Mike Newton, VP and Portfolio Manager, RBC Wealth Management, and Jason Mann, CIO at EdgeHill Partners and EHP Funds, join us for a rich conversation on running money at both the retail and institutional levels.
• How was business and what were the investing challenges of the pandemic from a business perspective?
• Mike Newton shares some valuable nuggets on how he organizes and runs his retail wealth management practice.
• How to use model portfolios productively in your practice.
• What are the processes you use to organize your business around?
• Jason Mann talks about his and his firm's approach to running liquid alternatives, and how he approaches the challenges of portfolio construction and outcome.
• Outlook and opportunities - Mike and Jason talk about how they make investment decisions, and what kinds of investments.
• How do you manage investment risk?
• How are you communicating with clients?
• What are big challenges forward, and what lessons have you learned from this period?
• What sets you apart? What kind of investor are you?
• How do you help your clients overcome their behavioural risks, like selling at the wrong time.
Mike Newton and Jason Mann Walk Into a Zoom...
Joseph Lamanna: [00:00:00] I'm joseph Lamanna Managing Director at AdvisorAnalyst.com. My co-host is Rodrigo Gordillo from Resolve Asset Management Global. Our special guests today are Jason Mann, co-founder partner and chief investment officer at EdgeHill Partners and EHP Funds and Mike Newton, Vice-President and Portfolio Manager at the Newton Group at RBC Wealth Management.
Disclaimer: [00:00:25] The views and opinions expressed in this broadcast are those of the individual guests and do not necessarily reflect the official policy or position of adviser, annalise.com or of our guests. This broadcast is meant to be for informational purposes. Only nothing discussed in this broadcast is intended to be considered as advice.
Joseph Lamanna: [00:00:44] Jason, Mike, welcome to the show. It's great to have you
Mike Newton: [00:00:47] Great to see you too Joseph.
Joseph Lamanna: [00:00:49] So to kick things off for those in our audience who aren't familiar with you, uh, please take turns to introduce yourselves, how, and when you started in the investment industry. Tell us about the arc of your career and what you're up to these days.
Mike Newton: [00:01:04] You want me to start Jason? I will. I always like to go first. Uh, I guess it was a '91 when I graduated from university. '92, uh, I went right into the business with a small boutique firm in Canada called Midland Walwyn. Uh, uh, worked very hard there being at a non-bank, uh, owned firm was an interesting perspective on how to grow your business.
Uh, we were purchased by Merrill Lynch, um, where I learned a lot at Merrill Lynch. Um, and then most of my time when Merrill Lynch left Canada was spent at the individual, uh, sorry, independent dealers. Uh, so non-bank owned for those who need clarification. And uh, spent eight years at Scotia bank and now I've been at RBC.
Uh, today's actually the 11 month anniversary since I made the move over to RBC. Um, I would divide my career into two, um, distinct chapters. Chapter one, or book one was a asset gatherer, financial planning, servicing clients, and then reallocating my assets to individual portfolio managers. You know, so I'd be allocating money to say Jason and his team, or in those days, you know, some of the big Canadian portfolio managers.
Um, and then about 17 years ago, um, when I met Rodrigo actually in the business, um, I was turning my business around, into one where I became the portfolio manager. Um, and at the same time, obviously providing a full range of services from my client base. For 17 years, I've been doing it my way. And, uh, it was scary at first, but it's been very rewarding, so very happy.
And I love what I do and get up at five 30 in the morning. And I'm very excited when the day starts.
Joseph Lamanna: [00:02:58] Excellent. Interesting. Very good.
Jason Mann: [00:03:00] For myself. Uh, you know, I'll, I won't go back to the very beginning, but I'll talk about my experience in this, uh, in this industry. So I actually started out in this industry at Scotiabank, um, working on the institutional, uh, equity desk as a trader, uh, and also trading the bank's money, uh, proprietary trading.
Uh, there really aren't any prop desks left anymore after 2008. Uh, and you know, I always joke that the fastest way to get fired from a bank is to lose them money. We were fortunate that we never did that. We never had a down year, including '08, including Lehman. And it was because we were always risk managers first and foremost.
So, so we, you know, and then we left and started up our own hedge funds. Now they're called alternative asset managers, which is a much more friendly term. Um, and we run quantitative strategies long and short. So, uh, you know, we're factor based. We care about things like value, momentum, volatility, um, but you know, ultimately we're where we still have the look and feel of, uh, of a proprietary, um, bank trading floor in the sense that we use multiple strategies, uh, to give us a return stream that, that our clients are looking for.
But most importantly, we control risk. So we view ourselves as risk managers. First and foremost, our returns are a by-product of that. Um, and ultimately we express that in individual stocks and, uh, uh, and soon bonds.
Rodrigo Gordillo: [00:04:30] Great. So, so, you know, Mike, I've known users at the beginning of my career. I think, um, I was a year or two in to finance when I moved over to Blackmont Capital, uh, got to meet you.
And one of the things that stood out then, and I think continues to stand out to the day is what you just said, waking up at 5:00 AM, having a plan every day and executing on that plan religiously. And, um, and I just would like for you to share a little bit about how your framework is because you're not just managing portfolio portfolios right now, picking stocks and managing that risk, but you're also running a business, raising assets, meeting with clients.
So tell us how you think about structuring your day in order to create some success for yourself.
Mike Newton: [00:05:17] Well, because, um, nothing, no day ever, you assume every day is going to be one of equilibrium, but it rarely is. So, uh, number one is, um, I do divide my, uh, my week up the seven days up. And I think, you know, this, uh, Rodrigo, but, you know, I sort of stole from, um, uh, a consultant in Toronto, uh, by the name, uh, with the 'Strategic Coach' approach.
Um, and his view is you divide your weekend to focus days, buffer days, and free days. Um, so, uh, it's really, really important because those phone calls. First of all, when a client phones it's really important that I'm involved in that I own that client relationship. Um, we do have people taking care of sort of the smaller inquiries.
What have you, but the big stuff I still get very much involved with, and there's still lots of scale in the business for me to, to take on tons, more clients. Um, but essentially, um, we're really trying to get the daytime blocks. So the best time for me is, you know, 5:30 to 9:30 AM, I've got the lay of the land figured out, uh, until 9 31 when the market starts trading.
But yeah, we sorta try to get the portfolio management details. You know, I've done my research. I've done in my reading. I've, uh, taken a look at all my different blogs that I get emails for newsletters I subscribe to. And then on Mondays we work on the business, meaning, uh, you know, we had our team call at two o'clock today.
Uh, we talked about. You know, big things happening. Uh, we talked about things that are, you know, spills and messes here and there. We talked about distractions that are, you know, regulatory things. Um, but Tuesday, Wednesday, Thursday, uh, from basically about nine o'clock on we work in the business, meaning, uh, that's when I roll up my sleeves and I'm, I'm on the phone all day.
So I'm either talking to clients or I'm talking to referrals or I'm talking to partners or I'm chatting with, um, Jason Mann and his team, uh, you know, about various issues, but we work in the business and then Friday morning, depending on whether it's winter or summer, we, uh, we typically, it's a, it's a work day.
And then around 12 to one on Friday, I really like to sit back and just make it up as I go, hopefully a free day. But as you know, all of the, all four of us, uh, the blurred lines between. Work and pleasure and home and personal, uh, you know, it's, it's very blurry because I'm always consuming what's going on in the, um, but really, uh, our meeting process, the clients and our review process with client is very rigid.
Um, my assistant of twenty-five years, she G she books Tuesday, Wednesday, Thursday, uh, 48 out of 52 weeks with between four and six client touch, uh, you know, touches. Um, and then lastly, you know, why do I get up so early? Uh, it's funny. Cause my parents used to drag me out of bed when I was in grade nine. Um, now I can't wait to get out of there.
Um, and I, I, I always think, uh, I read the book Range by David Epstein, um, when it came out and, and I love the idea of interdisciplinary thinking. Uh, I love the idea of reading other people's, um, newsletters, industry newsletters, to see how they think about things and how they solve problems. And you find out that basically everybody has the same.
They're trying to reach the same and solve for the same things that humans want. And I can learn a lot from that. And then also I learn a lot from behavioral thinking. I learned a lot from great ideas come into my portfolio. So again, unlike what Jason does, which is very factor driven and their screens.
And when the screens, you know, come down to a small basket, there's a little bit more research done. I, on the other hand loved when an idea triangulates from many different disciplines. And then I say to them, I'm really in love with this idea. And what I love is the ability to just actually affect the trade on it and put on not just a 1% position, but even maybe as high as a 5% position.
Um, and I managed the risk from there. So, you know, that's how I structured my day. It's, it's basically working on the business or working in the business and, uh, uh, it's been very disciplined for 10 years. The funny story though, Rodrigo is I I've run into clients that run the same thing. So we're always trying to have our, they're always trying to have their meetings with me on Monday, but I'm like, today's not my meeting.
And they're like, wow, that's my meeting day. So we, uh, we, we sorted out, but anyways, it works really well. And being super organized as you super organized is the key so that when things do pop up, like I found last week kind of stressful, um, with, you know, the big turnoff on tactical, you know, continued resurgence of value, you know, really took hold less.
So, you know, my Monday, Tuesday, Wednesday, it was a little busier than I would have otherwise liked, um, because I was actually working on the portfolio.
Rodrigo Gordillo: [00:10:35] So he has to have an anchor back to some sort of process. Uh, you know, Jason, you probably had to deal with a lot more chaos when you were at the prop desk, as you were constantly responding to whatever was going on in the market.
Um, but at the end of the day, in order to be able to make progress is, is it's not about doing a bunch of small things that keep you busy, but it's about doing a couple of things, right. That are going to actually move the needle. And as things are thrown at you, you just gotta anchor yourself back to your process and get back to it, uh, to build a business, to be good at asset management to manage your risk.
So, yeah, that's what I've always saw. What I always saw of you, Mike, is, is your ability to always stick to that discipline even during the summertime, which is where many advisors end up not doing much. So, uh, So that's, that's commendable, not now. Jason, how do you structure your day as an asset manager?
You're managing risk. It used to be a prop trader. Uh, do you find that you're more reactive because of the market or because of the factor based investing? Are things more streamlined?
Jason Mann: [00:11:47] Yeah. So if we think about, you know, the, the, um, the funds we run a good 90% of them are what I'll call purely systematic.
Um, so the, the day to day can actually be quite straightforward, right? Really? We're not, we're not picking stocks day to day. We're executing a process. Um, that is a process that we've done research on and implemented months or years ago. Uh, so we're not, we're not changing things on the fly. We don't tend to react to markets, uh, necessarily, but we want to be in touch with exactly what is driving markets, because that informs, um, you know, what, what may come.
It informs how we talk to our clients about what we're seeing. It gives us a clue as to how likely certain strategies are to work or not. Uh, and then there's about 10% of what we do that, that actually is a little bit more reactive. Uh, you know, a strategy like merger arbitrage, for example. Um, so for those that don't know, merger ARB is really straightforward.
You know, if one company's buying another, um, you, you buy the company being acquired at a slight discount to the eventual price. You're going to get a, you, if in a perfect world, you hold it until that deal closes and you earn that little spread, uh, and you do it across as many names as this product.
Trying not to own deals that aren't going to close. Uh, that's the whole trick with, with merchant. Um, so, you know, even though we have a quantitative process for helping us to find a merger or a deal that we like, or don't like, there's still a certain amount that can't be completely modeled. There's still an element of discretion with that.
Um, so something, a strategy like that does consume more of our time, usually in the morning, as we're looking at new deals that have been announced, um, and we might be talking to some, some, uh, sell side desks or some research departments getting, you know, their views on it. Uh, but you know, even there, we, we are trying to follow a structured approach to picking up the premium that's embedded in buying merger deals much like we're trying to on our main strategies to pick up typically behavioral biases.
Mike mentioned the likes, the behavioral side. Most of what we do is, is taking advantage of behavioral mispricings in our opinion, um, and having a structure, consistent process for, um, you know, generating returns based on that. So we, yeah, we, we really try our best to not allow the day-to-day emotional moves of the market to have anything to do with our process, uh, because our experiences, you know, when do you make the worst decisions on risk in the heat of the moment, right?
You better have a plan well, in advance of that risk. Uh, like COVID for example, uh, you better have an idea, even though pandemic is going to be seen once every a hundred years, you should still have an idea of what you're going to do when the market acts in a certain way, no matter what's causing that option.
Um, and that's very much how we approach it,
Rodrigo Gordillo: [00:14:59] right? The systematic question for you all the major opportunities before and after, right? So you weren't, you, weren't trying to figure out how you were going to manage risk, uh, the day of the day that everything fell off the, uh, the wagon in March, but you actually had that idea, you know, exactly what you were going to do when that, um, when COVID did happen, but we saw it ourselves.
I remember we have the option of being discretionary or risk managers at any point and taking risk off the table. And every day during March, where we're like, you know what, we gotta, we gotta take this down another 30. This then we'd do the a would run the system and the system would take us down 30%.
Right. So whatever our intuition had us thinking at the time the systems were there already, and it was fantastic to see it kind of play out, be emotionless. And that's, that's the greatest part about being disciplined, whether you're building a business or being disciplined about and systematic about the way you manage your money.
Um, and Mike, I know that you also run your book with good risk management stop-losses in the lake. Um, those are again, you know, tell us a little bit about how you, how you manage it. You've got, you told us a bit about how you pick your stocks, but how is it that you manage your risk and has that changed over the years?
How you seeing it today in today's faster moving markets.
Mike Newton: [00:16:17] We, um, you know, it's funny coming back to what happened last week and all, and perhaps all the other stress points that we have. Is I, I have a, um, uh, listen, you can S you can categorize your book into the, you know, the nine different sectors. Um, but then I sub-categorize it, I have it in, uh, also, you know, I have names that I really, really don't want to give up and I'm willing to let them drop 15, 16%.
So we have them categorized as you know, Mike really wants to hold this. Um, then as another example, you know, the whole thematic, you know, I'll just using a recent example, but the whole Kathy with space, um, you know, I, you know, it's been rewarding for me because I actually own a lot of the stuff that she owns.
Um, but I, but I basically killed most of it on February 12th. Um, because I had written down in the side notes, uh, forget about price action and what have you, but I'd also written down the side note, Okay. These nine stocks, I consider them to be very high on concept, very low on fundamentals. Um, but again, I I've always thought some of the most magnificent returns can come from, um, when there's a pylon, uh, just like there's a, when there's a pile off.
Um, so, you know, I often look at the top holdings of, of Kathy wooden and I'm not afraid to own those top holdings and in size. Um, but I'm also not, I don't want to be the bag holder. So we, we categorize our stocks into, uh, besides the nine sectors. We categorize them into things that we think are, you know, were, were they're running on fumes.
Um, you know, uh, we've gotten, you know, I owned zoom for example. From March, um, obviously a very successful position. Um, but I knew it, I knew I was getting away with, uh, you know, ridiculous rates returns. So we were just position sizing down on a regular basis, Rodrigo. And then, um, you know, we're, so we constantly have what I call, uh, in case of emergency break glass.
So we have these little, uh, boxes and the whole team knows what they are. So during COVID, uh, I was actually, um, in front of my computer, down in, in, in Turks and Caicos, I couldn't have told you it was sunny outside, cause it was cloudy weather. Uh, and, and I was able to email phone my team and say, okay, uh, liquidate basket, one liquidate basket too.
And we were, we were, de-leveraging completely out of the market very, very fast. Now you might be surprised I work at a bank. But, uh, I built into all my, my investment policy statements, the ability to go from 50 to as high as 80% cash, uh, which is very unusual. It's also, um, completely contradictory to the way I was trained and taught in this business.
Don't time the market. Um, but guess what? We had a boatload of cash to which we could shoot fish in a barrel in the very end of March and through the middle of April. Um, so it worked on both ends and, um, you know, it, it it's difficult. It, it only happens once every decade. I hope a pandemic. I, as you said, Jason OPO hope happens every a hundred years, but you know, these bigger than 5% drawdowns happened all the time.
So I'm not using stop losses on that regard. And a lot of my competitors that are talking about stopping. And I read a lot of these technical people. I mean, they're getting stopped out at minus 3% and stuff like that. I'm not doing that. Uh, 5% loss of your work are absolutely commonplace. I'm talking about these really big events and, uh, I'll tell ya my work on the COVID.
Yeah. And being very decisive and raising cash, um, was one of the main reasons that I brought every single one of my clients with me on my move, my career move from Scotia to RBC. People said, I want to stay with somebody that actually does that. Um, and so it's worked for me. Um, I stay flexible in my positions.
I, I also stay very humble on my convictions as well at the same time. So it's a balancing act, but, um, I don't like getting stopped out of holdings, but, uh, they've been incredibly good. Uh, the other side of having a stop loss strategy is you're not afraid to actually take a position so you don't have to overanalyze it over things.
Uh, drill it, you know, you'd beat it to death. Um, what I do is I put up 1%, then a 2% and a 3% as it works out, I add more, but if my first one present doesn't work out, um, you know, you know, we lose 15% in three days, you know, that's not a huge drag on the overall portfolio, so the stops help in reality, but they also give me confidence to actually add positions as well.
Um, which I, like,
Joseph Lamanna: [00:21:31] I got a question for you. What's it been like for you to, for you to onboard new clients without being able to meet them in person?
Mike Newton: [00:21:38] Um, because I had a background, um, with television, a lot of my more recent prospects have been through the television channel. Okay. Um, and an echo effect from that.
And number two, um, a lot of the new clients have been very, very, um, really highly endorsed. So those have been, those have been okay. What's been difficult is where, uh, I'm competing with two other entities and, um, unfortunately, listen, my performance is good and it's fine. And you know, I have quarters where I lag in quarters where I win, but generally our performance has been excellent.
Um, the problem is, is when you can't take people to a leaf game and a steakhouse, uh, and they can't really get to know you and meet you in person. Um, you're at a bit of a disadvantage, I guess, because then it becomes only numbers. Uh, it becomes only metrics in a lot of cases. And as you know, and as Jason knows, and, and Rodrigo now, I mean, you have your performance numbers, but it doesn't really outline your, your risk statistics or your, you know, what's happening, you know, amount of risk you're taking to get that return.
When it becomes just numbers, it's hard to color. It's sort of like a black and white photograph. It's not color. Um, and that's the only difficult, uh,
Rodrigo Gordillo: [00:23:06] Josephine. You're not able to establish trust in the same way. Right? It's one of those half of the time when you're taking your clients out, you're, you're taking them out.
You're getting to know them as a person, you get to know their values. You're also having an opportunity to explain what your risk management is, how you, how your strategy works in a more deeper way versus once a year reviewing numbers. And either you won or you lost, and they start losing faith because they don't know you.
They don't, they don't trust you. So I can imagine how this is a much more difficult thing. We've got to get everybody to be our sets and like meet in a virtual room, watch a virtual sport. That's the next evolution for me.
Mike Newton: [00:23:49] If it's, um, you can, you can learn a lot about people. You know, even by what kind of watch they wear or, you know, how they treat the waitress, you know, those are little clues, right? Yeah. You know, uh, I remember golfing with a client of mine who I thought was shy, reserved, boring. He turned out, it turned out to be one of my best four hours I ever had in my life and were, I didn't know him that well.
Yeah. Um, so, you know, when you can do that with a prospect, um, you know, and, uh, again, coming back to sort of my thesis, which is I, I'm more of a touchy feely, I like big ideas. I like jumping out of the spreadsheet and into the world. I'm more of a, more of a painter than a architect if you follow me. And, and I think when people can see that side of me, um, versus going out with a propeller head engineer, You know, uh, no personality.
I think I can win in those situations, uh, you know, or convert to somebody thinks I'm a bit of a jackass. So, well,
Joseph Lamanna: [00:24:55] you mentioned, you mentioned, you know, you know, going to Leif games or going to a restaurant and getting to know the individual. So what is your meeting process been like these days? Are you doing a lot of zoom calls?
Like how are you able to, because you know, body language says a lot, right? We all know that. And, uh, as you mentioned the way they treat people, uh, we'll waitress, whatever the case may be, but are you doing a lot of zoom calls and w w how, how are you benefiting from
Mike Newton: [00:25:24] that? Um, yeah, it's, it's, um, it's WebEx, zoom calls, FaceTime, Microsoft teams, Google meet.
Um, ironically the only approved platform is WebEx and zoom, but, uh, clients don't care. They phone you anyways. They, another, another thing that's been interesting, which is. You know, I shouldn't be saying this on a, on a public podcast, but people, you know, it's getting firms need to figure out how the communication channels work, because I don't check Facebook messenger very often.
Um, but I get a lot of messages on there that I don't even know where their and their clients, um, and you know, even Instagram, um, WhatsApp, um, I don't even have a tip talk account, but you know, one of my clients said, oh, I sent you something on Tik TOK. I was like, why? I'm not even on Tik TOK. I couldn't have been me.
You know, Ron, Michael, it's just weird. It's just very weird. So,
Rodrigo Gordillo: [00:26:22] so yeah. Jason, how about you? I mean, you're speaking mostly with advisors, I imagine, and trying to get them on, on the phone. Um, I guess in your area and your end, it's also zoom calls and, um, and not a lot of pain.
Jason Mann: [00:26:39] Yeah. I mean, we were fortunate given the way we run money gives us a lot of time to actually interact with clients. So we actually view our, um, marketing and client interaction as a, as a core competency, just as important to us as, uh, our ability to invest their money. Um, and you're right. The bulk of our clients are advisors, IROC advisors in Canada.
Um, and so historically, you know, I, I probably do 300 meetings a year with advisors and a lot of those would be done out of town when we had, whether it's in Vancouver, Montreal, and Calgary, obviously that's all gone. Um, but we haven't really slowed down on the client. Maybe it's just a different format now.
And frankly, in some way, It's a lot more efficient, right? I can now do 10 calls in Huber and do it from right here at the desk. Uh, and
Rodrigo Gordillo: [00:27:34] now more efficient as sales and marketing become more efficient for your firm. Are you able to get more meetings than you ever have? Or is it, is that the opposite?
Mike Newton: [00:27:43] I
Jason Mann: [00:27:44] wouldn't say more meetings.
They just, and the reason I, it's not that we couldn't do more meetings if we could get them, but it's almost difficult. There's only so many advisors who want to meet with, uh, a PM or a wholesaler or what have you. Um, I'm talking new prospects, so we'll take as many meetings as we can practically get, but the delivery of those has become far more.
Right. As opposed to, I mean, to travel and, and five hours on the plane and three nights in a hotel, all, you know, and ultimately getting 10 meetings out of that day, um, we can do 10 meetings in half a day now, realistically, right. Because it's, you can do groups and you can do a couple of people together.
It's been great from our perspective. So, Jason,
Joseph Lamanna: [00:28:30] what is your biggest challenge to this past year?
Jason Mann: [00:28:35] Okay, go ahead.
Joseph Lamanna: [00:28:37] I was just going to ask you, what was your biggest challenge this past year?
Jason Mann: [00:28:42] Um, I mean, obviously COVID was, was, uh, uh, a challenge for all sort of investing strategies. We fared pretty well, given this, given that I think Reed Rodrigo used the term, but the, the speed of the markets.
Um, I think the reality is that. The liquidity plunge was as much driven by, uh, options positioning in this liquidity cascade that we, we read about, um, you know, volatility becoming an asset class and then ultimately imploding on itself. So the speed of the market has been a challenge for systematic strategies and it's been a challenge for, um, taking risk off, but also putting it back on.
So we, you know, we were taking the risk off in February, uh, and we were adding risks back in late April while there was a big gap in between there where you could have had some, some pretty juicy returns, but the market just moved too quickly. Um, so, you know, we didn't lose money in March. We didn't capture that April bounce either, you know, and then we got on it in may and then the other channel, just that speed of market, doesn't just relate to the overall industry.
It also is tied to factor rotations or regime or patients. So, you know, if you recall coming out of COVID somewhat unusually, the stocks that did best were high priced growth stocks. Normally when you're coming out of the recession, you expect lower quality, um, value stocks to do well junk stocks. Well, it didn't happen, right?
You had a, a rush to high price growth and it wasn't until you got the vaccine news in November that you find these started to see what I'll call a normal bull market cycle, where the junkie, uh, beaten up stress balance sheet stocks, rally the hardest. Um, but the speed of these changes, if you're a trend follower, the trends were not stable and they were rapid.
Um, so that was for sure, uh, you know, a real challenge. I would say this year, things have looked a lot more than normal in terms of rotation and speed. But I don't think that that hidden risk of, uh, the options Vicks, uh, trade that hidden risk is not growing. So I think we all need to be wary that, um, liquidity plunges are more likely than not to stay with us.
Uh, and we can take from COVID a learning experience as to how to deal with that.
Mike Newton: [00:31:10] Absolutely.
Rodrigo Gordillo: [00:31:12] So let's chat a little bit about that rotation, right? Cause you saw in, in March, like you said, the gross toss coming out of it. And so if you're a momentum, if you're picking stocks based on momentum filters, you're capturing a lot of that, those growth stocks in that, in your momentum strategy.
But over the last couple of quarters, you've seen that rotation out of growth and into value. And possibly if it continues this way, you're seeing more and more value names becoming momentum stocks. Right. So are you seeing that happening right now? And, and what does that mean for, you know, value finally being in favor again after 10 years of just getting absolutely right.
Jason Mann: [00:31:50] You're absolutely right. That is exactly what's happening. So, you know, for us, we look at momentum plus valuation and for us valuations, things like price to free cash flow return on equity. It's more of a quality metric than it is deep, deep value book value metric. Um, so the challenge where they sure growth at any price environment like we saw coming out of COVID is that the value piece of the puzzle stops you from buying the Shopify guys of the world and the zooms of the world, because they just don't have the cashflow we're looking for.
So they have a great price demands, but lousy valuation on inequality. Um, the, on the flip side you have coming out of November and the vaccine news, you had the lowest quality value stocks doing well. So the companies that there was a risk of them being bankrupt. Well, we don't want to own those either because they've got really stressed balance sheets and they have been in a deal.
So the sweet spot is actually what we're seeing right now, um, which is, is when, as you say, the stocks that are becoming market leaders actually have high quality value measures. So think, you know, auto parts companies or industrials or financials, and that's very much what we've been seeing for the past six months is a rotation in our funds.
Um, out of, let's say more defensive staples and, and you know, some, some of the growth year stocks into these more reasonably priced value stocks and it's, uh, it's, it's always gradual. But the reality is if you actually look at the forward growth expectations of those industrial stocks or these commodity stocks, their growth is actually going to be higher than what are called growth stocks in the, in the tech industry.
Um, so, so the growth is actually in these, these value sectors for the first time. Uh, I think the meaner version has gone have gone so far out of value and into growth at any price. Um, uh, and the Kathy ward is a perfect example, Mike, that arc, uh, I call it the momentum machine, um, and you know, momentum machines work on the way up.
And then they work as great shorts on the way down because there's a lot of trapped dollars in the same momentum stocks that really don't have a fundamental backstop to them. So I think this trade can last more than just a quarter or two. Uh, this, this looks a lot more like an '01, '02, '03 environment to us where reasonably priced stocks could outperform for a long time.
We don't need a recession. We don't need a sell off like a one or two of them. But, you know, more like what we've seen recently, where value's doing just fine and growth has really struggled with a surface. It's
Rodrigo Gordillo: [00:34:36] an interesting, this theme of value, finally value, quality with momentum. Finally, having a stay in the sun.
There's also an, a counter narrative to that, which reminds me of the early two thousands about the, this time it's different, right? And the narrative is that we're part of the exponential age that it's no longer the, a lot of these assets and a lot of these investments that no longer mean reverting, but there are no longer good shorts that, that this is an age of technology and future growth out like a Tesla out, you know, decades that, that investors actually see that three, four decade long vision and will, and are willing to invest in it consistently.
And so I need Mike, you talked a little bit about Cathie Wood and her strategies and that you are not opposed to that type of. Um, you're out now. I don't know if you're out now, but you got out, is it, are you willing to get to, to buy into that exponential age, you know, to the moon, all the tech stocks, plus the Bitcoin stocks, plus the crypto and riding that out, if it plays out that
Mike Newton: [00:35:41] way?
Well, let me, so I had, uh, you know, my, my, I run four portfolios and one of them is aggressive and it had a superb year last year. And, uh, and I knew why it had a superb year. And I know why, um, some of the folks at fidelity, you know, fidelity insights, dynamic, power, American growth, you know, uh, Noah, black Steen, mark, Shamiel all those guys.
So, you know, I was sort of in that group. Um, and as we all know when you're, um, I guess I'm a stock picker, uh, but we all know that you're only as good as your last trade as the old saying. What I, you know, you could have looked at all four of those and predicted at the end of the first quarter of 2021, they'd all be either plus five or minus 20, you knew they wouldn't be plus five or plus 25.
Um, so always in the back back of my mind is I hate the term bag holder. So I didn't want to be the bag holder. Now having said that, um, this value, uh, conversation, uh, I've seen the charts where they show the ratio of growth, the value, or the, the, the S and P 500 to the commodity complex. And it's never been more strict.
Like at the end of say Christmas, it's never been more stretched, but I looked at those charts, I don't know, every three months for the better part of six or seven years. And it, it never actually came to fruition. It just got worse. And so one half of me has to be a believer. And the other half of me has to be a skeptic.
And it's, it's a weird thing to counter balance in my mind. So, um, like I said, had on the first crack, in the, uh, uh, in the, in the armor of the, of what Jim Cramer called the Woodstocks, the Cathy Woodstock, he calls them Woodstocks. Um, we were very quick to pull the trigger, um, and what, and we completely exited, whereas something like shot, which kept growing to 5% of my portfolio is I just kept trimming it back to three and a half.
I think that, I think I did that about four times finally, it wasn't going anywhere. It was losing its sort of momentum as they say. So I just said, okay, I'll just leave it be for a little while. Um, and it, you know, it comes back to this, you know, this framework I think, and no disrespect to anybody on this call.
We were steeped in this narrative above value and growth, and we assign these metrics to these things. And I think Jason, you alluded to at the end of your conversation, that there is growth in these value names and there, there is momentum inside, right? These value names. So there's a different, I think most people get confused with value being a banal boring company that just can't really get its act together.
And we can, we can all point to a bunch of those, but you know, we'll get Deere, uh, you know, uh, th th th you know, ag company, um, some would argue it's an agricultural technology company now. Um, so I was very, very early that the deer rotation, uh, for a whole bunch of reasons, it not only fit my reopening theme, but it also fit the sort of value theme.
And then. Ticked off my exponential growth technology cloud theme with artificial intelligence and machine learning. Like it's, it's a classic industrial company filled with all that Cathie Wood stuff. So you got to find that stuff too. Um, you know, and you know, in Canada you're always in trouble. If you don't have a 30% allocation to banks.
Well, for five years I was 3% allocation to banks, 3%, but guess what? On February 12th, I went from 3% to 19%. That's where I put my money and, you know, I don't have the sufficient okay. The models that Jason might have, but I do have a screen that has the nine sectors. And I just, I look at the trend in the momentum.
Where's the money going. And the mistake I don't want to make this time around is if value really comes into focus, um, how long will it be lived if this economy cools down. Um, growth will start doing really well again, and these value names that everybody's running into, they're going to get destroyed again.
Um, look at lumber, you know, you know, you're in trouble when your 93 year old grandmother is over for mother's day and she's talking to a whole bunch of offense, cost lumbers dropped 24% in six days since mother's day. So, uh, make sure you have companies that just have massive cash flywheels and, uh, you're going to do pretty good.
I think you're going to do really well and then add your risk measurement to it as well. And by the way, I, I have money with Jason, um, because I think they're excellent at what they do. And they're a great, I think it's a great glove. For me,
Rodrigo Gordillo: [00:40:47] I think it's a great compliment because there's two sides of what we're discussing.
Right? Number one, what Jason and resolve does is we've looked at data going back, you know, 30, 40, 50 years, if not longer, do identify that behavior, the series of behavioral flaws and a series of accounting realities that we can take advantage of in order to be able to harvest what is generally correct.
Right. And so that is backward looking and expecting a certain type of behavioral, maybe risk pattern to emerge and over time that does emerge and it is backward looking for sure. Um, what's a great compliment to that is somebody that is looking at what is likely to happen in the future. What's different this time.
How do I adjust to this value? Um, uh, growth ratio that's that doesn't seem to react in the same way as in the past. So there's certainly. A fantastic combination that you could find between those two methodologies. Right. So for sure, um, Jason should add value and I'm sure it's somewhat correlated to what you're doing,
Mike Newton: [00:41:55] right?
Jason Mann: [00:41:58] Yeah, no, I would, I would agree with that local. I would love to be better at managing growth in our, in our models and its growth is a really tough one to get because it doesn't end slowly. It ends quickly when the cycle runs for growth stocks. When, when the cycle ends for the expensive.
Joseph Lamanna: [00:42:20] Yeah. Uh, Jason and Mike, uh, maybe a question for both.
What are your thoughts on inflation? Are we in a hot flash of inflation because of base effects or do you think we're entering into a period of structural inflation?
Jason Mann: [00:42:38] I can start with that. I think the answer is yes. So we have no question we have about, of, of short-term supply driven, inflation, lumbers, and perfect example.
It's not that we have a lack of trees. We have a lack of throughput for, for Loma. Um, and as you know, nothing solves prices, high prices like high prices, right? That, that will be the cure. And you see west Frayser as an example, putting $150 million into the U S mail to get that up and running, there will be all kinds of mil capability in, in, in the near term.
And that's part of why lumbers down six days in a row. Um, at the same time, there have been some large, uh, not miss allocations, but under investment in Korea. Commodity products like Papa, and it's not as easy to, um, you know, flip, open up a moth ball mill as it is to find and develop and permit, uh, carbon.
So, so there are some structural problems and you've got the tailwinds presumably of an infrastructure spend in the U S um, I think the challenge, I think what central banks have finally figured out or governments and finally figured out is that central bank stimulus is deflationary period. Uh, it, it crushes the velocity of money, whereas fiscal spend has potentially the opposite impact.
Uh, and now that we've gone down that COVID rabbit hole of, of allowing for fiscal spend without a whole lot of guilt, it's hard to turn that top off. Um, if you're a politician, is it works really well. People like getting checks in the bank account who knew, um, and that ultimately can be quite inflationary.
So, so it's a bit of both, right? I don't think there's a clean answer on that. I think the other thing is you gotta remember the fed has already told you they are going to let inflation run hot. They would way rather err, on the side of inflation than having to go to negative rates in a deflationary and environment, that's what scares them to death.
They know how to deal with inflation. They can let inflation run, but if you want to run it an average of 2% and you've run the last couple of years, sub one, well, how long do you have to run it? Three or 4% for right. It could be a little, it could be longer than people think so. So I think the inflation trade is, is real in the sense that it's it'll, it'll persist because of government policy.
Um, but some of what we're seeing is, is certainly short-term, uh, supply driven that will get resolved.
Mike Newton: [00:45:19] Excellent. Like inflation. Gosh, I hate macro stuff. Um, I, I think another thing that's interesting that came out of this inflation situation is obviously, as you said, the base rates obviously, but, um, I think, I think the other thing you can read into this is that corporations, uh, have been running as efficiently as possible maximizing profits, minimizing costs, you know, the advent of just-in-time, uh, inventory management.
Well, you see what happens when one tiny thing goes wrong. Um, you're, you're finding out what companies are not resilient. What, what supply chains are not resilient? Um, you know, uh, it, this, you know, if you look at Google or Amazon, just as an example, they have whole divisions. Go into work and nobody really knows what they're doing.
Um, they're just inventing and toiling and running mice on wheels and stuff, but they're actually running things for when weird stuff happens. And I think too many companies are running too close to the bone. Um, and they're not, you know, it always bothers me when, um, the proverbial shit hits the fan and none of the Canadian banks are ready for it.
Um, you know, they plan for it, but they don't do anything about, I mean, I'm not the bags per se, but a lot of companies, when they finally have their big chance to do something, they're not ready to do it. Um, so, uh, you know, it's like the at and T uh, discovery deal today. I mean, um, you know, why wasn't this done a year ago?
To me, this feels like reactionary, financial engineering, as opposed to. Intellectual capital and invention. Um, uh, it's like companies that announced a stock split. Gosh, I hate that stuff. It's just silliness. Um, so coming back to inflation, um, I think an inflation is a victim of our own maximum utilization of profit seeking.
And I think it, nobody carries inventories, nobody over supplies. Anything, if you do you get penalized, there's all kinds of things. And then it didn't help when you had a de-globalization happening in trade wars happening. So, and then there's a trap on the other end is, is, uh, what's going to happen to Americans and Canadians if interest rates go to six or 7% to choke this off.
So there, I think there's a bit of a trap here, so I'm not, I don't disagree that we can't see this run a little bit hotter, but I have a deep feeling that it's going to run higher, but not much higher. Okay. So, but then you have tools. Yeah. So box the player, eat difficult,
Rodrigo Gordillo: [00:48:06] different types of areas. I can run a very difficult thing to raise.
Yeah. Yeah, absolutely. I think when you win a deal, when it comes to inflation, you gotta, you gotta run it hot. They need to run it somewhat hard so that you can reduce the amount of debt that they have on the books, because they're not going to do it by being austere. They're going to do it by implanting it away.
But then, you know, inflation is one of these weird things. As a, as a south American, who's seen plenty of inflation. It's one of those things that you control it, you control your control and then overnight you're up 6000%. So, um, you know, it can't get away from you fairly quickly on both sides. So it's going to be an interesting time and we're playing an interesting game now that the fed has certainly taken away their ability to target something there.
What do they call it? The free float interest rate. So, yeah, I think inflation is, uh, is going to play whether it's inflation or deflation. It is going to be a very interesting next two years, as we see fed governments, try to deal with that. Um, now guys, I wanted to kind of take it back.
Mike Newton: [00:49:09] Rodrigo you grew up in Peru, right?
Rodrigo Gordillo: [00:49:13] Oh yeah, no, we saw, I've said this in the pocket. You saw that firsthand. The reason I got to Canada, I saw it firsthand. You're looking at, at the time stores were setting their own food prices. They won't go to the market to figure out what a plate of spaghetti cost. Right. They were kind of, you know, personal heuristic and they were increasing their prices to three times a day, trying to guess what inflation was going to be the next day based on just complete mistrust of the currency.
And by the time I left Peru, so it was in six months, inflation went from 20% where you were getting around 23% interest rate in your bank to 7,000, 200% without the banks actually increasing the rate of interest. Right? So people were wiped out. My parents were wiped out. My grandfather who had retired, sent a letter to everybody in our family saying, you'll never have to take care of me because I have the equivalent of a million dollars in Peruvian currency.
Had to go back to work. Um, my next door neighbor had, he was going to be thrown out of his house for not being able to pay his mortgage. He had a massive debt. And then after that six month period, he was able to pay off his loan, his Peruvian denominated loan with a couple of hundred dollars, a U S right?
So you got your winners and your losers. And this, this thing can get out of hand very quickly. It was a six month period. And then there was massive deflation after that. So it wasn't just hyperinflation. It was hyperinflation and hyper deflation, which is always the case. There's two sides to that coin.
Right. And look, it's the only small cap country countries here like that. That's, that's the type of stuff that may not necessarily happen in a developed nation, but the us and Canada with went through similar things in the seventies. So it's not us dollar. And the Canadian dollar went down like purchasing power.
It went down 50%, six years during the seventies. Right. So these are real things you just, because we haven't seen it doesn't mean they're not gonna have. And you just gotta be prepared now with, uh, with an active and diversified portfolio in order to be able to deal with things that we may not have seen in our own careers and the belt markets.
And to that point, this is one, one thing I want to ask both of you is, you know, there's something in common between all of us here is that we're active managers and we're active managers in a world that is begging for indexation and we've survived it. We've made it this far. What's wrong with us. And, uh, don't answer that question more importantly, let's start with you Mike, over the years, uh, has it become easier or tougher to, to sell your product, to be able to bring people into the fold as indexation became?
Are we okay?
Mike Newton: [00:51:50] Um, you know, in one step further, I mean, uh, back in 99, 2000, you know, TD evergreen, not TD evergreen, TD, uh, whatever it was called, the online trading was 9 99. Um, right. And all that stuff I thought, oh boy, you know, this it's over. Um, uh, the indexing is excellent. In fact, in my, when I'm building my business in my email inbox, in my drafts, I have the world's cheapest ETF portfolio.
And, uh, I updated about every six months. It's amazing. I mean, it's down to like three basis points. It's a couple of Vanguard funds, a couple of, uh, Schwab ETFs, and it covers international to real estate to commodities, everything. And, uh, one of the Vanguard ones used to pay you to be in it because they lend your stock out.
Right. So I have that ready to go. And you know, when they come down to fees and this and that, and yeah. Uh, I said, oh, well, it sounds like we're not going to be able to work together. Um, here's a, here's an email for you and then they get it and they're like, oh, this is amazing. Thanks. And then I said, you know, you can go to wealth simple.
You can do this. Do that, that, uh, that the funny thing is, uh, it's weird Rodrigo, but managing the risk, managing the emotions. Um, also having good performance is important, but being able to manage that risk, manage those emotions, provide my other services. Um, they keep coming back and I, I have to say, I was always surprised how people still need help.
Um, the pendulum of fear and greed is perpetual. And, um, you know, there's always two, two things I always got all, you know, I could have, you know, an in, in a year where I'm, you know, let's say, uh, you know, 2008, we were down 10. Which was actually, by the way I go, I know you guys know this that's pretty damn good, but you know, you always have that client says I could have just bought a GIC.
Well, yeah, I know you kind of, um, and then, and then the other one is that I started getting, thank God. I have my opportunity portfolio, which has all the risky stuff in it. And that's half the reason I have that portfolio quite frankly, is it funnels the conversation to, well, did you know, I do have a portfolio that owns zoom and Peloton and Tesla.
Oh, you do. And the reason I do that is because it becomes, it's an unbelievable, uh, that's the greed. Um, I'll give you two another example just after Christmas, just after Thanksgiving. And usually a few times in the summer I hear from my clients and they tell me about their children who are making a fortune in the stock market.
And it's usually those coins crypto, you know, online gaming, whatever it might be. So. Uh, for some reason I've managed to fare off the, the challenge. Um, and it really comes back to what I said earlier is that, um, you know, look at the last last week, uh, the Kathy Woodstock's in one week, we're down, you know, 18% for a total combined sort of one and a half month decline of about 40.
Um, well guess what? That, that wakes up people pretty quickly that they got to think about risk and index funds don't provide any risk management whatsoever. Yeah, they
Rodrigo Gordillo: [00:55:15] don't. And I mean, it's really, we talk about the advisor, alpha being a massive thing. So look, you're managing active portfolios, as you said, sometimes you're ahead in one quarter, sometimes you're behind in a quarter.
And what keeps you going? Is that advice and that trust that you establish with your clients? So the advisor alpha to me has always been. Everything, when it comes to being an active manager, dealing with private wealth money in order to keep them invested in long-term. Right. But, but also, you know, Jason, I mean, we also, you know, we're both selling to advisors as well.
I have a mutual fund in the U S and ETF that we sub-advised for horizon in Canada. When we are talking to advisors, I find it particularly difficult. Number one, to get them, to make some space for alternatives and number two, to get them to make some space for quantitative alternatives. So what has your journey been like?
And, um, and how are you finding that space now? Is it getting harder, better?
Jason Mann: [00:56:15] It's uh, it's gotten a lot better with the advent of liquid ALS. Um, and I will see right off the bat, we tend not to sell ourselves as quantitative for exactly the reason you just said. Um, we really do focus on quantitative being something that.
Discipline risk management, uh, process. But even there, we focus on the outcome, not, not the process itself. Um, so we, we don't know position ourselves first and foremost as quite, even though that's really what we are, but we do absolutely talk about how we can, um, replace something in their portfolio, like long, only bonds, which is a lot less likely to do what it used to do when rates went down for 30 straight years.
And I think more and more advisors are getting that this past six months has really started to clue them in and seeing the back that it's getting less and less likely that bonds are going to be a proper defensive allocation in the portfolio. And their use of alts is expanding as a result. So even though most of what we do is inequities really we're replacing the bond part of the portfolio and it's going from traditional 60, 40.
2 50, 20 30, um, when we're part of that 20, which is now alts. So liquid offices has made a huge difference. You know, when we, um, when we launched, like what else we had run, offering memorandum funds. So we launched what all we were all at 300 million. We're now just shy of 900. Um, and that's, that's been very much driven by liquid all prospectus, daily liquidity, easy to buy and sell medium risk on, on risk platforms, uh, on dealer platforms on no paperwork, all those things make a world of difference.
Um, and you know, so, so yeah, it's gotten a lot easier. And I think the, the acceptance at the top level of banks from the, from the top level down is much, much higher. Not every is the same, but certainly banks like a TD or a Scotia or a Raymond James, or a national. Or a GMP they're, they're quite, um, uh, they, they view Alice as a key part of an advisor portfolio looking forward.
And in some cases we're actually, uh, not mandating, but strongly suggesting that they have a minimum, at least a minimum allocation to these strategies that can be defensive.
Joseph Lamanna: [00:58:45] What do you think is the best thing you do to keep your clients behavioral on side, to keep them from making mistakes, like selling, selling in a panic?
Mike Newton: [00:58:55] Um, well, it's, it comes back to what I'm actually already doing for them. I, it's a promise I've made, which I'll do it for them. I'll panic for them. Um, and I'll do it in a more rational way if, if you, if you will. Um, but the, you know, it, it, it's interesting, uh, if I could dovetail into the previous conversation, but also from the view of an advisor quickly, please, and then also how it fits into what I do.
The first iteration of volts in my, I had lots of alternatives at one point, and it comes back to where you're like playing a hockey game. And when you go to play hockey, you have to play within the rules of the game of hockey. Well, the alternative space or the hedge fund space was always two and 20 with all these gates and all these one-year hold lockups and all these form, these scary forms.
So it was a, it was a, it was, it was a club or a restaurant where they invented their own rules and you had to play by them. And in my opinion, it wasn't very democratic. It wasn't very client-friendly, I, they, they mean well, and they wanted to do the right thing. It's just the structure. Um, and by the way, I'm not talking about, uh, you know, I, I met Jason Day one and, and, and I, I, I invested day one with my own personal money.
And the reason was is they launched in what I thought was authentic, clean. Relatively transparent, flexible, honest, reasonable fee. And I thought, okay, here we go. Here's the new wave of vaults. And, um, and as you mentioned, Jason, the new, uh, liquid alts have actually made it much easier for, for people like me.
There's no reason whatsoever. And I've been in talks with his team that, that 60, 40, that 40 side of the equation, um, which I've actually on my IPS brought down to all the way down to 25%. I just wrote it in and saying, I just can't have 40% in bonds anymore. So we've got it down to 25, which, uh, which was a big move we did about nine months ago.
Um, and I do plan on, you know, maybe I'll become, you know, uh, you know, 75, 10, 15, maybe I'll be 15 alt I don't know, but coming back, how do I people keep people involved or how do I keep people living with the investments I have? And this is something. When you look at, when you look at Jason's fact sheets, you can see their top longs and the top shorts, and I've always believed.
And remember, I deal with retail clients. I have some large corporations and what have you, but I'm a, I'm a retail. My target audience is the retail group, not institutional. Um, people like a narrative, people like a story. And w you know, when it's funny, it's funny. I own Shopify, which has been bludgeoned in the last, uh, six weeks.
The good news is we've reduced the holding, but everybody in my, and I know it's overpriced. It's only about a 2% weighting in my portfolio. Everybody believes in the Shopify story. So they weren't, they didn't care about Shopify being 20%. They were worried about other things being down, which I thought was kind of funny.
And the reason is is that again, people like a narrative people, and this is one problem with most retail investors. Is they the old adage you invest what, you know, you know, the old Peter Lynch, you know, went to the mall and looked where his family was shopping and then bought stocks that they saw in the mall bought stocks.
You see in the medicine cabinet, whatever the case may be. The problem with that. Obviously, as everybody leans too far to the side of the boat and it gets overgrown and overpriced and there's no, you know, there's no, uh, you know, there's no secret anymore. It, you know, that that surprise upside's kind of gone.
So yes, I love the narratives narratives, keep people very involved in loving their stocks. Um, if you just have a line item and a statement, um, XYZ fund and it's down 22% from us. You lose clients. Um, but if you have a portfolio of stocks that are down collectively 22%, somehow these tend to believe in that all still.
Oh, but it's wrong, Mike, they're not going out of business. So that's the old way I did it. But most importantly, Joseph is that I do, I've made a promise to my clients that I can't do anything about the first five, six, 7% of a decline in a portfolio, but I I'll get pretty damn busy protecting the wall, uh, when it gets down to minus eight, minus nine, minus 10.
Um, you know, I'm not talking about an Advil P positions here, I'm talking about the overall portfolio. So I hope that answers it.
Joseph Lamanna: [01:03:35] It does. What are some of your favorite resources for market Intel where you inform your, your, your narratives?
Mike Newton: [01:03:44] Um, good question. Um, it's funny, you know, you gotta, you have, you know, you used to have, uh, blogs, bookmarked.
Um, we can start with the basics obviously of your in-house research. Um, RBC happens to have a very robust, uh, uh, platform. We have other third-party manager, uh, uh, research homes, you know, Thomas, Leah funds, Strat Veritas, Morningstar, um, JP Morgan RBC. What have you? That's fine. And it's, um, it's kind of expected, but it's all the, you know, I've gotten into more technical things.
We have technical strategists that I follow. I've subscribed to some of my own stuff that I pay for. Um, so I just, I grab it all Joseph, but if I could make a comment on that is, uh, I remember, um, you know, you look back 15 years ago after the oh nine, 2000 8 0 9. People tend to gravitate to what answers there, scratches they're rich.
So if you're bearish or do you tend to latch onto the people that are bearish and scared, uh, if you're a Pollyannish bull, you tend to read Cathy would or. You know, any of these big pie in the sky, uh, blog posts, what have you? Um, I do my best to stay kind of agnostic and balanced. I try to read the negative and the positive of everything I'm doing.
So, um, I would argue, I probably subscribed to too much now. Um, and I probably need to call it a bit. Um, but just staying involved in life, Joseph is where I get my ideas from. Perfect. Jason, how about you?
Jason Mann: [01:05:23] You know, I find, um, to be honest, Twitter is probably my number one source for these days for both research news.
But the challenge is if you want that to be true sure. Rating your list of people that you follow. It's, it's, it's all in on that. Um, but, but I, you know, I'll agree with Mike in that, uh, I think it's really important not to have your own little equity. Of just confirmation biases and views that are exactly yours.
That's probably the worst way you can go about your research. But for me, it's, it's really, uh, a broad mix of, um, macro information, uh, sort of quantitative research. So like the real propeller hat kind of deep work that, uh, um, certainly someone like Adam Butler and the zone team and in Virginia would be putting out.
Um, so I'll follow a lot of that type of content, but then it's a lot of, you know, honestly it's independent, uh, styles of training. I'll follow people. Day traders, I'll follow people who are more growth focused, uh, in, in, in how they run money. I spend a lot of time these days, following people who are in close attention to what the options, market and volatility market's doing, because it really has become the tail that wags the dog in the short medium term.
And if you don't understand how dealers are positioned with their options books, are they short gamma, are they mom Ghana? Are they having to hedge? Is there an expiration coming up that informs a lot of the short term news, and maybe it doesn't matter, but it can reinforce or accelerates risk on and risk off news.
Um, and if that, if part of that process and your process is timing markets, then that's an important short term drive in and pay attention to. Um, so it, it really is a whole broad swath of, of resources, but honestly, I use Twitter as the filter for all of them as the delivery sponsor.
Mike Newton: [01:07:26] Excellent Twitter as well.
I love it.
Joseph Lamanna: [01:07:31] That's good. Thank you guys for sharing that. It's been a great conversation, a great conversation. First off, I wanted to share that with all of you. Um, it's been a great conversation and, uh, but before we sign off, um, I have one last question and, uh, we've been doing this and, uh, sort wanted to continue it on.
So it goes for both of you and you can both take, whoever wants to go first, but the question goes like this. Uh, would you rather spend a week in the past or a week in the future? And I'll let you guys decide on who wants to go first?
Mike Newton: [01:08:09] I, uh, one of my. Most liberating things I ever did was not let the past dictate anything in my life. So, you know, whether that's a mistake or a triumph. So my answer is I'd love to live a week in the future. Excellent. Yeah, I
Jason Mann: [01:08:33] have to say that's, uh, uh, that's an easy one. It's to be at weaken future. I feel like, you know, given that a new Drigo alluded to this analogous back, you alluded to this earlier in the conversation that as quads, all our, all our lives are, are spent looking at what, what has happened in the past.
So I, I feel like, you know, certainly from a, from a market and investment perspective, um, but that obviously ties into just life and human history. I would, I have a relatively decent sense of, of how these cycles have played out over the past, but of course the, the giant pitfall for client is that the future isn't the.
It may Ryan, it may feel similar. It may be consistent patterns, but the future is absolutely going to be different. So a week in the future with, uh, and obviously not just from an investing perspective, from a personal curiosity perspective or week in the future, that's gotta be the one for me.
Joseph Lamanna: [01:09:33] Excellent.
Mike Newton: [01:09:33] Thank you. That reminds me quickly of, uh, Josh brown, who I love has such a great way with words he was talking about. Remember back to the future, Marty McFly gets the, um, all the sports scores for the future, and then his nemesis ends up owning casinos and he's a billionaire, but one of the, one of the posts that I liked was, uh, he talked about if you could get all of the U S economic data, uh, in the future, Um, and he went on to say that even if you had it in front of you and you knew the economic data, it didn't necessarily mean you're going to be a write about what happens in the stock market.
And, uh, I, I strongly believe that. I mean, the most curious things happen with today's data that completely goes against what you think is going to happen in the future. So, uh, coming back to what Jason says, yes, you want to correlate and extrapolate and all that. It's part of the process, but I wouldn't weight it too heavily.
Um, the future is absolutely unknowable.
Joseph Lamanna: [01:10:38] Excellent. Fantastic. Well, Regal, uh, do you have anything to add?
Rodrigo Gordillo: [01:10:46] All right, well, JAMA, I trust you had an awesome conversation. Oh, I love those, uh, those answers. No worries. Apologies. Lost power here for a second. Um, yeah. Jason, Mike, awesome. To get your knowledge and help everybody here up their game a little bit.
Um, is there anywhere that we can find you social media? Well,
Mike Newton: [01:11:09] I actually
Jason Mann: [01:11:10] try to keep my social media presence, real quiet I'm alert.
Um, but, uh, yeah, that's, that's
Mike Newton: [01:11:21] it for me. Uh, my website, uh, LinkedIn and Twitter, although it's not an official, officially endorsed Twitter account. Okay. Um, my apologies I've become a little angry with the lockdown. So, um, my Twitter tends to reflect a little bit of that anger and I still try to provide valuable information for investors, but who knows?
Joseph Lamanna: [01:11:49] Um, for me guys, I listen to it. I, I just want to say I've had a blast. This is a, you know, this is all new for me. I'm usually behind the scenes has been a great conversation. Um, I want to thank Rodrigo for helping me and taking me on this journey. Uh, and Mike and Jason. Thank you both. Uh, it's been a great, I had a great time and it's been fun.