Ep672: Vincent Deluard – Know the Difference Between a Trade and an Investment

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to winning investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to join me go to my worst investment ever.com and sign up for my free weekly become a better investor newsletter where I share how to reduce risk and create grow and protect your wealth. Fellow risk takers this is your worst podcast hosts Andrew Stotz, from a Stotz Academy, and I'm here with featured guests. Vincent Deluard. Vincent, are you ready to join the mission?

Vincent Deluard 00:42
I am looking forward to join the worst podcast in the world I hope to be the worst guest as well.

Andrew Stotz 00:48
Well, you know, that's the great thing about calling yourself the worst, we just don't have that much competition out there. But let me introduce you to the audience. Vincent is the global macro strategist for stone X group, where he authors weekly commentary on global macro topics and advises pension funds on asset allocation. Prior to joining stone X group. Vincent served as Europe strategist for Ned Davis research where he created the firm's Europe product. Before that Vincent was Executive Vice President for trim tabs investment where he headed the firm's quantitative research. Vincent is frequently quoted in the Financial Times The Wall Street Journal, and Barron's, and is regularly on Bloomberg TV and CNBC. And you'll also find him on many great podcast Vincent, take a minute and tell us about the unique value that you are bringing to this wonderful world.

Vincent Deluard 01:45
There is a harder way to answer without sounding like a pompous fool. I don't know if I bring a unique value to this world. If they were I think a might be the a keen sense of history, passion for economic history, and some sort of attachment towards money. I grew up in France, middle class family teachers. This was not what I was supposed to do. I was supposed to be work for the French Foreign Service and kind of fell into finance, mostly out of curiosity about how the world worked. And then, you know, the more you study history, the more you understand the centrality of finance, and you understand how, you know, pretty much everything has was in financial crisis. So that's what got me in there. I, you know, I work at a very large brokerage, fantastic, people will say, you know, worked on Wall Street before, and I'm not, I'm not motivated by money itself, like, I don't have angst over the monthly bonus, or, you know, and, as always, you know, a lot of finance people, none of there's nothing wrong with that. I mean, it's the, it's the industry that wants it, but I'm more interested in, in understanding long cycles, trying to write well, trying to have some time with culture and think of markets not so much as a separate thing, but very much just a small but very important object in the social fabric. And I'll say a question

Andrew Stotz 03:48
That is very interesting answer. And I, it reminds me, I was speaking at an event for CFA in the Philippines, and they brought together like 2000 young university students. And I gave a presentation based upon CFA ethics called, you know, 10 ways ethics adds value to you. And one of the students came up to me at the end of this presentation, a 2000 students, and she said, I just want to thank you, because I didn't realize that there were ethics in finance. And it really made me realize, like, you know, the stigma and all that. And I think when I think about what you've said, about two aspects, you know, there's a place for people who understand history in the world of finance, you know, not everybody's keen on that. But I think I have a similar desire to really understand what happened in the past. So welcome to everybody who's like into history, there's a place for you in finance. And the second thing is that there's also a place for people who are not driven completely by money. I know in the world of investment banking and all that, you know, the young people Want to get, you know, make a lot of money and all that, you know, we get paid well, but it's the joy of figuring things out and trying to understand, you know, has this happened before? And, you know, how do I think this is gonna play out? And then, as you said, you know, writing that well and presenting that well. So I like your answer, because I think it inspires, it can inspire many people who, you know, may think that finance is just, you know, money, money, money, which I think there's so much more, it's so interesting, you know,

Vincent Deluard 05:31
two thoughts on that one. I don't know if you knew that before we actually teach the ethics session that I used to teach from the CFA society in San Francisco, and I teach it for St. Mary's College. And I Yeah, it's, it's the first part of the curriculum, and it's on every level, and there's a reason for that. And then the second thoughts on you know, not on making money, versus gaining knowledge, I think, at the end of the day, and I think that's why I, I was intrigued and happy to join your boss get your podcast is, you know, knowledge is more important than money and the silver lining from simulating from making mistakes is, you know, if hopefully, you get the lesson out of it. And the older you get, the more the more lessons yet. And I mean, surely what I find fascinating about our industry is not so much the money again, you know, I'm on the research side. So this is not where people who want my money go. So can we put that there, but you know, so what I find most fascinating is that we get to learn about so many things. And most careers as you go in, that you're in, in a silo and the walls get closer and closer, you know, more and more things above you get deeper and deeper about a smaller and smaller topic. And it can be, you know, a bit depressing over time in finances, the exact opposite. I mean, this week, you know, we had to learn a lot about Swiss banking regulation and convertible cocoa bombs, and at one capital. And, you know, the week before it was about wonder how the Silicon Valley Bank do and why is the bank that doesn't do anything other than this bank? Yes. And, you know, before that, it was, you know, the impact of the Russian invasion on the supply on, you know, commodities that you may never have heard of, the chemical makeup of fertilizers. Before that it was the Chinese reopening. I mean, this is really, I cannot find that kind of think of another industry that is more suitable for a curious mind. Where you just get to learn and, you know, as you learn, you make mistakes, and great, you know, you make a mistake, you learn from it, and hopefully you share it with other people, so they don't do the thing.

Andrew Stotz 07:59
When I, when I talk to young people, I just basically say, you know, it's been 30 years I've been in the industry, and every day is still interesting, and, you know, stuff to learn. And, like, that's what I wanted, when I was young, I, I there was a lot of other things, you know, I thought, you know, I want to have money and all that. But the main thing is that I really wanted to be able to feel like every day was an interesting day, you know, like, and I think like, I get that. I'm interested in something, I just want to highlight that we're talking on March 22. So maybe just that events are unfolding so quickly these days. So who knows what, what will change when this comes out? But I'm curious, you know, you've done a lot on inflation. And I've listened to some of the stuff that you've done. And you talked about the era of cheap capital, cheap labor, cheap goods, you know, I would add into that probably cheap oil, which may be, you know, part of that. And now there's kind of a reversal of that. But yet also, when we look at inflation in the US, it seems to be coming down. And at what point do we decide, okay, inflation is, is over? Or it's not? Or are we in a situation where inflation has come down, but hey, it's coming right back up, because all of those things, cheap capital, cheap labor, cheap goods, and maybe cheap oil, you could say are all going to reverse? I'm just curious where you stand right now on let's just talk about US inflation for a moment. And then maybe we just expanded a little bit globally.

Vincent Deluard 09:37
Well, so I like to make a distinction between inflation CPI not necessarily the same thing I think inflation is. I would like to think of inflation as a broader kind of social, political, historical phenomenon. And CPI is the tool that statisticians have developed. So I'm not claiming these nice sort of quotes bureaucracy or, you know, to the law, I don't see any force and behind it, but the concept of a thing and the thing itself are not the same thing. That's just the fact of how the world works, we can create models of things, because we can never see the thing, right? It's the, and the CPI is a concept. So construct is, means has some some flaws, it has some good things. And so, anyway, long story short, I do think the CPI is going to keep falling, in large part because of base effects in the commodity sectors. So, you know, we have all that 65, the spike award when when Russia, you know, it went all the way up 100. And you see that in that gas, and then other prices. And I think that was a large part of the planet that said, Right, I mean, even if that hadn't was added and retirees rates, inflation would have fallen, because of this base effect. We also have use coal prices, which spiked a lot last year. And that's, although I'm not sure to what extent I will fully normalize, I would, I would, I would caution to expect it's probably not going to fully normalize, but across many quote unquote cool goods, we had all these supply chain disruptions that are normalizing today. So yes, CPI is going to fall. And then if everything goes fine, towards the end of the year, what we should start seeing is shelter invasions, the shelter or the CPI to fall. And again, that's that's an issue of the construction of CPI, there is a huge part that lags quite a bit is shelter about 33%, the index rent 7% and owners equivalent rent, which is a statistical construct that the fed us wouldn't BLS uses to track the theoretical value of the rent that homeowners would pay themselves with some, some crazy thing like that. So anyway, so

Andrew Stotz 11:54
what was the lag roughly on that? What's your estimate? Is that six months? 12 months? Yeah.

Vincent Deluard 11:59
So on rent is probably closer to six months, again, that has to do with the timing of renewing the lease rates or inflation spiked, right, but your landlord doesn't renew the lease every day, right? So it takes a few months, for the rent the new way, if you were to sign a new lease, you'd pay a lot more than you would last, you know, it takes a few minutes for for that to go through and then only Oh, er, it's even longer, it's probably more wealth to 18 months. So let's say that the peak for the housing market was late 2021, maybe something like that early 2022. That should get you towards late 2023 to start seeing during the run, but again, that what I'm describing a disclosure is math right? Easy facts. Okay, so prices went higher last year, so on a year over year is going to change. And so that's why I'm saying CPI is falling, CPI is falling down, I'm not questioning. I generally don't, I doubt it's gonna fall all the way back to 2%. It is possible with your very weak money prices, but now my guess would be it kind of bottoms out at 3.5 Something like that. Three 3.5. And then yes, I would be in a camp to think that it will probably re accelerate or certainly stay significantly above 2% for a sustained amount of time. And that is because I think inflation before understand it as a kind of broad socio cultural, economic political phenomenon is still there. And if you in a way to measure that, and CBI really wages to me at the end of the day inflation, you know, I would prefer we measure wage wage growth. And I mean, I guess you need price at the same time. But right now what the Fed what really matters when long term inflation is waging in labor intensive sectors. So when I look at the CPI reports, I don't look at the headline, the core, the tree mean, I mean, now we have so many versions of the CPI now, because everybody's trying to break it down to the bits that fits your narrative. Well, I'm going to add to the bit that flip narrative is haircuts. I'll get haircuts because I think it's a highly competitive you know, there's no one everybody can open a haircut salon, and really what you pay for accuracies ease, serve labor, and we will rent so this is truly the underlying measure of inflation economy dummies, you see that in haircuts? I mean, I say haircuts, but you could do laundry service, laundry, garage mechanics and garage attorneys. What else going we'll go into childcare. And that data, core services in the CPI has been basically inflating by six 7% For couple months, it's no longer accelerating, but it's not stabilizing. And I would say it's a good thing. I mean, I would argue that, you know, the hairdressers haven't been paid a fair, fair deal for a long time. And it's good that they get pay raises. And I don't see that, you know, any what's happening right now with, you know, the collapse of Silicon Valley Bank and venture capitalists crying for the money and, and private bankers in Zurich, running like crazy people, is really going to impact the price of America.

Andrew Stotz 15:33
And if we were to put it into the context that, you know, in my case, I have a global strategy. That's, let's say, stocks, bonds, commodities gold. How do you look at those? And when I say stocks, let's say mainly, I'm thinking global, let's say us, is obviously a big issue. But let's just say global. Does this mean that it's the commodity I know, in my case, I've reduced my commodity exposure over the last few months, and I've kind of given up on I made a good, you know, good performance on that. But I think, at this point, probably not worth it. Gold still seems to be worth it to be in the portfolio. And I'm underweight the US right now and shifting that towards Europe and Japan. I'm just curious, like, how do you look at, you know, either those four asset classes, or the way that you look at, you know, investment strategy?

Vincent Deluard 16:36
Um, okay, so you said the stocks, tomorrow, logo, bonds commodities go? So, my, I think, my big view is that we are, you know, kind of a secular turning point where inflation is returning, and he's going to be more persistent. And at some point, I think we'll, we'll just learn to live with it, and will abandon the fantasies of going back to 2%. And, in a way, I think that is a good thing. There's no reason that 2% is a number we'll meet up and we should be able to adjust it if the conditions required to adjust it. So that the implication obviously, of higher inflation over a longer a longer period of time is is most meaningful balls. Because now we've seen what I will say about bonds, up until the events with the past few weeks, we've seen bonds with price, especially in the front end. I mean, if you look at that, that US yield curve and us moving lifts pretty easy. I mean, you know, just was like a month ago, we're thinking, you know, we're gonna see like, you know, 6% Fed funds rate and, and 75 basis points on the table. And so, the short end of the curve actually looks quite attractive, but it was still kind of ugly. But bonds are we priced stocks, especially US stocks? They are not repriced all that much. I mean, yeah, we had a small bear market last year, but it was, you know, by no means catastrophic. And we had a pretty good, you know, bear market rally and went up above the 200, day moving average went back to, you know, above 4000. So, it was kind of hard for me to be very constructive on the US stock market in general, especially given its concentration in a handful of very long duration stocks, stocks that were very rate sensitive, since I think long term rates rise, go. It's hard for me to be very constructive on the US stock market as a whole. Globally, I think, you know, one of the trends of the past four years along with well, inflation, has been outperformance of us over the rest of the world, especially in the past 10 years. I think in each of the past 10 years, the US outperformed the world MSCI World ex us by more than 10% Each year, particularly brutal for Europe, emerging markets. I kind of think that a lot of that is I mean, it's cyclical, and it will reverse. We are actually seeing some of that, since October, we are seeing better performance, high performance by Europe. Now Europe, of course, the issue in Europe is You we had this, you know, the resurgence of inflation is not just a US phenomenon, if anything's worse in Europe, because we have the shock from higher gas prices. I mean, I think emerging markets are really I mean, depending what, of course, it's a, you know, a broad category, then sitting together that may not make sense, but you know, places like Indonesia, like, you know, kind of where you are Brazil, like inflation is not new to these places. Like if anything's definitely a bit lower. You weren't resilient and that was there last week. I mean, you know, six 6% inflation 13 point 75% on the Cedric the benchmark, so they already had their big adjustment in monetary policy and of course, looking at cuts. So, yeah, it could be that emerging markets and up, I forget on a regional basis. Maybe the point again, it also shouldn't get the composition or the indices, my concern is rates are gonna go up inflation. So you want to shorten the duration. One issue with the US and actually China at the same time is, is the dominance of this mega tech stocks. You don't have that in a lot of emerging markets where I used to be BDT. Banks, we are seven, very short duration kind of value oriented assets, we've a balance sheet of tangible assets, which, of course, has suffered dramatically in this era of low rates when people have valued intangible assets. Things that may make a lot of money in the future, if we go back with a shorter time horizon, because that's what inflation does, you will go back to the tangible asset investing in that will include some emerging markets, which are not that affected. I mean, if you look at, you know, places like India, if anything that means to get to by auditor 30% discount on the global prices, I mean, it's fantastic. This is a very unusual crisis. But usually when you have a crisis, financial markets, I mean, so it's going to be, you know, Indonesia is going to be there. The rupee is going to take a beating, you know, the weaklings wide or South African rand or in the vulnerable country? This is happening in Switzerland. Switzerland, California. So maybe it is this art crisis that's not, you know, the checkbook that one one is not like the others. One is one is not this one is not like the

Andrew Stotz 21:54
other one of these things is not like the others. I remember that. It's interesting. You mentioned about tangible assets maybe being more attractive nowadays. And I know, in Europe, you know, there's less tech and a little bit more tangible assets there. I'm curious, Are you positive or negative on what's going on in Europe as far as equity is concerned?

Vincent Deluard 22:16
I mean, well, your Europe has got going couple couple things. It's cheap. I call it you know, I can't I ran a Europe product for 10 years. And I left because I ended up Oh, shoot. Yeah, he pals cheaper now. So happy when my you know, I picked it the best European bank this year, it's only down 25%. So it's hard for me to be very excited about Europe. But what I will say so yeah, it's certainly this big discount, there's a lot a lot much greater leverage on China, I think for people who are not comfortable investing in China for, you know, political reasons or regulatory risk. One way to get your china exposure could be to get it Fiat, the other DAX which, you know, essentially is leveraged, leveraged by the Chinese reopening. And, yeah, I mean, we're supposed to go to freeze to death this winter, so that's our benchmark, you know, going to the idea of the worst investment, but if you're, if your expectation is to die, pretty much anything is anything beyond that is a win. The only and that is a big, big, but the only caveat is if you know, inflation is at 10%. And the ECB is way way behind the curve. So that rate track which in the US make may make a case that we're closer to the end and we're gonna be ending. In Europe, it's unlikely and never discount the stupidity of European policymakers. Like they will always, you know, the, there is tradition for European Central Bank to do one last rate hike at the worst possible moment. So that would be an issue for donations in Europe. And we do have a banking sector. I mean, we hadn't monstrosity, I mean, we had negative yields for you know, since 2015. For the ECB, really over a year for the Riksbank in Sweden. We had a one point 18 trillion worth of bonds with a negative yield, the vast majority was in Europe, in Italy, in Japan as well. I mean, somebody's got all of these somewhere. I mean, a lot of them are several banks downstream. Thank God. But But I don't think that's the only, you know, banks, insurers and the pain of repricing something from you know, a yield of minus 1% to let's say, plus 4%

Andrew Stotz 24:46
and a long duration. Yes, yes. So, we're talking about 30 40% Crashing the value of those.

Vincent Deluard 24:54
Yes. So basically what took down SVD you know, having a 30 year duration thrown in a totally busy spot of sharks. So use, you know, 6% of, you know, I suspect it's there. And as we believe in hatch, but I, I mean, I doubt that people, you know, I'm not sure that everybody was hatched either. So I suspect there will be more ghosts coming out of Europe in the financial sector.

Andrew Stotz 25:23
And one last thing I wanted to tell you about was something I wrote about about a year ago, and over six months ago, I kind of updated it. And I said that World War 2.5 just happened. 2.5 2.5 It wasn't three, but it just happened. However, the point five refers to the use of nuclear weapons. And yeah, yeah, we get that, then we're really we're at three. Yeah. But it was the US against who? That's what I always say to my clients when I'm talking, I'd say and, you know, they say, oh, us against Russia. And I say no, no, in fact, Russia is kind of meaningless in some ways to the US. It's not economically a real threat. It's not even militarily a real threat. China, no. Now the key thing is in World War 2.5, America one and World War 2.5, in my opinion, sitting from Thailand, looking out at the world is US versus Europe.

Vincent Deluard 26:32
Yeah, I mean, they brew a pipeline.

Andrew Stotz 26:36
And the significance of the cutting of the supply of oil from Russia to Europe is just cannot be understated. It is such a cute, huge, you know,

Vincent Deluard 26:49
okay, actually, you know what, I would agree with 0.5 on that, because, again, my initial pushback was that to be at a war it takes to like, you cannot have a warlord because like I can see the youth attacking your property. I don't think so that maybe that's where the point five comes from. Right. There's only one villager of that world in that world, the only one is the victim. But so I

Andrew Stotz 27:12
I think of Genghis Khan coming across, you know, across the steppe and approaching and destroying city after city and he approaches the city and says render or I'm gonna burn down everything and destroy everything and I thought many of those cities just thought okay easier just to go with the flow here.

Vincent Deluard 27:35
Yeah, that's our that's the unfortunate I would agree with your assessment on the war is the I mean, at the end of the day, you you you look at it you know, for the great game real politic you I mean, the US is a good year, right? I mean, they'll fight it to the last Ukrainian, right in the opposite situation as in the Vietnam War, were they in the Vietnam War, the Chinese and the Russians, were helping the Vietnamese kill American soldiers. Today, all they have to do is send them money and have the Ukrainians die for them. Defend the Russian army, that's a good deal. The energy independent if anything, that means that individual huge demand is European demand is diverted. What used to be, you know, Russian, for pipelines now is LNG, mostly from Qatar, in the US? So the US is yeah, okay, I can keep doing that. And then the rest of the world, you know, China, India, like, wow, well, we get a keyboard out of this. So really, the only losers outside of obviously, the Ukrainians and Russians who are dying? Are Europeans. I think,

Andrew Stotz 28:53
my the question I got is, why, why does America need to do that? And my answer is because America stated very clearly that their number one opponent is China. And what we can see in the global south in particular, and countries like Thailand and India and others is that they're not going along with America. And so the only place that America America's Got to get Europe under its control, when it gets really

Vincent Deluard 29:22
boring blowing back North Stream to wars, right. It's like, it's no return your you know, even like, even if you if Germany wanted to, and then I'm okay. I I never believed that was, you know, a serious threat but that that basically Russian European reconciliation and you know, the, but I think in the US that that was there that was a fear like a kind of a hardcore like Trump or in Peter Zeon type of guys that Europeans are gonna backstab us and the Germans are gonna, you know, basically like, you know, they export more to China and China used to be became the Germany's biggest trade partner. So you Okay, so you send your stuff to try and out, you buy the ship gas from Russia and then you don't pay for your defense because you're protected by NATO. I mean, you're, you're really getting the bed, the better bargain here. And they want you to clamp down on that. And do with your irremediably. So I think it's exceeded like it's very hard to imagine. I mean, I think I guess anything is possible and can get a peace deal and stuff. But at this point, it's the amount of bad blood that was spilled between Russia and Europe is going to be horrible. And again, the infrastructure has been taken out now. So even if we wanted to, there is no, there's no pipeline left.

Andrew Stotz 30:52
All right. Well, I really enjoyed talking to you about these things. I think there's a lot that we can all learn. I was taking a lot of notes about, you know what you were saying? And so I appreciate it. But now it's time to share your worst investment ever. And since no one goes into their worst investment thinking will be tell us a bit about the circumstances leading up to then tell us your story.

Vincent Deluard 31:13
Oh, okay. So circumstances were in great financial crisis, summer of 2008. I just started working. Just started investing. And in the fall, and the fall of Oh, eight, I mean, I remember just day after day, that 30, year years dropping, dropping, it was stable at 5%. For me that 5% was the right number, right? 2% growth 2% inflation 1% in premium. It was one of these numbers. Maybe the CFA is where I learned it, you know, it's like, Oh, we didn't discount model like you would tell me that was it right, the long term was rate is 5%. And then, no matter of week, I see the 30 euro for two, I think it went all the way to 2.5. In the debt for the Lehman panic. That makes no sense. I mean, you see, at one point, 50 basis, point move in a matter of weeks, I'm going to fade that I'm going to, I'm going to buy TBT, TBT, ProShares, ultrashort. Treasury long, and so, so you're on the long end. So you already have built in level, you're talking about duration, right? So the duration of that baby's around, like 20 years, right? So, so every, every, every percent move, you're gonna you're gonna get 20% in there, right? And then the adding some leverage to it. So I Oh,

Andrew Stotz 32:43
let me just try to explain that for the people who aren't necessarily sophisticated. In the investing side, the interest rate went down, which meant that bond prices went up. And you were saying to yourself, that's just too high bond prices are too high interest rates are too low. And I think that's going to reverse Is that what you're saying? Yeah. And, and therefore you're taking on a position to say, Okay, this is going to reverse and you're doing that through an ETF that gave you access to shorting? US Treasury prices?

Vincent Deluard 33:20
Correct. Correct. And then, and the hard thing about my mistake is that it worked at the beginning. And I think these are the worst kinds of mistakes, because, like, if you put on a train, and right away, it goes in your face. I mean, you're like, alright, you know, I'm a moron.

Andrew Stotz 33:35
Let me get out of this. And I know, like I just did with financial

Vincent Deluard 33:39
accounting one, but then you have some emotional kavalan bolo. I'm smart. Because indeed, my, my case was kind of right. You know, like, it was excessive that move to 2.5%. And then after that, you know, a QE and, you know, actually the economy came out of recession, the yield curve steeper and, and, and so I was big, I was a big, but I thought it would go a bit higher. I thought I'd go back up to you know, it go back to that 5% range, so I didn't sell so they're already two mistakes there when I went to one was the choice of the vehicle, I mean, leveraged ETFs are their trading non investment vehicle. And I was if I just made the trade I would have made a lot of money and I had but I, I got what trade and investment confused and I had a trading vehicle for which I wish I wish I have so because of the national averages. Yes, I mean, it's compounding right if you go down by 50% and 100% gain to go back up. So leverage works against these variants rain, if you will, though, the more volatile something is, the more likely over time it is able to lose its value. So if you plot any leverage ETF, regardless of you know what is leverage all your leverage for the key, whatever, they all handle zero over time, and that's, that's by design. It's not a constraint. See, it's not a, it's just you just have to keep pulling all these contracts. And you know, sometimes you also have some rock or roll costs, or they're not something to be held for the road. And then there's a vendor perspective. And I guess I knew that I just, I just thought, you know, like, the luxury guys, you know, it's not going to happen to me. I don't know why. So there was that there was using the wrong vehicle. And then I think the more important question was, what was kind of confusing, a trade trade women investment? Basically, you know, you, you, you have, it was a massive counter move. And I pretty right initially, but it was a counter move the trend for for rates at the time was was lower, we had no inflation, we were gonna have QE, the central banks, were going to monetize trillions of debt, and then most of the long end, and I was fighting the Fed effectively by by showing Banyule fighting the Fed and what the Fed, the Fed just announced, you know, for three, you know, over the next decade, they would, the balance sheet will grow from, you know, maybe 1 trillion before eight to 9 trillion, and I'm the idiot fucking. I mean, it's really somewhat of a printing press against

Andrew Stotz 36:19
me. But I'm really confident. Yeah, I'm gonna show

Vincent Deluard 36:23
the asset that you're buying. So, so, yeah.

Andrew Stotz 36:28
And how did you get how did you end the position, and you close the position?

Vincent Deluard 36:33
In shame in shape? Probably last night, you know, eventually I kind of gave up, you know, like a, okay, I was, because I lost on the fact that rains went down. Although, again, it was not a I bought into the right leg. I bought it at the right time. So I didn't lose too much on the race. But it was the divine straggler the real thing I was describing before, and the fact that I'm over leveraged ETF, like, just because this when you end up with kind of a doubt, so that's why we got me. And I think, yeah, I lost like 60-70% on it. And yeah, sold it for a tax boss. And I reminded myself that I could be an idiot.

Andrew Stotz 37:14
It's, it's good to make these mistakes when we're young, because we don't have you know, we're not putting million dollars down on it. So that's, that's the one good part, how would you describe the lessons that you learn?

Vincent Deluard 37:29
Again, that lesson really goes back down to trade versus, versus investments and kind of understanding the period where you're, you're into. It's kind of this mix of cyclical versus secular. And I think that ultimately, that's kind of what I confused. So what I thought was, okay, so there was a cyclical, right, where we had this panic, bond prices went through the roof, it was excessive. And there was going to be a counter reaction. And that got right, the problems that counter reaction was within a secular environment of falling yields, falling inflation, central banking, right. And I should have taken that into account into my analysis just to get Oh, it's too Oh, yeah, it is too low. And it's, it's got a bounce. Yeah, it's gonna bounce, but it's not going to go bounce back to before, it's not going to return. But you know, we're not going to return to 5% plus 30 year yield. We're still not there. By the way, even three years later, like the environment really had changed. And I didn't see that. So it's also in terms of, I think, getting an exit. So you find it was market dislocation, you find rational pricing, great, good for you. Either position, but have a plan to get out. I do you now.

Andrew Stotz 38:54
Right. So maybe I'll summarize a couple of things I took away. I mean, the first one is probably for most people, it makes sense just to avoid leverage. You know, it can be useful at times, but generally, it's probably not for the other thing. It's interesting, you know, you talked about good idea, wrong vehicle. You know, when you get an idea about a trade, you think makes sense. You know, think carefully about how you're going to execute that. And does this really give you, you know, you mentioned something earlier as an example of this, like, maybe investing in, you know, German manufacturers is a play on the recovery of China? Well, recovery of China's a good idea. And this is one vehicle to do it. Is it the right vehicle? I think that's a question that is not that commonly asked. So I think that's a good one. The other one that I wrote about, I wrote down when I was taking notes was Be careful about treasuries and also Forex. Because basically you're fighting against the Fed. You're fighting against banks with a huge balance sheet, and you're fighting against an on limited buyer who can move in any direction, without any, you know, without any warning. And that leads me to my last thing is and I, I wrote this down about what you said about European bureaucrats, and they just said, Don't overestimate the genius of fed and other bureaucrats to just go and do something very, very extreme or wild, like keeping interest rates at basically zero for 30 years, you know, who would have thought that they would have done that? And so those are some of the things I take away anything you would add to that.

Vincent Deluard 40:33
I think you, you really summarized it well. And I mean, the one thing I would add is the psychological aspect of it. Of that I think that's really what got me is the human race of having to trade work at the beginning. And, you know, I remember this, this was a way right. I mean, this is like, the world was falling apart. Wow, this could be my George Soros baking, breaking the Bank of England trade type of thing. Like, why am I making this and I'm like, Tony, something. You trade? Okay. This is why PA on is not clients that, fortunately, you know, I'm like, I gotta have 20 Something I was like, that I put a significant amount of my kitchen. Yes, you know, what I'm gonna push you to Yes, I'm treasuries in that, and then he goes my way and I'm validated and, and that, I think it increased my cough, I should have done the exact opposite, right. Instead, if I had been wiser, been okay, I got the counter move. You know, the case, my case, you know, again, the, the more you make money, the more your case is validated. So the My case was valued at the time, you know, when when when yields or your cash 2.5% he was stupid, he was panic. Yes, that was true. Inflation will come back with all that, but I won like 3.5. Like, that's it? The world that agreed with me, but I want even more.

Andrew Stotz 42:10
Yep. So let's go back in time and think about yourself, as well as the young people listening to this podcast, and try to think about them kind of coming up with their idea, which is a smart idea. You know, you've thought about it, you've studied about it, you're relatively young, based upon what you learned from this story and what you've continued to learn what action would you recommend they or our listeners take to avoid suffering the same fate?

Vincent Deluard 42:40
I am sizing up the position is important. I was okay, you know, as the beginning of my career in but I had one point, he was probably like, you know, 30 to 40% of my as I think I did in my, in my IRA, my retirement account today. What the hell was a fee? I mean, I was really so there's that thing. The underlying is, I think launch wipes on 30 year treasuries. What why is that? Why is that valid invest? You know, why did I have 30% of our retirement savings? In this now, hopefully, fortunately, for me, and I think that that is maybe the lesson, you know, when you only can make mistakes, like, you know, I had, I had almost one year to invest my 401 K in a smarter way. So I guess, I guess my answer would be making mistakes when you're young. Any, because you can't really avoid them, right? I mean, like, you know, we all do make mistakes. With age, we just become more more prudent in how

Andrew Stotz 43:53
enable accumulation of a state state so we've built some knowledge, we have

Vincent Deluard 43:57
some All right, you know, I think I'm really smart right now. Yeah, this is okay. But I'm not gonna go 100 on anything, right. So there's that. And then the other Don't, don't let yourself get beaten down too, with mistakes. I mean, we all had their learning experience. And yeah,

Andrew Stotz 44:16
let's wrap up. One of the things I just wanted to ask you about as a resource. I know you've got your global macro reports. Maybe you could just tell the audience, you know, what you got and what you're doing there so that if they're interested in learning more, they can go. And I'll have a link to that in the show notes.

Vincent Deluard 44:33
Here. Wonderful. So yeah, so I write weekly reports. For our next global financial firm, we have fortune 100 companies offices pretty much everywhere on the world. We serve primarily my reports as institutional clients. So the way people can get them is they trade with the firm, and then they get in touch with it and so next rep or because of regulation in Europe, or we are actually you have to have bundle the research and execution, so it's possible to subscribe to my work. I think it's very competitively compared to the original product. But compared to organizational products, it's actually very reasonable. Four times a month, I tried to write about things that people don't really think through. I tried to avoid, you know, the press release or earnings guidance or PMI, or data, I tried very hard to think about risks that people may have missed and things that are overlooked. I mean, we have a very good glorious industry. So there is room for that. And yeah, so if you go to my Twitter handle at Vincent, di n, C, and G, Dillard de l UA rd, at Vincent De Leon on Twitter, under my pink tweet, there is a link and you can sign up, you get a two month free trial of my work. And you know, then I'll get in touch with you. We'll see if we can turn that into an ongoing raishin or just just DM me like I love I love Twitter, I met some fantastic people on Twitter. People were very kind to me on Twitter. And I tried to become that by being kind to people who reach out.

Andrew Stotz 46:20
Fantastic. Well, we'll have links to that in the show notes to both your Twitter as well as the free trial site. So last question, what's your number one goal for the next 12 months?

Vincent Deluard 46:31
Personally or like for

Andrew Stotz 46:33
whatever you want to share? Personally is interesting. Professionally spine

Vincent Deluard 46:45
number one goal. So I'm gonna go with a personal answer. I mean, I'm, I'm about to turn 40. My dad just passed, and, you know, I'm going through this kind of moment of soul searching, you know, on. Okay, like, I'm not immortal. I have half of my life most likely behind me. Why do I want to do the next house? And what is it that matters to me? You know, I think for a lot of people, we try spent a lot of time trying to be good for other people, for parents, for teachers, for the boss. And at some point, you realize that you know, you get caught in, in doing things for other people. And, yeah, that's probably what a midlife crisis is. And I hope I can not solve it by buying a flashy red car and getting some air in France, but in a way that is a bit more meaningful. Well, I

Andrew Stotz 48:03
know that feeling I lost my father six and a half years ago, and it really did make me think, you know, okay, my time is limited, what contribution do I want to make? So that's an exciting journey, you're gonna learn a lot. So listeners, there you have it another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. If you've not yet joined that mission, just go to my worst investment ever.com and join my free weekly become a better investor newsletter to reduce risk in your life. As we conclude, Vincent, I want to thank you again for joining our mission and on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Vincent Deluard 48:43
No, thank you. This is a lot of fun. I enjoy your style your conversation. This was very fun, and I like your humanity. And I think we all need some of that. So thank you.

Andrew Stotz 48:58
Well, we appreciate your authenticity on this show. And that's a wrap on another great story to help us create, grow and protect our wealth fellow risk takers, let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.