Trey Lockerbie (00:05:02):
Very cool. And Damien, I have to talk a little bit with you about your experience at Bridgewater Associates. So for those who don’t know, Bridgewater is one of the largest hedge funds with over 160 billion in assets under management. And Ray Dalio, who you spoke about is himself a billionaire of worth somewhere around 16 billion, I think. Ray has also pioneered this concept that the Holy Grail of investing is made up of about 15 uncorrelated investments, and uncorrelated being the key word. So this is obviously possible for someone maybe as big as Bridgewater, but how is that realistic for a retail investor to find 15 uncorrelated bets?

Damien Bisserier (00:05:47):
It’s probably not possible for a retail investor to find 15 uncorrelated bets, but there is the possibility to incorporate four or five uncorrelated return streams. You just accessing liquid public markets in an inexpensive efficient way. And that’s essentially what risk parity is. So if you think about the traditional approach, 60/40 or some derivation of that, that is primarily invested in equity and equity-like risk. And so you have to check one number to figure out how you did day-to-day in your portfolio. Just look at what the stock market did. That’s why when you turn on the CNBC, they talk about stocks, primarily. That’s all that anybody cares about because their portfolios are concentrated to that one thing. And the idea of the Holy Grail is finding a few things that are unrelated to each other and taking a much greater advantage of diversification. And it’s a simple concept, but in practice, very few people do it.

Damien Bisserier (00:06:47):
So risk parity is our approach to implementing that with liquid public markets. And so essentially, if you think about the asset classes we use there, in addition to equities, we identify other assets that are reliably different than equities, but still have attractive returns on their own. And then to the degree that they come packaged up in a lower returning form, we actually make adjustments, which we can describe. But essentially the other asset classes would be treasuries, would be inflation-protected security, different types of commodities, both commodity-related equities, as well as gold. And all of those things are relatively lowly correlated to the stock market. So when you combine those things with stocks, you get something that’s a lot more consistent than being concentrated in one thing.

Trey Lockerbie (00:07:31):
I have a follow-up to that question. So stocks themselves can be uncorrelated, right? You have different industries, different sectors. So how much of the portfolio is typically thought of as, are stocks, just stocks and that’s how we should think of it or can you dig a little bit deeper into a stock portfolio and say, “Look, this is in itself a little bit more diversified because banking isn’t that correlated with utilities or whatever it might be.”

Damien Bisserier (00:07:57):
That’s a great observation. So that’s true that if you think about what an equity is, it is a package of earnings from a particular business. And businesses have earnings that are driven by different factors. So you’re right that there is diversification across different industry sectors. But the challenge is that when you invest in equities, you also have certain risk factors in common, namely, economic risk. So all of those earnings tend to be better in a strong economy and they tend to be lower in a weak economy. So that is a common factor across all equities, no matter what sector you invest in. Similarly, interest rates can have an impact. So if you think about what an equity is, it’s a present value of all of those earnings and that’s impacted by how you discount those earnings. And many companies utilize leverage as well. So they’re very directly sensitive to the cost of leverage, which is the level of interest rates.

Damien Bisserier (00:08:57):
So those common factors tend to dominate the behavior of equity markets day-to-day. And so when you look across different sectors, they tend to be very correlated to one another. You don’t usually find different equity sectors that have zero correlation, just because of those common risk factors. Now that said, you will benefit by having as much diversification as you can within your equity allocation. And it is important to think about equities that behave differently across different environments. So earnings that are different across different economic environments. And that’s why we do utilize commodity producer equities in that way, but we are also honest with the fact that those are not zero correlated to stocks. They are probably 0.6 correlated to stocks. And so what we also hold is gold and gold is pretty close to zero correlated with stocks. And so when you put the two together, you get a package of commodity exposures that are actually quite lowly correlated to the broader equity markets.

Alex Shahidi (00:09:55):
The one thing I would add is when you think about diversification, you really want to consider it during the worst of times, because that’s when it’s there to protect you during the worst periods. And if you think about the O-eights and the first quarter of this year, in 2020, when you had a massive sell off, just about every stock went down. And it’s the real diversifiers like treasuries. And we’ll get into this, and gold and inflation-protected bonds, like TIPS, that go the other way. And so you’ve heard this saying of, “During a crisis, diversification doesn’t work because all correlations go to one.” It’s true for a lot of these assets, but for many others, the correlation actually goes to negative one. It actually does its best during the worst of times. And those are the diversifiers that are truly valuable. And so we’ll talk about that a little bit later.

Trey Lockerbie (00:10:44):
You mentioned something interesting there. You said that you’re looking at commodities producers. Does that mean that instead of holding gold or oil directly, you might be holding [Barrick 00:10:53] Gold or ExxonMobil?

Damien Bisserier (00:10:55):
We hold gold on a direct basis. So we invest in the physical metal. Whereas with the other commodities, we access them through the commodity producer equities. And we do that for a couple reasons. Commodity producer equities, in our view, based on our research, have higher returns, long-term than commodity futures. So some risk parity strategies utilize the futures. We think we’re going to generate a higher return with the commodity producing equities. There’s also, from a taxable investor perspective, some pretty significant tax advantages to utilizing the equities.

Damien Bisserier (00:11:31):
So you can essentially get deferred long-term cap gains instead of realized income from the futures. That’s a pretty big deal over time. And then we can build the portfolio in such a way that we can be cognizant of the equity risk we’re picking up in the commodity equity exposure, and either hedge that through the gold or hold a little bit less of that in the broader equity allocation we have. So that’s how we adjust for that. But we found that in the context of this portfolio, the ETF that we’re managing, that is a more efficient, higher returning way to get the commodity exposure.

Trey Lockerbie (00:12:04):
The main thing with the ETF and what we’re talking about here is built on this idea of risk parity, which is something that Dalio had coined, I believe. And the philosophy is essentially that all the bets that make up the portfolio are uncorrelated and that the risks offset each other, or at least balance to a certain degree between the level of risk in each bet. Is that a good way to explain risk parity, or how do you guys think about it?

Alex Shahidi (00:12:31):
Yeah. Why don’t we start at a high level and work our way down, just so that we all in the same place. So you can think of it as a traveler, right? Every portfolio sets on a journey to go from point A to point B, and hopefully point B is higher than point A. And these journeys go through peaks and valleys, and you can think of that as volatility. There’s ups and downs. And the journey ends when the strategy is abandoned, and hopefully it’s not at the trough. And so investors have a choice of what path they want to take from A to B. And we can divide it up into two. There’s the traditional path, which I’ll describe, and then there’s the risk parity. We can think of it as an independent path. That’s the path that managers like Ray Dalio followed because they think it’s a better path. And better meaning, less volatile way to get from point A to point B.

Alex Shahidi (00:13:22):
The big risk of taking that route is abandoning it at the wrong time. And so you can ask, how would that be if it’s a better path, if it’s less volatile? And it’s because it is the less traveled path. You ask somebody how they’re doing, it’s all about the market. And the market means the stock market. That’s what’s in the news, that’s what’s on TV, that’s what’s advertised. And so the focus is on that market, which is what Damien described as the traditional portfolio which is dominated by the stock market. And so when you’re on this less volatile path and you’re looking over the ravine to the other side where the other investors are in that more volatile path, it’s hard to hold on when you’re focused on maybe the shorter term results or how others are doing. So I think that’s a very important distinction here, is just to make sure everybody’s aware that we’re talking about two different types of portfolios.

Alex Shahidi (00:14:16):
And so let’s go back to the traditional approach. It’s understandable why that’s the traditional approach and why it’s made up the way it is. I think the way most people think about building a portfolio is they have two menu items. There is stocks and bonds. Stocks have higher return, higher risk. Bonds have lower return, lower risks. And so you own stocks for the return, you own bonds to control your risk. And you scale up or down between those two assets based on how much risk and return you’re trying to target. So that’s the way most people think about it. It’s a very simple model. It’s very convenient. But our view is, there’s actually a better menu available that leads to a better model. And essentially there’s a completely different framework.

Alex Shahidi (00:15:01):
And the key, and now we’re getting into what risk parity is. The key is understanding that asset class returns are by and large influenced by the economic environment. And there are assets that do well in different environments. So there are bad environments for stocks, but that same environment is actually good for other assets. And then we’re talking about growth and inflation, which we’ll get into in a little bit more detail. And so rather than concentrating in one asset class, like the traditional 60/40 type portfolio, that’s dominated by what stocks do, we think you can balance across a diverse mix of asset classes to achieve a smoother ride. And so this recognition that the economic environment largely drives asset class returns is the first step in building a risk parity portfolio.

Alex Shahidi (00:15:48):
The second step is matching the return and risk of each asset class. And basically what that means is you pick asset classes that do well in different environments and then you structure each to have a similar return over the long run and similar risk. And when you put it all together, now you’ve got a portfolio that’s much more diverse with a comparable return. Actually a higher return than stocks we think over time. And that’s effectively what risk parity is.

Stig Brodersen (00:16:16):
So how you’re defining risks, academics define risk as volatility, but here on the show, we’ve been very much influenced by Warren Buffett, who disregard volatility, but focus on permanent loss of capital and the opportunity cost of holding all the assets.

Alex Shahidi (00:16:31):
Yeah, I’d say there’s two. But one is volatility, that’s the statistical measure of the wiggles of the line. And less volatility is better, because you’re, it’s a smoother path from A to B. But I think that misses one thing. And that is the risk of catastrophic loss or risk of a loss decade. So stocks, for example, go through these massive declines. We saw in the first quarter of this year, 33% drop in five weeks. That is a pretty steep rollercoaster drop for anybody to live through. We’ve also seen last decades, people remember that the bull market of the last decade, but in the 2000s, the stock market was negative for 10 years. So that isn’t completely captured by that volatility measure. I think it’s good to look at that, but also look at the risk of these steep declines and also the risk of a lost decade. And we think of the risk parity minimizes the risk to all those things.

Trey Lockerbie (00:17:27):
It’s reminding me of my question about the stocks and diversifying the stocks, because what you just said reminded me of the fact that, if the value of investing approach has somewhat had a lost decade, where value has just been sitting by the wayside or declining while these growth companies are just overtaking and now 40% of the S&P 500, it just a few, really about six tech companies. So in your diversification, even on the equity side, are you factoring different types of companies based on how you would, I guess, classify them either value or growth?

Alex Shahidi (00:18:04):
We basically are trying to keep it as balanced as possible. And so we invest across all those styles. So the ETF has almost 13,000 stocks in it and that’s across growth value, U.S., non-U.S., large-cap, small-cap, emerging markets across the board. And the reason for that is I think the market and the average investor has been trained to draw the lines across growth and value or large-cap and small-cap and feel that you’re getting diversification by going across those assets. We draw the lines differently, because our framework is we want things to do well in different economic environments.

Alex Shahidi (00:18:46):
We recognize that a lot of equities go up and down together during those shifting periods and so we draw the lines across assets that do well in those periods. And that takes us away from trying to dissect and split up the equity markets and focus more on, just on all the equities, because that gives you that full exposure and you’re not going to have the issue of being overweight value in an underperformed for 10 years. You’re just invested across the board and then really focused on owning those diversifying assets. And I think that’s a much better framework than the one that most people are used to.

Damien Bisserier (00:19:21):
The thing we’re most confident in is the relationship between the assets and the underlying economic drivers. So if you’re in a recession, we are pretty confident that treasuries should outperform stocks. And similarly, as the economy recovers and you’re in an economic expansion, we have pretty high confidence that stocks should outperform treasuries. And so just building a portfolio around those very logical relationships, in our view, is far more reliable than trying to lean into a particular factor or style within the equity markets. There’s certainly value there and there are many managers that can generate value that way, but in our view, it’s just not as reliable as the relationships we discussed.

Alex Shahidi (00:20:06):
And to add to that, I think 2020 is a perfect example of how reliable those relationships can be. Because if you go back a year, nobody was predicting a global pandemic. That wasn’t, that’s not anybody’s models. The last time it happened was 100 years ago. People weren’t building portfolios for that, but what happened in Q1 when the economy collapsed, and without regard to what the cause was, a virus in this case, but the economy collapsed and these relationships that Damien just described, played out exactly as you would have expected, recognizing that the economy collapsed, therefore interest rates fell because the fed had to cut rates to zero to stimulate the economy in response to this collapse. And so treasuries did really well. They were actually in a bull market at the exact same time that equities were in a bear market. And the printing press has turned on in response to this collapse and so gold rally. And so those relationships are very reliable without even having to guess what the cause is.

Trey Lockerbie (00:21:07):
Well, it’s interesting you say that because when the meltdown happened, a lot of people, and this happens with almost every meltdown, which is people first flock to cash. And before they figure it out and then make a rational decision, they just sell, they get the cash, they liquidate everything. Does the portfolio hold any cash just for those kinds of reasons or any optionality feature in the ETF, or is it fully allocated?

Alex Shahidi (00:21:33):
No, it’s fully allocated. And you bring up a very good point because there are rare and short-lived periods in history where cash is king. And so effectively, what you’re doing with this portfolio is you’re making the bet that a diverse mix of asset classes is going to outperform cash over time. And that’s a pretty good bet, because if that didn’t happen, capitalism would fail. But there are periods where when it doesn’t happen, where cash is the best performing asset. And as a result, you would expect this in any portfolio to do poorly. But then what happens is it doesn’t last long because there’s always a policy response. And you saw this this year, where the economy is basically going straight down, capitalism has stopped and markets are not performing as you would expect. And then a policy response ensues and things go back to normal.

Alex Shahidi (00:22:25):
It doesn’t mean the stock market’s going to go up. But you get a more of a relationship that you would expect. We saw the same thing in September and October of 2008. Same thing happened in the 1930s. And those periods just don’t happen very often. And so holding cash might do well during those periods, but because they don’t happen very often, over the long run you fall behind. And so rather than trying to time those things, we recognize they are rare and short-lived and we just live through it. And by being balanced, you probably have the best odds of surviving than if you’re too concentrated.

Stig Brodersen (00:22:59):
So given the amount of research you’ve done and also the background you have, I’m sure you used to backtesting all these different strategies. So as you’ve gone through the process, did you decide that all roads just lead to risk parity or is this just one of different options for the retail investor?

Damien Bisserier (00:23:15):
From the Bisserier of a retail investor, we believe that this approach or some derivation of this approach is the most efficient way to hold assets. That this will lead to the most reliable outcome over the long-term. And it’s for the reasons we discussed related to the diversification to different economic outcomes, that you can establish a portfolio that can meet a return objective that just has less variation year to year, decade to decade, over time. And so from our perspective, all roads do lead to this as the most efficient way to hold public markets.

Damien Bisserier (00:23:51):
There are, of course, other return streams that investors can access that would be classified as alternative return streams, maybe hedge funds, which are more related to manage your skill rather than holding markets or potentially in private assets where you can get pretty unique return streams related to real estate or royalties or different types of credit and equity securities that might be different in profile or different in terms of active management aspects of it that could be complimentary to this. But from a retail investor perspective where it’s harder to access those alternatives, we believe all roads do lead to this as a more efficient way to hold assets.

Trey Lockerbie (00:24:31):
It’s interesting you say that, and I’m really happy that you brought up the private sector as a form of investment for the retail investor, because not a lot of people might think of that as part of their overall portfolio, but it raises a question which is, if real estate is a viable option to diversify, why would there not be maybe a REIT in part of this portfolio?

Damien Bisserier (00:24:55):
So we’ve looked at public market rates and the reality is they tend to be very correlated with the broader stock market. So similar to what we discussed earlier, they tend to be more equity like than real estate like. And so we’ve looked at it as a potential inflation hedging exposure, but what we found is that it’s not as tight of a fit to inflation as the other things that we hold in the portfolio, namely, commodities. Different types of industrial commodities and gold. So we made the choice to utilize those exposures as opposed to REITs, but it’s certainly something we continue to look at. And for, I think retail investors, it could make sense as a small allocation as part of their inflation hedging portfolio. The challenge with REITs and real estate generally is that it’s not clear that it’s a pure hedge to inflation in the way that commodities are, because of the sensitivity to interest rates.

Damien Bisserier (00:25:48):
So as interest rates rise, which tends to happen in an inflationary environment, real estate struggles because it’s such an asset that people buy with leverage. And so the cost of leverage goes up in that environment. And so there’s a headwind there associated with rising interest rates that you don’t have with some of the other inflation hedges we mentioned, but as a component of that inflation hedging portfolio, I think it could make sense. It’s just in our view, it didn’t benefit the portfolio to the degree necessary to include.

Alex Shahidi (00:26:16):
And Trey, also the other reason we think all roads lead to this is the other road, the 60/40, is going to be really challenged looking forward. The 40 of the 60/40 is yielding near zero. So if investors are hoping to get reasonable returns out of something that has 40% and low yielding assets, and it’s largely because those bonds are shorter duration than what we have in ours. It’s going to be a challenging road. And so all investors face this conundrum of how do I get reasonable returns with controlled risk? Because the 40 is there to give you a better downside protection, but now it costs you because the yield is so low. Historically, the yield was reasonable. And so the cost of that diversification wasn’t material. Now it is. And so we think this is a much more appropriate allocation looking forward for that reason, as well as the odds of severe outcomes and the potential range or potential outcomes in this environment is extremely wide, which is more reason to be more balanced than what a 60/40 allocation offers.

Damien Bisserier (00:27:26):
When people today allocate to fixed income in general, advisors, individuals, they’re unhappy with the yields they get from government bonds and the really safe stuff, the investment grade stuff. And so normally those fixed income portfolios are much riskier than what’s implied by the broader bond market, which is the more conventional 40% that most investors would target years ago. So today that 40% is invested in things like high yield and sometimes REITs because they generate income and things like MLPs, which are master limited partnerships that invest in pipelines and things like that. So there’s all sorts of income-generating things that get thrown into the fixed income bucket that are very equity like because investors are reaching for yield.

Alex Shahidi (00:28:12):
The other thing I think that is really interesting about that is there’s two ways to look at it. You can look at it from a mathematical perspective, and then there’s also, there’s an emotional aspect to this. So mathematically, it’s a terrible portfolio because you’re basically betting on one asset, which is effectively, you’re betting on one environment. And when that environment transpires, you’re thrilled and when it doesn’t, you’re in terrible shape. But what’s really interesting about why that persists, because a question somebody might ask as well, is that obvious, that why is 60/40 a conventional portfolio? Why has it been around for so long?

Alex Shahidi (00:28:46):
That goes to the emotional side, which is that’s just the way other people do it. So you’re sitting here in 2008 and first quarter of 2020, and you just lost 15 or 20%. And you look over to your neighbors and they lost 15 or 20%. So you shrug your shoulders and you say, “Oh, that’s just the way it is. You just got to hold on.” And the challenge is because it’s convention, it’s actually been self-reinforcing and it’ll stay like that until the masses start to realize that there’s a better way and that might take some time. And so I think what we’re doing is trying to be a little bit more innovative and ahead of the curve. And if all roads lead to this, ultimately, you’re better off being there before others.

Damien Bisserier (00:29:28):
One of the reasons why I decided to work with Alex, is years ago, he noticed this. So after those initial conversations with Bridgewater, his reaction was, “This is a really interesting concept. Let me try to figure this out on my own.” And so he ended up writing a book on the topic of asset allocation, Balanced Asset Allocation. It was published by Wiley in 2014. That’s how we approached the advisory business, which was roll up your sleeves, do your own independent research, and only then recommend it to your clients.

Damien Bisserier (00:29:57):
And in this particular case, he thought this deserved to get better recognition than just for the few sophisticated institutional investors that were adopting this approach. And so he wrote that book to really provide that transparency to the masses, to be able to implement these concepts on their own. And then the ETF has been really a continuation of that effort, but really taking some of those concepts, refining them and then putting them in an easy to invest liquid package.

Stig Brodersen (00:30:28):
Okay. So let’s dig a little further into risk parity. Predella talks about four seasons or quarters, if you like, that could affect the prices of the assets that we have in our portfolios. One would be higher than expected inflation, and the other would be lower than expected inflation. The third quarter, season if you like, would be higher than expected economic growth and the last one would be lower than expected economic growth. Could you talk about the holdings in your ETF and how those four seasons are reflected?

Alex Shahidi (00:30:57):
We think of it the same way. And this is the conceptual framework that I described in my book. And I think the way to think about it is that there are certain assets that are biased to do well in each of these environments. And so, for example, in rising inflation, inflation-linked assets like TIPS, Treasury Inflation-Protected Securities, are biased to do well. Commodities and gold, in falling inflation, it’s equities and treasuries. In rising growth, it’s equities and commodities, and in falling growth, it’s gold, treasuries and TIPS. And so you own assets to do well in each of those environments. And what you want is, for the most part, be indifferent to what environment transpires. And the reason that’s the case is because this is, I think, widely misunderstood and actually really important, is the odds of each of those environments occurring is about 50-50.

Alex Shahidi (00:31:48):
And the reason it’s about 50-50 is because there’s a key term they use in your description, which is what happens versus what was expected. And so there might be people saying, “Oh, I think inflation is going to be low for the next couple of years.” That’s not enough. For it to move markets, it needs to be lower than what was already discounted, which is what the consensus view is, or it needs to be higher than what was discounted. And so the odds of those environments transpiring is roughly 50-50. So we want the portfolio’s exposure to be about equal across those assets and those environments. And you can structure the portfolio to do just that, where for the most part you’re indifferent. And so to us, that’s roughly 25% equities, 25% commodities. And that 25% commodity is split between the commodity producers and gold.

Alex Shahidi (00:32:38):
And then there’s 35% TIPS and 35% treasuries. And the reason the TIPS and the treasuries have more than the equities and commodities is because they’re less volatile, meaning they’re less risky. So you need to own more of them to have an equal risk so that when those are in favor, they go up enough to offset losses elsewhere. And so if you add all that up, you get 120%, and that 20% comes from a modest amount of leverage that’s used to basically match the risk across these assets.

Trey Lockerbie (00:33:08):
You mentioned the 60/40 allocation. And I’ve even heard things like you should match the bond allocation to your age. So it’s worked out in a similar way. There’s a lot of non-optimal investment advice. What would you say is the worst investment advice out there that you’ve heard lately?

Alex Shahidi (00:33:26):
It’s a pretty long list. I don’t know if it’s bad or not. I think it’s just a different perspective. And it’s the conventional perspective, which is what I described earlier. And that is if you want to take more risks own more stocks, if you want to take less risk own more bonds. And the assumption is, the younger they are, the more risk you can take and the older you are, the less risk you should take. And you slide up and down that scale. And the reason, I wouldn’t say it’s bad, is that if that’s your universe of choices, if that’s the menu from which you’re picking, then that approach is perfectly reasonable. But I think there’s an opportunity here for people. And that is there’s a much more efficient, better menu of choices.

Alex Shahidi (00:34:07):
And so, for example, if I told you the choices are high-risk bonds, high-risk stocks, and then low-risk bonds, the choice is not just that if it’s high returning stocks, high returning bonds, high returning TIPS, high return commodities. Now, how do you pick across those? It’s not as clear. The answer is really, you want to own all of them and you want to be balanced across all of them, because that is as diversifying as you can get. So I think the framework is the bad advice. So it’s all coming from the wrong framework.

Trey Lockerbie (00:34:38):
Let’s talk about that word balanced. So it’s probably easy for the listener here to think about a balanced portfolio being somewhat of a zero sum game, where your one part of the portfolio is going up while the other is going down. How does it all just not net out to zero?

Alex Shahidi (00:34:56):
That’s understandable why that would be the result that people would think you would get to. The reason that’s not the case is that each of these assets has a positive expected return. Meaning it’s mean, it’s average is, let’s say six or 8% a year, something like that. And if you’re diversifying across all of them, then a good environment for one means that it does better than its average and a bad environment for another means that it does worse than its average. And because it’s average is in zero, it doesn’t net out to zero. And that’s out to the average across all the assets. And so when we say it outperforms or underperforms, we don’t mean versus zero. We mean versus it’s average. And so what you’re trying to achieve is to get as close to the average as possible and minimize the variation around that. And by balancing this way, we think you can achieve that.

Stig Brodersen (00:35:49):
Tony Robbins wrote this book, MONEY Master the Game. And the best part of that book, at least if you ask me, was this interview with Ray Dalio. And Robbins asked Dalio there in the book, “If you could leave a portfolio for your kids that could not be changed, what would the asset allocation be?” And Dalio electively said something like, “40% long-term bonds, 15% medium-term bonds, 30% in equities and 71/2% in commodities and 71/2% in gold. Is that similar to what you guys are doing in your ETF and are those percentages even correct?

Damien Bisserier (00:36:25):
It’s similar. Frankly, I saw that. I was still at Bridgewater when that came out. And I’m not exactly sure where Tony got his allocation from. I think there was some interpretation that went into that. It wasn’t literally from Ray’s lips, but I’m not 100% sure about that. But there’s obviously similarities to what we’re doing. And again, the idea is this was the genesis of All Weather for Ray, which was to create a strategy that would last for generations in his family, that would not require active management. So it was the ultimate investment strategy. And that framework, even though we implemented differently, that framework is really the governing framework on how we think about asset allocation as well. And then that informs how we do our risk parity portfolio.

Trey Lockerbie (00:37:10):
So I’m glad you brought up the All Weather Portfolio. So for those who don’t know, All Weather is a fund at Bridgewater Associates that is supposed to survive through the four economic seasons we talked about. And from what I’ve gathered, it’s average the rate of return around 8% with maybe a similar level of volatility. Is that the expectation with this portfolio as well for the retail investor?

Damien Bisserier (00:37:35):
We’ve built this portfolio to target about a 10% annual volatility. That’s in line roughly with a 60/40 portfolio. And we think we can generate a return competitive with equity, so in excess of a 60/40 portfolio. So that’s how we’ve designed this. And Bridgewater has a number of ways that they implement this portfolio. So, it depends on how they package it, but that’s how we’ve structured it.

Trey Lockerbie (00:38:01):
So this risk parity ETF, RPAR, has an expense ratio of 50 basis points. So half of 1%, which is essentially the fee that you’re charging the investors for managing the ETF. But that said, RPAR is holding lots of other ETFs that I know also charge similar fees. So is the 50 basis points inclusive of all of those fees or in addition?

Damien Bisserier (00:38:25):
It includes all of those fees. So that is the total net expense ratio.

Alex Shahidi (00:38:29):
Yeah. And to keep the fees low, we use ETFs where there are low-cost options, like Vanguard ETFs for example. In cases where there are no low cost options, we actually get the index exposure by just buying the securities directly to avoid that additional layer.

Stig Brodersen (00:38:46):
So if RPAR is holding all of those, say low-cost ETFs from Vanguard, which adventures would it give me as a retail investor to hold the RPAR ETF compared to buy up the underlying ETFs that RPAR is holding in the first place, and thereby saving the cost for your ETF?

Alex Shahidi (00:39:07):
It’s a great question. And it’s something that we’ve been dealing with for about 15 years, because we used to do that. We used to buy the underlying assets. And in one word, the reason it’s better in the ETF is efficiency. So the ETF is very tax efficient. So for taxable investors who take all those assets and put it inside of the ETF, you gain tremendous tax advantages, where effectively most of your return is deferred until you sell the ETF as opposed to generating taxes throughout the process. The ETF has about 20% of leverage within it, as we described earlier, that’s achieved at a very, very low cost near zero. So that’s fairly attractive.

Alex Shahidi (00:39:49):
I’d say the biggest advantage of the ETF is implementing the strategy is, while it’s easy to talk about, it’s hard to do in practice because it’s so different from the traditional approach. And anybody who’s been managing even their own portfolio or other portfolios, realizes that humans are hardwired to look at their portfolio, their eyes go directly to the thing that’s doing the worst and their emotional response is how do I fix this? This is the problem. And what you’re supposed to do is buy the things that are doing the worst, rather than sell the things that are doing the worst.

Alex Shahidi (00:40:25):
And because all the assets in here are relatively volatile, they move around a lot. And so your emotions are going to be pulled in all different directions if you’re trying to manage this outside of the ETF structure. And so what you’re supposed to do is buy low, sell high, but the emotional reaction typically is buy high, sell low. And so this prevents you from doing that because the package is much more palatable and easier to hold onto than the underlying line items. And so that’s actually one of the biggest advantages of putting everything inside the ETF. And we just talked about the fees. So the fees are very reasonable.

Alex Shahidi (00:41:02):
And in some cases, a lot of the assets inside have no additional layer fees. And then the last advantage is there is a little bit of discretion in extreme cases. So for example, in March, when the deflation alarm started to sound, balance in a deflationary world is a little bit different from all of their environments. And through the portfolio, targets changed a little bit. The allocation to TIPS went down, the allocation to treasures and gold went up and that trigger occurs because of our understanding of what it means to be balanced in these extreme environments. And so that also occurs within the ETF. And if you’re doing it outside, you may not have that insight.

Damien Bisserier (00:41:43):
One thing that Alex mentioned, I think it’s an important point that a lot of investors maybe don’t fully appreciate, which is the benefit of rebalancing regularly. And what that means from a return perspective, at the portfolio level. So we’ve looked at this mix of assets because we created this index going back to 1998. So we’ve looked at this since 1998, explicitly in the index context. We’ve also looked at it with similar exposures back 100 years. And what we found is by rebalancing regularly, the portfolio return is about a percent higher on average than the average of the underlying component return. So if you took the average of the stock component, the treasury component, TIPS component, et cetera, that average is a percent lower than the portfolio average return, which is really powerful from an investment perspective.

Damien Bisserier (00:42:37):
And something that we don’t think a lot of investors appreciate to the degree they should, partially because when you rebalance across similar things, you don’t have nearly the same benefit. That benefit exists. It’s proportional to how lowly correlated the components are. This gets back to your original point of the Holy Grail. The Holy Grail isn’t just a risk reducing phenomenon. It’s also, if you can find things that are lowly correlated to one another and individually are quite risky and combined in a portfolio, you actually get a portfolio that’s higher returning than the underlying components. So that is a really powerful aspect that we’ve been able to take advantage of in the context of ETF.

Alex Shahidi (00:43:15):
Yeah. It’s kind of the oldest rule in investing, buy low, sell high, and it’s just hard to do. And the reason it’s easier to do with these assets is because you’re not betting on any skill or anything like that. You’re just betting that you have mean reversion and broad asset classes that have been around a long time. It’s easier to have confidence in that.

Trey Lockerbie (00:43:36):
Yeah. As Warren Buffett says, “The stock market is the only place where people run out of the store when things go on sale.” And I have to relate. It’s so hard to fight that urge. And no matter how much you study this stuff, when you see the stock market down and you open the app on your phone, you get an emotional reaction. It’s just so much about what investing is all about. So if you’re able to take that away, it’s powerful. And if you’re adding a percentage or two based on rebalancing, it sounds like that pays for the expense ratio by itself. So yeah, you’re getting that active management side and taking away that emotional side, which is really fascinating.

Alex Shahidi (00:44:13):
And the reason that emotion exists is because when the market is down, regardless of what market you’re talking about, there’s good reason that it’s down. The news is bad and the outlook is bad. So it seems very logical to say, “I’m seeing red on the screen and the outlook looks bad. I’m going to sell until the outlook looks better. The experts think the market’s going down. Why should I hold?” And then maybe you fight the urge for a little bit and it goes down further and you kick yourself and you say, “I knew I should’ve sold. If I would’ve sold, that would have been better off.” Until you get the last there standing, meaning everybody has sold and that’s the bottom of the market. And that’s just, the timing of that is impossible to consistently call. And like you said, it’s really hard to fight that urge. In some ways you have to remove that power from investors because, to protect themselves.

Damien Bisserier (00:45:06):
It’s funny, we’re obviously our advisors ourselves and we talk to a lot of advisors, and it was interesting how stressful the crash was in February, March, and then how equally stressful the rally was because a lot of advisors were out of the market when the rally happened and they were incredulous that this is a real thing in the midst of this historic recession to have the market rallying to that degree. And so that market timing decision is inherently difficult and very stressful. And in my experience, very few people are actually any good at it. And you see it on the positive side as well. In terms of where everybody’s investing today, it’s the tech stocks and things that are up four or five times this year. Those are the things that people want to buy.

Damien Bisserier (00:45:49):
And I can tell you having been in this industry for a while now, that’s not how things normally behave. Things don’t quadruple or quintuple in a year. It’s nice when it happens, but the challenge is a lot of those things can equally fall by half or 70% in subsequent periods. And so our view is that you’re just much better off having a balanced mix and not being so dependent on trying to time the bottom or the top in a particular asset class. And when you have a portfolio structured like this, it’s just less sensitive to those timing concerns, because usually within that portfolio, something might be doing great, but many things are doing poorly. And so it’s not like you’re buying everything at a top or trying to time the bottom. You’re basically capturing bottoms and tops at the same time. And you’re just less sensitive to that timing decision.

Alex Shahidi (00:46:37):
And to give you some numbers, so RPAR at the market low, which was March 23rd, the SMP was down 30, RPAR was down 10 year to date. And then through the first quarter, RPAR was down 4%. And that was one of the worst quarters we’ve ever had. And now it’s up about 15% year to date. And it’s largely because it protected on the downside and it participated in the upside and the net of it, obviously we all know that the negatives hurt you so much more than the positives help you. You lose 20, you have to make 25 to break even. You lose 50, you have to make 100 to break even. So you lose only four. You don’t have to do as well on the upside. And you can net out way ahead.

Stig Brodersen (00:47:16):
And it’s interesting that you bring that up. You’re saying this is not how this typically works. And we are in uncharted territory in so many ways, especially when we’re looking at the global debt and money printing situation. How’s the RPAR ETF accounting for that?

Alex Shahidi (00:47:34):
The way I would think about that is you’re in unchartered territory on many levels. And if you just think about what the next five to 10 years looks like, you could have deflation like what Japan’s been going through the last 30 years. That could easily be the outcome. You could get high inflation, like maybe what we had in the 1970s or anything in between. That’s a pretty broad range. And the assets that do well in the first scenario are almost the opposite of the assets that do well in the second scenario. And then you’ve talking about growth. You could have a depression.

Alex Shahidi (00:48:06):
I mean, we were effectively heading into a depression. If the fed just stepped back and fiscal stimulus didn’t come in, you could be in a depression today. You could get really strong growth if the stimulus is just extremely powerful and ongoing, or anything in between. And so the potential range of outcomes is so wide that it almost sounds irresponsible to not be super well diversified. I mean, this is of any time in our lifetimes that you want to be really well balanced and own all these assets, it’s today.

Trey Lockerbie (00:48:37):
I’m reminded of this other Buffett quote, where he says, “Diversification is for those who don’t know what they’re doing.” With this idea of a concentrated portfolio, if you’re highly specialized in something and you have an expertise, that’s where you should go really deep. And I’m curious if you agree with that sentiment and just that the average person often does not have that type of, or level of expertise, or does it go totally in face of what you’re talking about here?

Damien Bisserier (00:49:05):
No. I would refer to that as something different than what we’re trying to capture here. So what Buffett is referring to is how do you translate skill in identifying those undervalued or under managed companies that are about to turn the corner and concentrating your views to try to outperform the market in those few stocks. That is an active decision. And there are some people like Buffett and others that are exceptionally good at that and they can generate a return stream that looks very different than the markets. It’s going to be much more of a function of the behavior of those companies that they’re concentrating in. And there are a few people in the world that can generate very attractive returns doing that. So I think that is absolutely viable. We’ve allocated to those, some of those managers over time and had success doing so.

Damien Bisserier (00:49:52):
The challenge is getting access to those managers. Not a lot of them exist within the mutual fund universe, which is what most retail investors can access. There might be a handful. And if you have the ability to access those managers or if you have the ability to do it yourself, great. But in general, that’s a very, very difficult thing to do. Even Buffett has underperformed the S&P for more than 10 years. So alpha is a hard game. Alpha meaning, because I know a lot of listeners may not know what alpha is. Alpha is what we refer to as active management return. So it’s the return that’s generated by you deviating from the market. When you say you’re trying to do an alpha, it means you’re trying to generate outperformance versus the market.

Damien Bisserier (00:50:29):
And getting alpha is a hard game. There are very few people in the world that have done it successfully for long periods of time. Even the legends that you’ve quoted now a few times have gone through long stretches where they haven’t generated any alpha. And so this was raised acknowledgement early on, that at Bridgewater, in their alpha portfolio, their active management portfolio, their individual trades were right about 60% of the time. So they were wrong 40%, which is a lot. So they have an edge and they’re able to translate that edge into something that’s attractive, but they’re also wrong a lot. So the idea that individuals or the average person, or even the average manager can be more right than wrong after fees and taxes is a tall order. And in our experience, most don’t accomplish that.

Damien Bisserier (00:51:15):
And so we view this as your core, set it and forget it, buy and hold approach. And then if you can find alpha or managers that can concentrate in generate market outperformance, go ahead and access those managers. That’d be great. And you can compliment, or if you do it yourself, you want to form your own views on what stocks might be the next market leaders as we come out of this pandemic. That’s certainly something that I think many people have found profitable this year. And so we think there’s merry in that, but also be humble about your ability to do that consistently. That one good year doesn’t mean that you’re going to be able to do this on a long-term sustainable basis. And this is what I was referring to as this notion of, things don’t just keep quadrupling and quintupling because they make a great product. That’s not how the markets behave.

Damien Bisserier (00:52:02):
And so there’s some pretty extreme outcomes which I think have resulted partially because of the stimulus you mentioned, partially because a lot of people are at home and there’s a lot of speculative enthusiasm around certain stocks, partially because of good fundamental reasons that interest rates are low and you have a lot of technology disruption that’s impacting all industries. And so you have these big differences between winners and losers. But those things can’t persist forever because eventually the price reflects that optimism. And then at some point, the price is so high that you’re more likely to disappoint relative to that optimism. Even if the company is wildly successful, the price is basically over reflected that very attractive outcome. And so there’s a long-winded way of saying that, I think to the extent you can find it great, but I think it’s actually quite rare and that most investors would be better served by just having the right allocation to start.

Trey Lockerbie (00:52:56):
Speaking of accessing those right managers, what would it take to access the All Weather portfolio fund, if you even could at this point? I mean, how much money are we talking about that someone would need to even participate in something like that?

Damien Bisserier (00:53:10):
I’m not sure what their current minimums are, but it’s 100 million dollar or something in that range. [inaudible 00:53:15]. You need to be an institution with billions of assets under management.

Trey Lockerbie (00:53:21):
Right. Which is so great that you guys are compartmentalizing this down to a retail investor level and making it accessible. It’s something I’m very passionate about. And kind of leveling the playing field to a certain degree. And speaking of Ray and his skillset, I’m wondering how you look at him, Damien, especially working with him so directly for so long. Warren is often looked at as a great stock picker and a great operator. But I look at Ray as this more macro investor who is able to distill down a lot of information and make these really beautiful, elegant frameworks and ways to look at the world and then mitigating his risk pie automating a lot of the decisions, whether it’s actual algorithms. But you read his book on Principles, it seems like his brain is one machine learning computer based on these algorithms. And that’s how he operates. Do you look at him like a stock picker? Do you look at … And some superpower that’s totally different than that?

Damien Bisserier (00:54:22):
I think, so Ray is a phenomenal person in many regards. The thing that, he’s obviously very well-respected for his investment acumen and his views on things. And you’re absolutely right. I think you had a good distillation of what makes him unique, that he’s able to see these very compelling and very simple frameworks out of the noise of investing. And these oftentimes are frameworks that nobody else has acknowledged prior to Ray coming up with these frameworks to explain how the world works. It’s like he’s identifying the laws of gravity. And that’s really his mission, is finding truth. And that applies to the markets as well as it applies to people and how to manage people. And so I think actually though, the thing that’s underappreciated about Ray is how great of a leader he is.

Damien Bisserier (00:55:14):
The Principles talk about how he approaches the job of management. And I think they’re phenomenal, but what I found most enriching at Bridgewater was the community that he was able to build and cultivate. The talent that he is able not just to find, but to retain. So it’s interesting when you talk about Bridgewater, there are no senior investment professionals that ever left Bridgewater and started their own hedge fund. There are a few people that did it, but there were at the more junior levels. And so finding people like Bob Prince and Greg Jensen, who are some of the most phenomenal investors on the planet and having them contribute for as long as they have and continue to be completely invested in Bridgewater is an exceptional talent that Ray has. And I’ll tell you as somebody who worked for him, the reason why that happens is because Ray has an incredibly big heart. That culture obviously drives excellence.

Damien Bisserier (00:56:13):
And this is a very competitive game, trying to beat the markets. And so you have to find the best talent and then you have to get that talent to work harder than everybody else. That’s just the reality of it. Kobe Bryant wasn’t what he was because he was just talented, he also worked harder than everybody else. The same thing with Michael Jordan or anybody you think about, Tiger Woods, et cetera. And the same thing would go in our business. And so Ray was really talented at finding these exceptional individuals and then squeezing every ounce of productivity out of them. So it’s a challenging environment, but it’s incredibly enriching. And part of what he does in order to achieve that is that he really cares about the community and the members of that community. So an example was, when I was there, I was three years in and I joined Bridgewater back at a time when Ray hired everybody. And so I had a personal relationship with him, but I wasn’t very senior three years into my Bridgewater tenure.

Damien Bisserier (00:57:06):
And my mother was diagnosed with colon cancer. Was living on her own in San Diego. She was going to have to go through chemo, it was pretty advanced. At the same time, my father was going through triple bypass and recovering from that. And I basically said, “Look, I need to be with my family.” And Ray was very understanding. He actually allowed me to live out with my mother for a year as she went through chemo and work from there. But not only that, he gave her his personal doctor to coordinate all of our specialist appointments. He called her personally. To this day, when I talk to my mom, she ask me how Ray is doing. And I left Bridgewater in 2013. That’s the kind of individual he is. He just cares. Literally everything stop for him and he’s a busy guy. And he called my mom who, for somebody to work for him for two and a half years. And really that was the most important thing to him at that moment. And so the loyalty that people have to Ray is real and it’s tremendous.

Damien Bisserier (00:58:01):
And so that culture that he’s created there, it’s not just a cold, harsh environment where you’re braided constantly. Of course, they’re high standards, and he’s tried to create an environment that drives excellent outcomes. And so you have to have high standards, but it’s also a very caring community. And the support I got from him, from my colleagues, was really tremendous. And ultimately, I went back after a year and I moved back to the West Coast for personal reasons, but my experience there was great and it really forged my approach, not just to investing, but to life in general and how to think about what’s important to me. And a lot of that came directly from him challenging me on personal choices that I was making. Not just investment choices that I was making.

Stig Brodersen (00:58:46):
I love that. And thank you so much for sharing that personal story, Damien. It’s so insightful to learn how Ray Dalio has shaped us a strong culture. And speaking about the culture, [Brits Border 00:58:56] is known for having this search for the truth. And that is found through something Ray Dalio refers to as radical transparency, which is very uncommon in the rest of corporate America. Could you provide a few different examples of radical transparency and what it personally meant to you?

Damien Bisserier (00:59:15):
So radical transparency just means that there is an active effort to constantly evaluate bad outcomes. Whether that’s something that resulted from a weakness that I had personally, or a bad process, you want to stare at the bad outcomes and understand what contributed to those outcomes. Be very honest with each individual as to their strengths and weaknesses, be very honest about what parts of the process are not working as desired and constantly improve and iterate. And that’s how you drive an organization that continues to compete at the highest levels. It’s not about just finding the magic formula and utilizing that to get rich. Organizations that are successful face challenges all the time. And if you hide from those challenges, most people don’t want to look at uncomfortable truths about themselves, but that is a hard thing to do. And so they avoid those things and therefore they don’t really evolve.

Damien Bisserier (01:00:15):
What I found most rewarding about Bridgewater, and I think the reason why I fit in there is because I actually enjoyed the challenge of facing the things I wasn’t good at and trying to improve upon those things. And sometimes it’s also just acknowledging that I’m never going to be able to do those things well. That’s just not who I am as a person. And so I have to design around my flaws. But you’re going to get to the place you want to arrive at much quicker if you’re honest with yourself, about those weaknesses or those flaws or those mistakes. And that’s the environment that he tried to create there, Alex and I have tried to create in our own business, because that’s how you drive rapid evolution, that’s how you drive improvement. And frankly, that’s how I think you drive fulfillment in whatever endeavor you’re approaching, is constantly trying to achieve better outcomes and being honest with yourself at when those outcomes are less than ideal.

Alex Shahidi (01:01:09):
But it’s hard to do because there’s emotional blocks. It’s hard to focus on the things you’ve done poorly. Most people run away from that. And I think the way you get there is, this is what I think Ray’s a master of and then there’s others like that. They’re truly independent thinkers. They don’t just follow the herd because that’s just the way other people do it. They step back. And I describe it as zooming out. You Zoom out to a point where you can see the flaws and the way convention has evolved. And you look at it and say, “No, what is the right way to do it?” And you go back to the basics and you build things based on what you think is ideal. Forgetting What has been learned through time. Some things that have been learned through time, you can use, others you can throw away.

Alex Shahidi (01:01:52):
And so building a balanced portfolio, you can get there if you do have that independent thinking framework and managing an organization, which is basically you have this machine and you try and improve it and you forget emotions, you forget what everybody else is doing, and you find the weaknesses within that machine and you improve that piece. And then you go to somewhere else and you improve that piece. And fast forward, five or 10 years, you are in a much better place.

Trey Lockerbie (01:02:17):
I agree. It’s one of the hardest things to do in an organization. And not only is it hard because it’s emotional, it actually also takes a tremendous amount of energy and time. You have to really set aside time to put yourself under the microscope or put your colleagues under the microscope and analyze, because that’s what we’re talking about here. It’s almost like you’re analyzing people just like they’re a stock pick or something. You have to take that level of care in detail into your examination and do it on a frequent basis. It sounds like almost a daily. In my company we have six month reviews. This sounds like it could be daily reviews. I mean, is that the right way to think of it, Damien? Is it that level of analysis or how much are we talking about here?

Damien Bisserier (01:03:05):
It is. I mean, I think you want to be efficient though as well. And so you have to balance the desire to provide feedback, which can be done on a regular basis with those longer, more meaningful conversations, which might be done on more of a periodic, quarterly or semi-annual basis. But I think it’s important that you spend the time to do that. That you’re going to achieve a much better outcome if you create the space to evaluate these things and figure out how to improve.

Alex Shahidi (01:03:34):
And the key is the buy-in in the beginning. Meaning recognition that if I want to get better, this is the path to get there. And that allows you to get through the challenges of facing your flaws and your weaknesses and recognizing you’ve made mistakes and trying to get better, because without that initial buy-in and appreciation for why you’re going through that painful process, you’re probably not going to do it.

Damien Bisserier (01:03:58):
Yeah, it’s hard. You’d rather hear nice things about yourself. Even today, I’ve been doing this for many years and I still, I’d rather hear nice things, but the reality is I also really value that critical feedback. That’s how I get better. And the good stuff I already know. The insightful stuff or things that maybe I didn’t notice or I’m blind to. And that’s how I’m going to then reach that next level.

Alex Shahidi (01:04:21):
That’s one of the reasons Damien and I are partners, is I was searching for a partner for about 10 years. And Damien was the only one who tell me what I was doing wrong. And so I’d come up with some idea and I’d share with 10 of the people who are closest to me, who I thought were very thoughtful. And all of them would say, “Brilliant. I love it.” And that happened over and over and over again. And then I tell Damien, he’d say, “That’s the worst idea I’ve ever heard?” And I listened to him, I go, “Wow, maybe seven or eight of those I actually agree with.” So then I would go to him more for feedback, because that was what actually made improvement. And so that’s how we ended up together.

Stig Brodersen (01:05:00):
Fantastic guys. I want to give you the opportunity to talk about EVOKE Advisors, your new ETF and where the audience can learn more about you?

Alex Shahidi (01:05:08):
Our websites for the ETF are rparetf.com. The website for our firm is evokeadvisors.com. So we have a lot of information on there. There’s a lot of material that we’re constantly updating. We’re a $19 billion registered investment advisor in Los Angeles. We manage money for high net worth and institutional clients. And we have this ETF that we created for our clients and it’s shown broad appeal across not just the U.S., but across the world. The ETF has now over 850 million. We just started in December. Normally when you launch a product before a global pandemic and the steepest stock market decline in history, it’s bad timing. In this case, it was actually a perfect timing because we have these theories of how it’s supposed to hold up and it did, and how it’s supposed to recover and it did. And so it was like a real life stress test. And that’s similar to how we manage our total portfolios. So RPAR is actually a good encapsulation of our overall philosophy and how we try to achieve a steady return for clients.

Trey Lockerbie (01:06:13):
I really appreciate you guys coming on the show today. I look at a portfolio as like this work of art. I mean, I know we’ve a talk in finance, but honestly it’s no different than if you play drums and guitar and bass and you package all these things up into something that makes a great song. I mean, that’s what you’re talking about here, is what is the recipe that’s going to be put together in a very great way? And it’s almost this puzzle that you’re trying to put together. What is the most optimized way to structure portfolio? So I was really glad to bring you guys on. I know you do a great job talking to the listener and making this really a bite-size and approachable for us. I hope we can do this again soon. I would really love to do that. And I look forward to tracking RPAR and seeing its performance over the years to come.

Alex Shahidi (01:06:56):
Thank you for having us.

Stig Brodersen (01:06:58):
All right. So as we’re letting Damien and Alex go, I just wanted to follow up on what I said there at the very beginning of the episode. Every Wednesday, Preston will have a brand new Bitcoin episode and then every weekend, I’ll be co-hosting a regular episode of [VMS 01:07:11] podcast. Sometimes co-host with Preston, other times co-hosted with Trey. Thank you for our time guys. Have a great one.

Outro (01:07:19):
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