PBD Podcast | EP 137 | Billionaire Investor Leon Cooperman
FaceTime or Ask Patrick any questions on https://minnect.com/
PBD Podcast Episode 137. Patrick Bet-David is joined by Danielle DiMartino Booth along with Billionaire Investor Leon Cooperman
Leon Cooperman is an American billionaire investor and hedge fund manager. He is the chairman and CEO of Omega Advisors, a New York-based investment advisory firm managing over $3.3 billion in assets under management, the majority consisting of his personal wealth.
To reach the Valuetainment team you can email: booking@valuetainment.com
Download the podcasts on all your favorite platforms https://bit.ly/3sFAW4N
Text: PODCAST to 310.340.1132 to get added to the distribution list
About:
Patrick Bet-David is the founder and CEO of Valuetainment Media. He is the author of the #1 Wall Street Journal bestseller Your Next Five Moves (Simon & Schuster) and a father of 2 boys and 2 girls. He currently resides in Ft. Lauderdale, Florida.
Danielle DiMartino Booth is a Founder & CEO of Quill Intelligence. DiMartino Booth set out to launch a #ResearchRevolution, redefining how markets intelligence is conceived and delivered. To build QI, she brought together a core team of investing veterans to analyze the trends and provide critical analysis on what is driving the markets – both in the United States and globally.
0:00 - Start
6:06 - Luck vs Hard Work
22:06 - How to rewrite the tax code
23:19 - Is a recession imminent?
29:07 - Thoughts on Trump
33:40 - Goldman Sachs/Jamie Dimon
41:05 - Gas/Inflation
46:07 - Biden cyber attack
51:23 - Bitcoin & Crypto
So folks, we have a special show for you here today.
We have the great Danielle DeMartino Booth here with us.
To my right and to my left, we have Leon Cooperman, whom we talked about on a podcast.
I want to say, I don't know, two months ago, Title, we talked about Leon Cooperman.
An article came out, The Moral Calculations of a Billionaire.
Like, what did I do wrong as a billionaire?
Leon, being a billionaire himself, maybe you've given all of it away.
I don't know if you've given all of it away.
In the process.
In the process of giving it all away.
Not easy.
Not easy, I bet.
25 years at Goldman, partnered there, 25 years with Omega Hedge Fund Manager.
You started it there.
And then now you're trying to give away all your money.
That's your story.
There's no shortage of worthwhile organizations, so I'll succeed.
You know, I've been very lucky.
And, you know, people ask me, what do I attribute my success to?
You know, I started out in the South Bronx.
I'm the first generation of my family born in America.
My father came to America from Poland at the age of 13 as a plumber's apprentice, no formal education.
And I went to public school in the South Bronx, high school in the South Bronx.
And then I followed the advice of Harlis Greeley.
I went west and I went to college in the West Bronx, part of the City University of New York.
And I've been very lucky.
And people ask me, what do I attribute my success to?
I say, luck, hard work.
I did work very hard.
I still work very hard.
And intuition.
So the hard work and luck is easy to understand.
Intuition requires more explanation.
So I give them two examples of intuition, which is important.
Back in the 60s, if you finish your major and minor in college in three years, you're allowed to count your first year of medical or dental school towards your fourth year of college and get a separate degree.
And in the summer of 1963, I took physical chemistry at the University of Pennsylvania to finish off my major.
My major was chemistry.
And then I enrolled in the University of Pennsylvania Dental School in August of 1963.
And after eight days, this is intuition now, I started to wonder if I was going down a path I was fully committed.
So it was a very traumatic time because I paid room and board for a year.
I paid tuition for a year.
My father, may rest in peace, was pissed as hell at me when I told him I wasn't sure I wanted to go to dental school.
The only guy that appreciated the significance of the decision was Glenn T. Nygren, who's deceased.
He was a dean of Hunter, had to approve my matriculating back into undergraduate school.
And he said, very heroic decision.
Of course, you can come back.
And I had all electives available.
And I took 10 courses in my senior year in economics, got 10 A's.
I never looked back.
That's intuition, you know, because it's a very difficult thing, you know, to basically walk away from room and board and tuition.
And I drilled my initials L C into $1,200 worth of equipment because I tell you things have a way of disappearing in the laboratory.
And then a second example of intuition, back in the 1960s, Wall Street was at a very high point.
And basically, I had 16 job offers.
A very different environment today.
16 job offers.
Yeah, well, I was an attractive package.
I had a six-month-old kid, so I was a serious guy.
I knew what I wanted to do.
I was beta gamma sigma.
I was Wall Street Journal Student Achievement Award, and I was straight A's in finance.
And Goldman was the fourth best offer I had financially.
Who was the best one?
I don't remember.
I'm not sure, Lazard or somebody like that.
Maybe Merrill.
What year is that?
1966 I was interviewing.
Got it.
And so I'm very anal.
I'm very reliable.
If I say I'm going to be in your studio at 9 o'clock, I was here at 9 o'clock.
I was actually a little earlier.
And I got a call from Bob Danforth, who is the gentleman that extended the offer to me, and said, Lee, we're disappointed we haven't heard from you.
What can we say?
I said, Bob, let me be honest with you.
I was very knowledgeable with the compound interest tables that Union Carbite had sent around at the time, and it offered for $12,500.
I said, Do you think I can make $25,000 in five years, which is 15% compound, a double?
And he said, if you work hard to keep your nose clean, I think you could do it.
I said, I'll tell you what, I liked everybody I met at Goldman, even though you're my fourth best offer financially, I'll come with Goldman.
And that turned out to be a great decision because one of the few firms that didn't change their name, I got elected to the partnership in 1976.
Ten years later.
Yeah, nine years later.
And basically, when I got elected to the partnership, the firm had a record year.
They earned $40 million in 1976.
And when I retired 14 years later, they earned $1.8 billion.
And I was there for the whole run.
And you lived through the death of equities.
Yeah, that was in 1982, I think, cover of Business Week.
Yeah, actually 72, maybe.
The other cover that was dumb at Business Week was the one where my hero in life was Henry Singleton, the founder of Teledyne.
And the guy was absolutely brilliant, the smartest guy I ever dealt with.
And in August of 1982, basically, Business Week had him on the cover, pictured as Icarus, the mythical Greek god that flew too close to Sargo's wax wings melted and he crashed to earth.
I wrote him a seven-page letter saying how foolish they were, that this guy was really a genius.
And Warren Buffett got a hold of it and sent me a letter.
And I call this one of my big mistakes in life because he sent me a letter which I framed in 1982.
I framed it, but I didn't buy a stock.
If I framed his letter, I must have thought very well of him, right?
Way before he was viewed as the genius, which he is.
And he sent me a letter, Dear Lee, I always enjoyed the quality of your writing, the quality of your thinking.
You later to Business Week ReTeledyne was 100% of the mark.
Best Regards Warren.
I framed that letter.
It's hanging in my office wall to this day, but I never bought a stock, which is a big mistake, a big miss.
Never bought the stock.
Never bought it, but big miss.
But if you thought so well of him to hang the letter from them on the wall.
You thought about some of the stuff.
That was a big mistake.
That's a big miss.
That means you don't walk on water.
Which is good.
Listen, in this business, if you don't make mistakes, you're either a liar or you don't make decisions.
Absolutely.
I got a question for you.
So you said luck, hard work, intuition.
If you were to, you seem like you're a data guy.
For sure, you're a data guy.
What would you say percentage-wise?
Because a lot of people say it's 80% luck.
Some people say it's 80% hard work.
What would you say with your experience?
I don't know, 60-40 to be different.
60% luck?
Hard work.
60s hard work.
The harder you work, the luckier you get.
Okay, so fine.
That's the truth.
And where do you put intuition?
Very important.
In my case, it was paramount importance.
You know, you got to go with your gut.
And I tell these young people today, I do a lot of talking at colleges, you know, basically you got to basically have good intuition.
You have to have good judgment.
You can't teach that, though.
No, but listen, all throughout life, we all have setbacks.
And what makes a success is how you handle the setbacks.
I've had my setbacks, and I came roaring back.
What's your biggest one?
Well, I hired a guy out of Goldman who turned out to be a crook and violated the Foreign Corrupt Practices Act and implicated the firm.
We knew nothing about it.
The government is a bunch of criminals because they try to, you know, they don't want to know the truth.
They just want to basically embarrass you.
And I had to fight through that, and I won in the end, but it was a very, very difficult situation, very costly.
I had a billion dollars of capital, left the firm, but we came back.
That's the comeback.
So, question in regards to capitalism.
You've been around for a while, and you've seen how media presents the wealthy.
Socialists are not a new thing.
They've been around for a while.
They've been doing this for a while.
I saw one of your quotes in this article with, what do you call it, with WAPO that you did and the other gentleman that did the interview, which I thought it was pretty fair.
You said one quote here.
You said capitalism has flaws, but socialism has no benefits.
Well, I quote Winston Churchill.
He said, the main vice of capitalism is the uneven distribution of prosperity.
The main vice of socialism is the equal distribution of misery.
One of my other heroes in life is Ken Langogan, who's one of the finest human beings I've ever been.
He really is.
He's a fabulous guy.
If you haven't read his book, you've got to read it.
I read it.
I read it.
He and I have a lot in common.
His father was a plumber in Long Island.
My dad was a plumber in the Bronx.
And I think the world of Ken.
And Ken says he'd like to take his private plane and fly these young kids that think socialism is superior to capitalism to Venezuela and Cuba and see what it's all about.
I went to Cuba about six or seven years ago on a mission.
And, you know, it takes three hours to get from the suburbs to downtown to get to their work because they have no organized transportation system.
Their cell phones cost, I think, $3.85 a minute.
This is five years ago.
They all drive around 1955 Chevrolet.
$3.45 a minute?
$3.85.
$38.
A minute.
Five years ago.
Five years ago.
And they can't afford it.
And the only capitalists in the country are the hookers.
Wow.
I lived in Venezuela.
I mean, I was witness to the craziness before Chavez came on.
And there's something to be said about how desperate people get when there's an inequality divide in the United States like there is, but it's not the solution.
Not the solution at all.
What's changed, though?
What I'm trying to find out with you is, so 25 years Goldman, 25 years Omega, 1966 is when you took the job offer with $12,500 with 15% rate growth.
Over five years, you'll make $25,000, and I'm assuming you made it.
I made $180,000 in the fifth year.
Great.
So ninth year, they have that big, you know, you become a partner, $40 million, and then $1.8 billion.
You've been through the Howell Riot as you went through, and then start your own company.
The relationship between the capitalist and media and the youth, there's always been a relationship, right?
There are more poor people than rich people, and the politicians like to play that up.
I had this battle with Elizabeth Warren, who I consider a politician in the worst sense of the word.
So I gave a speech at a conference about three or four years ago, at a time when she was running strongly in the polls.
And the moderator asked me, what do I think the market would do if Elizabeth Warren won?
And I said, we'll go down 20%.
Next day, not knowing anything about me, she tweets, Leon, I'm only looking for 2% is the wealth tax, which is complete bullshit.
Give others a shot at the American Dream.
So I think long and hard, and I decided to tell you, you know, Michelle Obama made a comment, when they go low, we go high.
And I sent her a very, very good five-page letter, which I recommend.
If you don't have, you get it.
In fact, it was so good that Larry Summers, who's a liberal economist and a very bright man, calls me up and says, you know, if you submit that paper in a class I gave at Harvard, I give you an A plus, not an A plus.
Where is she right?
Next day, doesn't address anything I wrote in the letter, which was very respectful, very balanced.
I told you we all got to work together to fix the problem.
She comes back and says, Inside Trader, where I had this problem with the government, I won the case, and owned Stock and Naviant, which was irrelevant to the situation.
She doesn't like student loan companies and made no attempt to address the substance of my letter.
And so I look as a politician in the worst sense of the word.
Then a year later, she invites me to fear me before one of her committees in Washington.
I turn it down and she says on TV that I was afraid to meet with her.
I wrote another letter.
I says, I'm not afraid to meet with you, but I sent you a very serious letter where basically somebody commented was an A-plus paper and a liberal economist, and you dissed it and never responded to it.
I'll meet you in any program on TV to debate you.
How do you get to be a billionaire in the economy?
You know, basically, you get to be a billionaire, you develop a product or service that the world needs, and you get rewarded for it.
And most billionaires I know give the money back to society.
And I love telling the story.
I'm very friendly with Bernie Marcus, who lives in my community in Florida.
And Bernie, I think, was terminated by Sandy Siegeloff on a Wednesday night.
He calls up Ken Langone in tears, saying, I got three kids, a big mortgage, I have no income.
And Langone, who's a tough guy, he says, what the hell are you moaning about?
I'll raise your money.
You'll open your superstore.
So he gets 40 families to put up $50,000 each raise is $2 million.
The market cap of Home Depot today is over $300 billion.
Ken and Bernie have given away billions of dollars to charity.
Both, I think, have taken the giving pledge with Buffett.
There are 3,000 employees at Home Depot that are worth over a million dollars as a result of the stock appreciation.
That's amazing.
If you could explain to me what's wrong with that picture.
You know, I believe in the progress of— By the way, you're going fast, folks.
I don't know if you caught that.
Over 3,000 employees who have a net worth of a million dollars because of a capitalist got together and did this.
Please continue.
Yeah.
And so, you know, you broke my train of thought.
But basically.
No, he said, what are you crying for?
Here's the money through it.
Now there's 3,000 millionaires.
Yeah.
But basically, I'm saying, if you tell me what's wrong with that picture, the world is better off because of Bill Gates, Jeff Bezos, and Larry Ellison and Bernie Marcus.
They're amazing employers.
You know what's crazy in that book?
I love capitalism.
I recommend it to a lot of people.
There's a story he tells.
I think I want to say Ken's dad died at 62 years old, maybe 63.
And he says, his dad died from a basic, we could have saved him.
He says, I've been on blood thinners.
I don't know how long he's been on blood thinners.
He says, I've been on blood thinners since 50s or since I was 60.
He says, if capitalists, because of capitalism, we now have blood thinners, where my dad would have lived an additional 20 years.
Because I think Ken is in his 80s right now, late 70s, early 80s.
85, I think.
85, yeah.
So think about a capitalist creates a business.
He's in great shape, though.
Goes to the gym every day.
He goes to church every day.
He's a large contributor.
He's a big guy.
He's a very unique guy.
He's a very special human being.
I was inspired by him.
But the part I want you to unpack and educate us, I know this story about Elizabeth Warren.
This is me.
I'm 43.
I lived in Iran 10 years.
I saw what happened when they divided Iran.
And then there was a fall.
I went to Germany.
I've been here.
I've seen from 1990 to today.
That's the politics I know.
I came here November 20th, 1990.
And I grew up watching the life of the rich and famous.
It was aspirational to be a real estate mogul, to be wealthy, to be somebody.
Today, to me, it's different because they're being bashed.
Is that just a new thing, or has it always been like this?
Is it worse today than ever before?
It's getting worse because income disparity has been greater.
Exactly.
And the income disparity, to some degree, results from government policy.
In the 2008 economic downturn, Bernanke, head of the Fed at the time, said, we've got to get the economy turned around.
What's the best way to get the economy turned around is to create wealth.
How do you create wealth?
You get the stock market up.
Trouble is 80% of the stocks are owned by 20% of the people.
And then we spent the next 15, 20 years trying to get the money back from the wealthy people by having a negative return on savings, which is a disincentive.
We've had screwed up policies.
I listen to these people.
We don't need a wealth tax.
Raise the marginal income tax.
Get rid of 1031, which enables these real estate guys to roll forward indefinitely, get capital gains taxation, eliminate carried interest special taxation for hedge funds and private equity firms.
That would be huge.
Get rid of the loopholes.
I have no problem paying more in taxes.
But what I love quoting in Thomas Sowell, the black conservative economist.
Incredible comment.
He says, in this era of social justice, what is your fair share of what someone else has worked for?
Now, you speak to Bernie Sanders, who's a communist.
He's not a socialist.
He's a communist.
He says the marginal tax rate is 90%.
You speak to Elizabeth Warren, she says 70%.
You speak to Paul Krugman, New York Times, 64%.
I'm willing to work six months for the government, six months for myself.
I have no problem with progressive income tax structure.
I think the biggest question we have to confront as a nation today is what should the maximum tax rate be on wealthy people?
Because that will define the revenue yield to the government.
The government's got to size themselves to that revenue yield.
And I'm willing to work six months for the government, six months for myself.
And that sounds about right and fair.
Beyond that, I think it becomes confiscatory.
I want to give away.
I work for my money.
I want to give it away.
I don't want the government giving it away.
So you know how sometimes a progressive will say, well, you know, that's all good and dandy.
You don't want to go to 64% or 70% or 90%, and you're calling Bernie a communist.
How about the fact that for 40 years, the top line taxes, you know, was income taxes was 90%.
And how do you think you can make it?
And Middle America was doing better.
You'll hear a progressive saying that.
What's your rebuttal to that?
Well, back then you had enormous deductions, which have now been eliminated.
So what does that mean?
Tell us what that looks like.
Well, you know, you have a lot of write-offs.
You can go with oil and gas ventures and real estate ventures and other forms of deducting expenses against your income.
So your effective tax rate was not nearly the number that they talked about.
I think it gets to be a question of equity.
You know, you work 12 months a year.
What is the government's share of that?
What should it be?
And I think if you work six months for yourself and six months of the government, it sounds about right to me.
You know, and look, at the end of the day, if you think about it, the wealthy people, there's only four things you can do with money.
I observed this many, many years ago.
The first thing you could do with money is you could spend it on yourself.
You buy homes, you buy cars, you buy art, you buy planes.
I'm married 57 years to the same woman.
She was an educator for 35 years, very purposeful.
And basically, she and I have the same view that material possessions brings with it aggravation.
So we're kind of a less is more.
I drive a Hyundai.
I don't drive a Bentley or a Tesla or a Rolls-Royce.
I give away 100 Bentleys a year charitably.
So I couldn't spend my money.
So it's the first thing you can do with money, spend it on yourself.
I'm not an art collector.
I miss that game.
Like I missed Warren Buffett.
I miss the art game.
I'm not into professional sports, so I don't buy teams.
Second thing you do with money, give it to your children.
But my opinion, if you have a lot of money, which I developed a lot of money over the many years, giving all your money to your kids is a mistake because you deprive them of self-achievement.
And I have two terrific kids, you know, very different.
One has a PhD in environmental sciences, but he worked for his PhD.
The other one has an MBA from Wharton, graduated Stanford Phi Beta Capital.
And he worked very hard.
And I never gave my kids money until they were older.
What age?
What age was it?
In the 40s.
Oh, you didn't give them the money until you.
So they had to make their own money until 40?
Yeah, yeah.
Well, you don't want to deprive them of self-achievement.
How's your relationship with them?
Excellent.
They come home.
The only better relationship I have is with their kids.
Yeah.
People ask me all the time, what's the greatest gift you can give to your children?
Financial independence.
Yeah.
My kids still come home.
The grandkids is the ones you have a problem with?
No, no.
I said, no, I have no problem.
I have a terrific family.
I said, a friend of mine who just recently passed away said if he knew how much enjoyment he'd have from his grandkids, he never would have had kids.
He just had grandkids.
But no, I have three grandkids, 24-year-old, 21-year-old, and a 13-year-old.
And they're terrific kids.
And I'm very close with them.
And so I'd say the first thing you can do with money is spend on yourself.
I'm not a big spender.
And I'm not cheap, but there's nothing I want.
Anything I want, I can get.
I can afford it, but there's nothing I want.
Second thing you do with money, give it to your children.
And I'd explain that that's a mistake if you have a lot of money.
Third thing you do with your money is give it to the government, but only a schmuck gives the government money.
You don't have to give them.
You pay your taxes as a taxpayer, but you don't volunteer to pay them more.
And the fourth thing you do with money is recycle back in society and to try to make the world a better place.
And that's why I've elected to do it with my invest bulk of my money.
And I get a great deal of enjoyment.
Next to seeing my kids and my grandkids grow old in health and purpose, I'd say helping others less fortunate is a highlight of my life.
What are your favorite causes?
Well, it's not the biggest number, but the one that I like the most because it's impactful is Cooperman College Scholars.
So many years ago, I made a decision to put $25 million into a fund to send 500 kids to college.
The criteria was, and you had to live in Essex County, New Jersey, or have a home.
You had to be academically qualified.
I'm big on equal opportunity, but not equal outcomes.
Certain kids shouldn't go to college.
They're better off being tradesmen.
Third thing is you have to have a financial need unmet by government.
And fourth, you have to show the initiative and enroll in a free three-week pre-college program designed by Franklin and Marshall, which explains to these kids what to expect in college.
So when I gave them the $25 million, I said, look, I know the statistics.
They're not encouraging.
35% of Newark High School kids went to college.
Only 5% graduated.
I said, I busted my butt for this money.
I'm not going to throw it down a rat hole.
You've got to show me improvement.
Well, our first cohort graduated, and thanks to Twinkle Morgan and Norm Atkins, who run the program for me, we had a 73% graduation rate, which is competitive nationwide.
So I gave him a second $25 million.
So I gave him $50 million to send 1,000 kids to college.
And you're really changing lives.
The average lifetime earnings of a college graduate is about $1 million plus more than a non-college graduate.
Plus, you're giving them skills to be more competitive in the world.
So I've done that.
More recently, I say this with a laugh, they swapped a saint for a Jew, but I gave $100 plus million dollars to St. Barnabas Medical Center, which is now called Cooperman-Barnabas.
I gave a large gift to Boca Regional Hospital.
I gave a very large gift to the New Jersey Performing Arts Center.
There's a whole bunch of things.
There's no shortage of people that are looking for money.
It's very honorable what you've done with all that given.
I think a lot of times people forget, like, when you make money, what are you going to do with that money when you die?
Crowds don't have pockets.
Yeah, the money is eventually going to go back into the market.
It's eventually going to go into a charity.
It's going to go to a family.
It's going to go somewhere.
And even when nowadays with the estate taxes, the government's still going to end up getting some of the money.
The question becomes, who does better with money?
the free market enterprise or the government and if it's you and i know that answer we We know the answer to the question, but you and I also know that we got to give a little bit to the government to get military, to get some of the work that they do.
If you had, you know the tax code very well, if you had a structure for a tax code that would benefit and change the gap, middle income, upper class, the wealthy, how would you change the tax code?
Well, I think I believe in the progressive income tax structure.
I think we just got to get rid of more of the loopholes.
As I said, you know, 1031 enables all these real estate entrepreneurs to roll forward indefinitely capital gains.
Get rid of that.
Let them pay their taxes.
In my industry, there's this carried interest thing.
It's really ordinary income.
Get rid of that.
And, you know, Schumer talks about taxing the wealthy people.
He's a New Yorker.
My guess is he's been responsible for that legislation not happening.
Exactly right.
A lot of real estate people live in New York, and a lot of the private equity people operate out of New York.
We've got to operate with more enlightened interest rather than enlightened self-interest.
I want to get your thoughts, both your thoughts, on a couple stories that's coming out here.
So Carl Icon, this is a CNBC story that came out this week.
Carl Icon says there very well could be a recession or even worse.
Famed investor Carl Icon said Tuesday on economic downturn could be on the horizon and he is loaded on protection against a steep sell-off in a market.
I think there very well could be a recession or even worse.
Icon said to CNBC's closing bell to Scott Wapner.
Have kept everything hedged for the last few years.
We have a strong hedge on against the long positions, and we try to be activists to get that edge.
I'm negative, as you can hear.
Short-term, I don't even predict.
The founder and chairman of Carl Icon, et cetera, et cetera.
Do you agree with Carl Icon's position?
Let me just say this.
He's a brilliant trader, but in 1980, which is what, almost 40 years ago?
41 years ago, 42 years ago?
He closed out his hedge fund, returned the money because he said he didn't like the outlook.
And we were on a 10, 15-year role in the economy.
He's a brilliant trader, very smart guy, but he has a bearish bent to him.
I don't disagree with him presently.
I think we've had the most irresponsible combination of fiscal and monetary policies in our history.
You know, I would just point out that if you had 100 economists in your studio rather than a very attractive young lady and a broken-down stock jockey like me, basically, and had 100 economists in here and asked them, what is the potential real growth of the U.S. economy?
The response would be probably centered around 2% real, because real growth is a function of productivity growth, which is about 1.5% per annum, and labor force growth, which is about a half of 1% per annum.
Most of the last couple of years, we were growing at 2%, 3%, 4 times potential, yet the Fed was keeping interest rates at zero.
And they pushed everybody out on the risk curve, taking speculative bets.
Six or eight months ago, it wasn't on Scott Watner's show, was on the SquawkBox same network.
I said that if Powell was right on inflation, I would tip my hat to him.
It's not transitory.
And the Fed had a very, very serious miss on inflation.
It's going to take them a few years to get inflation down to where they want it.
64% of a typical business cost is labor, and labor's not coming down.
And then the other one on the fiscal side, this nation was founded in 1776.
We had very limited national debt.
In 2017, our debt grew to $20 trillion.
2017 to 2021, in four years, it's gone from 20 trillion to 30 trillion.
It's a growth rate far in excess of the growth rate of the economy.
I think there's a price to be paid for that.
And we could very well have a crisis.
ICON could be right.
But then again, like I said, he's a very astute trader, very smart guy, very generous guy, too.
Smart guy.
I mean, I'm worth achieving.
You don't get to be worth $18 or $19 billion.
Yeah, exactly.
But I think he's got a point about stagflation.
And I think that you're right, that the fiscal policy was 43.2% of GDP inside of two years.
It was bigger than the New Deal.
And we have nothing productive to show for it.
Nothing.
I mean, we've taught people to not work effectively, which is definitely not the American way.
And at the same time, as you said, the Federal Reserve basically monetized every penny of it.
They acted as co-conspirator.
Now we've got runaway speculation in housing, huge, huge price inflation in food and in energy.
And this was before Ukraine.
That this is the same thing.
Yeah, I think Ukraine has been kind of a smokescreen for him.
It's a red herring.
It's a serious issue.
You know, very hard to make predictions about the future.
But I would say that Putin, to me, is like a wounded animal.
A wounded animal that's cornered is very dangerous.
What makes him dangerous is the nuclear capability.
Of course.
Adolf Hitler, when he saw he was losing, committed suicide.
The question is whether Putin has got that capacity or whether he's going to try to use a nuclear option and take the rest of the world with him.
And I don't know the answer.
I hope not.
But that's a very dangerous situation.
How much pride do you think Putin's got?
Is he a guy that's driven by a lot of pride and his publicity, like how people view him, and he has to always show strength?
I think he can give a damn less.
That's a good thing, though.
That's actually good if he doesn't give a shit, because if he doesn't give a shit, he won't do what Hitler did.
If he does care about what history and people think, he's going to have to do something because people are selling him right now as somebody who's weak.
Yeah, well, my concern is if he didn't have nuclear capability, he's being exposed here for being a paper tiger.
Basically, he can't even deal with the Ukraine.
Exactly.
Let alone NATO.
Let alone NATO.
Yeah, well, that's a real concern because if he resorts to a nuclear solution, very, very negative.
The other thing I watch very carefully is China.
Now, I'm assuming China is a very mercantilist nation, and they see the market in Europe and the market in the United States as much bigger than the market in Russia.
So I think they'll stay out of this.
And I think if China stays out of it and we don't use a nuclear option, this too shall pass.
Yeah, I think they've learned how expensive it would be right now to invade, basically to try and take Taiwan back.
I think that Xi Jinping has learned a big lesson watching from the outside looking in what's happening with Russia and how devastating it's been to the economy.
Yeah, absolutely.
Putin says what with this daily business briefing.
Putin says unfriendly countries must buy Russian oil and gas in rubles.
Let's hear it for the Italians.
They were the first to say no.
Yeah.
And then by the way, meanwhile, did you have an opinion about what Saudi Arabia said that they're thinking about moving away from dollar to price the oil to one since since 1972 they're priced it with U.S. dollar.
Now they want to go that direction.
Well, I think if we keep depreciating the dollar, they'll look to the verse.
They don't have a choice.
Exactly.
So you've been very critical of almost anybody in office.
You've had some comments about them.
Well, I think the Democrats and Republicans both are deficient.
And let me explain.
I think the Democratic Party has been too silent in the violence in the cities by Black Lives Movement.
They should be more critical, more outspoken.
And I think the Republican Party has put on with a lot of bullshit with Trump.
His behavior was disgraceful.
Criticizing a hero like John McCain or Cohen Powell in death shows no judgment whatsoever.
And so very few people other than like Mitt Romney and a couple of others have been critical of Trump.
Trump's economic ideas were superior to Biden's, but his behavior was disgraceful.
And the way I assess it unemotionally is I know a lot of very decent, hardworking people that voted generous, that voted for Trump.
And their vote was basically motivated more because they feared the progressives more than they feared Trump.
Okay, and my view is different.
We live in a democracy.
There are 300 members of the House, 100 U.S. Senators that are going to represent my interests.
And I felt that I would rather take a chance with them than put a would-be dictator into a second term where he have no allegiance to anybody but himself.
I do believe his behavior has been disgraceful.
And so I voted for Biden.
And I voted for Biden very reluctantly, but it was a vote against Trump, to be honest with you.
And I think the saddest thing for our country is a country of 330-odd million people, we had these two choices.
Disgraceful.
So who are you excited about for 2024?
You live in Florida.
You've got a governor here that some people like.
Yeah, well, I don't like his anti-masking stuff.
I would say I had lunch the other day with Joe Manchin, and I could support him, but I don't think he could run as a Democrat who have to switch parties.
I agree with you.
He sabotaged the billback better, so it's hard for me to imagine the Democratic Party would put him on the head of the ticket.
Well, he sat, the State of the Union address, he sat with the GOPs.
And he was in Dallas, Texas recently for a fundraiser, energy industry.
It was all GOP fundraising.
He's got a lot of common sense, and he's got a lot of fortitude.
He's been getting calls every day, multiple calls, about changing his vote, and he hung tough.
And so I would support him.
Mike Pempeo is going to run.
Chris Christie from New Jersey is going to run.
You know, there's plenty of people on the Republican side.
I don't know anybody on the Democratic side that I would vote for at this point in time.
Newsom?
I don't know enough about him.
Gosh, that's a star for them.
Yeah, he's kidding me.
Give that look.
They love Newsome.
He sent out a fourth stimulus check to California.
Totally get it.
As if we had to go to the bottom of the column yesterday for gas something, $400 per person.
That makes no sense to me.
You look at the discouraged consumption.
You don't lower the price.
No, California had net out migration for the first time since 1850 when it became a state in 2021.
They actually had a lot of money.
The word I love to quote, he's no longer governor, but Cuomo, Andrew Cuomo, said basically that people are leaving New York because of the weather.
I thought that was a great comment.
That makes a lot of sense.
I can dead and leave it the last, you know, however many years in decades.
But Trump, you think Trump's running?
I had lunch with a very leading Democrat who said two things, very politically connected, a very fine human being.
I don't feel it's appropriate to mention his name.
And he gave me what I call good news and bad news.
The bad news was Trump is going to run, Trump's going to get the nomination, and Trump's going to win.
I happen to disagree with him.
The good news was he said predictions and the presidential outcome three years in advance have never been right.
You're so funny.
It's the truth.
He's a very leading guy, a very major philanthropist who's on TV like you quite a lot.
He does a great job.
But I don't think the Republican Party will give a nomination to Trump when it comes down to push comes or shove.
Just like the Democratic Party denied Bernie Sanders.
They didn't want him to lead the ticket.
How important are these midterms?
I think it's a lead pipe since that the Republicans are going to sweep.
Maybe that's what's keeping the market up.
But I think it's a matter of how they're going to sweep and what the composition is going to be and whose side they're on because the Republican Party is just as divided as the Democratic Party is right now.
Yeah, yeah, well, it's a divided country.
Do you have any opinions on Lincoln Project and what those guys are doing?
No.
No, not at all.
Okay.
David Solomon.
So Goldman Sachs.
When we were during COVID, I would sit down with a lot of investment bankers.
Call them.
I would have meetings with them, right?
In New York, we'd go have six, seven, eight meetings with them.
And I would say, so tell me what your COVID protocols are right now with your company.
And they'll say, well, you know, we can only do Zoom or we can only do this and we can only do that and we can't go to the office and we can't travel.
And then behind closed doors, they would say, let me tell you, the Goldman Jets are off.
They're traveling.
They're going to meeting with people.
They're sitting down.
They're meeting with the entrepreneur.
They're raising the money for them.
They're doing all that stuff.
The reputation of David is they capitalized during COVID.
I'm sure you have an opinion about David Solomon, who he is and what he's done.
What do you think about David Solomon's leadership?
Outstanding.
I mean, the company is doing extremely well.
He's a very engaged guy.
It's a terrific firm.
You know, I have nothing but good things to say about Goldman.
I sat down with a guy that runs a $10 billion company, and we had dinner last week or two weeks ago at Casa D'Angelo.
And he said, you know, I just had dinner with Solomon, David Solomon.
He said two months prior to that, he said, he flew out on his jet, not with a team of five, eight people.
He flew out by himself because they were trying to do a round of $900 million, whatever the number was.
He says he flew out by himself, and we sat down, we talked, and then he left.
He had a two-hour meeting with me.
That's it.
He just left.
I'm like, he came himself?
Yeah, he didn't send anybody else.
No.
He came himself, yes.
You got to respect a leader like that.
That's doing that.
Remember what Jamie Dimon said recently?
He said, no more Zoom because he'd lost business.
Of course.
Of course.
This is one time where Solomon kind of took everyone's lunch.
And you've got to respect that.
I'm sure you have an opinion also for Jamie.
I think Jamie's almost in a class by himself.
I mean, he's terrific.
I have a very high regard for them.
I know him well.
And I think Goldman, I mean, Goldman is a very accomplished firm, very motivated, wants to do the business.
I had my own experience.
You know, I was one of the few times I was ahead of Goldman in terms of thinking.
I ran Goldman Research for many, many years.
And I kept on telling Goldman, you're making a mistake by not being in the asset management business.
And for 10 years, they told me, Lee, you don't get it.
We believe money managers should do money management.
Brokerage firms should do brokerage.
Don't compete with your customer because Goldman's traditional customers are professional money manager.
And I said, open up your eyes and look around.
The world has changed.
Merrill Lynch asset management, Web Stewart's division of Key to Peabody, CSFP, everybody was in the business.
And they didn't want to do it.
And then one day, Solomon Brothers, who was their art trading rival in the 70s and 60s, announced that Bob Solomon Jr. was leaving the research department to start Solomon Brothers Asset Management.
And Steve Friedman, Bob Rubin, called me up.
They were then co-heads of the firm, said, you know, you were right.
We were wrong.
We made a mistake.
We should have gone into asset management.
Are you willing to leave research and start an asset management division for us?
And I laughed.
I said, sure.
It was a mistake on my part because Goldman, being the great firm it is, understood that assets under management times fee equal revenue.
And I was interested in the performance of the assets, not raising assets.
And after about a year of doing it, I decided I wanted to retire and become a full-time money manager.
But, you know, Goldman, when they go into a business, they're not the first, but when they go into a business, they try to capture 100% market shares.
They're very motivated.
GSAM is a monster.
It is.
And I started.
It's a trillion-dollar business now.
It sat down with a small private equity firm out of New York.
They came into my house last week, nice people, good guys, and their team.
Five people there.
Goldman Sachs, former Goldman Sachs, 28 years.
Former Goldman Sachs, 26 years.
Former Goldman Sachs, 25 years.
Former Goldman Sachs, 26 years.
I see it a lot after 25 years.
Is there like something that happens at 25 years at Goldman that people leave after 25 years?
Because it's a great firm, but I see a lot of 25, 26 years ago.
It's different now than it used to be because people would spend their whole careers there and then either only leave to go into government or academia.
You know, I don't know exactly what's changed, but I would say that when you get up in the morning, you have one suit, and you look in the closet, you don't have to spend a lot of time thinking about what you're going to wear.
Goldman, you know, partners at age 50 are worth a lot of money.
And you have more than one suit in the closet.
And it's a very demanding business, very hard work.
I had a voracious appetite for work, so I didn't leave over that.
I just wanted to do something different.
I did not want to run another business.
Now, in research, self-praised things, but we had a very good team of sales, research, and trading coordinating together.
When I took over Goldman Research, we were largely unranked in these various surveys that tech your technology.
Institutional investor, II Magazine, Greenwich Research, which was founded by Charlie Ellis, Financial World, which isn't in business anymore.
When I took over the research department, we were unranked in those polls.
When I left the research department, we were number one in every one of those surveys.
And there was a category called Portfolio Strategy, which I competed in as a soloist.
And for nine straight years, I was voted number one strategist.
So I was ready for a new mountain to climb, and that's when I went into asset management.
But like I said, I wanted to be a money manager and not an asset gatherer.
So I selfishly have to ask: how did the Federal Reserve's policies, as they evolved, change how you looked at managing money?
Well, I would say the business has changed, not so much because the Federal Reserve is business has changed because the machines now run the world.
And I am highly critical of the SEC.
You know, I wrote Jay Clayton a letter, which he never responded to.
He's now in private practice.
Ironically, he's chairman of the board of Apollo, which I have a large position in.
When I wrote him a letter when he was head of the SEC, he never responded.
I pointed out to him when I came to Goldman Sachs 50 odd years ago, Goldman, Morgan Stanley, Salmon traded stocks for 25, 50 cents a share.
And the Volcker rule didn't exist.
So the brokers had the capacity and the willingness to position and create liquidity.
They can't anymore, legally because of Volcker and economically because of the commission structure.
There's no reward.
Secondly, 50 years ago, the specialist system handled, and the New York Stock Exchange handled 80% of the volume.
Today, 80% of the volume is off-board in dark pools.
And finally, what I'm particularly critical, in I think 2007, they eliminated the uptick rule, which was enacted in 1938 in response to the abuses of 29.
And this gave rise to all the machines to trade the way they trade.
And these machines know nothing about value.
They know everything about price.
And so the market goes up too much when it goes up and goes down too much when it goes down.
And it's a destabilizing force.
But they don't seem to be focused on that.
They seem to be focused more on the trading costs.
I don't know.
I just operate in the world that I'm in.
I'm happy I'm not in the money management game professionally.
I'm being paid a fee.
I can take a long-term horizon and run the money for tax efficiency.
Leon, for the average person that's having a hard time with gas, I saw this article the other.
I don't know if you saw this or not.
Is inflation ruining your day?
Just eat lentils and let your pets die.
Corporations are artificially inflating prices.
Bloomberg opinion came out the other day saying inflation stings most if you earn less than $300,000 a year.
Here's how to deal with it.
Take the bus, don't buy in bulk.
Try lentils instead of meat.
Nobody said this would be fun.
Okay.
What are your thoughts about some of these things on how people are handling the rise of gas prices?
Well, if they're economically sensitive, they're going to drive less, right, and take public transportation.
And the politicians are trying to ease the pain, so they're reducing gasoline taxes when they should be not doing that.
Yeah, there's talk about price controls, which is really scary.
That didn't work for Nixon.
No, no, no.
I hope we don't go in that direction.
I mean, these oil companies are coining money, no question about it.
I'm doing relatively well in the market because I have 20% of my portfolio in energy.
And I just tell you, look at the numbers, they're powerful, powerful.
Well, they're not making stupid investments anymore.
Well, they're afraid to because they've convinced the public, the administration has, but ESG, and that it's a sunset industry.
And so they're afraid to make investments.
So they're returning the money in the form of dividends and stock repurchase activities.
You can't blame them.
No, but I believe that this capitalist system adjusts and things will happen.
You think this is we're seeing the high with gas prices and inflation or is it still going to continue the rest of the year?
I think it's going to continue until the Fed gets ahead of things or the price of energy pushes us into a recession.
I think we're heading to a recession.
I don't think in 2022, but I think in 2023 there's a growing probability of recession and that will bring the market down.
By how much?
What are you thinking?
Well, I'm thinking when a recession hits, the market will have dropped 40% from its high.
So the high was 4,800, so that would be near 3,000.
But not this year.
That's a pretty big number right there.
Yeah, well, it's a big number, but we're seeing the discussion should center around what is the appropriate multiple for the market.
And when I consider the degree of involvement by the government in the system, I say an 18 multiple in the SP is a reasonable number.
Well, 18 times $225, $230 says the market's fairly valued at $4,000.
The market's been kept in the overvalued territory by very, very accommodative monetary policy.
And that's changing.
I think Powell will be the first to admit that he made a huge mistake on inflation.
Huge.
Biggest policy error the Fed has ever made.
Absolutely agree.
And so I think that interest rates are going to get up to the point where it'll hit the economy.
It may take another year to get there.
Right now, the stock market is benefiting to some degree by we're the best game in town.
You know, they say in the land of the blind, the one-eyed man is Kane or with a tallest midget.
You don't want to invest in Europe now, but it's the proximity to Russia.
China's big questions about rule of law and fixed income is totally mispriced.
So, you know, the U.S. market wins by default.
As Richard Fisher used to say, the most attractive horse in the glue factory.
Okay.
I'll think about that one, but that sounds reasonable.
So we had an interesting comment, and maybe Danielle can give some thoughts on this.
Paul Volcker had it right: higher rates, lower prices.
That's the cure.
That is the cure.
But as Lee just said, Jay Powell missed the window.
And now it's going to prove very costly because he's going to have to channel, hopefully, his inner Paul Volcker.
Paul Volcker purposely put the U.S. economy into recession in order to get inflation tamed and the economy paid a price.
And you have to have somebody with the spine and the Constitution to go that distance right now because the Fed is, as they say, so far behind the curve.
And in fact, Senator Shelby asked Powell outright in his recent congressional testimony: Can you be Volcker?
And Powell answered him, I hope when history is written that the answer is yes.
It remains to be seen.
You know, the Fed is only raised by a quarter of one percentage point.
They're 700 basis points, seven full percentage points behind where they should be in terms of tightening.
And that's going to be painful in an interest rate-sensitive economy.
It is very clear that Powell and the fiscal side of the economy has elevated societal issues relative to inflation as a concern.
Absolutely.
And just remember, every recession sows the seeds in the next economic recovery, and every economic recovery sows the seeds in the next recession.
He used to have recessions every four or five years.
The last recession we had was 2008, 2009.
He's going to try to engineer a soft landing, but my guess is we're so far from reality in terms of rates that it's not going to happen.
It wouldn't be a bad thing.
We've got 20% of U.S. companies are what they call zombies.
They can't service their interest expense.
So recessions had been cleansing when they came around with regularity every four or five.
You get the bad players out of the market.
Well, they say a rolling loan gathers no loss.
That's very good.
Are you following what they're saying with Biden's warning about cyber attacks from Russia?
Are you following that story at all?
Yeah.
How much credibility do you give to that, that that could happen?
Oh, I would say very credible.
I'm just hoping the government is astute enough to have plans.
I remember I joined Wall Street almost 60 years ago, and one of the first companies I visited was a company called Bemis Company, okay, in Minneapolis.
And they told me they had just completed a government contract, be news to you, to bury a couple hundred million shrouds along the eastern seaboard because they felt in the event of a nuclear attack, we wouldn't have the time to bury everybody.
So we had shrouds buried along the eastern seaboard to cover the bodies in the streets.
So, you know, the government is always thinking for us.
Hopefully.
They know what's best.
They know what's best.
They know what's best for you, Leon.
I see the smile on your face.
Of course.
I mean, you're talking to the guy who escaped that to be here, so I can make a decision for myself.
If I screw up, go be it.
But no, this is what Biden said.
He said on March 21st, the more Putin's back is against the wall, the greater the severity of the tactics he may employ.
One of the tools he most likely to use, in my view, in our view, is cyber attacks.
The magnitude of Russia's cyber capacity is fairly consequential and it's coming, he continued.
So, you know, does anybody really know what that would look like?
Is anybody talking about what that would look like?
Well, they shut down the power grids and stuff like that.
Of course.
And that's where they can be the most important thing.
Where they did to the colonial pipeline, where they had gas lines for a while.
Look, this is a different form of war, and hopefully it's cyber and not nuclear.
You read my mind.
Much more dangerous.
But that's a good way to sow the seeds of societal unrest in an economy that's plagued by inequality is you turn the lights out.
We have to decide whether we're a capitalist nation or a socialist nation.
I think one of the biggest threats this country has is, from what I read, 30% of the young people think socialism is preferred to capitalism.
It's even higher than that.
That's scary.
So scary.
Did you see the chart about the support for unions since 1965?
Did you see that chart that was shared?
Okay, Tyler, do you have that or no?
If you have that, if you can pull that up, make it.
Okay, so this is from our, go a little lower so he knows who it's from.
That's from Robert Reich, I'm sure, which you appreciate Robert Reich.
Robert Reich is a very important.
Another socialist.
Another socialist.
Public support for unions is at a 50-year high.
This is a big deal.
You see approval rating, how high it is, 68%.
Last time we were there was 1965, a year before you got with Goldman.
Is this, for the average person, I was like, what's the big deal?
Unions are good because they protect the employee.
What does this mean to the average person that's reading this?
I'm not anti-union, but I would basically just say it's very clear that the power is shifting from capital to labor right now.
And that's one of the reasons I'd have a conservative view about the market.
I'm not anti-union.
Basically, this is just a fact of life.
Did the pendulum swing too far in terms of income disparity is a big issue.
Well, I'm talking about CEO pay versus the people who are working for the companies.
Yeah, it has.
But, you know, Warren Buffer says that they ought to name these consultants Ratchet, Ratchet, and Ratchet, because they just come and they bless what the boards want to do.
I think it is a big problem.
You know, I own stock in a company that the CEO has made a shitload of money, huge, huge amount of money.
And the stock is lower than it was a decade ago.
And it's just wrong.
And, you know, I just don't have the time to tilt the windmills.
So I keep the position small or I just move on and sell.
Well, at the end of the day, you get what you pay for.
And you can pay people to be productive.
You can, but I think that business is getting paid more than they produced.
And you quote Kyle Icon.
He's a big soapbox on that.
And he's not wrong.
Business is getting paid more than they produce?
In some instances, yes.
In some instances, they get paid less.
Like I said, one of my heroes was Henry Singleton of Teledyne.
Never made more than a million dollars a year running the company.
And he was absolutely brilliant in everything he did.
He basically did 130 acquisitions intelligently.
He basically bought stocks at other companies intelligently.
He managed his own capital structure.
He bought back 90% of his stock before dying very intelligently.
He made the investors a shitload of money, never got paid a lot of money.
And he made the money because he owned 20% of the company.
And he was totally aligned with the shareholders.
I think that this income disparity is a very long-term issue, and it has to be dealt with through education.
Unpack that.
Unpack that.
Amen.
Well, you know, basically, you've got to create economic opportunity for people, and you've got to give them the tools to be competitive.
And I think education is the best way to do it.
Are you familiar with Michael Saylor?
He's the crypto guy.
He's a crypto guy.
I take a cop out on crypto.
They say if you don't understand crypto, it means you're old.
I'm 78.
I don't understand crypto.
I don't want to say it's a fraud.
I think blockchain technology is for real.
I don't understand crypto.
I got a couple million bucks with a money manager.
It has a 4% position.
So I got $80,000 in crypto.
You got $80,000 in crypto.
Yeah.
That's two Bitcoins, give or take.
$2.5 million guy.
Two Bitcoins.
I know nothing about it.
I don't have an intelligent view.
I know smart people on both sides.
So me too.
And I own a position in Bitcoin and Ethereum, but a person wouldn't call me like, oh, this guy's a full-on.
But I have Michael Saylor here the other day.
He's a smart guy.
He seems like a very smart guy.
When you said education, I said, so why are you doing these things?
This is only one reason.
I got to educate people.
I got to educate people by Bitcoin makes sense.
The one part that more and more I think about it, more and more I think about what's going on is when what took place with Ukraine and Russia, what's going on right now over there, right?
Or what happened with Canada, the whole truckers, what they were doing.
They can shut down your checking account if they wanted to.
They can shut down your credit cards.
They can shut down access to a lot of that stuff.
I can't send gold to you, my family in Iran, and say, hey, you're going through tough times?
Here, in 30 seconds, I'm going to send you gold.
I can't set that.
If the direction of how exchange can take place, the blockchain technology as well as Bitcoin or Ethereum, that's making more and more sense for the younger audience.
And some of the older guys are starting to say, maybe this does make sense.
But Charlie Munger came out.
Rat poisoned.
Yeah, he called her rat poison.
Yeah, he can say whatever he wants.
He did not say good things about Bitcoin.
I would be more in line with him, but the truth is I've learned over the years, you speak about things you know something about.
I don't know enough about it.
Charlie's a very bright guy, and he speaks his mind.
Jimmy Diamond has said things about it.
Warren Buffett said things about it.
I don't think it's in the interest of the U.S. dollar, the U.S. country, to promote an alternative currency.
But it may emerge on its own.
Who knows?
Do you have control over that?
That's free market, though, right?
The market decides to.
I think they've missed their chance.
There's trillions of dollars now held in this stuff, so that they outlaw it.
They'll just tax it to death.
That's all.
They'll basically have adverse taxes on Bitcoin.
Final thoughts I'll give to you here with the audience, okay, with where the market is at, your life experiences.
If you can give advice to me, I'm listening to this.
I'm like, listen, okay, here's a guy that's given me perspective from a billionaire standpoint.
You're a billionaire.
What do you know what it is to be middle-American?
Why should I give my life and go out there and work hard and make some money?
Why not socialism?
Why not these rich people?
All they care about is money.
All they care about is becoming rich.
All they care about is that.
And then they bully the small guy.
Why not socialism?
What would you say to the folks that maybe are more supportive of that socialism?
Look at the most prosperous economy in the world.
It's not a socialism.
I went to Cuba.
We talked about that in the US.
Venezuela.
Venezuela.
These are all economies in the toilet.
Look at Russia.
It's clear that capitalism has been the most successful.
And so I would say that just look at the facts.
Most of the people in these socialist countries want to come to America.
Of course they do.
I'm the American dream.
My father came to America at 13.
I got to all public school education.
I worked hard, made a lot of money, and giving it all away.
That's the American dream.
America became successful not because we envied people with wealth.
We want to become wealthy.
And we're fine.
Started working to put bread on the table to support my family.
And then you develop a certain work style, work habit.
And I work very hard, but I work very hard and give away my money.
And I like giving away money.
I like making money for two reasons.
If I make money and don't lose money, it validates my views.
And all of us have a certain degree of arrogance.
You want to be right.
I don't want to sit in your program and give out bad advice.
I want to give out advice that makes people money.
The second reason you want to make money is to give away more money.
It makes me happy.
You're optimistic about the future.
I would say not as optimistic as I'd like to be.
And Warren Buffett says it well that nobody ever got rich being short America.
But I don't like the polarization of the country.
I don't like the leadership that we have.
And I think that this debt creation is going to come back and bite us in the ass.
Every bubble that we've been through has had a very bad economic outcome.
And I think that that is in the period ahead of us.
So I would close on, not that the market's going to collapse or anything like that, but I got my MBA from Columbia Business School on January 31st of 1967.
And a six-month-old kid, had no money in the bank, had a student loan to repay.
I was broke.
I couldn't afford a vacation.
The very next day, I started my 24-year care at Goldman Sachs, February 1st of 67.
If you go back and check the charts, you'll see in February 1st of 1967, the DAO was roughly 1,000.
In 1982, it was roughly 1,000.
Wow, 15 years later.
15 years later.
Now, I'm not making a 15-year forecast, but I am of the view that we're in store for an extended period of time at very low returns in the equity market.
We may have a big swashdown next year and we come back to where we are now.
But I don't think we're going anywhere for a few years, and you're going to have to work hard and be a stock picker.
And just be disciplined.
Don't be on margin.
Be a cash-based investor and know what you own.
There's no miracles.
We've been through one of the most speculative periods in history.
I mean, just look at, you know, and I said this on TV a while ago.
It's not one market.
You know, there's the SP market, there's the FANG market, and then there's the Robinhood market.
And the Robinhood market was crazy.
They had no idea what they were doing.
Those stocks are down 70, 80, 90%, and they still don't own money and they still look expensive.
Robin Hood's stock has gone from 80 to single digits down 80-odd percent, and they don't earn money.
So, you know, I buy companies that are only companies that earn money.
Smartest guy in the room there was the AMC CEO who kept selling stock into it.
Now he's buying, I gather, and I don't know what he's buying, but we'll see.
Well, first of all, appreciate you for coming out.
This was great.
I'm glad we were able to have you on the podcast here, Danielle.
It's good that we did it together.
The timing was perfect because you guys, your backgrounds collide together, folks.
We'll do the podcast again, I think, next Tuesday with Hanton Fett, created the AI company.
I believe his database is the largest in the world of faces and facial recognition.
It's pretty wild what he's got.
A little creepy, little scary, but something I want to learn more about.
If that interests you, we'll see you next Tuesday.
