybe take a look. I went to a a

talk with um Brad Jacobs, the serial

sort of acquirer. He always has these

rollup companies and and he said that he

went to his consultants at the banks and

asked them, "What sector should I roll

up?" And they said, "Well, on a price

basis,

oil. That's what you should be rolling

up, but you can't get any funding for

it. You can't do it." So he went on to

number two in his list just because it

was literally uninvestable. He couldn't

get the financing. Um so I guess is

there any equity risk at all in these

MLPs? Do you have to worry about

terminal value reinvestment risk from

from the partnerships?

>> They are fairly dirty animals in terms

of continual capital spending to either

maintain or to expand. Um there's a

bunch of uh ratios out there, free cash

flow and and enterprise value that could

help you uh make a decision. Uh are they

focused on liquid oil or on natural gas?

I prefer natural gas uh for these

things. Uh because I think that's going

to be that's that's the that's the easy

source um for for for uh these data

centers. Um, but I mean, look, there's

out there's plenty of research on these

things and I I I think it's publicly

available and you can do your own

research on these things and and uh I I

I own the tend to own the safer ones.

Um, and some of the really safe ones

really never got that hurt. Uh, some of

the more leverage speculative ones have

been more volatile. Um, but once again,

it's your choice. Do you want to earn an

eight uh that's pretty solid or earn a

14 that's going to be a little risky?

Okay. I mean, once again, pick your

poison. I I tend at this stage of the

game, I tend to pick the more

conservative trades. Um I I mean,

getting a tax preferred 10% yield. Um it

sounds equity-like to me.

>> And when you say safer, you're just

looking at at leverage.

>> Leverage. And if things go south,

they're not going to get cooked. And

they're uh capex budget is more

reasonable within the confines. Their

price sensitivity is less. um things

like that that they're legal exposure.

They're not, you know, I mean, when

you're drilling under Indian lands, I

guess there's some risk to that. Um I

own one of those. Um and that's always

the headlines go back and forth all the

time.

>> All right. Well, let let's go to maybe

the stocking stuffer that has been the

trade of 2025. Many are still saying

it's going to be the trade of 2026. That

is gold and precious metals. So, as you

said, you do not think inflation is

going away. Maybe not going to 9%, but

certainly not going back to 2%. Is gold

your favorite way to position for

inflation?

>> Let's be careful about inflation. It's

not inflation that I'm really bugged

about, although I think it's there. I

think it's um the devaluation of fiat

currency. Okay, Buffett, look,

[laughter] I'm not he's smarter than I

am, clearly. Um but he's dead wrong

about gold being an asset. It's not

okay. It's It doesn't make a product. It

doesn't deliver oil. It doesn't cure

cancer. Okay. It doesn't have income per

se. Doesn't have a dividend. It's an

alternate currency. The same way as if

you go and get yen or euros or rubles or

anything else out there. Um it's a

currency and it's a hard currency. It's

not being printed by anybody. Um there's

no liability against it versus the

versus the government. Um, and the

amount of gold that's produced every

year is relatively slim. I mean, it's

kind of the Bitcoin story. I mean, what

is Bitcoin? I mean, it's sold as

basically digital gold. Um, I I my

problem with Bitcoin is that, well, I

we'll skip that for now. Um, Bitcoin

might go to a million before it goes to

zero is my thought. Um, but gold is just

an ultra currency. I think you should

definitely have an allocation to gold. 5

to 10% is probably the number and and

just put it away and and call me call me

in 10 years. I mean, you can't trade

gold, per se. I've owned gold since

2010, 11, 12, 13. Um, and and I haven't

sold any of it. Um, and and

the return you got in the last year is

just basically the previous 10 years

happening in one year. That's how gold

works. It's just kind of these things

that kind of goes goes goes and then it

jumps. Um, clearly, you know, uh the US

kicking uh Russia off Swift um did a

lot. uh the US uh pushing back on China.

Well, that's kind of pushing back uh on

it. So, you're so central banks are

buying as opposed to selling now. But I

just think in general it's an alternate

currency and we can see right in front

of our eyes what's happening with the US

debt. We have too much debt and the only

way to get rid of it, well, you can grow

out of it after World War II, but let's

take it off the table. Um you default or

you inflate. We're not going to default.

So, we're going to inflate and we're and

and and and that's that's a fine

strategy. And the Fed's been that's why

the Fed was was was going to QE and

everything else, you know, 15 years ago

was to create inflation. Now, the idea

was to create wage inflation. That

didn't work. The inflation went to

assets instead of wages. But we did get

the inflation, just the wrong inflation.

And if you want to look at our politics

the last, you know, eight years, I will

point to that as the problem is the

wealth creation went to the rich and we

widened out the wealth gap uh to back

where we were in the late 20s. Um the

Fed, it was a good idea. It just didn't

work. They had good intentions. Didn't

work. We had asset inflation and um and

so we've widened the income gap and

that's created these what I will call

desperate politics uh for people. Um,

and they're they're not crazy. Um, it's

unfortunate, but they're not crazy. And

we have to go and somehow, you know, put

the toothpaste back on the tube on this

thing. But I think the Fed's going to go

and the government's going to go and

support this slow inflation that can

over time grow the economy uh above the

debt over many years. Um, so inflation

is the strategy and therefore uh I I I

want to own gold as some kind of

altercurrency.

>> What about some of the other precious

metals? Obviously, silver has been

grabbing the headlines with its spike in

volatility and pretty incredible return.

I think it's up over 150% this year. Um,

just just the spot price alone. Do you

ever play in these other metal markets

or are you purely focused on gold?

>> I'm just gold. I mean, you can make the

story of gold versus, you know, any of

the other metals out there. You look at

copper, but I mean, copper is really an

industrial metal. Not I mean, gold has a

5,000-y year history of being a

currency. And the old story is an ounce

of gold finds a fine man's suit. So, you

could buy a toga, you could buy a suit

of armor, you could buy a Zenya suit,

and it's all one ounce of gold. So,

there you go. Um, and I think that gold

has a history of of of doing that. And

and that is the idea here. I'm not

trying to think too hard over here.

Yeah, you can go and trade these things

and if you bought silver, you know, a

year ago, you've made a bloody fortune.

But I I'm not thinking that hard. I'm

just saying I my core idea is, you know,

we have fiscal prophecy that's debasing

paper currency and I want to go and

invest in something that's going to go

and be the other side of that trade.

That's what gold is.

>> All right. Well, I want to close with

one of my favorite comments from you

that you put at the end of everything

you write, which is sizing is more

important than entry level. So, let's

talk about sizing of of all of these

ideas and a portfolio construction. How

are you thinking about putting them all

together into a portfolio? I

>> I think number one is you have to go and

and break up the high risk versus low

risk, basically stock bonds. Um, and you

can put some money into other things

also, but the bigger idea is you want to

go and buy something. You want to buy

enough of it so if you're right it has

an impact on the overall portfolio. I

mean if you investing pennies in

something this doesn't help you at all

but you want to be small enough so if

you're wrong and you will be wrong

plenty of times it's not going to go and

stop you out. You don't want to get

situation where you're forced to

liquidate other investments. So that's

and that just means you have to go and

look at yourself in the mirror and go

what could I tolerate? Where would I get

stopped out on something? uh and where

would uh and how confident am I in

things? Try and time the market. I

[snorts] mean you can go I mean what I

would do I mean buy half now and then

you could time the market with the other

half. But if you like an idea just do it

now. Um I I I I don't think timing ever

works for people. I mean you could look

at the whatever even before all the

index nonsense. Uh historically active

managers never beat the index um in

aggregate. Um, and and I don't believe

I'm any better than anybody else at at

timing the market. I think I think I'm

pretty good at interest rates and other

things over over a three to five year

horizon, but tomorrow's price, I have no

idea, and I'm not put myself in a

position to go and uh and trade on that.

>> All right, Harley. Well, we'll leave it

right there. Thank you so much. Anybody

can find the full stocking stuffers on

the Convexity Maven blog that you write

as well. I'm sure there's plenty of

stuff over on Simplifi's website. Uh,

thank you so much for joining us.

>> Thank you very much. Have a good day.

>> All right. And to everybody else, if you

notice, I'm not Jack Farley. One thing

that's coming from us in 2026, I'm going

to be hosting a few more episodes of

Monetary Matters. There's so many great

people out there like Harley that Jack

simply does not have the time to

interview. So, I'm going to be stepping

in. Thank you very much for welcoming me

in 2026. Uh, as I step into Jack's shoes

a few more times than I did last year to

host Monetary Matters. I'll still be

hosting other people's money where I

talk to fund managers about their

businesses, but you'll be seeing me more

on monetary matters. So, thank you to

everybody as well for for listening.