[00:03:12] Logan Kane: Sure. I think the first thing that we can start with is the difference between strategy and tactics for investors. So 99% of what you’re going to see right now, this time of year on the market is going to be strategy. Where’s the S&P headed? What earnings inflation, like where are we headed? But this is tactics.

[00:03:28] Logan Kane: So the difference between strategy and tactics was first really dug into by sun sue, Chinese military thinker, hundreds of years before the birth of Christ. He came out and he said, okay, so there’s tactics and there’s strategy. So you gotta have good strategy and you gotta have good tactics. For example, like a strategy would be if you could predict where the market was going, but a tactic would be like, what’s the best fund to play?

[00:03:51] Logan Kane: What we did on our last podcast when I came on was we did a lot of tactics and I think that’s what people liked. We said, don’t buy Apple. You can buy Berkshire Hathaway. because 40% of Berkshire Hathaway is Apple and Berkshire is much cheaper. You buy the Google Class A stock rather than the Class C, it’s 1% cheaper.

[00:04:08] Logan Kane: You see, you pick that up for free on the Grayscale, Bitcoin trust, you say you buy that instead of regular Bitcoin and you got the 50% discount. There’s a big activist campaign that we’re going to talk about later. But I guess I’ll refocus the question on the tactics with the S&P and why small and mid-caps are better.

[00:04:23] Logan Kane: This is fairly uncontroversial. It’s long-running academic research that typically small and mid-cap stocks outperform large cap stocks. And there’s a few reasons why this is larger stocks are more popular, they get more attention from investors. Smaller stocks have more room to grow. And historically, but not always.

[00:04:41] Logan Kane: There’s often evaluation difference where you can get small cap stocks for. This is very true right now, and it’s only been this big of a valuation gap in the 2000 tech bubble, late nineties, early two thousands. So you have the S&P that’s quite expensive, and you have these small and mid-cap stocks, which are pretty cheap.

[00:04:58] Logan Kane: So tactically, you move away from a lot of these mega cap stocks that might be trading 40, 50, 60 times earnings, and you go into small caps that are trading 10, 12, 14 times earnings. It makes it a lot easier to make. And the reason why IJH and I ijr is important here because the Russell 2000 is the most popular small cap index, but it’s actually flawed, and this is just a classic tactic right here, but there’s a paper called Size Matters if you Control Your Junk.

[00:05:27] Logan Kane: It was done by Cliff Asna if a QR. It’s the title’s meant to be ironic, obviously, but it doesn’t matter if you invest in small cap stocks, if you invest in junk stocks, and a lot of small cap stocks are quite speculative. We’ve seen this with SPACs. You could take anything public, it loses money. The beauty of the S&P 600, which is ticker IJR and the S&P 400, which is ticker IJH, is that you’re required to make money to be in this index and a lot of small cap stocks, 30 40% of the broader universal small cap stocks lose [00:06:00] money.

[00:06:00] Logan Kane: If we were going to invest in a brick and mortar business on Main Street, we would not want to invest in one that loses money. But in the stock market, there’s this idea that people take in efficient investing too far. So they say, yeah, let’s just build an ETF with all the companies that lose the most money and we’ll invest in it.

[00:06:15] Logan Kane: No, you invested that. You’re going to get crushed. The beauty of IJR and I G H, it’s these profitable companies and historically, if you go back to the late nineties, it outperforms by about 2% per year versus the broader index with the money losing companies. This is related to the academic trend of quality, so that size matter.

[00:06:34] Logan Kane: So if you control your junk paper by Cliff aau, he’s the founder of aqr. It’s one of the world’s biggest hedge. That’s the key insight is that you need to tilt towards quality in your portfolio at all levels, but especially in small cap stocks, cause it’s kind of hard for them to get financing, especially when the economy turns down, if they’re losing money.

[00:06:52] Logan Kane: I really like that 

[00:06:53] Rebecca Hotsko: article. I think it pointed out so many great things, all of which you just mentioned. And I was quite surprised at the [00:07:00] mid-cap performance, which was very close to small cap over time. And so that’s actually a segment of the market I’ve kind of ignored, to be honest, just because I’ve been factor investing.

[00:07:11] Rebecca Hotsko: But there is a lot of, I guess, research on how the small cap premium could be dwindling. And I actually had a. On who talked about, they don’t view small cap as a factor anymore or a premium. They just view it as an extension to get more stocks, more exposure to stocks with these other qualities. It was an interesting view because at the end of the day, we just want to earn the most money by doing the least amount.

[00:07:36] Rebecca Hotsko: And so small cap stocks, there’s so many more of them, and so it just gives you a wider variety for diversification. 

[00:07:44] Logan Kane: I think if I might hear, I would probably push back on the idea that the small cap premium is dwindling. I think you can attribute all of that to junk stocks in the small cap universe for the Russell 2000 versus that’s the index with the junk.

[00:07:57] Logan Kane: It’s got about 80, 90% [00:08:00] market share with small cap index funds. S and d 600 has much less market share. So a lot of the money that’s going into small caps is simply being lit on. You invest it in these companies and they’re trying to do space tourism, or they’re trying to do just like wacky zany stuff and they get this money.

[00:08:20] Logan Kane: Cause you know, your 401K provider says, Hey, this is the Russell’s 2000 just but it there’s no quality control and that’s kind of the genius, these indexes. That is going to be a debate and that’s an argument for mid-caps, I think, because they are so ignored. But I like IJR and I, like IJH and we could probably run it in a horse race against AVUV and I think you mentioned some other funds.

[00:08:42] Logan Kane: So, I guess 

[00:08:44] Rebecca Hotsko: that message is small cap. You believe the premium still exists when quality is controlled for, and so IJR is one that does very well at that and avoid the Russell 2000 indexes or ETFs, subtract that. But then, yeah, last time we [00:09:00] also touched on small cap value because that gets into different territory.

[00:09:04] Rebecca Hotsko: There’s a bunch of ETFs. Give you exposure to small cap value and out of the small cap value ETFs, which would you say is your preferred way to invest in that 

[00:09:14] Logan Kane: segment? We kind of let back and forth before the show unplug some of these ETFs. And Rebecca mentioned AVUV for the listeners. It’s a really good etf.

[00:09:24] Logan Kane: I looked at it and I think there’s a good chance that if I were to choose ijr and if she were to choose that and we were to say, Hey, let’s place a bat and see which one does better in five years, I think it could win. I think A B U V could win. The expense ratio is a little higher. She’s spotting me about 20 basis points per year on this.

[00:09:41] Logan Kane: If you were to choose that and I were to choose IJR but I think AVUV could have the advantage. You gotta watch sector exposure in some of these ETFs because it can, if you had a lot of energy exposure last year, it could make you look really good and if you didn’t it could make you look really bad.

[00:09:56] Logan Kane: Historically, it’s not that insane with like energy being up [00:10:00] 60% in the market, being down 20, that’s pretty extreme for a sector outperform, I mean, 80, 80 percentage points about performance in a year is pretty extreme. But I think small value is among the most well-known like areas of the market that you want to be and most people really don’t.

[00:10:16] Logan Kane: It seems like everybody’s doing factors, but most people really don’t. I mean, a lot of people are just putting money in Tesla and like just, they’re just chasing the hottest stocks. There are a few areas of the market where factors might be a little overplayed. The easiest is probably momentum. Momentum funds are pretty notorious for not being able to live up to there, because anytime you’re betting on the behavior of others, it becomes reflex.

[00:10:40] Logan Kane: I prefer the kind of anomalies that correlate to better businesses rather than kind of anomalies that correlate to other investors being irrational, unless there’s like hard constraints that are going to cause them to do that for a long time in the future, which we can get into later. That 

[00:10:55] Rebecca Hotsko: is such a good point because the momentum premium actually has [00:11:00] the highest odds of out performance in every year.

[00:11:03] Rebecca Hotsko: But I would argue it’s the hardest to actually achieve because it’s such a high turnover strategy and I think it’s often implemented, perhaps ineffectively, and it’s just, it’s hard to 

[00:11:14] Logan Kane: capture. It’s very hard to capture with the ET T F, especially if it’s a multi-billion dollar et t f. As a tactic, if we’re like, if we own some socks and they’re going up a lot and we want to write the momentum, it’s great, but it’s very hard to build a fund around it because your fund is so big.

[00:11:30] Logan Kane: You become, if you’re not the predator, you become the prey with some of this momentum stuff. Zero sum. Like if we invest in these businesses, right, our return is the return of the business. So if you invest in a better business, you get a higher return. I personally think that’s easier than just playing poker against people in like SPACs or something.

[00:11:50] Logan Kane: Like I said, unless you have like institutional advantages or you have a better capital stack, it’s very hard just like, beat people on this because you know you’re going against computer [00:12:00] programs, you’re going against all kinds of stuff. It’s hard to beat, in my opinion. So I also want 

[00:12:04] Rebecca Hotsko: to talk to you about a few specific stocks.

[00:12:08] Rebecca Hotsko: Now we’re going to get into it because our listeners really loved your deep dive on Google and Apple, where last time you mentioned how you don’t like Apple, but you do like Google and you think that it would give investors sufficient returns under $80 per share. I think also under $90 per share you said wasn’t too bad as well.

[00:12:27] Rebecca Hotsko: I wanted to follow up on this because of new AI that has been getting a lot of attention lately, like chat, G P T, which has just been, I don’t know, it’s, we were talking about this before the interview. There’s just so many applications and maybe some concern that AI could dominate the search engine space now, and so I wanted to get your views on.

[00:12:51] Rebecca Hotsko: And this new disruptive technology, how you think that could, is it a big competitor to Google and should they be worried? 

[00:12:59] Logan Kane: I did [00:13:00] an article on this and I did some research on chat G P T and, and Google. And I was like, huh, I was like, the media got very ahead of itself on the metaverse, and I’m like, is this for real or not?

[00:13:12] Logan Kane: But then I actually tried this thing out and it’s really good if you haven’t tried this thing out, like go try it. And I mean, this thing is doing people’s, it’s doing kids like homework. It’s like, they’re getting a’s on the homework. Like you can have it write cover letters for like if you’re applying for jobs.

[00:13:27] Logan Kane: I was having it write poetry. That’s. This startup has been, so they come out with this bombshell AI chat bot, and people are saying, can this take on Google? The answer is maybe it depends on the type of chat. I reached out to my friend in Dubai who runs a tech startup, and she was like, this is legit. Like this is for real.

[00:13:48] Logan Kane: I was expecting her to just be like, oh, don’t worry about it. But since, since we’re talking about Google here and AI disruption, I think Google is probably one of the last companies we have to worry about being disrupted by ai. [00:14:00] They have substantial investment in ai. They have their own ai. It costs more money to run.

[00:14:05] Logan Kane: Some of my readers have commented that ChatGPT. Sorry, I can’t pronounce it. It’s G P T, but I’m just going to say G P T because it’s easier for me. , it’s costing them a lot of money to run this and they’re not making any revenue off of it, which is likely why Google hasn’t made the upgrade yet. They’re bringing in Microsoft, they’re likely to.

[00:14:22] Logan Kane: Microsoft is, I don’t know if it’s announced yet or if they’re negotiating it, but Microsoft’s going to pump in like 10 billion and then they are going to try to take on Google. And again, I think this is a case where you could probably buy both. I think Google and Microsoft are among the cheaper stocks in tech.

[00:14:38] Logan Kane: Apple and Amazon. And Tesla being the more expensive than I would avoid. If you can get Microsoft 10% lower, I’d buy it. If you can get Google at today’s price, I would buy it. It’s really interesting. I mean, the world is continuing to evolve with tech and AI just has tremendous. What’s going to be disrupted, I think is more likely to be a lot of brick and mortar businesses.

[00:14:58] Logan Kane: Like if you’re a pharmacist, I would be a [00:15:00] little bit worried about what AI could do to your job. If you’re a writer on Seeking Alpha, maybe a little less. I asked it to recommend me some investment strategies, and they were pretty plain vanilla. I don’t think Chat G B T is ready to manage your money yet.

[00:15:13] Logan Kane: That’s so 

[00:15:13] Rebecca Hotsko: funny. Yeah, I got it to do quite a bit for me too. I got it to write me lease agreements and that’s one thing that I think is so crazy how accurate it was. And you still need to know what to put in what inputs, but it’s just going to get better over time. And so I’ve had a lot of fun using it as well.

[00:15:31] Logan Kane: The more formulaic, what you’re doing is the more trouble AI can cause. It is interesting, like since the pandemic, you go to McDonald’s or somewhere and where somebody might have checked you out, a cashier, you might go to a computer now, and AI really accelerates the ability of machines to replace man in a lot of cases.

[00:15:50] Logan Kane: In the end, I don’t think it’s going to save the world or ruin it, but I think it’s going to be a huge incremental improvement on technology. It can really increase productivity. Like if you’re [00:16:00] a software programmer and you have this right code or edit your code and then you look at Oprah, it’s, it’s pretty good.

[00:16:05] Logan Kane: I mean, it’s, it’s pretty powerful. 

[00:16:08] Rebecca Hotsko: I haven’t done that yet, but I have seen so many videos of people asking it to write them codes for trading, for anything, and it works. And so lots of applications. And I guess the other thing is, I was just trying to think about how this could disrupt the advertising on Google, because when you type in chat G P T, it’s like what are the 10 best restaurants in Colonna, bc?

[00:16:31] Rebecca Hotsko: They would have to come up with some type of search algorithm based. Because Google, you pay a certain amount per click to have your business show up, and so it’s just interesting to see how that could compete with the open 

[00:16:45] Logan Kane: ai. One of my readers also commented on this, I’m lucky to have some really smart readers.

[00:16:52] Logan Kane: There’s two kinds of searches. There’s informational searches, and then there’s transactional searches. So informational searches. AI potentially has a [00:17:00] pretty large advantage, but let’s say somebody searches car wreck lawyer, Dallas, Texas. The AI is probably not going to have a lot to say, but if you search that on Google, then you know you get these lawyers and they’ll pay big bucks to Google to be top on that.

[00:17:14] Logan Kane: Cause personal injury attorney leads are worth a ton of money. That’s actually one of the highest value keywords on all of Google. I think this is potentially a threat to Google. It’s also potentially an opportunity if Google stock is getting cheaper because of. I remember people thought Amazon was going to take over healthcare, or people think Apple might take over the car business.

[00:17:34] Logan Kane: It’s just not going to happen. Not that the car business is generally automaker stocks aren’t typically the best places to put your capital, but anytime people get caught up in some of these narratives and they overplay them, I think there’s potential. And Google remains cheap here. I think the long-term compensation is pretty good.

[00:17:52] Logan Kane: I mean, 15 plus percent annual returns is what I would expect over the next 10 years. Partly because of AI and partly in spite. [00:18:00] 

[00:18:00] Rebecca Hotsko: I will have you back on again and we’ll get updated views because I think the interesting thing about company’s competitive advantages, and I talked about this in my year end episode, my learnings from guests is that they can change what was once considered a moat or a company’s competitive advantage can change over time.

[00:18:17] Rebecca Hotsko: And so like you said, AI could benefit Google or it could really hurt it in the long term, and we don’t know right now. And so it’s just worth knowing about and I guess watching it as it evolve. And so I guess the other thing though, I wanted to ask you before I get into your top picks for 2023 is how to be a better bear because you talked about how to be a better bull.

[00:18:38] Rebecca Hotsko: On the flip side though, if investors are just bearish and they don’t perhaps want to deploy capital into the market right now, what are their other options and how can they make money while still being a bear? 

[00:18:52] Logan Kane: We’re going to do more tactics here. If you’re bullish on the market, it gave you some choices if you’re bearish or about to give you some more choices.

[00:18:58] Logan Kane: The best I have [00:19:00] found for right now is Vanguard Money Market Funds. You can theoretically get a little more from treasury bills under some of these auto roll programs, but for a lot of investors it’s not worth it because if your broker is charging you a bid ask spread, you really have to run it in Excel and see if the bid asks Spread is exceeding the yield in the money market or exceeding the difference in the yield between the money market and the treasuries.

[00:19:21] Logan Kane: Treasury directs an option that people have kind of said it’s a. The Vanguard Federal Money Market Fund is paying about 4.2% right now, 4.34. 4.4. By the time you hear this, I think that’s your best bet. And the reason why this is a tactic is because when you just stick your money in a brokerage account, chances are you’re getting zero.

[00:19:41] Logan Kane: And a lot of people don’t know this because over the last 14 years, interest rates have been zero for almost all of the time. So people got trained to not expect interest. And this is part of why I like the financial sector this. Americans alone are leaving 40, 50 billion a year on the table just from not caring about interest [00:20:00] anymore.

[00:20:00] Logan Kane: I think they’ll eventually learn, but they’re not learning yet. If you put money in Vanguard, they’re pretty classy about it. They’ll automatically put it in this money market fund, but if you put it in like E-Trade or Fidelity, they’ll just put it in a sweep account and it doesn’t pay as much in the the broker profits.

[00:20:15] Logan Kane: If you use one of these brokers, you can still put it in money market funds. You just have to know that. You just have to know that this is a thing and that you have to manage your cash. The other thing with the money market funds is Vanguard has a municipal money market fund and then they have a federal.

[00:20:32] Logan Kane: The advantage of the federal is that you don’t pay state income tax. The advantage of the municipal is that you don’t pay federal income tax. There’s a set of calculations that you can do here, but the break even is around 20%. Right now with the tax rate, and this is pretty typical actually, and this is interesting because we might talk about market pricing being fairly efficient, but everybody has a different tax.

[00:20:53] Logan Kane: Some investors pay zero tax because they’re institutions like pension funds. Some investors are in the top [00:21:00] bracket and they might pay, like, for example, if you’re a New York taxpayer top bracket, you might pay 50% on interest on just ordinary income interests. These different people who are in the market have different preferences and different tax rates.

[00:21:13] Logan Kane: That creates opportunities. If you know your own situation and you know how stuff is priced, you can compare stuff for a tactic. 3.5% of the municipal money market fund versus 4.2 is an easy win for somebody in a top tax bracket, you’d have to get almost 6%. And this is a classic tactic that like advisors and like just savvy investors are able to use.

[00:21:32] Logan Kane: But it, it’s good to know if you’re in the top tax bracket in the US and investing in taxable account, the municipal money market fund is the best place for your cash, almost always. And if you’re in a lower tax bracket, then the federal has probably going to. 

[00:21:47] Rebecca Hotsko: And then I was looking into it. I couldn’t find it on my brokerage account.

[00:21:52] Rebecca Hotsko: But are there any, I guess, because typically, sometimes you’re held up for a certain amount of time when you invest in these type of [00:22:00] securities. But that’s not the case with this Vanguard fund. Right? 

[00:22:03] Logan Kane: It should be one day. It’s like a mutual fund. So you redeem and then you get your money in one day. People have like, ask me about this.

[00:22:10] Logan Kane: So like, what if the market crashes in one day and I want to buy, and you give up that one day of flexibility. But like if the market has the massive one day crash, you can just buy in the morning. I don’t think it’s worth paying a hundred basis points a year for the ability to buy. I mean, you’re effectively paying a hundred basis points a year for the ability to buy at two 30 in the afternoon rather than wait until the next morning.

[00:22:34] Logan Kane: That makes sense. 

[00:22:35] Rebecca Hotsko: Now I think onto the fun stuff. I want to get your top picks for 2023. I know you’ve written some articles on this. Please share what you think your top picks are for the 

[00:22:47] Logan Kane: year. The best place to be last year was energy. I mean, energy had a historic year. I think the best place to be this year is going to be financial.

[00:22:57] Logan Kane: And it’s for the same reason we were just talking about on the Be [00:23:00] A Better Bear is that people are not used to earning interests on their bank and brokerage accounts, but the Feds continues to hike rates, so the difference just goes straight into profit for the banks. Now we’re recording this January 13th.

[00:23:12] Logan Kane: So the big banks reported earnings today and they’re all pretty good, but some banks more than others have started to put money in loss reserves for consensual recession. So on one hand you have big net interest income coming in from the Fed, and then on the other hand you have this fear of recession.

[00:23:28] Logan Kane: But I think if you do a half decent job of picking the banks, I think you can get some good stuff here. Cause evaluations are pretty low. The dividend yields are good. And by the way, on those lost reserves, if they don’t end up incurring the losses in the end, they can add them back into their net income.

[00:23:42] Logan Kane: It’s just a reserve. It’s an accounting thing. Like this happened during Covid. They thought they were going to take a ton of losses and then they didn’t. So they got, they had big earnings in 2021 when the losses weren’t as bad as expected. So, I mean, we were talking earlier, the pricing for banks within the sector is pretty efficient.

[00:23:59] Logan Kane: I think [00:24:00] the pricing for the sector as a whole is wrong, and the reason I think it’s wrong gets back to this 14 years of almost zero interest rate environment. This compressed the margins for banks that. QE is often thought of as helping the economy, but the problem with the QE and the zero interest rate policy is that anybody who earns interest is not going to earn very much interest.

[00:24:24] Logan Kane: I think investors are not fully appreciating the earning power of these banks that have kind of slept over the past 14 years. You get back to a normal interest rate environment, the earnings just explode. It depends on their recession. Like it depends on, I’m not particularly bullish on the housing market if you really want to take a flyer.

[00:24:41] Logan Kane: Canadian banks are very cheap. They’re very exposed to the Canadian housing market actually. I mean, I say that the lending standards are a lot more conservative in Canada, but they’re still going to have a lot of exposure to the housing market in Canada. So they could take losses that’ll be more severe than American banks, which have fixed rate [00:25:00] mortgage.

[00:25:00] Logan Kane: If you think the compensation’s enough, you can get five, six, 7% yields in a lot of cases. Bank stocks in the us I like Truist. I like Truist because it has a funny name and it’s less popular than Bank of America and JP Morgan, but the business is pretty good. The business performs pretty similarly. JP Morgan has a higher return on equity.

[00:25:20] Logan Kane: I think this is in part due to its investment banking business. The JP Morgan has a very good investment bank. Truist is more, it’s more like you go down to the branch, you might get a loan for your business, you go deposit your money. But the demographics are very good for Truist being. They have a lot of branches in Texas.

[00:25:36] Logan Kane: A lot of branches in Florida. I’m the Mid-Atlantic. It’s a good place to. So I like Truist. Citigroup is probably the cheapest bank you could buy in the us It’s trading about half of its book value. They’re getting out of some unprofitable international businesses. And once that’s done, I think Citi’s okay here.

[00:25:53] Logan Kane: The Bank of America looks good. The only one I would really avoid of the big banks is Wells Fargo. This week they announced they’re [00:26:00] getting out of the mortgage business except for minorities and existing customers. So I immediately read this as trying to reframe the narrative in their poor earnings this week.

[00:26:08] Logan Kane: Without getting too much into the politics, anytime companies emphasize things other than earnings around earnings, it tends to be that the earnings are not that good. If a company has really good earnings, they’ll just emphasize their earnings during earnings weeks, which brings me to. Tim Cook just had the board vote him a 40% pay cut.

[00:26:26] Logan Kane: So if you’re looking forward to what Apple earnings are going to be later this month, that might be a little bit of trouble for Apple up. He’s cutting his pay in half or almost in half. 

[00:26:35] Rebecca Hotsko: It’s really interesting to see how cheap they are relative to almost every other sector. And so I do like those picks that you gave.

[00:26:44] Rebecca Hotsko: I was looking into them a bit more last night and it just does make me wonder though, what is the threshold where. Yes, rising interest rates improves their net interest margin, and I was even reading an article last night that was talking about the deposit beta for Citigroup. [00:27:00] For example, every time interest rates rise by it was like 50 basis points that has the potential to increase their net interest income by it was 2.5 billion, which is quite crazy if you think about.

[00:27:14] Rebecca Hotsko: Okay, so the expectation is that there’s still going to be a couple more rate hikes. That’s what’s, I guess, expected by the market so far. And so it does seem quite promising, but then you have to weigh what you were talking about with the increased potential of bad things happening, people defaulting because of that.

[00:27:31] Rebecca Hotsko: Is your view then still that the positive increase in net interest is going to outweigh the negative effects in the economy? 

[00:27:40] Logan Kane: I think some investors might be fighting The last war here, bank stocks were destroyed in 2008. In the last recession. Before that, in the early two thousands, bank stocks they did okay.

[00:27:52] Logan Kane: I mean, they’re down about half as much as the market, but the Fed also cut rates from 6% to zero. During that time, not zero, they come to about 1%. You [00:28:00] have this huge like IT pressure on banks, and then they came back, and then 2008 dumped. If interest rates stay high here, obviously you have this tail end getting really good compensation and a lot of times, this is how I think of stocks in terms of compensation rather than in terms of like binary events.

[00:28:17] Logan Kane: If you’re paying 10, 9, 10 times earnings for these banks, then getting pretty good compensation, they can take some losses because you’re getting a lot of points on the spread. We’ll see. I mean, in the 2000, 2002 recession, I mean, unemployment led to 6%. If unemployment goes to 6% here, I mean, that’s no problem.

[00:28:35] Logan Kane: If unemployment goes to 10 or 12, then we’re, we’re not going to make money in banks. But I’m not sure what other stocks you will make money in. If unemployment goes to 12% in the us, I mean, everything will go down. You might as well cover the most number of scenario of likely scenario. I think you’ve got 90% of scenarios covered with banks here of either interest rates staying higher and the economy does well, the economy going into recession, because interest rates stay up.

[00:28:58] Logan Kane: Inflation [00:29:00] isn’t a huge deal for the banks in my view because the fed’s fighting it, but customers are still trained to get zero, so like inflation can actually benefit them here. I think the setup is good. I think people aren’t appreciating them, and I think that’s the essence of value investing. Right. 

[00:29:14] Rebecca Hotsko: I agree.

[00:29:15] Rebecca Hotsko: It does look very attractive right now. And I guess just on that point, because you just talked about how unemployment, if it reaches 10% or 8%, that could signal things. It’s going to be issues for the bank. What else would maybe change your thesis? Would it be if the Fed perhaps pivots because something breaks in the economy before that?

[00:29:34] Rebecca Hotsko: Because there’s lots of. That I’ve at least had with other guests how it could happen just because something breaks in the economy and even in the global economy that forces them to pivot. So it might not even be within, I guess, the US that really causes that, such as they’ve reached their inflation 

[00:29:51] Logan Kane: target.

[00:29:52] Logan Kane: So, I mean, a lot of people are clamoring for the Fed Pivot. I mean, we’re not talking a whole lot of macro here, but stocks are very [00:30:00] expensive. Yet people think the fed’s going to. People view the Fed cutting interest rates as a solution. But I think to some extent the Fed keeping interest rates too low is actually the problem.

[00:30:10] Logan Kane: I think that can make growth lower. For example, let’s say you’re retired, right? And the Fed cuts rates is zero. Retired people look around and they say, Hey, you can’t get a return anywhere, so I’m going to cut back my spending. See that’s a problem. It increases certain areas, the economy and stimulates certain areas, see the economy, but it holds back other areas, like classically, like in Europe, they did this negative interest rate thing and then their banks couldn’t make any money.

[00:30:34] Logan Kane: So in the end they found it hard to get banks to loan people, money. Consumers who might have a million, 2 million euros in the bank are like, well, I guess I can only spend 20, 30,000 euros a year because I’m not getting any return on my investment. I’m not convinced that cutting interest rates to zero would actually help the economy.

[00:30:51] Logan Kane: I mean, the mainstream theory would tell you that it would, but I’m, I’m not sure here, especially with inflation, cause over the last 15 years, inflation has been [00:31:00] very benign and now it’s, it’s the opposite of that. If we shift regimes here, banks sucks are where you want to be. If we go back to the old regime, and I don’t know, we go back to a slow growth, high unemployment world with zero interest rates and you don’t want to own banks, but you really don’t want to own anything else either.

[00:31:16] Logan Kane: You’d probably want to own government bonds in that case. That’s 

[00:31:20] Rebecca Hotsko: a good point. And then maybe that goes back to your tactics of how to be a better bear, but then we wouldn’t even want that. Cause then interest rates would be zero. 

[00:31:29] Logan Kane: You would just take as much duration as you could and you go buy a bunch of 30 year treasury.

[00:31:33] Logan Kane: You go buy long-term corporate bonds, and then they, they’re paying 5% now on the corporates and 4% close to 4% on some of the treasuries. You got your duration locked in and then, and then you would earn the difference. Okay, so we 

[00:31:46] Rebecca Hotsko: just talked about your top picks for 2023. And now I want to talk about another strategy that you got me interested in, and that is called return stacking.

[00:31:58] Rebecca Hotsko: And so last time we were talking about [00:32:00] how you tend to like quantitative strategies and now they’re available to investors through a lot of low cost ETFs are just really not that hard to implement these days, but a lot of us don’t know about them. And so I found this strategy super, super interesting and I was hoping that you could explain it for our listeners and how it works.

[00:32:20] Logan Kane: Sure the strategy is return stacking. It’s been popularized by some people in Boston. There’s newfound research in Boston. There’s Resolve Asset Management in Toronto. They have some funds around this. It’s not a new idea, but it’s a very good spin on it. As early as the 1980s, PIMCO came out with their stocks, plus was the name of the fund.

[00:32:41] Logan Kane: And this is still a great fund, but the idea is that you can use futures to get exposure to stocks and well, you might only need 10% of your money downs, do that, and then you get another 90 to play with. So you could put that in bonds, you could diversify, you could do some commodities. There’s a lot of stuff you can.[00:33:00] 

[00:33:00] Logan Kane: Now there’s ways to do this wrong and there’s ways to do this, right? Like it wouldn’t really be return stacking if you just, I mean, you could do this, you could just lever the S&P two to one, and you’d make a ton of money if it went up. But I think the most classic approach with this is to take that money and to put it into bonds.

[00:33:17] Logan Kane: Now for a kind of a neat tactic here, what you could do is you could invest in one of these funds and then you could just put the money in municipal bonds to get tax-free interest. So you get exposure to stocks, and then you get tax-free municipal bonds in one, you, you gotta manage the risk here, but you should be able to handily beat the S&P by doing this because you have both stocks and bonds, they’re stacked on top of each.

[00:33:40] Logan Kane: Now I started to get into return stacking in 2021, kind of as a result of seeing how bad the expected returns for assets were. In the end. This didn’t this wasn’t the best time to be thinking about return stacking. The best play would’ve just been to sit in cash, but it was the right idea at the wrong time in my mind.[00:34:00] 

[00:34:00] Rebecca Hotsko: So kind of walk us through why it broke down in 2021. Because I think what’s interesting about the strategy is that in normal times when stocks and bonds are not positively correlated, it can actually reduce volatility. Even though it’s a leveraged strategy, you get higher returns for lower volatility, which almost seems like a free lunch.

[00:34:24] Rebecca Hotsko: It seems too good to be true, which it can be in some cases. And. What happened in 2021? 

[00:34:32] Logan Kane: In late 2021, the strategy stopped working. I don’t want to say failed, because a lot of these funds are back to the prices they were in. 2020, everything went down. It didn’t matter whether you had stocks or bonds or international stocks, or preferred stock, or pretty much everything went down except for commodities which went up.

[00:34:52] Logan Kane: So if everything goes down, leverage is bad because there’s no way to diversify if everything goes. But in the last two [00:35:00] bear markets in 2008, I guess we can call the Covid Dip a Bear Market in 2008, and then in 2000, this strategy was extremely helpful to the point where you could about break even if you did it right, versus losing 50% or more.

[00:35:15] Logan Kane: Historically, concentration of risk inequities is more dangerous than leverage on a broad set of asset classes. In this case, meaning stocks, bonds, and commod. Stocks have gone down 50 plus percent a few times, and I think it’s, it’s more likely to happen now because the Fed seems to be more involved. That also became the problem with the return stacking.

[00:35:37] Logan Kane: I think we compared some of the policies to, like the policies where they put out every fire and like in the western US and Canada, and then you can’t stop wildfires from happening this way forever. They just, they just happen later and they become worse when they do happen. The Fed, they can’t stop the business cycle.

[00:35:56] Logan Kane: And I think they’ve begun to realize that, that they shouldn’t just [00:36:00] peg interest rates at zero. It creates chaos and do massive qe because it, but I mean, where we are now, I mean, if you have bond yields at three and a half percent on the 10 year and it’s more symmetrical, it could make money or you could lose money.

[00:36:13] Logan Kane: And I think bonds in some ways may be priced better than equities and commodities can offset some risks from. I might not be selling the strategy very well because of the brutal performance in 2022. But I mean the research on this goes back a very long time. And in as much as 80% of the market environments, you’re going to do better if you lever, rather than you concentrate all your risk inequities over any given 10 year period.

[00:36:37] Logan Kane: I mean, the drawdowns will be longer with equities, the worst drawdowns will generally be worse. It’s just outperforming, like the theory shows that your risk will increase by the square root of the amount of diversified investments you can make, but your return will go up linearly. And Cliff Asmus was a big proponent of this.

[00:36:56] Logan Kane: He wrote a paper called Why Not 100% Equities? And what he [00:37:00] recommended was, anybody who’s considering going a hundred percent equity should also consider a leverage 60 40 portfolio. And in that case you go 90, 60, and this has been shown to outperform a hundred percent equity. So, I think probably the best way you could think about this is not just let’s, like take a ton of risk to try to hit long-term return targets, but rather just start with a more diversified portfolio and use leverage to get your desired volatility rather than go all out just to try to hit a return target.

[00:37:29] Logan Kane: And by the way, it showed that it outperformed by about 1.52% per year, the 90 60 versus the a hundred percent equit. 

[00:37:37] Rebecca Hotsko: Yeah, that was so powerful when I read that and I love Cliff’s work. He puts out exceptional research and he’s been doing it for so long, and it’s just so interesting to think that, yeah, instead of going 100% equity, which I think a lot of investors are who are in their accumulation or growth phase, there’s actually a better way and you can get a higher [00:38:00] return for less volatility.

[00:38:02] Rebecca Hotsko: But not in these times. But nothing works in the current times we’re in. And so that’s where it’s run into trouble. And so you talk about a few different ways that investors can get exposure to this strategy in your article, so you talked about the PIMCO one, and then there’s another ETF, NTSX. And so talk a little bit about the differences between those two because they implement the strategy a bit differently.

[00:38:27] Logan Kane: Okay, so the PIMCO fund is called PS Ldx. It’s a firecracker of a fund. I mean, it went up at a very high rate for a very long time, and then since 20 20, 21, it’s come down a lot. It’s come down to early 2020 prices, but this has created a lot of wealth over time. It’s basically a hundred hundred, so a hundred percent stocks and then a hundred percent long duration bonds on.

[00:38:49] Logan Kane: This fund is useful if you want to lever up. This fund is also useful and with the idea of the return stacking here is if you want some exposure to stocks and bonds. Let’s say I want, I want to go [00:39:00] 60 40 so I could get, if I could put some money in this and I could get a lot of that exposure towards that 60 40 without having to post all of that money.

[00:39:10] Logan Kane: It’s efficient in terms of capital. So you could do 30%, or I don’t know, 20, 30% in this fund, and you’d get double the exposure per every dollar that you throw in. Now, the reason why you would do this again is so that you can diversify the rest of your portfolio. Commodities are a good thing to add to a portfolio.

[00:39:26] Logan Kane: The research shows that it’s kind of dead money to put money into commodities because you can’t maintain the same equity or bond exposure. But if you add a fund like this to your portfolio, even if just for a very small amount, you can maintain your exposure to stocks and bonds, but you can also get some exposure to commodities which has been shown to hedge those two when they go down.

[00:39:45] Logan Kane: Like we said, there’s been right ways and wrong ways to execute this. NT SX is the other one you mentioned. NT SX is a lower octane version of this fund. It actually close to follows the original Asmus paper. It’s 90, 60 and the sixties and treasury future. [00:40:00] The PSL DX is kind of the higher octane version.

[00:40:04] Logan Kane: NT SX is another good version that’s lower. It’s the 90 60 NT sx. Like if you really wanted to just do a two or three fund solution, you really could put a lot of money into NT SX without having to worry about risk management or anything because it’s not a super risky fund. It’s a good S&P 500 alternative that can free up money for some alternative stuff as.

[00:40:25] Logan Kane: You could go very low risk with this by adding municipal bonds, or you could use it to use your equity exposure. You could get some commodity exposure with this. It’s a good fund. It’s, it’s from Wisdom Tree Professor Jeremy Siegel. He’s on the board of of Wisdom Tree, and this fund was designed after Aspen’s work.

[00:40:42] Logan Kane: I think a lot of people are very down on financial theory after the last, after the last. Financial theory missed a lot of things due to the Fed really making the fastest pivot in history from zero interest rates to now going all out to fight inflation. But going forward, this should be a good strategy.

[00:40:59] Logan Kane: [00:41:00] I, I think these strategies are very useful. And there’s one more fund, by the way, it’s called TYA. This is a classic strategy that takes advantage of treasury constraints. Basically, a lot of investors are forced to buy long duration treasuries, which makes intermediate treasuries have a better risk reward than long duration.

[00:41:16] Logan Kane: In almost all countries, in almost all time periods, the intermediate is going to perform better than the long term. The exception that should be like if they picked interest rates to zero and you’re earning like half a percent in intermediate term bonds or so. You don’t want to add leverage on an asset that returns nothing, but it works very well in environments like this.

[00:41:35] Logan Kane: If you can get intermediate term bonds in the right part of the yield curve, you can kind of take advantage of the fact these long-term bonds tend to be a bit overpriced. 

[00:41:45] Rebecca Hotsko: Hey, that was super helpful because yeah, I think that was good pointing out that it’s not even just implemented stocks and bonds, it can just be a pure bond fund as well.

[00:41:54] Rebecca Hotsko: So TYA was that. And I guess the other thing I just wanted to ask you [00:42:00] is in what case would someone be implementing this wrong? Because it’s leveraged exposure. Who might it not be Right for. 

[00:42:09] Logan Kane: You don’t want to inadvertently take more risk than you’re comfortable with, which I think some people did.

[00:42:13] Logan Kane: With p s Ldx, it’s a hundred hundred funds. So I think a lot of people saw, especially because PIMCO was paying a high dividend yield on the fund, I think people bid off a little more than they could chew because it, it’s capable of, even in 2008 this fund went down a lot. I think people, they loved the 10, 15% distributions when it was going up, but then they saw that leverage is two-sided.

[00:42:34] Logan Kane: In this case, it’s not going to sink you because it’s well diversified, but you don’t want to take more risks than you need and you can track the risk in your portfolios by tracking the volatility. Longer term volatility scales pretty well with shorter term volatility, so you’ll get a lot of warning signs like your portfolio’s swinging too much and that you might not want to take as much risk as you are.

[00:42:54] Logan Kane: It’s not yet time to lever up on the stock market because I think we have a ways to go down. [00:43:00] But you know, if you get the 10 year treasury at 4.5%, if you get the S&P at 3,200 or maybe even below 3000 and you want to make that money back once you think we got a bottom. And once the volatility subsides a little bit, like once we have some signs of a bottom and the down trend is broken, you can make a lot of money really quickly and funds like this and you can cover a lot of.

[00:43:21] Logan Kane: That’s fun to buy these wait for higher yields and lower stock prices. That was what I was 

[00:43:26] Rebecca Hotsko: going to follow up with because it seems widely expected that the market still has farther to drop. We would expect that this fund has a lot more pain to come, but then on the bond side, that would act as, so the bond side would perform better perhaps when interest rates start to fall.

[00:43:44] Rebecca Hotsko: And then bond prices appreciate because, or is that the right way to think about the bond portion? 

[00:43:51] Logan Kane: If we’re buying bonds, we want lower prices. If we’re selling ’em, we want higher prices. So it just depends on, on when you buy. I think with some of these strategies, I, I [00:44:00] think they’re going to be very useful and it’s good to know for like, on the be a better bull and be a better bear.

[00:44:05] Logan Kane: It’s good to know that these tools exist because they can help you express opinions in more efficient ways. And they, they can help you be more diversified. That’s the true inside of this. It’s not that, let’s use a bunch of leverage, try to beat the market, or let’s go all cash to try to time the market.

[00:44:20] Logan Kane: It’s good to know that these tools exist so that you can have a wider range of efficient tools that you can use for different market environments. Then you can use these tactically to help you win. 

[00:44:31] Rebecca Hotsko: And I guess the last thing I’ll ask you on this is that some leverage strategies when say they’re daily leveraged, you can run into trouble if you hold them very, very long term.

[00:44:42] Rebecca Hotsko: And so is this more of a short term play or is this something that could potentially take a bit of your portfolio away from Disinvesting in a total S&P index? 

[00:44:53] Logan Kane: Yes. The daily rebalancing funds are actually pretty interesting. I actually did some cool quant research on. [00:45:00] There’s a mathematical relationship between the return, the interest rate, and the volatility.

[00:45:05] Logan Kane: In these leverage funds, you can actually predict the prices of these leverage funds if you’re able to predict the volatility. But the long story short on the the leverage funds is that they’re dangerous, but they’re useful for trading. You can hold them long-term, but what you’re better off doing is just investing in funds like these because they’re not mechanically required to rebalance into down days.

[00:45:27] Logan Kane: It’s called volatility drag on these, and it’s actually kind of interesting because all of these leverage ETFs have to rebalance at the end of every day. They get picked off by the prop desks at the banks and hedge funds. Basically, imagine the S&P goes down 3% on Monday. These funds have to mechanically sell, I don’t know, billions of dollars in this.

[00:45:46] Logan Kane: And guess who’s going to take the other side? That’s obviously the banks. This will really blow your mind on the leverage funds, short leverage funds, right, and long leverage funds. So let’s say we got triple short S&P and we got triple long S&P. So at the end of [00:46:00] the day, the short fund and the long fund, what you think the rebalancing would cancel out?

[00:46:05] Logan Kane: It’s a trick question. They actually don’t cancel out, and this is the key insight. They actually compound each other. The triple leverage short fund has to make the exact same rebalancing as the triple leverage. Long. So if it’s down, they sell to reset the leverage. If it’s up, they buy. Now this obviously creates problems because people are, they think they’re betting on opposite things, but they’re actually betting on the same thing for this last half hour of the market.

[00:46:29] Logan Kane: And it creates a pretty decent wealth transfer based leverage ETFs to the prop desks and the banks and the hedge funds. Now, the leverage ETFs where they’re useful is if volatility is really low, you can make big returns. I think where they’re not useful is you can always beat them generally by using features or something where the rebalancing is discretionary rather than where the rebalancing is forced, because that, that’s just something to get picked off every day.

[00:46:57] Logan Kane: I don’t recommend the use of long of leverage [00:47:00] ETFs, long term daily rebalance leverage ecfs that now that’s distinct from funds that use the futures market to get moderate amounts of leverage. Those are fine. And there’s especially in the mutual funds, there’s often better risk management frameworks.

[00:47:15] Logan Kane: The leverage ETFs are kind of toys for people. They’re very popular on Reddit or to bet on big moves, but you’d be better off, especially in the options market, and this is important. You’re better off buying more calls on the S P Y than you are buying calls on the leverage et tf because of this volatility drag thing.

[00:47:31] Logan Kane: And there’s actually some trading strategies that go around that. I know a hedge fund manager in Canada who does pretty well trading some of these anomalies. I was going to 

[00:47:40] Rebecca Hotsko: ask you, why would someone implement this instead of just buying options? And I guess perhaps just because it’s easier, it’s already done for you.

[00:47:50] Logan Kane: Yeah, that’s the main reason it’s. Options. You really gotta know how they’re priced. For example, like if we were to use options on a stock and [00:48:00] if the average listener is not paying attention to the implied volatility or what’s going on in the options market, weird stuff happens all the time in the options market.

[00:48:07] Logan Kane: Well, the way stuff gets priced, it’s stuff will get priced strong. And then you don’t want to be on the wrong side of something that’s priced strong. But what’s what’s cool about the options market, and I think people would like some of this, is you can do some nice tactics with options like you can with future.

[00:48:21] Logan Kane: Like on heavily shorted stocks, you can use the options market to, you can buy calls. Yeah, you buy calls and you sell puts, and you can earn the short borrower rate through the options market. Your broker won’t share this with you. For the most part, the best you can do is like get half of Fidelity or IB so you can earn the whole thing if you use the options if you buy some of these speculative stocks.

[00:48:41] Logan Kane: Conversely, if you want to short something, you can use the options market to get a better deal. You can earn the cause when you short something, you get the cash rate, but you give the return of the stock. So if your broker isn’t that nice, then they’re, they’re going to pocket a lot of the cash rate options and features are incredibly useful to get around some of these, like, get [00:49:00] around a lot of these antiquated like rules and just middlemen and stuff like that.

[00:49:03] Logan Kane: They’re very useful. Maybe we’ll have to 

[00:49:06] Rebecca Hotsko: dive into some of those strategies in another episode because that is something I used to use options as more of a way to, I guess, get a lower cost basis for shares, and so some OP strategies like that. But I would be very interested to learn more about those.

[00:49:22] Rebecca Hotsko: But the one last thing I wanted to ask you before I let you go today is on Bitcoin because last time we spoke FTX was just unfolding and nothing had really happened or hadn’t been solidified yet. And so you were talking about the Grayscale Bitcoin trust, and I just wanted to follow up. On how you’re thinking about Bitcoin now after all of that unfolded and specifically even that ETF, because I remember you said it was perhaps largely determined on what happened because now maybe it might not be approved in the us 

[00:49:55] Logan Kane: So that’s the last time we talked.

[00:49:57] Logan Kane: The crypto world has been a little off . [00:50:00] That’s, there’s been some drama in the crypto world. There’s more people in jail than there were during our last podcast. I, I guess some people are out on bail, but grace. The best way to own Bitcoin, I believe, is the Grayscale Bitcoin trust. And this is tied to this fund that basically owns Bitcoin and Coinbase and it trades at a discount.

[00:50:20] Logan Kane: It got as bad as 50%, but now it’s 40. There’s an activist campaign underway, so there there’s, there’s two ways you can win here. The first is Grayscale, issuing the government to try to get them to allow a open-ended et t. This might work. It’s a little less likely to work since everybody seems to be under investigation or indicted already in the crypto world.

[00:50:40] Logan Kane: But I think it’s important that Bitcoin itself is blameless. Bitcoin did not hurt anyone. It did not steal anyone’s money. It’s actually a fantastic idea, but a lot of hangers onS&People who just wanted to get in the crypto world to make a quick buck came in. I mean, 20,000 alt coins. It’s crazy. All this junk happened with [00:51:00] Crypto, but what we have here in Grace Skill, Bitcoin Trust is actually a very old school activist opportunity.

[00:51:05] Logan Kane: And basically you can win if Grace Gill is converted to an open-ended ETF, because the 40% discount will go to zero Mechanically, they can just redeem the shares and cash everybody out. And then there’s also another activist campaign by a guy named David Bailey. He’s the publisher of Bitcoin Magazine. He does not like the management of Grayscale, and he is organizing a campaign to kick them out.

[00:51:29] Logan Kane: And in December, they had about 1% of those shares, and last I check, they had over 25. They’ve got some hedge funds involved. According to his Twitter, they’re completely inundated with calls and requests every day for people to pledge their shares because the idea is if you buy something for 60 cents on the dollar and you kick the management out and redeem it for a hundred, life is good.

[00:51:49] Logan Kane: Also, Grayscale itself is trying to do a tender offer. Something’s going to happen. This discount is like, there’s a saying in physics that nature of bores with vacuum. So there’s a big vacuum here. So [00:52:00] something is going to happen to close this discount cause there’s so much money on the table. One way or another, I think Grayscale is going to be redeemed at a hundred cents on the dollar.

[00:52:08] Logan Kane: And all you have to do if you have any interest in Bitcoin at all is you buy this for about 60 cents in a dollar, and then if it goes to a hundred, you get a hundred. And I was way too early to this trade traded for a 20% discount in 2021, and we thought it was a great idea, and now it’s 50. But it’s either your downside’s not so severe, because like I said, if there’s a hundred cents on the dollar worth of Bitcoin at Coinbase, and then you can buy it for 60, eventually something can always happen, which will always keep it value.

[00:52:39] Logan Kane: Or if you win, then you, you get the whole hundred. I think the downside is, is not so severe, but the upside is very clear, and crypto being the least efficient segment of the market. I think you get opportunities like this. Historically, there’s been a lot of opportunities like this in crypto, and I think this is another one of them.

[00:52:57] Logan Kane: We’ll see maybe next time I come on, if Grayscale is redeemed, we can take a victory lap. If it’s not, then we can do a postmortem, but I think the risk reward is quite good. Yeah, 

[00:53:07] Rebecca Hotsko: it’s definitely interesting. And then I have been looking more into the Canadian ETFs, because we actually have a ton already in Canada.

[00:53:15] Rebecca Hotsko: And so there’s a lot of interesting ones in how they’re trading for a discount to their net asset value. So it does seem like a very efficient way to get exposure to Bitcoin, although you give up some of the things that maybe people like to buy Bitcoin for in the first place. You don’t hold the Bitcoin, it will never be your Bitcoin.

[00:53:32] Rebecca Hotsko: And so I guess that’s potentially a downside and maybe it doesn’t. I don’t know. It just, maybe that’s one of the reasons people buy it in the first place, so it might go against some people’s values, but I find it’s quite a good deal if you want to get exposure to it. 

[00:53:47] Logan Kane: Yeah, I mean if we can get a safe Bitcoin like trust and Grayscale is safe, it’s just problematic because of the discount and because it’s a closed end fund.

[00:53:55] Logan Kane: I think that’s a great way for a lot of investors. There’s people who are Bitcoin maximalist who say, this is not what Bitcoin’s about. It’s like people, it’s the perfect parallel is gold. Like people, like why are you buying gold ETFs? Like when it hits the fan, like you want gold, the gold in your house or at your business rather than at a bank or in an ETF.

[00:54:15] Logan Kane: So it’s a similar debate. I’m comfortable with Grayscale. I view the risk of something bad happening with Grayscale as low. It’s not FTX, but obviously people who are more on the side of the Bitcoin world where they want that control over, the Bitcoin keys. Then you obviously do it a different way.

[00:54:32] Logan Kane: You don’t, you don’t invest in an ETF.

[00:54:35] Rebecca Hotsko: Alright, so I think we’re going to end it here today. I want to thank you so much for coming back on, Logan. Could you remind our listeners where they can go to connect with you and learn more about everything that you do? 

[00:54:47] Logan Kane: In the description here, we should have a link to Seeking Alpha, so you can get my work and hundreds of other authors for, I think right now we got a sale for $10 a month.

[00:54:55] Logan Kane: I encourage anybody who has any interest at all subscribe, support our mission, you’ll support our business. And then I also have a substack, which is my own, so anybody who wants to read some of my occasional work and musings and thoughts subscribe to that too. So that’s it. 

[00:55:08] Rebecca Hotsko: Thank you so much.

[00:55:10] Logan Kane: Absolutely. 

[00:55:12] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you never miss a new episode. And if you’ve been enjoying the podcast, I would really appreciate it if you left a rating or review. This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter,

[00:55:36] Rebecca Hotsko: We Study Markets which goes out daily and will help you understand what’s going on in the markets in just a few minutes. So with that all said, I will see you again next time. 

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