Stig Brodersen  06:36

Yeah. So, Morgan, there’s just this thing that just keeps puzzling me and that is you see that the oil consumption has just still increased and you showed that in your book. It basically increases from the very day that it was invented. And even since you wrote this book it also keeps on a steady increase. Now, at the same time, you hear politicians talk about moving away from fossil fuel. And you also see like massive investing in renewable energy. So the logical question for me to ask would be 50 years from now, do we as a world, like globally, do we consume more oil than today?

Morgan Downey  07:20

I’d be slightly shocked if we will be consuming a similar amount of oil as today, mainly because there’s a supply-side issue. So it’s not going to be because people are demanding less oil. And oil, as you mentioned, the oil industry started in 1859. So it’s actually a relatively new industry. Your great grandparents were there at the beginning of this industry. And since 1859, oil demand for consumption of oil has only fallen through three times.

So it’s grown every year throughout World War One, World War Two. Every year steadily. And the three periods where it fell were 1973 and it only fell for that one year, just that single year of 1973 where there was no growth in consumption. Then the early 1980s, you had 1981, 1982, 1983 you had a fall off and the consumption. And the only ever time oil demand that fell was 2009 because you had a spike in prices and the credit crisis in just that single year. Every other year in the 155 or 156 years of the oil industry, the consumption has gone up.

And you mentioned renewables and the underlying thing about oil is that oil is primarily a transportation fuel. And unfortunately for renewables, but fortunately for the oil industry, there’s almost no alternative at the moment. I mean, you do have electric cars and electric aircraft is that that small plane flying around the world trying to set of records at the moment, that electric solar-powered plane. So you do have electric cars, but they are a tiny, tiny fraction of the transportation world.

So to put the renewables in transportation in perspective, this year, there should be roughly 16 million cars sold in the US, just the US alone, obviously. But there are huge numbers internationally in China and Europe and whatnot. But 16 million in the US number. And the electric cars to be sold this year in the US, just around 20,000. Obviously, Tesla and all these guys get a lot of hype and buzz, which they rightly should. This good to have some innovate to have innovation, but the scale of renewables in the transportation field, it’s not on the radar. It’s just a fancy rich man’s toy you right now, in terms of renewables.

Preston Pysh  09:41

So what you’re saying is that there’s a potential for the demand to decrease in a long 50 year period, but you just don’t see that happening in a short amount of time?

Morgan Downey  09:50

No. I don’t see it happening. I mean, oil is, as I mentioned in the book, is essential to the modern way of life. And people say, “Well, modern kids these days are using Skype more so you don’t have to fly or are using our chatting online so you don’t actually have to physically visit someone. Or you’re ordering something off Amazon so you don’t actually have to drive to the store.” But all even with all of that, oil demand is still growing pretty strongly. And so it’s one of those things that people have to get to and from the office, have to get to and from work and school. And people have said, “Oh, well, suburbia is ending.” Even if suburbia ends, you’ve got a huge amount of things needed to be transported around the world every day, and the only fuel that is used to transport is pretty much oil. Shipping airlines, trains, cars, trucks, everything uses oil. There’s and there’s no real competition for that at the moment.

And should there be competition? Yeah, I think it’d be a great thing if battery technology evolves and we can ramp up solar and wind and renewable energy. But the big challenge is that the scale of oil consumption is so huge, that it’s baked into our modern society. And, there’s no real alternative out there at the moment.

Stig Brodersen  11:14

So, Morgan, I think you have a really good point because when I’m talking about like, will the oil demand increase, one thing is to talk about the demand for oil. We might as well be just talking about general energy consumption. And I think that everybody agrees that energy consumption will increase in the world. I don’t think you can find anyone where they will tell you otherwise. But debate right now is how this demand should be met. Is it renewables or is it with a third thing? And I think what a lot of people forget, is that you can’t just replace oil and I also think that’s what you’re saying that oil has some provisions, for instance, when it comes to distribution and storage that you can’t do with windmills. You can’t do that, but solar just doesn’t work like *inaudible oil.

Morgan Downey  11:58

Yeah. One of the interesting things that people talk when people talk about oil energy and renewable energy, oil is its own bucket. Whereas if you look at electricity, and almost zero oil is used to produce electricity, just because oil is so expensive and so energy-dense and so valuable in its use as a transport fuel, you can jam a huge amount of energy into a car tank or an airline’s wings or a train. Whereas, if you look at the electricity, electricity production almost all around the world is roughly coal, nat gas, and nuclear. And in a small amount of Hydro and wind and other renewables.

So there’s the world of electricity, which is one part of the energy world. And it’s all those, coal, nat gas, and nuclear. And then you’ve got the world of oil, and the two are not really, they’re not fungible, you can’t… People are trying to solve the renewable world is trying to solve the electricity issue. And but in terms of there being an alternative to oil, there’s nothing really out there at any scale at the moment. And even if you do get a ramp-up in solar and wind and renewable generation, power generation, that’s primarily for use in the electrical grid.

If you need a car, battery technology is going to have to improve hugely and dramatically to try and offset oil. And one of the interesting things you mentioned was that 50 years from now, they’ll still be a demand for transportation. People still will need to get from A to B and get goods moved from A to B.

13:23

But I think the major challenge is going to be on the supply side. And we’ve only now started in seeing that big shock in 2005 when oil went from $20 to $150. That was not speculators. That was purely because conventional easy onshore oil has begun the production has begun to decline. And there’s this whole movement called the “Peak oil” movement a few years ago that was saying oil production is going to decline forever type thing. And conventional oil production has actually peaked and is declining. That’s unsure we just drill straight down and it’s cheap oil, 15 to 25 dollars per hour. And we shifted to a newer source because we are running out of that easy, cheap onshore oil.

We’ve known how to move up the cost curve and if you’re familiar with economics. You move up to more and more expensive cost curves when you burn through your low-cost supplies and so we’ve moved up to deep offshore. Offshore oil is a $50 per barrel business that’s where it’s going to start. And yet, is there more oil at that price? Yes, but it was much more expensive.

If you want to repair an oil rig, you need a wrench 50 miles our of water. That wrench becomes a thousand dollar wrench because you got a helicopter to fly that thing out and back. So offshore oil production is very expensive. And then we’ve offshore oil production is not going to meet this continued growth and demand. And so we’ve shifted to an even higher cost supply, which is all this fracking.

14:50

Fracking is actually a natural gas technology. It was primarily way back. It’s old technology. It’s obviously controversial somewhat in the US because people are concerned about what the oil leaching into groundwater and chemicals uses in fracking fluids. But it’s a very good technology to use for nat gas. And it was developed from the nat gas industry for where you drill down and you turn the drilling pipe sideways, and then you literally frack the rock with water.

But it only really started to take off in 2009, because oil had reached a place where this new source of supply, it’s a very expensive thing to frack for oil and oil fracking costs $70 to $90, depending on where the fracking is occurring.

And so we’ve moved from conventional onshore which peaked and began to decline in 2005. And globally, not just in the US and others globally. We move to deep offshore, around US Gulf Coast, obviously the North Sea and all that stuff, that’s around $50 oil. But that’s not enough supply there. So then we were moving higher to fracking supply, and fracking is a $70 to $90 per bottle cost in terms of the supply cost.

16:10

And the problem with fracking is that you look at it to 2020 to 2021, US fracking oil supply is also going to begin to decline. So there are only certain parts of the US than can be fracked for oil. There’s North Dakota, West Texas, some parts of Pennsylvania, New York. And so it’s great that there’s an additional few million barrels per day produced by the US at the moment. But no, have you noticed that no other country in the world is fracking for oil. Or none of the scaling as in the US. And so it’s limited, and a very high-cost new source of supply.

And so now we’re moving on to what’s the next high-cost source of oil. And there are two big areas. One is Arctic oil, which is where you drill way up and in the Arctic in polar regions, where it becomes a much more technically expensive thing because you’ve got freezing conditions obviously and ice flows, and all that stuff. But that oil is, anyone’s guess, between $125 and $150 per barrel, but you can produce it. It’s there. People can see it and you do seismic analysis.

And then you’ve got the next highest cost of oil is what’s called ultra-deep offshore oil. And this is in places like Brazil. Brazil made a whole bunch of noise, the Brazilian government about five or six years ago when they said they had discovered this huge oil field and it was called the Tupi field back then. And it is an enormous oil field. And the challenge with this oil is that. And Brazil said, “We’re going to save the world, we’re going to produce all this oil.” The problem with it is that it cost $200 per bottle to produce that oil. And by the way, the technology to produce it hasn’t been created yet because you’re drilling off the continental shelf. So you’re drilling way down through the water, miles deep, then you’re drilling into the rock and so it becomes very expensive. And the first barrel of oil that’s meant to be produced from this should be in the early 2020s. And it’s roughly around 200 plus dollars per barrel.

And so we’re moving up a lot to these different supply curves. Everyone knocked all these peak oilers and, and there was a certain element of survivalism type thing. It was almost got wrapped up into this sort of evangelical type movement. And so that was what knocked us I think, sideways.

18:22

But the big challenge is that oil is not a renewable resource. We are burning through our supplies, and then obviously, at an ever rapid rate. And we’ve burned through all the really cheap stuff. Now we’re going to much higher costs. If you price oil, it’s pure economics. If you price a barrel of oil high enough, you can get oil out of a lot of things. You can make oil, liquid gasoline out of coal, you can actually go to hydrocarbon. You have to do some. A lot of expensive things to that hydrocarbon to get an oil or coal, or to make gasoline out of coal, but at $500 per barrel, all things being equal. You can create gasoline out of any other hydrocarbon.

And so you’ve got a situation where the demand side demand is going to continue to grow because there’s no real alternative at the moment. Electric cars are still a tiny, tiny, tiny fraction of the world. The demand will continue to grow. The biggest challenge is on the supply side. For all those people that cannot, all those peak-oilers, they were all right. Conventional oil production has peaked and began to decline in 2005. That was what caused that big rally in prices because we hit a supply window. And so our supply ceiling, and we had to force the market up to pay for the newer higher price oil, which was deep offshore, and then fracking oil.

Preston Pysh  19:43

So right now. So it’s really interesting that you say those things because you’re talking about how expensive the oil could get here in the future. And the question that I’ve got, so in January of 2015, in our show, we obviously like to study these different billionaires. So that’s where this question is going. So we had billionaire over in Saudi Arabia. His name is Prince Bin Talal.

Morgan Downey  20:06

Bin Talal, Al-Waleed. Prince Al-Waleed Bin Talal, he’s a famous guy in the finance world.

Preston Pysh  20:10

I’m going to go with your pronunciation. He said that that he will not see or that we will the world will never see another hundred dollar barrel of oil again. And I found this article. This was in the USA Today that they wrote this. In fact, we’ll put the link to the article on the show notes so people can see this, but it was in USA Today. And I found this to be totally mind-blowing, that somebody could come out, with his credentials and his background, and being so intimately familiar with oil over in Saudi Arabia, that he would say something like this. So I’m really curious to hear your opinions on why do you think he has this long term opinion of oil remaining below $100?

Morgan Downey  20:50

So it’s interesting. If you’re a kid of a rich family, everyone thinks that your opinions are much more weight here and deserve credibility, whereas that may not be the case. And so everyone thinks that everyone in Saudi Arabia knows everything about oil. It’s kinda like saying that everyone in Idaho knows everything about potatoes or things like that.

Obviously, he’s a billionaire and he made a lot of his money, not in oil, he made it another area in finance and a whole bunch of other things. But obviously, Saudi Arabia is a very unusual country. And it’s entirely dependent on oil. There’s no other industry there. There’s no tourism or, I mean, there’s a tiny amount of tourism, there’s no scaled-type industry. And Saudi Arabia is obviously the leader of OPEC. They’re the de facto leader of OPEC. And OPEC, their only ambition the world is to have higher oil prices and so they try, and reduce supply occasionally to try and prop up prices.

21:49

So the challenge I have with that statement that we’ll never see $100 oil again, is that okay, so where is this additional supply? I know a guy that looks at numbers and physical supply and demand. And where is the… We even have demand has continued to increase, every year it grows by one to one and a half million barrels per day. We’re up to the mid 19 million barrels per day of consumption right now. And where is all this additional supply going to come from?

To say that it will never see $100 oil, that means you’re basically by default, saying, we’re going to find cheap onshore oil. But where is that cheap onshore oil? I don’t know where that is. And I mean, there’s some cheap onshore oil, but not enough to meet demand growth, it wouldn’t meet the demand we have today. And you’re saying that also that fracking is going to go international, that you have fracking in Saudi Arabia, in Europe, in Russia, and that hasn’t happened yet.

22:42

And there’s a whole variety of reasons why fracking is uniquely a US thing at the moment. But basically, you’re assuming that you’re going to see all these sorts of sources of supply are going to come out over the next five to 10 years that are going to be under $100 per barrel. I don’t know where those sources exist.

So on the supply side, he’s definitely wrong. There are no huge sources of Then maybe saying that that demand is going to collapse that oil people are going to become much more efficient. And there’s a famous thing. Obviously, oil grows pretty much per population. So it grows steadily, has grown over the last hundred 155 years.

And so, maybe people are seeing… I’m trying to reverse his logic here to try to go through his logic, maybe saying, “Okay, people are just going to become much more efficient with their use of oil.” And so there’s an interesting thing in all markets, where it’s a… Something that it also occurs in other markets where every time efficiency increases, people burn more of that underlying commodity. So if you look at cars in the US, history 15 years ago, cars would get 15 miles per gallon or 10 miles per gallon. We’re now up… So you can get a car today. Just regular board, whatever, they can afford. They can get 40 miles per gallon. It drives and looks like a regular car. It’s using some hybrid technology, some regenerative braking, and the engines are much more efficient. They’re smaller engines but they’re turbocharged so you can actually get more efficiency out that way.

24:18

So you’ve got a trend work, miles per gallon if the average cars on this road in the US and globally are increasing pretty at a decent rapid rate. But the interesting thing is what do people do when they get a more efficient car? They buy a larger car. And so look at SUVs around the world, SUV sales are actually quite healthy. And so people, even though the underlying consumption device airlines, use more efficient jet engines, ships use more efficient marine engines, cars use more get more miles per gallon. And all that the average consumer does is they fly more because airline tickets become cheaper. They ship more stuff and buy stuff because Amazon can ship cheaper. All those things. I mean everything’s at Amazon. The world of the future and Google and buying stuff off the internet involves no oil consumption. It involves almost the exact same oil consumption as if you drove to the store because Amazon now has to ship this single box to you. It has to go through a whole network of planes, boats, and trucks to get to you. All that requires diesel usually for commercial transportation.

And so there’s no efficiency out there that’s not being offset by higher consumption at the moment. So I just don’t think that he can… What are the underlying facts that he would say that oil can never go above $100? There are no supplies, no huge source of supply coming out under $100 per barrel. And if our people are going to become more efficient, engines are becoming more efficient, but people are then using that efficiency to consume more oil. So by shipping more products, by flying more airlines, by buying larger cars, or just turning on the air conditioning in the car, are adding additional devices.

Preston Pysh  26:07

And I will say this in the article, it did not list anything that he said quantifiably why he felt that way. It was just like, “Hey, I feel it’ never going to be higher than $100.” And that was pretty much like the essence of the article.

Morgan Downey  26:19

Yeah. And it’s one of those things that and I’m a very much here because I come from the trading world. I’m very much a “look at supply, look at demand, and adding the numbers up type game” person and that… You can actually… Oil demand is actually relatively easy to model mathematically because it’s the law of huge numbers. You’ve got 6 billion people and people can when you get up the little scale of numbers, people behave very predictably. And so you’ve got… when you boil it down to people drive to and from work every day, to and from school, and at scale, it’s very easy to model consumption.

And the supply side is the more difficult thing to model for all markets because you do get these lumpy and technological shifts. You do like fracking only really took off in the US in 2009. But because it required oil to be at $100, to start that whole… to kick off that industry. And so the supply side, you’ve got a lot more dynamic things going on. And there’s also… there is a definite progression of technology on the supply side. And but it’s much more difficult to predict the supply side than it is the consumption side. And so I just think… I think he’s probably saying it obviously, for a for, maybe it’s things that the world’s going to become more efficient. But history has shown that has not ever been the case with oil.

Preston Pysh  27:39

And you don’t know whatever his political intentions might have been for saying that over in Saudi Arabia. Maybe he’s got some other attention tied to that comment or whatever.

Morgan Downey  27:49

Yeah, I mean, the thing about the Saudi is that… I don’t want to necessarily pick on the Saudis, but, their entire economy is 100% dependent on oil and of the 90 or 95 million barrels per day of supply in the world, and just over 10 million of that, it comes from Saudi Arabia. And so, it’s something where, politically, obviously oil is a very strategic commodity just because of everything… So many of jets, the military machinery all operate in oil.

And I would almost argue that every war since then, since 1900, has been won and lost. And a lot of the strategic decisions were based on oil. Japan going down to try and get to Indonesian oil, that was their reason to push down and claim knock the US out of… The Germans going into Eastern Europe, to get to the oil fields in Russia, that was that, to their detriment. They burned and wasted a lot of energy and a lot of people going east during I think, to get to oil.

So oil is a very strategic and so people are cautious about what they say and sometimes when your only business is oil, and then you’re even more cautious and it is interesting from that perspective.

Stig Brodersen  29:08

Yeah. So, Morgan, I can’t help to think about this from the perspective of the stock investor, because it seems to me… And the reason why Preston is laughing is that I always when there’s a guest always say, “Well, so if I’m a stock investor….” So that’s why he’s laughing.

So, Morgan, looking from the perspective of the stock investor, when we think about the oil industry, the typical thing about companies like Chevron, Exxon, Shell, and so on, like these big vertical integrated companies that might be quite vulnerable to the oil price, because they have a given cost structure, as you said, depending on how they explore that oil. And then the revenue is basically the oil price. Now, I’m thinking I’m not sure I want to be in that industry, but I want to be in the oil service industry because that is supplying equipment to that industry. Would you agree that that industry is less vulnerable to the fluctuating oil price?

Morgan Downey  30:10

And unfortunately, I think it’s even more vulnerable. And one of the reasons for that is that if you look at obviously fracking over the past few years, Schlumberger, Halliburton. They, if you’re doing a frack job, Exxon don’t do the fracking of the world themselves. They hire big Houston, Bashir Halliburton to do that fracking for them. And a lot of those companies have gotten hit in the power hurt their stock prices for oil services companies have got hurt because they’ve lost their fracking business when oil moved down to the 40s and 50s over the past few months, at the end of last year.

And so, and I would almost argue that oil service firms like those Halliburton, Schlumberger, Baker Hughes, they’re almost more levered version of exposure to oil prices and companies like BP, Shell, and Exxon, they’re much more closely tied to the price of oil, to flat price oil movements. And so I would almost argue the opposite that it’s the oil majors are much more closely correlated to the price of oil. And it’s not, that’s not a bad thing. That’s almost a good thing that they’re correlated to the price of oil. One of the biggest things in the oil market in the past few years has been all these ETFs for oil services funds and ETS for trying to track the underlying price of oil. And there’s a big famous one called USO. And the problem with some of these ETS is that they use futures contracts, oil futures contracts, and it doesn’t really work that well, it is my opinion.

And if you look at the performance of those ETS, it doesn’t really work that well when you have an ETF based on oil futures because all the futures themselves are there’s a whole bunch of transaction costs involved with them and whatnot. But if you wanted the purest play for, on the oil industry. It is just one of those majors, the Exxons. And there’s still they are very well run companies and they are correlated with the price of oil. So you have to be willing to roll with some fluctuations and oil price correlations.

But I would say that they’re also less leveraged version play on oil than the oil services companies. The oil service companies, they get hit when oil prices fall. Everyone starts cutting oil services to almost… It’s a more exaggerated or more levered version of the oil majors.

Preston Pysh  32:33

So I got a question for you, Morgan. I think a lot of people listening to this podcast are very curious to get the inside scoop of what you think has really happened over the last six months. And yeah, I’m just… We had a guest on the show, and he commented that the US, was payback to Russia. I think you talk to anybody in the industry. They’re all saying that and I see you smirking. So you’ve heard this story too. So I really want to hear your opinion and whether that story holds any truth and just your whole take on it.

Morgan Downey  33:03

Okay, so the oil industry is always got all these conspiracies surrounding us. There is, it was that whole thing in the 1980s, where people think that the Soviet Union was ultimately collapsed by the US. Ronald Reagan telling, the Saudis to pump as much as possible, and let’s get these. Let’s crush the Soviet Union. And so there’s always these underlying conspiracy theories. But at the end of the day, it actually is just pure economics. There’s nothing really… Politics does play a certain part in the story, but it’s purely economics.

And so what happened was up until August of 2014, until August of last year, for the prior five years since 2009. And oil had been WTI crude oil, which is the US   benchmark. WTI crude oil had been around $100 a barrel, give or take $10, and for five years, that is an incredibly stable weather market.

And there was a whole bunch of dynamics underneath that the behind the scenes in the oil market. The stability of oil at $100 enables the fracking industry to flourish. It basically said, “You can get your oil, yeah, cost $80 per barrel or $70 per barrel. But look, oh, there’s $100 and it’s been stable at $100.” So it encouraged all this new supply which the oil… it’s just pure economics. The oil market needed to increase the high cost of oil to come out of the ground. And so you had that creation of that whole new industry, the fracking industry, and so up until August 2009.

And then what happened in August 2009. You had a few major things that happened. One is you had the there was a Libya, decent size oil producer and those guys had gone through a whole bunch turmoil with their oil industry. But during August, September, October of last year, they’re oil production doubles with In a few weeks or a few months. They’re not a huge producer, but everything in the market moves at the margin, they went from just over a million barrels per day to over 2 million barrels per day. So that was that. That was the first thing that kicked off everything.

Preston Pysh  35:19

Morgan, see what you’re trying, what you’re describing here is that basically one person starts producing more, everyone wants to basically keep their market share. So then they start producing more and it gets competitive. Is that what you’re saying?

Morgan Downey  35:31

No, no, no. Actually, that used to be the case many, many years ago, and it was in the first chapter of World War One. But these days, everyone produces flamberge including Libya. And it usually the reason they wouldn’t produce flamberge is because of war and that was a good situation in Libya. And the other one, a whole bunch of other countries were just because of Iran is because the sanctions they’re producing about a million million half bonds pay less than they would like to. But they don’t, they can’t buy the proper pipes, the pumps that do the seismic tests that they need to do because they’re operating under sanctions.

The only country out there that actually deliberately withhold oil from the market is Saudi Arabia. And so they do it under the auspices of OPEC, so they can point a finger at someone else. But it’s pretty much Saudi Arabia’s going… Every other country and every other company in the world produces as much as they can if they can make a dollar out of it. If they make it get out of the ground at $80, sell it for $81 at markets, then they’ll do that. Just simple economics.

So in Libya, when production went up by over a million pounds per day back in August of last year, and it came out of nowhere. It was surprising. A lull in the fighting and some stability there. And so oil production recovered. That hadn’t been expected.

36:47

The second thing was that you had the dollar starts to rally and oil is currency. So it’s when I talk to, fellow oil traders, we don’t talk about the top line stuff in the ordinary, we always look at under the hood. And so oil is a currency. And so the dollar started to strengthen all these… Everything against the dollar, including the Euro, all other currencies, including commodities started to sell-off. So you had a sell-off in the dollar. The stronger dollar, the weaker all prices.  So you had Libya recovering unexpectedly, out of nowhere, you had the dollar starting to strengthen. If you look at a chart of the dollar index, the tickers DXY, you see that. It started off in August.

37:34

And then the third thing, which was one of the more critical things is that and two big organizations do oil demand forecasts. One is the EIA and then once the IEA. And when they do their big demand forecasts. They use an IMF and World Bank Economic growth forecasts. And so if you look at starting in August of last year, and people started to ratchet down global demand nominal growth for 2016. And so that whole, because mainly, a lot of was due to China, but then it clustered to all the BRIC countries: Brazil, Russia, India, China started… People, I had to expect them to grow at 8%. Now, they’re only going to grow at 6% per year. So they’re still growing but just not as rapidly.

And all of those that confluence of Libya, the dollar starting to take higher and global economic growth forecasts being all been reduced and been reduced by decent big piece, big amounts. That pushed oil down to say at $75 from $100. It has been five years stuck at $100. Now we’re down to $75.

38:39

And then OPEC, we met in November of last year. And one of the most unusual OPEC meetings ever in that they all met and everyone else always listens to what the Saudi says and there’s a Saudi oil minister. His name is Al Naimi. He is famous for the old world and usually, everyone hangs on. He’s like the Janet Yellen, everyone. Everyone hangs at every single word, and how will his facial expression and all that stuff because Saudi Arabia is the only country that deliberately tries to manipulate prices. They withhold oil that they could otherwise produce.

And so usually oil drops $25 a barrel, you expect OPEC and the Saudis to say we are going to support, we’re going to cut our production by two because Libya has increased by a million. And demand is as it was expected to grow next year by 2 million pounds per day. Now it is going to grow by one and a half billion. So someone has to take one and a half million barrels per day of supply out of the market to bounces and stop prices falling. So that’s the underlying logic of going into that OPEC meeting in November. And Al Naimi said nothing and OPEC said nothing. And it was crickets, you could hear the chirping of the crickets in Vienna where OPEC is based and one of the most interesting things that the Russian oil minister… So one of the CEO of one of the Russian oil companies went to this meeting as well, and Russia is not part of OPEC. They are similar size or producer as Saudi Arabia and the US. But they are not part of OPEC.

And so, but one of the heads and supposedly he’s Putin’s number two guy at the OPEC meeting, was listening in and participate. And he came out of one of these meetings and he said you would expect them to say something supportive of oil prices. And we were looking to help OPEC cut supply. Instead, what he said was we Russia, we’re not going to cut price. In fact, we can’t because we need the money. And technically it’s difficult during the winter. It was a nonsense type statement. But in that, if you’re in that position, you should never say that publicly. Never say we’re going to continue to produce and we’re not going to support OPEC.

40:44

So basically, you had a confluence of Libya, a dollar stronger, a slowdown in economic growth, still growth but slow down economic growth, all in August. Then in November, you had an OPEC meeting that was OPEC itself and no the ministers of Saudi oil minister said nothing. Russia said negative things, you’re almost forced the oil market to fall even further. And so we drifted down to the low 40s. And then you started to hear all these things about Saudis were saying, “Well, why aren’t you cutting? What’s the logic here?”

And basically came out in the whole series of articles and whatnot over, it’s almost like Kremlinology back in the Soviet Union days, people look at old technology. And so you read these articles, you look for certain keywords, and it basically came out that said, the Saudis in particular, and they were looking at the growth of US and Canadian oil production of the past few years. And since 1973, the Saudis have controlled the price of oil, or at least have tried to, if sometimes lost control of it. And they do that by withholding production.

And the only way you can do that is that you’ve actually got to be emergent. You’ve got to be the only guy out there with that excess supply. And so what they try to do is they basically are trying to wipe out the US fracking industry. All these guys that are $75 per barrel, $80 per barrel. They’re trying to wipe them out and remove them as a source of supply such that Saudi Arabia is the marginal oil producer. And so does that make sense for them to do that or economically whatnot?  , there’s a whole debate around that.

42:21

But basically, they’ve said, and they’ve said it much more clearly, since November of last year, they basically said, “We’re going to crash, we’re not going to cut oil production in order to support prices.” So it was a very, that whole confluence of things was very unusual.  , what happened since then is that demand growth wasn’t as bad as people had expected it to be so oil prices can hit the 40s. You had a collapse in US fracking. So, all that new source of supply US Oil. That supply had been growing at almost 2 million barrels, an additional 2 million barrels per day, and spreading perspective. The world’s gross consumption runs around 2 million barrels a day. But the growth in US supply stalls completely stopped. If you look at the numbers that come out every Friday for the Baker Hughes Drilling Rig numbers, reutilization has been collapsing. So the growth in US supplies stalled. Demand was not as bad as it had been expected to be. So this is a demand from last August, people were expecting a huge drop off in oil demand. It hasn’t been as bad as expected.

In Libya, after a little lull. It was a stable situation, they actually have gotten even worse again. So now that all that Libyan oil that was hitting the market is no longer in the market as we recovered back up to $60 or $55.

Preston Pysh  43:45

So I love your comment about oil being like a currency and when you say that and we look at the current condition in the world right now with China, really their market, their equity market is falling apart. I think you have a lot of people really running to the US, looking at the dollar as being one of the strongest currencies of all these fiat currencies, which are all just miserably terrible. But you see a lot of people running the US. You have the Fed talking seriously about potentially raising rates before the start of 2016. And you made the comment that oil typically moves in the opposite direction of the strength of the dollar. So I’m really curious, do you see oil prices staying where they’re at based on those circumstances and treating it as if it’s a currency?

Morgan Downey  44:32

And so you’ve got to just look at… It is a currency. In some parts of the world, oil is used as barter. People sell, give oil to get goods and so it actually is a currency in itself. But the one thing like you mentioned a fiat currency where you can just print, double the currency in circulation. You cannot do that with oil. It’s limited supply and also there’s not that much in storage. Say the world consumes 90-95 million barrels of oil per day and it’s a real-time operation because oil companies like Exxon and BP and Shell, they don’t like to sit there with tanks, huge, huge tanks full of oil because that it costs money to buy that oil and store it. And it doesn’t sit well for too long in tanks as it degrades relatively quickly.

And so basically it is a currency and if the dollar has been strengthening a lot over the past six months a year and if the dollar does continue to strengthen then oil will likely sell off in dollar terms. So it does definitely trade as a currency and as I remember back a few years ago, there was this big push to trade oil and euros and trade oil and yen and all this trade oil in rubles and our Chinese one. And that the problem with that is that no one tells the oil market to trade oil in dollars. Like, the US government doesn’t say “Hey, you must trade oil in dollars.” There’s no edict.

The reason oil is traded in dollars is that it’s the most liquid currency. And it markets to trade…  And people try and find your efficiency in if it were cheaper to trade oil in euros in terms of the bid-ask spread every time you have to buy and sell euros. It’s a tiny fraction as scale more expensive to that than it is to buy and sell dollars. And so the reason your market trades and dollars is because it is the most liquid, actively traded currency. It’s not because anyone tells anyone, and if, it’s it’s a but it does trade as, if you have if all things being equal, it’s just classic economics. If the dollar is stronger against the euro and other currencies, then the oil should sell-off also in dollar terms.

Stig Brodersen  46:49

So I have this question because you said before that the word consumption right now was approximately 95.

Morgan Downey  46:58

95 million barrels per day.

Stig Brodersen  47:03

Yeah. And I just read in a blog post here the other day that I think since 2009, where your book was from, the US production has increased by 3.2. And from that 3.2  to 2 billion of that barrels per day, that was from shale oil. So that was interesting for me, especially when I read your book because, in your book, you present shale oil, and you also introduce the concept, energy return of investment. Can you explain the concept of energy return on investment and then your opinion on shale oil?

Morgan Downey  47:42

The energy return investment is to get a unit of energy out of used energy out of the ground, and you have to spend the energy to get that. The easiest way to think about it is that if you’re driller well, you’ve got to power that diesel generator to drill that well. And so you’ve got to burn energy to get to the energy to get. And so over time, and like drilling on dry land is it has got a high return energy return on investment because you don’t have to helicopter things out, you don’t have to build an offshore oil rig, you don’t have to build any of these deep underwater pipes. You just can build a simple rig on dry land using very little energy and yet the return is huge, you get a lot of energy out of the ground from oil.

So and basically over time, going deep offshore, and then with fracking, the amount of energy required to be spent to get energy out of the ground has been increasing. So the energy return on investment has been decreasing. So in other words, it’s becoming much more energy-intensive to produce to get usable energy out of the ground. So it sounds like a strange concept but at its core, the cost of supply and energy has been increasing over time and will continue to increase. And so that’s energy return investment.

But the other thing is that on shale oil and so I, in writing the book, I   slightly regret using the phrase shale, because there’s a, what I should have actually referred to… Fracking is actually what’s called tight oil, tight oil industry, and because basically, the oil is locked in very tight little pores, and you’re going to blast through those pores to link them all using water pressure. And so it’s all this fracking oil is coming from what’s called tight oil reserves. And a lot of that title is in a type of rock called shale. And so that’s fracking, the fracking industry.

Separately, there’s a type of rock called shale, which is immature oil, and it’s basically oil that if you leave it cooked for another several million years, it will eventually turn into liquid oil, but it’s basically called shale.

And so that technology is very expensive that it actually make oil out of that immature rock. You have to just like you can make oil out of any hydrocarbon you’ve got, it would take a huge amount of energy to make oil from shale but to frack too tight oil fracking, which sometimes involves fracking shale rock, then you blast through the shale rock. And so that’s what’s the confusing part of which I probably will have to clarify in the next edition of fracking tight oil, which can be oil left in shale rock.

50:36

And then there’s another process of making oil, actually cooking oil out of shale rock turning, physically transforming rock coal shell into the oil. And so there’s a, it’s one of the things actually the challenges of writing “Oil 101” was that nailing down common terminologies because, one of my pet peeves is when people say gas and I hate that phrase because in my mind I’m thinking, “Oh, you mean natural gas? Or if you mean gasoline, or do you mean aviation gasoline or motor gasoline?” And so I usually like to use one phrase and use it very precisely. So there’s motor gasoline, there’s petrol is slang for motor gasoline or gas in the US is slang for motor gasoline. But it’s one of the challenges with writing “Oil 101”  was finding that common terminology of which one of which I probably didn’t explain as well as I should have was that fracking and tight oil as a distinct process from making oil out of shale, which is you take a rock and cook that rock into by adding hydrogen and whatnot. Also, make it turn it into a usable product like gasoline or jet fuel.

Preston Pysh  51:50

Absolutely. I’m so impressed. I’m serious. I know when I saw your book, I was like, “This guy knows what he’s talking about”. And as everyone and our audience can tell this is incredible.

Stig Brodersen  52:02

Yeah and I almost think that I’m unfair to you Morgan because, I pick and I got to be completely honest three lines from page 27 in your book, and then you can just, keep on talking about how to find it. I’m just completely floored about the knowledge you have.

Morgan Downey  52:20

Well, actually, it was an interesting thing that research because I knew a lot about the oil industry. I had done a lot of background reading and I had the exposure I know a lot of people have actually worked in the oil industry. So there was that… but the actual writing of all “Oil 101” at the end was something like 380 pages and I don’t consider myself to be a natural writer. And so I had a whole bunch of people help me with editing and all this stuff. But the original version, I want to reprint it out at one day and it was something like 1800 pages. And I looked at my desk when I’m and it took me about three years to edit it down. And a lot of that was due for readability.

And so I would hand it to someone who had no idea about anything about the oil industry. So I would hand it to my mother and say, “Here read this and tell me is it entertaining first…” because and so I try to put in what I call them like knowledge bombs, like putting little things in every page that people will go, “I didn’t realize that.” And make them interesting because there’s nothing worse than reading   an engineering text of, “Okay, here’s a chemical process.” You gotta say something interesting about, what is the little things like, why is the acronym for oil in the oil market is BBL. But there’s only one be in barrel, where’s the other become from? And so it goes back to the Standard Oil and John D. Rockefeller’s blue barrel, that the original barrels that were standardized in the oil industry of 42 gallons per barrel, or blue barrels, and that’s why everyone in the oil market today calls a barrel by acronym BBL and it comes from that little things.

Preston Pysh  53:55

So I got a question for you. And I was watching Stig he was placing a trade while we were talking there. I can see he’s buying more. The question I got goes to, there’s a lot of these TV commentators on TV talking about the price of oil. And I think the most prominent one that everyone knows is Boone Pickens, billionaire Boone Pickens. He from Texas, he’s on TV all the time. And I’m really curious, because I know recently he’s been saying that oil is going to be within a year, the oil will be like $80. He’s making these predictions and stuff which Stig and I usually shy away from any predictions, but I’m really curious for you, Morgan. I mean, you’re so intimately familiar with this stuff, who’s the person that you really pay attention to? I know for like investing where we watch the Fed like a hawk, they have a huge influence on the impact of where the markets move, and things like that, but who’s one of those key people that you follow for the oil industry that people could maybe latch on to? If this person says something, it’s usually a pretty valuable piece of information.

Morgan Downey  55:00

There’s obviously I listen to myself first.

Preston Pysh  55:04

I would imagine.

Morgan Downey  55:08

So, but I do that I know, T. Boone Pickens that he’s a famous guy. When I hear of T. Boone, I always remember that guy in The Simpsons, the cowboy in The Simpsons. I actually think that it’s based on him because T. Boone Pickens was a big guy. Before he was, famous for a hedge fund. He was famous in the 1980s. I think it is… It’s interesting. I could have actually written it into “Oil 101.” But one of the Seven Sisters, they were called, they were this big bunch of companies that control the oil from the 1930s to up until 1970. And one of those big companies is called Gulf Petroleum. If you look at and if you look right now there’s a few in the northeast of the US Petrol gas stations or gas stations that sell Gulf Petroleum. But T. Boone Pickens was the guy that actually did a buyout of Gulf Petroleum.

So he’s actually a famous guy he, in the oil industry for not just his statements, but just the history of the industry. And do I listen to him in terms of oil price predictions? I think he’s a very colorful character. In the end, a lot of what people see on TV and whatnot is a very extreme thing to try and get a reaction or get a buzz. It’s almost like writing a headline, you need to say something sensational. S

So who do I listen to? Obviously, anything that comes out of Al Naimi, the Saudi oil minister, that is like you, you have to listen to it. Where’s he going? So is he in China? Is he in Russia? Who is the meeting in China? What did he say in China? So Saudi oil minister, Al Naimi, is one of the critical people that anytime he says anything or just where he is.

Preston Pysh  56:56

Is he on Twitter? I say that jokingly but I’m serious.

Morgan Downey  57:02

No, actually, I, I don’t think so. Maybe someone should create a Twitter account for them. The fake Al Naimi. Yeah, let’s get on it right now.

Preston Pysh  57:11

It’s not a bad idea. I know I’d follow it.

Stig Brodersen  57:14

Oh, yeah.

Morgan Downey  57:15

And so he’s obviously critical. In terms of analysts and people in the published research partners, and there’s, there’s a whole ecosystem of these individuals. And, one of them and usually the interesting is that a lot of these people can have a bias. So Al Naimi is obviously a Saudi oil minister, he’s got a bias toward higher prices all the time. So you have to read a look with that lens. Look at what he says with that lens, of course, this guy wants higher prices. So, bear that in mind when he says anything. So a lot of if you look at some people that work at research banks a lot of there’s good research produced by Citibank. I know it’s a lame thing to say. But they produce some really good research. They’ve got a very good research team there.

Preston Pysh  58:07

Do you have any, like online resources that we could put into our show notes or like a link that you could provide to us?

Morgan Downey  58:12

Yeah, I can indeed, yeah.

Preston Pysh  58:14

It’ll be great. So if you’re listening to this, and you want to see what Morgan provides, Stig and I will have that in the show notes. And you can go to that and click on those links, and then you can use those from now into perpetuity as you continue to research your oil.

Morgan Downey  58:29

Number one will be the fake Al Naimi.

Preston Pysh  58:31

Exactly, exactly.

Stig Brodersen  58:35

Okay, so, Morgan, the final question that we have. That’s about books. So do you have any books that have dramatically shaped your life? A book that has really had an impact on you, and why the book has impacted you?

Morgan Downey  58:53

Interesting. When the books that got me interested in financial markets was “Liar’s Poker,” Michael Lewis. Great book, great book. Well written, very entertaining. He’s a great writer. I love everything he writes.

Preston Pysh  59:05

We’re big fans of Michael Lewis.

Morgan Downey  59:07

Yeah. And I like the way he can be. And the way he uses… he makes everything very accessible like things like Moneyball and those that his books are also… I like his approach to looking at an issue or a story, but looking at it from a different angle, but it would that was his first book, I believe it was his first book called “Liar’s Poker” written about the trading floor at Salomon Brothers back in the day, and that got m… That was the book that inspired me to get, one of the books that inspired me to get into financial markets. It just made it, turned it alive, turned that whole space into made it very interesting and compelling. And obviously, parts were exaggerated and whatnot, but it just, that book was one of the formative things that made me want to get into the world of finance.

Preston Pysh  59:56

Yeah, we’re huge fans and yeah, you’re right. That was his first book. That’s what gave him his big name. And Stig and I did an episode where we talked about his most recent book, the high-frequency trading book that he recently did.

Morgan Downey  60:08

Yeah, yeah. The Flashpoint. Yeah. That’s great, that’s a great book also. Yeah. I mean, he’s just he writes, well, writes very entertainingly. And, again, he’s an interesting author. And I also think he’s a little get a bit of a bias. Like a love-hate relationship with Wall Street.  He hates Wall Street, but he loves to write about Wall Street.

And, and, but he writes really well. And yeah, “The Flashpoint” is also a great book.

Preston Pysh  60:38

Well, fantastic. So for our audience. So Morgan Downey is his name. He wrote the book “Oil 101.” You should have no problems finding it on Amazon. If you go to the Amazon, just type in “Oil 101,” it’ll be the first thing that pops up. We highly recommend that if you’re interested in the oil industry, this is the go-to book. This is better than any book out there that I’ve ever seen on oil, by a landslide. It’s not even a comparison.

So, Morgan, thank you so much for coming on the show and sharing your time and your expertise. I know our audience is going to take away a whole lot from this interview. So thank you so much.

Morgan Downey  61:12

Thanks, guys. And if you need to follow me on Twitter. I haven’t created the fake Al Naimi on me yet, @commoditymd.

Preston Pysh  61:19

Awesome. Okay. I didn’t realize that you were on Twitter. So Commodity MD. No need to really follow anybody else. The guy to follow is Morgan, I promise you, you will not be disappointed. I know. I will definitely add you shortly after we’re done with this.

61:35

Alright, so this is the point in the show where we take a question from our audience. And this question comes from Dan Taggart.

Dan Taggart  61:41

Hi, Preston and Stig. My name is Dan and I’m from Minneapolis, Minnesota. I want to first say thanks for a great show. You guys are a wonderful resource, and I have had a lot of fun listening and learning from your podcast every week. My question is regarding inverse ETFs. A while back at the end of one of your episodes, you had discussed various financial instruments that an investor might want to think about holding during times of low return and overvaluation. I’m generally a long-only investor, but I am wondering what your thoughts are regarding inverse ETFs? Are these good investment vehicles to keep your money and as a hedge against an overheated market? Thanks.

Preston Pysh  62:18

All right, Dan. So this is a fantastic question. I think it really applies to the current market conditions here in the middle of 2015. And the summer of 2015. Because the market is, very high, a lot of people would say that it’s extremely overpriced. I mean, some people might not agree with that. But I think that the general consensus is that a lot of people think that the markets overvalued. And I think whenever you look at a, a distribution, you’re seeing it, two standard deviations away from where it normally is at. So with those conditions, what you’re asking is short selling the market, but doing it through an ETF or doing it through an index.

I want to talk real briefly about if you’re the type of person that wants to do a short sell. I think there’s a lot of risk in short selling. And I think there’s particularly a lot of risk in short selling an individual stock pick. Number one, the reason why I feel that way is because of buyouts. So let’s say that, and right now in 2015, the perfect company that I would say is just doomed for failure that is going to go into bankruptcy is Sears. Whenever I look at their income statement or balance sheet, it is just disgusting. It is really, really bad. So if I was ever going to short sell a company, that would be something that maybe I’d be interested in shorts on, because it’s just it looks so bad, it looks like it’s destined for bankruptcy.

63:39

But here’s the concern. Let’s say that another business comes along that has a much larger market cap and has a lot of resources on its balance sheet in order to buy out Sears. If I have that short position, and I think that it’s going to go down because it looks so bad. I’m going to get taken to the cleaners as this new company comes along and there’s talk on the street and in the newspaper of them being bought out, you’re going to see the market price surge, I’m going to get called, I’m probably going to lose a lot of money. That’s not anything that I feel like I can predict or control. And that is very bad. So that’s why I have never short sold an individual stock in my entire life and I don’t ever intend on doing it is primarily because of that specific risk.

64:21

The other risk that I just gently discussed was that you would get called so you’d have to buy this stock on margin, which is a loan or borrowed money. And if it moves against you, and you get called, you have to come up with the resources in order to meet that call. I don’t ever want to be in that position. That sounds like a very stressful position. So that’s me, other people were comfortable with being in that position. But what you’re talking about is not short selling an individual stock pick and having to worry about a call.

What you’re talking about is investing in an ETF that moves in the exact opposite direction of the market. So if the market goes up 1% for that, let’s just say the S&P 500. Let’s say the S&P 500 goes up 1%. You’re short ETF or bear ETF, which are commonly referred to would move in the exact opposite direction by the same magnitude.

I’m not necessarily saying that a short ETF is really all that bad of a thing to be in right now based on these current market conditions. And I think a lot of value investors out there might really say, Preston, what in the world are you talking about? You sound like a crazy person right now. But I mean, that’s really where I see this because I feel like the market has been so heavily manipulated by the Fed. I’m really curious. I want to stop talking because I think I’ve probably made a bunch of value investors very mad. They’re probably throwing things, they’re probably throwing things at their radio or their phone or smartphone or whatever right now, but I want to hear what Stig has to say about short selling, or primarily about an ETF, a short ETF.

Stig Brodersen  65:56

Yeah, so, Dan, I think I’m in the same boat as you. I’m like you. I’m primarily a buy and hold guy. And it’s just I think for me. I don’t know if it’s own because I don’t like to stress, I definitely don’t like to be stressed. Or it’s also because I don’t just feel comfortable about it because I don’t think I would buy into shorting an ETF for. And then the inverse S&P 500 index. And that is not me saying this is a bad idea. I just think that this is not the approach I have to my portfolio. So a lot of people would be asking me so if you think that the market is high, why don’t you sell all your stocks? I would never say to people they should just sell off all your stocks. I will not say to salespeople either that they should go short the S&P 500.  , it really depends on what they’re comfortable with.

What I’m comfortable with is to buy companies when I think they’re cheap and this, just hold them for a long time. Not necessarily sell them if they’re high priced because sometimes stock market high price.

Now if Preston is comfortable that, or you’re comfortable with that, I think that’s probably right for you and yes, my opinion right now is that the market is overvalued. I am just not comfortable enough to invest also because it will be… It is my opinion some sort of short-run bets and that’s just not my approach. It’s not a bad approach just not my approach.

Preston Pysh  67:32

Here’s what’s crazy is I agree with everything that Stig just said. I do. I completely agree with what you just said. And I think that if you’re a conservative investor and you’re trying to ultimately protect your principle, I think that that’s how you got to look at it and you got to also look at the fundamental nature of the market. No matter how you shake it is that you are buying a business. I don’t care what anybody says. You are buying a business when you buy a share of stock.

Preston Pysh  67:57

So let me try to defend… I probably will have a very hard time doing with my earlier comment. So I guess I look at the market right now. And you look at the Dow Jones and it’s at 18,000. Okay, and so if you’re buying into an S&P 500 short, How high do you think that the market can go? And if we’re basing that off of the history of the last hundred years, which it’s no judgment of what’s actually going to happen in the future, but let’s just say that you were going to do that. I guess you’d have to use the valuations in the year 2000, as basically the highest they could that it could go, which was what a PE of like 75, or somewhere around in that range, somewhere very high.

68:42

if that’s truly the case, then the market could go a whole lot higher. So, maybe it could go up over 20,000. Maybe it could go up to 22,000, something like that. I don’t know. I have no idea where it’s… how high it’s going to go or how or when the potential crash could occur. If it will even be a crasher. It’ll be like this slow, slope down. I don’t know, I have no idea if that’s going to happen. But I guess if I’m going to try to defend this idea of a short position, I think that it’d be hard for the market to go much higher than 20,000 or 22,000. And if that’s the case, the market if it moved up that high, if it moved to 20,000, that’s 10%, higher than where it’s at right now. And I think when a lot of people hear 20,000, they think that’s really high, that’s significantly higher than where we’re at, especially because we’ve had a severe resistance level here at around 18,300 on the Dow.

69:36

So if you’re looking at it from a short position, and you think maybe the market could contract 30 or 40%, and you think that maybe the top level of the market would be around 20,000. That means that your downside would be 10% in a short position and your upside could potentially be 40% or 50%, which is a lopsided downside versus upside position to be in. That’s probably why I maybe see it as being something that somebody could do if you were comfortable with that. And I guess I could understand your mindset a little bit. But I am not promoting that position to anybody to do that, but I guess I could say I could understand why you would do that.

So that’s as gently as I can try to back up my position as a strong hardcore value investor, I’d agree with everything Warren Buffett and Warren Buffett would probably smack me in the face for saying something like that. But I just want to put it out there. I mean, I guess I want to voice my own opinions, in addition to what all these other billionaires that are proven successes are doing, but that’s all we got, guys. So that was a really fun question to answer. And we want to play that one because that’s a really hard one. And it’s something that I know I’ve been personally thinking a lot about, and then really happy to hear Stig’s opinion.

So, Dan, thank you so much for submitting your question. We’re going to send you a free signed copy of the Warren Buffett Accounting Book and in that book, you’ll see Warren Buffett does not recommend that approach. But hey, it was really fun answering your question. And thank you so much for submitting it. If somebody else out there wants to get your question played on the show, go to asktheinvestors.com, you can record your question there.

71:10

We really appreciate these questions that everyone submits to us. It’s so much fun to respond to this and just get all the different email questions that we get and being able to correspond with our audience. We also want to definitely thank Morgan for coming on the show. I think you guys saw how knowledgeable he is about oil. It was just totally fascinating to have this interview with Morgan. So thank you so much. And that’s all we have for you guys this week. So we’ll see you next week.

 

Outro  73:26

Thanks for listening to The Investor’s Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.theinvestorspodcast.com. Submit your questions or request a guest’s appearance to The Investor’s Podcast by going to www.asktheinvestors.com. If your question is answered during the show, you will receive a free autographed copy of The Warren Buffett Accounting Book. This podcast is for entertainment purposes only. This material is copyrighted by the TIP Network and must have written approval before commercial application.