Investing Unscripted Podcast 133: December 2024 Mailbag

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Jason Hall: Hey everybody. We are on the stretch here for Investing Unscripted. Welcome back. I'm Jason Hall. He is Jeff Santoro, the voice of the people. And, uh, we're doing our last Q and a for the year. It's our last mailbag, Jeff. 

Jeff Santoro: Last mailbag, last couple of shows of 2024. We got some fun stuff planned for the rest of the month, but this is our last chance to answer listener questions or respond to listener comments.

We get some comments, not always questions. I got to be honest, Jason, a little bit of a light mailbag. I'm going to give our listeners a pass here. It's a busy time of year, you know, holiday people doing shopping, busy, busy with events and things, but yeah, I expect it's also kind 

Jason Hall: of close. It's also kind of close to our.

Uh, the, the live stream the first Friday. So we get a lot of people that come on to ask [00:02:00] questions 

Jeff Santoro: for that. I'm on, this is a one time pass though. Um, I'm expecting our listeners to step it up in 2025 and inundate us with, with questions. Yeah, that might 

Jason Hall: be our motto for 2025. Where the listeners step it up, you 

Jeff Santoro: guys need to be, we're working way too hard here as the people who work here, who talk, 

Jason Hall: yeah, please do our job for us.

So we do have some good questions. So we've got some good comments we're going to respond to. Um, but we're also the, the actually kind of worked out that it was a little bit lighter because we're also going to unveil our plans. For the 2025 investing, investing, unscripted portfolio contest. 

Jeff Santoro: Yes. This is the third year we're running a contest.

It each year has been different. Next year will be no, no different than that. It'll be something a little bit, uh, a modification that we think is an improvement. Maybe when we finally feel like we've settled on the right contest, we'll keep it the same. But, uh, it's been a couple of years of experimenting with different ideas.

So yeah, we'll answer some questions, respond to some [00:03:00] comments, have some fun. And then. Explain what our, uh, our contest will be because it will be open to listeners. So, uh, you're going to want to hear the deal, pay attention to the deadlines and be involved with us. Foreshadowing. 

Jason Hall: Uh, we have been doing a stock picking contest and calling it a portfolio contest.

We're actually going to be doing a portfolio contest going forward. You'll hear more about that at the end of the show. Jeff, before we get into the Q and a. I just want to remind people about our savvy trader. I want to encourage people to go check that out, especially right now where the market seems really fully valued.

A lot of momentum driving stocks. You and I've talked a lot about it feels like maybe harder to find good valuation or good value for investing. Um, something that we've been facing in that, but we continue to find a way through, and it might be a good opportunity to help kind of jumpstart some of those thoughts and as good as the market's been, the portfolio has done even better since we launched it in April.

So I'd love to see some more people get involved in that. 

Jeff Santoro: Yeah. I'd love that too. And it's all right. So I'm going to go rogue here a [00:04:00] little bit, Jason. I'm going to ask you a question, a mailbag question that I just came up with based on what you just said. this is fantastic. I was actually going to text you today because I, I feel for the last couple of months, I have felt almost no.

Desire, or I have not been compelled to buy, to do my normal, like monthly buying of stocks in your personal, real, my personal money. And, and this is, you know, the continuing evolution of me as an investor, where I went from, I couldn't wait to buy stuff. I would buy stuff every single day, just 5 here, 10 there.

And then I got to like a rhythm of every week. And then I got to a rhythm of every other week. And now I. Like, here's an example today I was having lunch at work, opened up my portfolio and I was like, I haven't bought anything in December yet. And I have my money sitting there ready that that's been transferred over.

And I opened my, my, uh, spreadsheet and I looked around and I was like, I just, I couldn't. And I don't [00:05:00] know if that's just patience setting in and me feeling like I don't need to be in a rush to do anything. But I think it's more that the market feels. Overvalued when I look at my stocks and they've done well, because the market's done well, I can't, I don't see any compelling value.

Um, and I wonder if we were in a bear market and every day was red and my, all my stocks were down, would I be. What I feel differently, would I be more eager to buy because I, I, I would feel like things are being offered at a discount. Whereas right now it feels like I'm overpaying. So I'm curious. I mean, you're not a regular buyer either.

You're sort of a raccoon on meth. So I'm curious, have you felt any differently? I spend, 

Jason Hall: I get very aggressive for short bursts and then I spend days and days asleep in the, 

Jeff Santoro: uh, And the not whole, I guess, because I think this is my first time going through like a prolonged, whatever you want to call it, exuberant, frothy market where I [00:06:00] wasn't new enough to be just like wide eyed and excited about it.

Like I spent all of 2020, well, the second half of 2020 and all of 2021 excited and buying at what I now realize were ridiculous evaluations. And then we had the long downturn and now we're, we were on this long. Um, upswing again, and I've, I'm, I'm feeling very Zen about it, but also patient. So I'm, I'm just curious if you have felt any differently, let's say over the past year of, you know, this year of 2024 compared to, I don't know, other times when the market's done well.

Jason Hall: Yeah. I mean, compared to where things, where I was, you know, a year ago and earlier this year. Yeah. Definitely feels like it's, there's less, there's, I think there's still opportunity, there's still pockets where you can buy really good companies for, for, for decent valuations. by and large, uh, the biggest winners in my portfolio, uh, I'm not compelled to add to them right now.

[00:07:00] Right. I think that's the key. Um, and again, this is thinking about the short term winners, right? The long term winners, you know, I'm not thinking about doing a bunch of selling or anything, but I just, I don't feel compelled to, to deploy a lot of money, um, into stocks. As a matter of fact, Jeff, um, I've been a net seller of, of stocks, um, over the past, certainly over the past few weeks, but definitely, um, you know, Yeah, I think if you look back over the past couple of months, so just for example, um, today, um, I, as, as the day we're recording this on the 11th December, I fully exited my, uh, zoom.

Um, I bought some zoom earlier this year when it just was trading for almost single digit cashflow multiples, just was too cheap for that quality of a business. Um, And we've seen multiple expansion. The earnings really haven't changed. The earnings have gone up. They've gone up a little bit. Cash flows continue to be good, but [00:08:00] there's still issues with growing their, their user counts, particularly in the enterprise.

They reclassified a lot of stuff about. what they consider to be enterprise customers. So essentially their enterprise businesses has shrunk. Um, and I just kind of got to the point. It's like, you know what, when it was cheap, it made sense to buy it. The business doesn't, I don't see any acceleration of traction and they've talked about buying back stock and there's actually 2% more stock, more shares outstanding than when they first rolled out the buyback plan.

So they're not, Creating value there. I just made the decision to move on. And then other positions that I've, that I've exited long term losers, Teladoc health, um, I sold out of, um, I exited stone code because I don't feel comfortable and confident in my ability to navigate and understand the banking environments and unregulated markets like in Brazil.

Um, that was a loser for me. Um, Next decade was a bit of a [00:09:00] winner for me, but I just think that that whole liquefied natural gas area has gotten really, uh, a lot of competition going on and I'm not sure about the longterm supply. I exited Boston Omaha, Jeff. Oh, you didn't tell me that. Interesting. Um, well, I didn't fully exit.

Um, I exited in a couple of accounts. I still have a small, a small position. I exited a sauna. Um, so I've, I've kind of trim what I think are some weeds and a lot of those have done relatively well over the past year or so, but I've just lost confidence and their ability. And I don't want to invest any more time to research those companies when I think there are other companies that the market's going to give me a better opportunity to, to, uh, to invest in because the market has gone up so much.

I want to increase my allocation into the bond ETFs that I've added to, to get those percentages back up. So a little bit of selling so that I can rebalance as we get to the end of the year. Yeah. 

Jeff Santoro: Yeah. I have a feeling I will, [00:10:00] when I have some time off in a couple of weeks heading into the holidays, I'll probably, you know, have the time where I'll, I won't be able to resist the urge.

Um, that's usually when I get more active is when, um, yeah, I have a day where I could just sort of think about stocks and do some writing and things like that. So I don't know, I just, What you said about the, the savvy trader portfolio triggered my thinking on that. So I wanted to see if you, you, you felt similarly to how I have.

And it seems like, at least in terms of not being compelled to add to your biggest winners, which is how you put it. I feel like that's kind of where I am too. 

Jason Hall: What I, 

Jeff Santoro: what I have started to 

Jason Hall: do before we get to our next question, just real quick, and this is a bit of a teaser. We have a guest that's going to be coming on in January that we're super duper excited about somebody that I think might be one of the best options investors out there.

Uh, holistically, it's incredibly talented investor, but can be really, uh, somebody that's going to help us talk about options a little bit. One of the things that I have been using is selling puts. So basically I'm taking a premium, uh, and giving somebody else the right to force me to buy shares at a set price.[00:11:00] 

And, but it's a price that I'm willing to pay, even if the stock falls below that, and, and I have to pay the higher price, it's a price that I'm comfortable paying. I've started thinking that that's a strategy that I want to use to create long positions more, um, even if I don't get the stock at that price, I earn that premium, so it's, it's a way to generate a little bit of something along the way.

Jeff Santoro: Yeah, I, I've been, uh, selling covered calls a lot, and, I feel like that could be part of the reason I'm a little bit less trigger happy because I, I am doing something in the meantime. Uh, but yeah, we'll dive way more into that in January when we have that conversation. 

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all right. Um, let's dig into the mailbag here.

The first question we got was from a friend of the show, Seena, who reached out to us and asked, and I thought this was a great question. I can't wait to talk about this. Do you ever feel simultaneously rich and poor? If so, what internal conversations do you have with yourself about it and how do you discuss it with your wives?

I only have one wife. Well, I think he meant the two of us, but yeah, also speak for yourself. Okay, 

Jason Hall: it's fine. She doesn't listen. Yeah, no, of course. Absolutely. Absolutely. So this is good. Jeff, I want you to [00:14:00] go first on this one. 

Jeff Santoro: I think about this a lot and I, To me, it boils down to the whole, what are you, the balance between saving for the future and spending now.

And I've, I've talked about this a little bit in the past, in the past, but I think it's worth revisiting. So I'm a thrifty person kind of generally, like I I've always been careful to not spend more than I make. And if we, if I've had conflict with my wife about things, it's, it's around spending and just making sure that we have enough saved, but I've also changed the way I think about.

Saving over the past several years, um, away from, I just need to make sure I have enough money for retirement and thinking about all these great things I'm going to do when I can retire. And more towards, I need to do some of those things now for a couple of reasons. One, tomorrow's not guaranteed, right?

Not to be morbid about it, but there are just in my close circle of friends and [00:15:00] acquaintances at work. There's enough people who've, who've shared stories of the person they know who retired and, And then died like three months later. Right. Um, and also I have limited time where my kids are going to be around to do stuff with, you know, like I have a junior in high school and a seventh grader, and especially for the junior, I can't help but think, you know, two years from now he'll be in college and four years after that, he could be living anywhere, you know, working as a professional somewhere.

So the, the, the chance to do things with. My family, especially my kids is now not necessarily when I'm retired and they're off doing their own thing and don't want to hang out with their parents. So I've, this is a long way of answering the question. I think about this a lot because I want to make sure I have enough in the future.

I want to invest. I want to live comfortably. And, and I also want to force myself to do things now while I can and have the time to do it. So I, I [00:16:00] do have this constant kind of, uh, tension between like cash flow and what's in my savings and retirement accounts because I, I'm investing a lot right now because I'm trying to reach some goals and do a little bit of catch up, at least on my side of the house for not investing as much as I should have from like age 21 through 40.

Um, so the nice thing is, is. I, so to Seena's question about the internal conversation I have with myself, that the biggest one I have is this, I can turn the spigot of investing off, or at least turn it down anytime I need to. Right. So I'm probably over investing right now. Like if you sat down with a financial advisor and ask them, they'd probably be like, you don't need to invest quite this much, but we're able to.

Do the things we want to do and get by and everything with me doing that. But if it ever got to a point where it was just too tight, too, too paycheck to paycheck feeling, I absolutely can dial that back. And all of a sudden [00:17:00] I have a little more cash flow through my accounts. And then I'll you, I'll feel a little richer to seen as way of framing this question.

Um, But I think for me, that's the way I think about it. It, when I look at like holistically, I feel rich. I mean, I'm, I, we, we are secure financially. Our future is in good shape. I don't mean that as a brag, it's just that I've worked hard to get there, but sometimes I do feel poor because I'm trying to save and therefore don't have as much immediate cash to do like stupid, fun things.

You know what I mean? Does that make sense? Yeah, no, it absolutely does. 

Jason Hall: It absolutely does, and I'm sure your, um, wife feels poor simply because she's married to a teacher, but, you know. 

Jeff Santoro: It's not so much that, it's just she feels like she made poor choices, I think is the way she would frame it. I was just setting you up to say that, I want to be I appreciate it.

I want to hear your answer because your immediate response to this [00:18:00] question, uh, Seena sent it to us via text message, I believe was something along the lines of, no, I don't know what you're talking about because I'm too rich. I have absolutely no way to relate to that 

Jason Hall: whatsoever. Um, no, it's, of course I was being glib and kind of a, a dick on purpose, but there actually is a little bit of a kernel of truth there. of the things that we've done, and I think part of it is Jeff, my wife and I, um, are in our late forties. Um, we're the same age, so, um, you can't call me very, very old anymore without also calling my wife, very, very old. I'll let you deal with those consequences. Um, fine. Um, I'm okay with that.

But we, we didn't have, um, kids until we were 40 years old. Um, we got married in our mid twenties. So, and we actually lived together for a few years before we got married. So we had a very, very long, period of our lives. [00:19:00] Um, and for a long time we didn't expect to have kids. It wasn't really until we got into our, our late thirties until we decided, okay, we want to, we want to have kids. It took her that long to trust you. She never, she never trusted, never trusted me. She doesn't need to trust me to have a kid with me.

Jeff Santoro: I'm just trying to be mean enough that someone writes us and says that we should stop being so mean to each other. I love reading 

Jason Hall: those emails and then promptly ignoring them. Yeah. point is we, I mean, we had a, you know, a couple of decades almost, um, of spending and traveling and experiencing and doing things kind of building a certain amount of lifestyle.

Um, there wasn't encumbered by the, the, the actual financial expense of kids. Um, that was good. And at the same time we found like, financial responsive, like constraints, like the idea of pay yourself first. And, uh, also we're both, uh, high earners. So that helps. So there's always been enough disposable income, [00:20:00] um, where we were able to both build a lifestyle while also, uh, building wealth too.

Right. Um, and. So for me, because we've been pretty frugal and mindful about like not buying new cars and, um, you know, the usual trappings of, of life that you can fall into that turn into traps and you get tied to all of these recurring expenses. And before you know it, you have to get a promotion just to afford your lifestyle.

We've done a pretty good job of avoiding, avoiding that. So as a result, you know, our disposable income has grown a lot faster than, than our expenses. To the point that, and again, I don't want this to sound like a brag, but generally speaking, if either of us want something, we just can get it right. But, but we don't want Maserati.

So that makes it easier to get to this point. So for me, like I went through that painfully hard lesson about money and the value of [00:21:00] money versus the value of time and being responsible in my twenties. Um, and, and came out the other side, kind of ditching those money and feeling stuff and really money as a tool, like learning how to think of it that way.

I'll be honest with you, my wife, you know, she would, she's going to be okay with me saying this. She still deals with more of the emotional baggage of money. Um, came from a pretty tough, hard background, um, worked her ass off and leveraged her insane mind. Um, Speaking of women who have to have some, uh, regret for poor decisions made at prior points in their life, um, to be immensely successful, um, and financial success has come along with that, but it's still a challenge that she, she deals with worries about bills and do we have enough saved and we've checked off all of like the short term and long term savings and all that kind of thing.

Um, So the conversations that we try [00:22:00] to have are the things that we do in general, just to think about, you know, mental health, um, talking through our money, regularly meeting, right. To talk about our finances, long term, how are things, are we making changes? Where are we on our goals? Do we need to back up the amount we're contributing?

Do we need to ramp it up? Like all of those conversations. And then, Talking through the situation with bills and trips, we're going to go on and kind of bucketing the money aside for vacations. And, um, you know, it's healthy, regular conversations around those things go a long way towards kind of helping, helping 

Jeff Santoro: deal with that.

Yeah, totally agree. Being on the same page in terms of the way that I have found to get on the same page is to talk about like, what are the things we both want to do? And then yeah, prioritizing those things. Right. And then not getting so much worried about the other stuff. Um, the other thing, it's not 

Jason Hall: about being on the same page on the balance sheet and the, and the working capital.

It's about being on the same [00:23:00] emotional page. And maybe that doesn't mean you, you feel the same way about things, but you need to understand where you're, life and financial partner. Emotionally, where are they on these things? Because then you can find the common ground. 

Jeff Santoro: The last thing I'll say about this, because I, I know Seena lives in New York City and this is, um, well, he is poor because he lives in New York City.

Well, no, this is what I'm getting at. I think if you live in an expensive state or an expensive city, like I live in New Jersey, it's just an expensive place to live. It, there's this weird mind. Thing between you look on paper at what you make, whatever that is, whether you think it's a lot or you think it's a little, and then you compare it to just your lifestyle.

If you're a frugal person, not if you're like an extravagant person with 60, 000 with a credit card debt, but if you're just a person who lives within their means, there is this disconnect between like what you make and what it feels like it. Costs to live in your state. And I think for me, that's part of it too.

Like the whole, like, do you ever feel poor thing? Like intellectually I'm like, [00:24:00] no, but then I think about like, Oh man, look at my property taxes or, Oh man, look at my car insurance or, Oh man, look how much it is to go out to dinner. You know? So, um, I think that might be. Part of it too, but 

Jason Hall: well, that psychology is amazing, right?

Because I think it's Morgan household and other people too. Um, I think Ben Carlson's also written about it where you, you can take like all everything else equal. And if the average person you knew earned 50, 000 and this was choice one, if the average person you knew earned 50, 000, but your salary was 75, 000, would you take that?

Or if the average person, you know, earned one 25, And you take, would you take 100 and again, everything else in your life is the same, the things, the cost of how much things cost is exactly the same as it is today. And both of those scenarios and a shockingly high percentage of people would take the less money that was worth more money than what other people made. 

Jeff Santoro: Hey everybody. We'll be right back. But first a word from our sponsors. Heads up folks, interest rates are [00:25:00] falling, but you can still lock in a 6% or higher yield with a diversified portfolio of high yield and investment grade corporate bonds on Public.com. You might want to act fast because your yield isn't locked in until the time of purchase.

Lock in a 6% or higher yield with a bond account only at Public.com/InvestingUnscripted. Brought to you by Public Investing, member FINRA and SIPC. As of nine 26, 24, the average annualized yield to worst across the bond account is greater than 6%. Yield to worst is not guaranteed, not an investment recommendation.

All investing involves risk. Visit Public.com/disclosures/bond-account for more info.

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Jeff Santoro: all right, Jason. Next question we got from Alien Investor on Twitter who asks for, he asks you this question, Jason. So I'm going to just ask it and let you go.

Uh, Alien Investor says, you own Bitcoin and also Quantumscape. Have you looked at the risks quantum computing may introduce to the Bitcoin network? So I love 

Jason Hall: this question for, for three reasons. Number one. Quantum scape has nothing to do with quantum computing, which alien investor absolutely knows, right.

They're developing solid state batteries. Um, but I just, I love how it's like, Hey, quantum computing's in the, in the news, you own quantum scape too. Let's make a weird question. So, so I love that. Number one, number two, quantum computing is massively in the news right now. Um, [00:27:00] number three, this is the thing that I love the most about it is it's, it's the reminder that, you know, there's.

I can't remember the exact, uh, context of the entire statement, but, you know, risk is everything else, right? We account for everything we know, and then risk is everything else. And generally disruption comes from places that Essentially a rounding error from nobody really expects. And I think, uh, alien investor, your point here with quantum computing, with Bitcoin, Bitcoin's blockchain is massively secure, right?

It's incredibly, incredibly secure. And that's one of the things that's helped. Continue to be highly valued. There's the limited, you know, the 21 million Bitcoins that'll ever exist. Um, it's the OG, the brand, right. That has value, but it has value because it's super secure. So it's viewed, viewed as incredibly trusted, right.

And unhackable and all of those things that are viewed as a real positive. Um, Now we're hearing in the [00:28:00] news. I think it was the folks at Google. 

Jeff Santoro: Yeah. Google 

Jason Hall: that just did something with a quantum computer where they solved essentially instantly a problem 

Jeff Santoro: that it would have taken the way. This is the best part.

It took it. Like five or five minutes or 30 minutes, something like that to do something that would have taken a non quantum computer more time than has passed in the history of the universe to figure out. 

Jason Hall: Yeah. 

Jeff Santoro: Yeah. It's pretty good. I heard a podcast where they tried to explain quantum computing and look, I am certainly not the smartest man alive, but I also don't think I'm the dumbest.

And I'm I was like, smoke was coming out of my ears, just trying to like surface level, understand what quantum computers can do. 

Jason Hall: Was it, I remember if it was Carl Sagan or whoever said it, a sufficiently advanced technology can be indistinguishable from magic. Uh, that's it's magic as far as 99. 997% of the people on the planet are [00:29:00] concerned.

Right. Yeah. Um, it's, it is, it is pretty remarkable. Um, but it's impossible, right? It's, it's, it's, it's, it's, it's highly improbable at this point, um, for a quantum computing to, uh, exist in a meaningful way, because it's, I mean, it's like a, it's like a Ferrari that can go from zero to a thousand in one second, but it explodes.

You know, seven out of every eight times that you turn it on. Um, it's so impossible to get it to actually work because you have to cool it to negative four 60 to stabilize the components and like somebody could fart in a bathroom and the building across the street from where the facility is and the vibration could make it not work anymore.

Right. It's just, it's, it's incredibly finicky, finicky and difficult. So, um, do I think eventually. Uh, innovation probably solves it. Probably. I mean, we continue to innovate just about everything else and make it better. 

Jeff Santoro: So, yeah, I mean, if you had explained, if you had explained semiconductors [00:30:00] to someone in the 1880s, that would have been just as magical as us thinking about quantum computing now, uh, they, they, yeah, they would have, um, they would have, Drowned 

Jason Hall: you in a bathtub, called you a heretic.

Um, so yeah, it's, uh, so eventually yes, sure, maybe. Um, but again, the point is that, that, you know, could, could quantum computing take these unhackable unbreakable things and break them. Sure. I think that's absolutely the, the case that it possibly could, but I think it's also the kind of thing that would make so many other things better.

I have financial exposure to, uh, it's why you diversify, I guess, is the best answer. You know, my, my cost basis of Bitcoin is, oh man, way under 1% of my portfolio. All of my crypto, it's like way under 1.1% of my portfolio, but it's, you know, grown into a couple of percent of value because it's done really, really well.

But so I reduced the, my, my [00:31:00] exposure to the risks on the, particularly on those kinds of things that I don't really understand or have the capability to understand. Um, But speaking of QuantumScape as a disruptor, there's a reason that I own very long dated calls on that business. I've got a small a bit of exposure in the premium I paid for the calls for an outsized amount of upside.

If it works out, if it goes to zero and they don't actually do the things that I think that they're going to do on a commercial basis, the dollars that I've risks are exceptionally small, um, compared to if I bought anything close to an equal amount of the stock. Um, but there's a massive amount of upside tied to it.

I think 

Jeff Santoro: the only thing I'll say, cause I don't know. Enough about this to say anything intelligent, which by the way, is kind of like the theme of me speaking. I, I look at this as from a 30, 000 foot view kind of perspective that if you're ever questioning a thing, whether it's, can this be the next big thing?

Or will this disrupt [00:32:00] this thing? Or will this thing I own be disrupted? I, I always come back to, that's why Reasonable amounts of that thing are the best way to go, you know? And it's, it's that, like you said, diversification, um, you know, cause like, so here's an example as it relates to quantum computing.

So my understanding is one of the things that could disrupt ASML, which is one of my highest conviction stocks, and it's, it, they, they make, you know, The lithography machines that you have to have to make semiconductors. So you can't have modern technology without this company. And for that, the high 

Jason Hall: end stuff.

Jeff Santoro: Yeah. And what I understand is the thing that could disrupt that would be if we no longer need semiconductors. Or at least their way of making them because of quantum computing. Cool. I know that's a risk. I'm not selling my ASML shares right now, but I don't know that I would make it an enormous position if I feel like quantum computing might actually happen sometime.

[00:33:00] Right. So I, it's just one example, but that's kind of how I think of these questions. Generally. I don't think you ever have to stay out of something completely just because you are worried that it will be disrupted or that it, it may. Have done all of the disruption it's going to do. You just, it's just like position sizing and diversification is kind of a way to sleep at night when you're worried about that stuff.

Jason Hall: It's also good to remember that it's incredibly rare that these sorts of things ever become binary. You know, uh, quantum computing would certainly disrupt some of the highest end computing. I mean, I think the company that would probably be potentially the most disrupted would be somebody like NVIDIA.

Right? Um, But we're not going to carry quantum computers around in our pockets. We're going to still have, still have these, right. And ASML is still going to be pretty important for that. And TSMC is still going to be making those chips. Um, so the disruption is rarely, again, it's, it's, it's so unknowable, but you know, these things always start out [00:34:00] going after the big things and then filtering down the commodity chain from there.

So 

Jeff Santoro: love the, love the thought exercise though. This is a fun, fun conversation. All right. Matthew J. Cohen asks on Twitter to you, Jason, would you consider Lindy, ticker symbol L I N, a commodity business? So why don't you say what Lindy does? Cause I've, I've heard about this company a few times, but I can't say I know exactly.

What the business does. 

Jason Hall: Yeah. So this was a DM, um, the, the Matt Cohen sent to me, Matt, thank you for sending it to me. I'm going to respond to, uh, to you in DM as well. But, um, the thing that I liked about this question is if you think about Lindy's core business, it's an industrial gas company. Um, and there's a handful of these companies, uh, less than five that have, I don't know, like 80% of the global market share for industrial gases.

So you think about liquid. Oxygen, um, nitrogen, hydrogen. They do a big business in, uh, helium. I could just name, name an industrial gas and, and [00:35:00] Lindy's going to be right in the middle of it. And you would think, okay, these are, these kind of sound like commodities and they do trade, I mean, there's commodity exchanges for these that they trade on and futures that can be bought and supply and demand kind of move the needle.

Um, but these companies are very, very different in the way that structure because they're largely. They're manufacturers, um, that plug directly into the input stream for their customers. So if you're, uh, I'm just going to throw a couple of examples out there. Let's say you're a steel producer and you need certain, certain feed stocks from an industrial gas company.

Chances are your steel mill is going to have pipes running from the industrial gas company to your facility. And there's not going to be a competitor on the other side of your building that's running in and that you're competing back and forth on price with them. You sign a long term contract with that provider.

[00:36:00] You do take or pay deals where you agree to certain minimums and you're like a cornerstone customer from them. You get paid. Really good pricing. You get guaranteed consistent supply because you can't turn this stuff on and off. You're running your facility. You have to have it at all times to run your facility and to manufacture your product.

Right? So they do that. You get a good deal because you're getting low costs coming directly to you. Guaranteed supply, all that stuff. And then Lindy, whatever it is, let's say it's, it's liquid oxygen, for example. Um, in a couple hundred mile, uh, diameter, Area from that facility, they're going to send truckloads out to customers that are a little lower on the supply chain.

They don't need as much volume, but they still need it. Their costs are a little bit higher. Um, so they can leverage that facility off of those kind of cornerstone customers that they're piping to and still sell additional capacity and supply that they have [00:37:00] and get better margins on that and meet demand.

And then you have. A geographical, um, a monopoly on, from your facility in that area, because you're not going to have a competitor try to come in. There's no reason for them to come in. Right. Because they don't want to overlap with you. Then they're going to try to find a market. And because this, it's the industry's built up now is as we've seen industrialization happen, uh, the market's kind of built, uh, built up, uh, and these companies, what they're able to do is grow a little bit faster.

That inflation generally, um, create value, uh, they get operating leverage. So as they grow the revenues a little bit faster than inflation, more of the revenue goes to the bottom line and their profits grow even faster. Um, and, and they generate enormous returns on capital investments. Enormous returns on their equity over the longterm.

Um, and even though what they're dealing with might feel like a commodity, um, they're so value add on what they do. I don't think of them as commodity businesses. Um, they're also [00:38:00] very, very cycle resistant and recession resistant. Again, because even though the volumes might shift a little bit, the customer customers have to have this volume of this product to manufacture whatever they're making.

And the fluctuations are a lot lower than you would think. 

Jeff Santoro: That's interesting. I don't know that. Like I said, I don't know much about Lindy, but I might want to look into it a little bit more. You 

Jason Hall: look at Lindy and air products, um, and a couple of other companies in that, in that industry. And it's remarkable.

Um, yeah. Like how expensive these stocks tend to stay all the time, yet continue to create value because there's just so well run, so strong, so profitable, um, and so important. 

Jeff Santoro: Okay. So that's it for the questions we got this month, Jason, but we do have some comments that I, I just wanted to read cause they're funny. So in response to. The short video that you put up of me saying I was going to be wrong and you telling me I already was Uh cunning project on [00:39:00] instagram replied.

You guys are refreshing. So thank you cunning project. We try to be refreshing and um In response to the video you made where you said you can't wait to hear my bad answers to our mailbag questions No, no, no, I didn't say bad answers. I said dumb answers. I'm sorry Yeah, I should, I should be correct about that.

Speak clear of my insults. Um, well, in response to that, also on Instagram, uh, Fearon01 wrote, Jeff usually has smart answers, the whiz that he is. I agree. That's fantastic. So, I had to read those. Um, alright, I do have a spam comment. Of the month, but I'm going to save that because you let me know that in response to our live stream, uh, from last Friday, which anyone can listen to on their podcast feeds, uh, the first Friday from December, one of the things we talked about was at the end was best and worst Christmas songs and a friend of the show, Colin reached out to you.

Cause he had some, he had some thoughts cause [00:40:00] we did ask for listeners to, to share their thoughts. So we're going to share them here on this episode. 

Jason Hall: Yeah. Um, I love Colin from Canada. He's one of my favorites. Uh, no longer on social media. Luckily we exchanged phone numbers at one point. So he texted these to me, um, sent me, uh, the white Buffalo bands, uh, Christmas Eve, um, a very bros Christmas.

Wait, are these, are these ones he thinks are good or bad? Oh yeah, no, these are top of his list. Okay. Top of his list, yeah, his three top of the list. Uh, there's two songs on the playlist from there, um, It's Christmas Day. And of course, this is a classic, uh, uh, Dropkick Murphy's, uh, The Season's Upon Us. 

Jeff Santoro: Oh, all right.

Yeah. I'm glad he shared those. I don't, I don't know the first two. I'm going to have to listen to them. 

Jason Hall: Yeah. So he says, this is interesting. So this, uh, the Christmas bros, uh, very bros Christmas, that one, you look it up. Um, it's actually, um, a Saskatchewan band called, um, the sheep dogs. [00:41:00] So yeah. Yeah. He says, you're not going to hear these on the radio.

So, um, love it. Love the obscure stuff. 

Jeff Santoro: Yeah, that's great. Okay. Here it is. Jason, your spam comment of the month, uh, we received this one on Twitter via DM, um, and it says That is most 

Jason Hall: of our spam comments are Yeah. 

Jeff Santoro: Actually, you know what? They see a lot. Most of them have been on YouTube recently, but I'm not even going to read them because they don't even make sense.

They don't even sound like English. No, they're all, they're all the same. They're computer generated. They're all the same. Yeah. All right. So here's this one. Hello, Mr. John. Um, Hello, Mr. John. I am a liar. Your financial management specialist, your usdt account password has been received, uh, retrieved. Sorry. Um, your usdt balance is 2, 880, 096.

And then it also gives it in your wait, stop. That's that's, that's, this is real. That's not spam. And then it gives the account and password and a link to click. Um, so, and then it asks us to please keep it safe. 

Jason Hall: Well, that's good. I'm really glad they DM just that on, [00:42:00] on, uh, on Twitter. So we could be sure to keep it safe.

Definitely the platform that prioritizes. Not spam and security. It's really bad. It's so bad. 

Jeff Santoro: I don't even know. Please find 

Jason Hall: us on 

Jeff Santoro: blue sky. Yes. Please reach us, reach out to us on blue. We have three 

Jason Hall: counts. We have each, we have our own individual accounts. We have an account for the, uh, for the podcast to find us on blue sky.

Jeff Santoro: So Jason, back in the day, we used to purposely plan a B section of the podcast and we would put a little ad break in. And ironically, When we had that structure, it was before we really had any ads. So we would be like, all right, here's some ads or maybe not. And then for most people, it would be like three seconds of silence and we would be right back.

Yeah. But we actually do have ads now. And we actually do have a second part of the show. So we can go back to. Well, the way we started, which was pretty professional, do the, do the read, do it. All right. We have a exciting second part of the show for you. We're going to talk about our 2025 portfolio contest, but first some words.

So I screwed it up, [00:43:00] but first some words from our sponsors. 

Jason Hall: Hey, Jeff, I'll, um, I'll make us some coffee. We can drink while the, uh, 

Jeff Santoro: no, no, no one wants the coffee transition. 

Jason Hall: Yeah. Yeah. We're getting it. We're getting it. We're leaving the whole thing in. 

Jeff Santoro: All right. We'll be right back.

Jason Hall: Hey, Jeff, how excited are you about the 2025 Investing Unscripted actual portfolio contest? 

Jeff Santoro: I'm excited about it because I think, as you mentioned earlier, having it be a portfolio contest and not a stock picking contest will make it more fun and interesting, but also it's simpler. Uh, our first two years were at certain times convoluted to the point where I had forgotten the things we said.

So. This is going to be pretty straightforward. It should not take us long to explain. I will go through it and then you can tell me if I missed anything. So we're going to open this up to anyone listening who wants to play. Um, and I'll talk about how you get your, uh, information to us in a second. But basically we're going to, everyone who plays in the portfolio contest is going to get 10, [00:44:00] 000 fake dollars.

You, we can call them smatter bucks. Uh, Investing Unscripted bucks. I don't know. We'll come up with some stupid name and that's what you have to start with. And you can use it any way you want. All you have to do is before the market opens on January 2nd, 2025, because it's closed on the 1st, you have to send to us any way you want.

Uh, email's probably easiest for something like this. So [email protected]. Just tell us the stocks you want and the amount that you want to invest in each of those. It just has to equal 10, 000. It can be as many as you want. It can be as few as you want. Um, it can be stocks, it can be ETFs.

Um, it could be crypto. I just, I would prefer it to be things that have like tickers, because then that's a lot easier for the spreadsheet for people to see it's less work for us. Um, so that's how we're all going to start off 10, 000 fake dollars, allocate it in any way that you want. Send it to me, send it to the show prior [00:45:00] to the opening of the market on January 2nd.

That's step one. Here are the rules for the year, every quarter. So each of the four quarters of the year, you can make two changes. Anytime in the quarter, but only two times by just emailing us and saying, I'd like to swap this out for that, or, or add to this or sell that whatever it is. Um, yeah, so again, to be clear, 

Jason Hall: any, any two times a quarter, anytime during, during the quarter.

So you got a stock that skyrocketed, you think it's gotten overvalued. You want to exit, you've got something else you want to buy. You can do that. Uh, if you've gotten in some insider information and you know, a stock's going to fall. You can execute that cell before it falls, thereby alerting the entire market because of our global audience and releasing that insider information.

So that I can't, I mean, we can't, we're not going to indemnify you if the feds come after you for doing that, people, 

Jeff Santoro: not legal advice as our, as our friend, Matt Levine would say, but, but here's the catch with [00:46:00] the changes. You don't get any more cash. You just, you have your 10, 000 for the year. So if you, 

Jason Hall: if you invest a thousand dollars and it doubles and you sell that whole position.

You have $2,000 to reinvest, right? If it falls by 50%, you have $500 to reinvest. 

Jeff Santoro: Exactly. Yeah. Now, the only exception to this is if something in your portfolio gets acquired, goes bankrupt, gets taken private, um, then you can immediately make a change to account for that. But that's the only, yeah.

Significant 

Jason Hall: corporate event. You don't, you don't have to wait. If, if a company stock goes up 50%, 'cause they're gonna get acquired and they announce it in February, but the deal's not gonna close till the end of the year. You, you don't have to wait. You know, and that's an exception to those two, the two free changes a year, a quarter that you get.

Jeff Santoro: Yeah. And the arbiter of all rules and questions will be us. 

Jason Hall: Yeah. 

Jeff Santoro: So, and because this doesn't really matter, we'll just make the decision we want to make. Um, and the last piece of this is we're going to do the same thing we did for the past two years. We're going to announce quarterly [00:47:00] winners and a year end winner, and we're all going to give a charity to that winner or we're all going to give to that winner charity.

So when you send us your picks, send us a charity you'd like to donate to. When we announce on the show who the quarterly winners are, we will encourage all of our listeners to give a little money to the charity of the person who wins and it'll be our way to help. Do a nice thing while we have some fun and have some new and interesting different conversations about these portfolios over the course of the year.

Jason Hall: Yeah, that's, that's just for the first year. We have a plan going forward too. And we'll talk about this more as the year goes through. But what we're initially thinking is once we get to the end of the year, if you want to continue participating in the contest, your portfolio carries over. New quarter, you can make a couple of changes.

We might say, maybe you can make even more changes. So let's say rebalancing. So maybe we'll say at the end of the year, if you want to rebalance, uh, across the holdings, maybe we'll allow that. Maybe we'll say you can make a couple more [00:48:00] wholesale changes. We'll work on the details for that. But the idea is again, this, we don't want this to be a stock picking contest.

The idea is we want this to be thinking about long term building of a portfolio. So if you're commit to do this, listeners, I'm looking at you. Talking to you, you need to commit to do this for a lifetime, or at least the lifetime of this portfolio, this podcast, or until we decide we won't, don't want to do the contest anymore.

Jeff Santoro: Yeah. And last thing I'll say. Even though this will be our new contest starting in January, we will continue to occasionally look back at both the 2024 and the 2023 portfolio contests and continue to have conversations as we see interesting things happen. It's already interesting to look back at the 23 contest and just see where, where things shake out now, almost two years into that one.

And we'll do the same thing with the 24 portfolios. As we, as we move forward, those spreadsheets will always live in our show notes, so you can go back and check them out at any time.

Jason Hall: So you'll be, you'll be hearing this on December 18th [00:49:00] is when this episode is going to drop. So you'll have a couple of weeks to, um, uh, to get your picks together, get your charity in order and, um, get those emailed to us. Um, if you have any issues with emailing, there's probably getting to us. You can DM us on all of our socials.

Uh, we're pretty easy to, pretty easy to get in touch with if you, uh, need to, you could, uh, you could get in touch with Seena Hassouna, who's so graciously volunteer, I'm kidding. Don't send Seena anything. He hasn't volunteered to do anything at all. Um, but yeah, you'll have a couple of weeks to get everything together.

So, um, I'm excited about this, especially the fact that we're going to continue talking about the 2023 portfolio contest, cause I'm up 182%. I think, I think I'm doing so good. That in aggregate, I think even with the losses. I'm soaking up this year. I think I'm still the two year winner. 

Jeff Santoro: Well, as soon as outset medical turns it around, I'm going to, that'll just help me too.

[00:50:00] That's right. Cause you have it in your 24 portfolio. I do. See? 

Jason Hall: All right. 4D chess, buddy. 

Jeff Santoro: Yeah. 4D chess. Yep. More like 1D checkers with you. That's fair. All right, Jeff. I think we, uh, I think we did it. We did it. We answered the questions. We responded to the comments. We talked about the contest. We did it. All right. 

Jason Hall: Stay tuned for more about that stuff. Get that stuff into us as quick as you can. We really look forward to having more fun with all of our listeners as we get into the next year and beyond.

As always. These are our thoughts, these are our ideas, and especially on the mailbags, these are our answers. It's still up to you to figure out your own answers for the hard questions about investing in finance. I think you can do it. I believe in you. All right, friend. We'll see you next time. 

Jeff Santoro: See you next time.