Leibel On Fire! New Tech Bubble?
Are we in a new tech bubble? Are we heading for another Y2K collapse? Join us this
week as we talk with Portfolio Manager Mr. Jan Naismith and Label Sternbach and
we'll talk about their opinions on the next Label on Fire.
And label, we've got portfolio manager, John Naismith with Algo IQ Capital.
But tell us a little bit more about how you two got together and why we've invited
John here today. Yeah. So one of the things that I do in my day job,
right, has been to run a Fintech platform. One of the things that I do at my day
job is I get to meet very interesting people like Jan. And what will happen is
people, we're constantly getting introduced to portfolio managers and economists and
all kinds of people in the plumbing of the financial industry. And when sometimes
I'll get called in and people ask me, well, is what they're saying real? I don't
understand what they're talking about. But you know, can you tell me, can you talk
to them and and it totally doesn't make sense what they're doing. Is it right? Is
it something that we can fit into our clients portfolio? And so, Jan is one of
those rear gems in the financial industry where he, his view on,
and the way he looks at finance is very different than everyone else. You know,
most people, you know, they'll read the Wall Street Journal in the Financial Times
and they'll be like, oh, this is my opinion. This is that opinion. Jan, opinion.
Jan was being a musical composer among his many other talents,
sees kind of the rhythm in the heart, the heartbeat of the financial industry.
And so he sees patterns in it that other people do not. And that has allowed him
for what, 30 plus years, 40 years almost, right? To create financial instruments and
and philosophies that create different outcomes than what your traditional investments
have. And so we were chatting the other day and Jan brought up the similarities to
Y2K and what's happening. And so I thought it would be great to have him on the
show to talk about, you know, kind of, you know, with his breadth of experience and
his viewpoint, right? What does he see the world where we stand the future is.
Yeah. Thank you. And thank you for having me on. I really appreciate this. And
thanks for the introduction label. What I'm seeing is I somewhat divorced myself from
CNBC and Bloomberg and all the talking heads and all that stuff back in about 2000
because of WorldCom and a number of different firms that were cooking the books and
so forth. So I lost trust in what I was actually hearing. of what I really did at
that point in time. I'm a decent math guy, and I decided to concentrate on price.
All right, now price is cool 'cause you can do all kinds of stuff with price, but
it tells a lot of stories. So it's not necessarily thematic what's going on. I
think what's happening now with AI and so forth, really kind of mirrors. It reminds
me of the days I was buying Sun Microsystems and Cisco and things like that back
in the mid '90s or early '90s. And Now I see the onset of the same type of
theme, meaning there's just different types of things. They're in the AI and so
forth. And the problem is from a mathematical viewpoint, what I did just for fun to
quantify my feelings and test them, if you will, is look back at the last 248
weeks just for fun. I did that this weekend, and that's the low that we had in
March of 2020 during the COVID scare, right on set of the COVID scare. And we're
up 165 % on the S &P 500 since then. So I thought, ah, let's go back to 1960,
right? And let's see how many times this has happened. It's happened four different
times, which is pretty rare. If you take, although if you take that whole timeframe,
that's very rare. So what happened during those timeframes? Well, Well, and let me
just have you right there, so yeah, are you saying that in the last 60 years, that
there has only been four times where we've had a run up of so many back to back,
high growth years? Yeah, that's correct. In 1998, we had a period of time where we
came off a low of 2000. So if we go back 248 weeks, we're talking about four and
three quarters years. So that was the beneficiary of the fall of 2002 going into
March of 2003. So we did have a few times where it breached that point,
but in terms of clusters, if you will, there's only been four times. So what I did
then is go ahead and say, "Okay, what happens when we have that kind of a run
-up?" Because we've had a huge run -up since the low of 2020, and the answer is
that we always have some sort of decline, right? Not long after we hit those
periods of time. Now, sometimes we'll have a 15, 20 % run -up from here,
but ultimately one of the most ironic one was the week before the 87 crash. Now,
what's the odds of that? And that just happens to be a statistical anomaly there,
but so it gives me concern that things are so good they can't possibly go wrong.
And unfortunately, that's not the truth. We will have some period of time where
we're, we need to use our risk management techniques and really celebrate what's
happened here, but be very cognizant of what could happen. Reminds me a little bit
of Warren Buffett saying, right, that when, when the tide goes out, you see who's
swimming without trunks, right?
Yeah, well, you don't want to see me do that. But anyway, so that's good. That's
just that label. I mentioned that it feels like 99 is there. And 99 I've already
been in the business for quite a long time before 99. And I hadn't seen much
exuberance as much as I did at the end of 99 until now. So what are you advising
right now? Is there a collapse on the way? And if there is, John, when,
how do we start to prepare for it? I don't know. I don't know prepare for it? - I
don't know if collapse is the right word. I think there's going to be a settling
down. It wouldn't surprise me to see a 15, 20 % pullback, not a 50 % pullback like
we had an '01 or '00 or even '87. That wasn't even a 50 % pullback.
We had a real crisis in '07 going in '08 that was basically broadcasted in the
January of '07 That things were going to get kind of ugly and they sure did I
don't really see that at this point But what I do see is that if you've collected
a heck of a lot of gain There's no reason to bring go down 20 % just because the
market is so you what you do She started taking things off the shelf that you've
had on there If you caught that that ride and he started using other items And so
you go the more uncorrelated you become over this next, period of time, which I'd
say in the next, in my case, I'm starting to do it now, then we can hopefully
bypass having decay in the portfolio that we might see in the equity markets.
Or how could we go to sidelines? There's nothing wrong with the sidelines. Ultra
-short government bonds right now are paying 5%. That's not bad. So, I mean,
what I'm hearing is we're facing a double whammy, right? We've got, like you
mentioned, the sidelines, right? So, you've got, on the one hand, you got equities
that are ripe for a pullback, right? So all the growth stuff has to come down at
some point. Questions, how hard are they going to come down and how long are they
going to come down? That's what I'm saying. And then you've got on the flip side
of that, the safe haven asset, the interest rates, and those are coming down because
we're trying to come bad inflation, right? And we're trying to, you know, creep this
off the landing. So you've really got, as a retiree that you're looking for to
build that kind of safe haven experience, you're now caught in between two
crosswinds. And so the question is, where do you go to protect your investments? And
it kind of reminds me of something that we've talked about a while, of your
harvester, right, where you do something that we talk about with our investors, which
we tell them, you got to have, you know, you got to have your shields, right,
where you have your, the of the year living off of it in the next few years, and
that protects the money that's for the near future and for the long -term future.
And you need to be harvesting those gains to replenish those buckets when it's
opportunistic. So taking that risk off, you want to talk a little bit more about
your take on that. Yeah, I find we rarely hit all -time highs, meaning that if you
go on an end -of -month basis, all -time highs Throughout history, you're talking 10 %
of the time possibly when you go to end of week Now you've got more data points
where you can pull off gain from the all -time high But most of the time the
markets are not at all -time highs or almost I don't know the exact number It's got
to be over 80 % that they're not probably 90 % and my thought is okay How about on
a daily basis? So what I do is that when we hit all -time highs on a daily basis,
I know statistically we're not gonna be sitting there day after day after day after
day after day. So what I do is I scoop a little bit of the froth, if you will,
from the all -time high, leave the majority in the portfolio at the all -time high,
but scoop some off, put it into something that is much more moderate in risk or
actually low risk. And what that does, it creates a smoothing pattern or smoothing
effect on the portfolio as a whole that works very well. So I can keep my
drawdowns and volatility very low compared to what the market's giving us, and still
I'll perform the market. So you've got guardrail set up to protect you in either
way, so you're not all in, but you're certainly not all out, and your chunks are
still up.
- Well, yes, and the thing is that when those guardrails are breached, then I go to
the sidelines and I'm very tactical. And I used to be president of a very tactical
organization. So I believe in trying to keep the drawdown and the volatility as low
as I possibly can. - When you talk to hedge fund managers, they're talking all about
risk. They're talking about what their hottest stock is and they're glorified and
impressive for the future, you very rarely hear them talk about the risks and taking
risk off the table. And it's kind of one of the unique things. Yone is launching,
just launched a brand new hedge fund specifically geared for retirees, right? And for
people who are worried about the future and are looking for that growth potential
because there's always growth potential, but not if you're just buy and hold and
being able to kind of harvest those gains. So So, Jan, tell us a little bit about
AlgoIQ, what you're doing, and where people can learn more information about you if
they want to learn more about your fund. Sure. AlgoIQCapital .com. It's a pretty new
site. This is a new fund, but it's based on technology that I've been using for a
long time. I have some Bond indexes. I'm an index provider with SmoothSailing. And
if you go and look at the returns of SmoothSailing on Bloomberg, you'll see that
they're very sleepy, but they're going in the right direction, right? So in our
case, what I've done is I've taken the same type of technology that I applied to
the bond indexes and they've been modernized because those indexes have been around
for a while. So the idea is that what I'm doing is, that's made it more unique is
that I am my own worst, what's the best way of putting it? I'm my own cop, if
you will, meaning And when things are not behaving, I've developed a way to detect
that and be able to correct it, which makes it very unique because a lot of times
the managers will just simply run it down or sit on the sidelines and cower. In my
case, if what we're doing is not hitting our goals, which is very lofty,
then we have the ability to correct that behavior. And that assures us or helps us
realize that we will be hitting our all -time highs as often as we can, or at
least we're trying to do that. That's our ultimate goal. And that helps retires
sleep and night as far as I'm concerned. And again, what's our website? I'll go
iqcapital .com. All right. Well, that's great information. And the other website,
of course, yields4u .com. Gents, thank you so much young May Smith and Label
Sternbach for being with us on this episode of Label on Fire. I'm Freddie Bell
tipping my hat to you and we'll see you next time.
