🧠Kant’s Revolutionary Investing Paradigm – how 18th century philosopher Emmanuel Kant’s “Copernican Revolution” in thinking applies to investing. Discover how shifting your perspective from “risk exists out there” to “we construct risk” can transform your approach to volatile markets.
💱 Dollar Defense: Getting European Exposure – with uncertainty around the US dollar, we break down four practical strategies for US investors to increase their European exposure.
🚢 Tariffs and Supply Chain Disruption – how recent tariffs are already causing massive shipping declines between China and the US. Learn why these disruptions could take up to a year to fully impact consumer prices, and what it could mean for inflation.
📊 BlackRock’s Vision for Market Democratization – Larry Fink, CEO of BlackRock, makes the case for greater democratization of investing. We discuss his vision for making private markets accessible to average investors. Could this revolution bridge the gap between public and private markets? And does Tokenization of assets really have a role here?
📈 Luke’s First Buy Since January – after months on the sidelines, Luke reveals why he’s taking a position in a European pharmaceutical giant. Is this European dividend-payer poised for a comeback despite fierce competition?
🌴 Thank You for Supporting Wall Street Wildlife on https://www.patreon.com/wallstreetwildlife
💵 Your support helps us continue bringing insightful episodes and valuable investing wisdom
Segments:
00:00:00 Cold Open
00:00:52 Introduction
00:08:49 Krzysztof’s Bold Prediction for this Autonomous Car Leader
00:14:50 Biotech vs. Med Tech
00:19:03 Kant’s Philosophy and Investment Thinking
00:28:30 Tariffs Impact on Global Shipping
00:35:15 Navigating Consumer Effects of Tariffs
00:42:21 Larry Fink’s Vision for Democratized Markets
00:47:56 The Case for Tokenizing Markets
00:56:31 How US Investors Can Gain European Exposure
01:09:47 Understanding ADRs vs. Direct Foreign Investments
01:15:46 Safari Stock: a European pharma giant
 E77 Euro Exposure and Kant with ads
[00:00:00] Luke: If people believe there’s gonna be a recession, then they buckle down and they save money and they’ve been more conservative with their spending.
[00:00:06] Krzysztof: I don’t need more chaos in my life at the moment. So, I’m sorry for not being able to say anything more coherent than when you hire clowns, uh, expect the circus kind of thing.
[00:00:18] Luke: a lot of the stocks I’m invested in seem to be objectively overvalued.
[00:00:22] Krzysztof: there is no such thing as like a kind of correct price for something, if that makes sense.
Price is a construct.
[00:00:30] Luke: I tried to avoid biotech ’cause I just don’t really understand it
[00:00:33] Krzysztof: If AI is as good as it seems like it’s going to be.
[00:00:37] Luke: I just tend to try and buy quality companies and hold ’em a long time. For an advertising free version of the show, check out patreon.com/wall Street Wildlife.
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[00:00:52] Luke: Hey, and welcome to the latest Wall Street Wildlife with Christophe and Luke on today’s episode, when are tariffs gonna [00:01:00] hit the US consumer and what’s the world gonna feel like? BlackRock makes the case for increased democratization of investing. Christoph’s gonna tell us what that means, plus how US investors can increase their exposure to Europe.
And I make my first buy trade since January. At the back of the episode, I’ll tell you what I bought and why.
[00:01:23] Krzysztof: Goodness. That’s exciting. How’s your weekend badger?
[00:01:26] Luke: good. You know, I got a special consignment of a final piece of Patreon merch. I got my Wall Street Wildlife t-shirt.
[00:01:35] Krzysztof: Oh, oh, oh. I, I knew there was, I I sensed there was something extra shiny and debonair about you this morning.
[00:01:44] Luke: Got all the merchandise. Now Katrina even said that’s a nice t-shirt and it is actually quite a nice fitted t-shirt. So I might try and find the, whoever manufactures the actual t-shirts and get myself a few extras.
[00:01:54] Krzysztof: Oh, sweet. Oh, I can’t wait to get my paw on on one of those. But, [00:02:00] uh, everyone listening out there in YouTube land or Spotify land, we’re at Wall Street Wildlife, I’m sorry, patreon.com/wall Street Wildlife, where you could join one of our tier to get your hands on on this, uh, really stunning fashion statement.
Uh, I’m glad you’re bringing some light and, and joy in, into. Into our conversation. I had another really rough weekend badger. Uh, my other furry buddy left us this weekend, Daisy. And so I’m still in the immense throes of grief and, uh, you know, it’s just such a heavy, heavy, uh, hole in the heart. And this is now my, I lost two buddies and a close friend in six months.
So this whole death thing, man, uh,
[00:02:56] Luke: Yeah,
[00:02:56] Krzysztof: you know, it’s what we get when we’re born, I suppose,[00:03:00]
[00:03:00] Luke: has some heavy shit at you. Sorry to hear that.
[00:03:03] Krzysztof: man. Uh, goodness gracious. Uh, so anyway, it’s, it’s lovely to see you because, you know, in moments of intense loss, it’s, uh, I guess I suppose you could, you know, despair and fight reality, or you could be grateful. For what’s here and what we have, and I’m, uh, immensely grateful to be doing this with you.
[00:03:27] Luke: I’ll be your
[00:03:28] Krzysztof: uh.
[00:03:29] Luke: I’ll be. Now I was reflecting on sushi’s mortality the other day, so I, at the weekend I said, don’t wanna go into too big of a sidebar. But, uh, I did, I did Katrina and I did 23 and me years ago. I think I may have said in a recent episode, like, we found some, uh, I found a second cousin. So essentially like a whole branch of the family, neither of us knew existed because of the somewhat scurrilous nature of my great-grandfather.[00:04:00]
Uh, so we went to meet them at the weekend, and so that was, um, fabulous to my mum and my aunt to meet their, uh, new first cousins. So like pretty close relations with them. Unfortunately, they’ve got like, uh, a doggie who’s definitely on his last legs. Um, Bailey the dog. So, uh, and I, but Bailey’s two years younger than sushi, my cat, so I came back.
I know cats last a bit longer than dogs, but sushi’s looking pretty like healthy and handsome still, but. You know, it might be, might be near the end of the road for furry friend at some point too.
[00:04:32] Krzysztof: well, you know, that’s the thing. Uh, the decline was, was so, uh, quick. and, but we knew it was the right thing, right thing to do. one of my last moments with Daisy where she, I was just holding her and her little. I could feel the breath she was taking, uh, you know, as she was inhaling and exhaling on my arm.
And it’s just such a extraordinarily tender, tender moment and precious this, this life. And it goes by so [00:05:00] fast. So all y’all listen to us, uh, sorry to be beating the same drum repeatedly, it seems like, but it does go by fast and you never know. So, uh, investing is for living or, or living, more fully.
It’s, it, it’s one of the things that enables us to get more out of life.
[00:05:20] Luke: well hopefully we don’t need to remind ourselves of that again this year. Let’s, uh, let’s, let’s hope.
[00:05:25] Krzysztof: I know. I hope because like, you know, I’m running out of, well, I hope it’s not one of us. I, I hope you don’t get some bad news, bad news about your humble monkey, your humble, uh,
[00:05:40] Luke: You, you gotta, you gotta stay alive. ’cause um, I think we might be getting together at some point in Europe a bit later this year, like more to be announced. But don’t die before then. ’cause I fancy my little vacation to come visit you.
[00:05:54] Krzysztof: Yeah, I’d be, I’d be way less fun. Dead.
[00:05:58] Luke: Plus I, I mean, I, if I have to come to your [00:06:00] funeral in Austin, like I am actually. It’s gonna, we’ll come back onto this topic a bit later, uh, about how Americans can get exposure to European stocks, like what’s going on with the US border. Uh, like I’m seeing horror stories all over Reddit about like both European, well, Europeans who are there legally and American citizens, like having a whole bunch of trouble when they come back into the states and being like, put in detention.
Like I’m supposed to be coming out for the US open to visit a couple of close friends. And even I’m thinking like, is that the right thing to do right now?
[00:06:35] Krzysztof: Uh, it’s a mess. It’s a, it’s a complete mess. Uh, man, I really, uh, uh, you know, because of this heavy heart, I, I had, uh, all weekend long when, uh, when bad news was showing up in the newsfeed and all the big headlines, I did not look, uh, because I don’t need more [00:07:00] chaos in my life at the moment. So, I’m sorry for not being able to say anything more coherent than when you hire clowns, uh, expect the circus kind of thing.
[00:07:10] Luke: Fair enough.
[00:07:11] Krzysztof: Uh, I, I do know, uh, the one thing I’ll say is that on the university level, there’s many students being deported. Uh, many students, graduate students not being let in. Uh, and many students don’t know, you know, what to expect or how to, how to deal with any of this. So it’s, it is major chaos and it’s, you know.
I try, I pride myself for trying to say, stay as, call it, curious amidst the complexities. But the more I see outright violations of law and certain freedoms, the more it seems shameful not to say something, you know, openly about [00:08:00] fundamental violations. But I let this not be the episode. I’m not ready to, to go ranting just, just yet.
[00:08:08] Luke: Fair enough, fair enough. Well let’s turn to some, uh, investing news and before we get into our headline topics for today, it is earning season and this is gonna be a particularly interesting earning season. Like we’re recording on the 21st of April and um, Tesla report tomorrow as do a couple of other stocks in my portfolio, intuitive Surgical and I think Lockheed Martin.
So I’m gonna be pretty busy over the next couple of days on my running, listening to earnings calls and takes. I I don’t wanna make any predictions about Tesla ’cause they’re gonna age so quickly, but I think we can probably be assured it’s gonna be a volatile moment for the company right now.
[00:08:49] Krzysztof: I will make a prediction.
[00:08:50] Luke: Go for it.
[00:08:51] Krzysztof: It’s gonna be bad.
[00:08:52] Luke: Yeah. Okay. But I mean, so bad results, like, okay, so what do we know? Yeah, like, deliveries are gonna be down, but I think the [00:09:00] market’s already priced in like a bunch of that. Probably like the thing that really drives the market or certainly for growth stocks and stocks like Tesla are forecasts. What does the company say about their future?
Um, planned expected deliveries. So that’s really gonna be like the headline news tomorrow. We don’t know what Musk and his team are gonna say about that, but, but, um, I imagine it’s gonna be ugly like Tesla, despite the fact that Musk is in bed with Trump. Um, Tesla get hurt by tariffs. Plus you’ve got all the anti Tesla sentiment we talked about on a recent pod.
[00:09:38] Krzysztof: I don’t think the market is pricing in a report that could be way worse than even anticipated. And, uh, for me right now, Tesla is, I’ve said this so many times, it’s not what they’re doing now. It’s what they’re going to be doing that’s most investible. And what [00:10:00] they’re going to be doing is not happening now, and it’s not gonna happen next quarter.
I. So on this call, I’m guessing Elon’s gonna give us, you know, his rah rah pep pep talk about how it’s gonna be the world’s most valuable company with the robots and with the auto taxis. But, I think the market’s probably not gonna buy that. It’s not gonna be enough to compensate will probably be even worse results than, than anyone could anticipate.
Because, the outcry, it was this, it was this quarter, right? It was the previous three months that were, that had the, he had the most, call it political, uh, damage caused the most political damage in terms of people actually, you know, destroying Teslas on the street and buying stickers saying, you know, I want no part of, I bought this car before Elon was crazy, and all this kind of stuff.
So in the sense that the market is a short term, what’s it [00:11:00] called? Uh, weighing machine? No. What’s that?
[00:11:04] Luke: The, the quote is in the short term, the market’s a voting machine in the long term. It’s a weighing machine. Yeah.
[00:11:09] Krzysztof: Yeah. So I’m using that adage as the vote’s gonna be bad. Um, my prediction, I’ll actually, I’ll, uh, for the fun of it, for, for ships and giggles, I’m gonna say the stock drops, uh, something like another 10%. And by the way, it’s down 7% as we’re recording now. So I, I’m, I’m sensing it’s kind of anticipating something along the lines of what I’m talking about, but I wouldn’t be surprised to see a drop below 200 bucks per share.
[00:11:40] Luke: Yeah. Yeah. It’s like $225 pretty much at at the moment of recording. Wow. Okay. Sub $200. Do you own any Tesla right now?
[00:11:48] Krzysztof: I sold, yes, I have some, but I sold about 50%, uh, some weeks ago.
[00:11:56] Luke: some weeks ago.
[00:11:57] Krzysztof: And, uh. Yeah, two or [00:12:00] three weeks ago. Um, it’s entirely in anticipation of, you know, it’s, it’s more market timing, kind of Tom foolery, but I wanna buy more shares back cheaper. And it’s gonna be what, uh, in my mind, like at about a year till maybe the Robo Taxii stuff starts showing up.
It certainly won’t be in June. I mean, he says June for Austin. Right. And maybe that’ll be a little pr rah rah, but certainly won’t be material for, for any, you know, company level wide income. So I’m hoping I have another year or so to buy back cheaper.
[00:12:34] Luke: Yeah. Fair enough. Yeah,
[00:12:36] Krzysztof: And by the way, I have a small allocation in King of the Jungle, which I haven’t touched for a
[00:12:42] Luke: yeah. I’m, I’m like four point a half percent, maybe 4 0, 4 0.2% Tesla in my real money portfolio. Um, and I haven’t touched it since September. It looks like I last sold Tesla in 2021. And then I’ve added to it in mid [00:13:00] 2023 and late 2024. And that most recent buy was looking good, but now I’m slightly below that, that cost.
So I’ve lost a lot bit of money on that most recent ad, and I, I’m just, I’m not touching it. I, I kind of agree with you. Like we’re probably gonna see more bad before we see Good. Um, it is still overvalued, you know, for the last couple of episodes I’ve been ranting about the fact that the market’s taken a hit, but a lot of the stocks I’m invested in seem to be objectively overvalued.
And Tesla’s one of those, even, even if it like drops down 10% tomorrow to sub $200, it’s still probably overvalued, but it’s such a hard company to value because there’s all these essentially intangible future things that you’re kind of pinning the thesis on, like Robax.
[00:13:47] Krzysztof: Uh, agree. So we don’t advocate for this very often on the show, you know, kind of dipping in, dipping out. But this is one of these moments that I, I don’t know, it, it feels like, [00:14:00] uh, the, it feels I’m emphasizing, feels like the probabilities are in my favor by doing a little bit of short termism. Uh, because the news is kind of so obvious and, you know, the market in the short term does react emotionally.
So
[00:14:21] Luke: So I feel like, I suppose maybe I did all this before, so I, I felt like I did all my selling up until like January time, and now I’m just waiting for valuations to get a bit more sensible. And I what, like I talked about a couple of stocks. I’d set limit order, limit buy orders on last week, and I’m, I’m gonna execute, I’m buy.
Well, when markets open in Europe tomorrow, so I’ll talk about that at the back of the episode, but essentially, I’m still kind of sitting on my hands apart from that one,
[00:14:50] Krzysztof: Okay. You wanna tell us about Intuitive Surgical as your largest position? Anything you’re looking for?
[00:14:57] Luke: med. Med tech tends to be a bit more [00:15:00] resilient and it’s probably gonna be more resilient too. Like tariffs ’cause like demand for medical procedures, like essentially intuitive surgical robotic surgery manufacturer. They sell these robotic surgeons called DaVinci to hospitals all over the world. But it’s kind of a razor and blades I kind of jokingly used to say like robots and blades business model.
Like they make most of their money from, um, the consumables that the actual divide, like the kind of the thing at the end of the robotic arm, the instruments for like cutting and sewing and slicing and doing different things. Suturing, like they make the money by supplying those. And you can use those for like two or three procedures, but then you have to throw them out.
Um, and like that’s not really gonna be impacted by um, like tariffs. They do a lot of their manufacturing domestically and it’s also not like the demand isn’t gonna be impacted, especially [00:16:00] ’cause most of the procedures. Are like non-elective. Obviously there’s some like cosmetic surgery and things like that you might put off if you’re feeling a bit broke.
But then if you’ve got medical insurance like you and you need to get something done, you’re probably gonna get it done. And if it’s like a chronic condition, like you’re gonna get it done no matter what. Um, so anyway, like med tech tends to be a bit more resilient and stable. It’s a big position in my portfolio, like 15%.
I think I said it’s the one I’m never selling unless it gets above 20% allocation.
[00:16:31] Krzysztof: Yeah, and, uh, I won’t, I won’t go on and on about this, but in general, I’m really, uh, looking for more investments in the biotech sector because it’s been so badly beaten down. Uh, in fact, EDS is interestingly one of the strongest performers in recent weeks. Um, as another example of, you know, when life’s on the line, it’s kind of its own thing, as long as it doesn’t get disrupted.
And obviously intuitive surgical seems like it’s in [00:17:00] pole position. You’re not worried about some up and new up and comer, correct.
[00:17:04] Luke: not. Yeah, like there’s no com, there’s no real material competition. Um, and like you said, biotech there, but like EDS and Intuitive Surgical, they’re more like med medical technology. Like if you imagine like the Venn diagram, like the big bubble in my mind is like medical technology. And then within that you’ve got like biotech and actually like devices and, I don’t know, like services and different, there’s like different subsets.
I tried to avoid biotech ’cause I just don’t really understand it and it’s um, uh, like it’s just highly volatile, highly speculative kind of investing. Um, but uh, but I do like my medical device companies and I’ve, I’ve bought Eds twice and it’s on my list of things I would like to add to. I’m just kind of holding off right now.
But, um, but yeah, that’s, that, that looks like it’s performing pretty well in the last couple of weeks. And I [00:18:00] dunno if you read Jonah Lupton on X, um, pretty prolific like fin it chap, he’s actually doing some quite decent due diligence where he’s tracking Edix flights. ’cause you’ve got like flight data as public data and he is using that to try and get almost like a real time insight into their demand.
And I think, I won’t try and pull out any specific tweets, but I think he’s quite bullish on them as a consequence to the data he’s seeing.
[00:18:27] Krzysztof: Yeah. Right on. Uh, thanks for that clarification between biotech and, um, med tech. It’s a important one. I, I don’t think biotech is speculative, uh, in the sense if you, if you can speak biotech language and if you could do, do the work, uh, it’s speculative in most ways that average investors don’t know what the hell they were talking about.
And yeah, then it’s like binary outcomes.
[00:18:53] Luke: Anyway, Christophe, should we, uh, let’s get, let’s closer to our headline topics. Christoph, I think you are gonna teach me about a [00:19:00] revolutionary, uh, philosopher and what he has to say about investing.
[00:19:03] Krzysztof: Yeah. Uh, well, he actually had nothing to say about investing, but I’m gonna bring it, I’m gonna tie it in. This is so pop quiz for you, Badger, Copernicus,
[00:19:12] Luke: yeah. I’m, I’m like persecuted by the church. He was like, the world is not the center of the universe. That dude,
[00:19:18] Krzysztof: Yeah. The we. But, but this is worth going slow, around slow. Think about that. For the history of humanity. We look out in the heavens and, and the sun is the center, right? I’m sorry. The earth is the center right? And the sun goes around us. Lo and behold, it’s exactly the other way around, right? Uh, imagine just, you know how mind blowing it is to sort to, to.
Discover for real that the way you thought the world was was exactly opposite and then to have to adjust everything around that revolution. Right. Well, in the philosophical world, uh, one of the giants is Emmanuel [00:20:00] Kant. In sometime around the late 18 hundreds, I mean, I’m sorry, uh, 18th century, so late 17 hundreds, he wrote something called critique of pure reason, and this brought about what’s in philosophy, commonly called the another Copernican level revolution. We usually, here’s what it is. We usually, it feels to us like we go around, we live in the world and the world is out there, and what our mind does is it kind of conforms to the world. So we’re like, you know, we’re learning about the world. Like that’s what knowledge is. Kant said is that it’s exactly the opposite.
That in fact, it’s our minds that shape the world. There is no direct access to something called the world out there. We cannot every, you know, [00:21:00] if you think about what seeing is, you’re seeing in your, our perceptions are the thing that, um, the filters if you will, or glasses, right? We can’t not have our own glasses.
So it’s kind of like objects appear the way they do because of how our mind organizes them. And one of the tools we have at our disposal, I’m not going to get too kind of way out there, but things like the physicists now say space and time and causality are not out there. They’re what our mind does to make sense of, uh, relationships.
So we create in essence, time and space in causality. So, you know, if you really sit with this, it’s, it’s, uh, or if you really try to feel what that means, it can really be disoriented potentially, or like, I don’t you, or maybe it’s too hard to even [00:22:00] feel that. Time doesn’t really exist. Space doesn’t really exist.
It’s, it’s just a filter. It’s just like a label we
[00:22:07] Luke: Well, the White House is on your side, right? They infamously published like a letter or something last week saying our technologies can control time and space, and they got widely ridiculed for like that weird one-liner.
[00:22:20] Krzysztof: Yeah. Right. So what does this have to do with investing? Well, I think a lot because usually we, uh. Sort of in the basic way that the pre-revolutionary way of looking at things is like there’s the markets and there’s things like prices and all these things kind of exist and we’re just trying to measure them, right?
Come up with better measurements. But I think it’s more useful if you take this stuff seriously to realize that that the way anything means anything is through our mental models of them. [00:23:00] it’s all like a kind of filter. And so instead of trying to come up with like reacting to things like price. We would be better served to understand more deeply the mental models we’re using to value things because there is no such thing as like a kind of correct price for something, if that makes sense.
Price is a construct. This is the whole thing about, um, I mean it’s, it, it kind of gets out there pretty soon, but, um, the takeaway sort of, slogan I came up with is this notion of am I really seeing risk as though it’s already out there or am I constructing risk? And in this time of volatility, I think that that’s an important shift in, in realization that, that we’d like to think of the world as independent of us and more stable and [00:24:00] we just have to get better.
Me measuring sticks. But all of this is pointing back to us that we’re the creators of markets, we’re the creators of models, we’re the creators of volatility, we’re the creators of risk, It’s on us to basically understand ourselves better. It’s what we talk about all the time on our show. But, you know, to, to kind of, for me to frame it as there’s philosophy before this idea in 17, we call it 90 and philosophy after it, and the world basically changed once people began understanding this, the whole place in the world really changed a lot, and I think we could become better investors.
All of us if we kind of sit with this a bit.
[00:24:45] Luke: Look what you’re, what you’re saying resonates in some ways, like let’s say a recession, right? That is almost like a self-fulfilling thing and what people believe. If people believe there’s gonna be a recession, [00:25:00] then they buckle down and they save money and they’ve been more conservative with their spending.
And that across like a whole society of people. If the net belief is this is gonna happen, it’s kind of self-fulfilling prophecy. So that there’s that, but I think you’re saying something deeper, which is like nothing really exists. It’s like our perception of these things. And that, oh, okay. That’s a nice philosophical idea, but it’s not actionable.
[00:25:26] Krzysztof: Yeah. Yeah. Uh, well, um, it, it, it is, and it isn’t on a, on, on one way It is Right. Sometimes after it ha uh, after doing something for a long time, you know, it just becomes intuitive. But I think it helps us be less reactionary, I’m not saying that it’s necessarily just perception. Everything’s perception.
I mean, there’s part of it that’s kind of sort of true, but it’s more that everything is relational. And you’re right that it becomes, things [00:26:00] become self-fulfilling, but we create the the world and if you are looking at all this risk and you kind of falsely assume that it’s out there and you have to adjust to it, that’s taking the stick from the wrong end look.
Look at, look to the extent that you yourself are creating your own causes and conditions for feeling freaked out. And yeah, if enough people, I mean, it is at some point you do get to this. If enough people panic and go on bank runs, then bank becomes bankrupt, right? Because. They’re projecting risk onto a system and then that, that brings it to life. Um, this is the kind of stuff though that you, I hope it’s useful, it’s useful for me anyway, as an investor because it makes me feel more in control in one sense that [00:27:00] no, um, it’s not about like, no, I’m not in charge of the world, but I am in charge of my, the goggles or the glasses that I put on. And if I put on really freaked out, paranoid, scared goggles, that will be the way I interpreted, interpret all the data that I see, and that’s not going to make me wiser or make better decisions. So seeing my place in my contribution to the panic and whatnot helps me stay more grounded.
[00:27:31] Luke: I, should I be sort of reminded of the. Uh, the matrix and like neo, uh, in the waiting room for the, uh, the Oracle and there’s like the Buddhist looking kid and he’s like, simply realize there is no spoon. And then your, uh, is that, is that essentially that idea?
[00:27:48] Krzysztof: Uh, close. It’s just, I would say there is a spoon that’s just constructed in, in, together with other you, with, you wouldn’t even [00:28:00] be able to use the word spoon if there wasn’t somebody else to hear it.
[00:28:03] Luke: Alright. Well, so let me, let’s take it, let’s take this now into like a totally different topic, but maybe we’ll come back and revisit this idea after I give you some like really hard data and some thoughts around what’s happening in the world right now. And then you can tell me if, uh, simply realize there are no tariffs.
I dunno, because, uh, because these tariff.
[00:28:30] Krzysztof: Tariff, there are
[00:28:31] Luke: There are Sarah, and they’re hitting, so I’ve got some data for you. here is some data on week over week changes in ocean bookings from like last week of March to first week of April. And so, um, this is essentially the change in like freight coming across from the rest of the, well going, moving globally.
I think, so tus just to kind of ground it, are 20 foot [00:29:00] equivalent units, which is like, uh, almost like a container, like you make these big container ships and so. The, these declines in global imports and exports, these represent around three quarters of a million containers, like reduction in global shipping.
And you can see obviously like self-evidently the, the biggest decline is us, sorry, is China into the us so like there’s a whole bunch of goods that would’ve been sailing. And haven’t arrived yet. And it takes a while for these impacts to kind of flow through the supply chain. Um, I read an estimate that we’re probably not gonna see because some of these supply chains are quite long and complex, like you can imagine, some of these containers will have like raw materials, which then get assembled and it builds like final goods in the US and then those things end up on supermarket [00:30:00] shelves or with retailers or business to business.
So it could be as long as 12 months from like now-ish before we really feel the impact. But we are gonna feel the impact of this decline in supply chains and something sooner than others. So, uh, and then what’s, well, what’s gonna happen if supply essentially starts to dry up? Well, your, the demand is still there.
Less supply. Economics 1 0 1, like prices are gonna go up and then that’s gonna drive inflation. So like, and it’s too late to make these changes. Even if tariffs got reversed and put back to normal. Like today, these ships are not sailing and the lack of confidence from exporters and importers is such that like supply chains wouldn’t be put back in place just ’cause if the tariff suddenly got turned off, they could get turned on again tomorrow.
Like it’s so unstable. [00:31:00] That’s sort of political decision making environment. I. Like, I think most businesses if they’re smart, are just gonna be like prudent and conservative and probably try and like de-risk their supply chains by getting like multiple suppliers, ideally domestic, but like some things you can’t create domestically, like coffee for example.
Um, so yeah, like we, the US consumers or the world’s consumers haven’t felt the impacts of this yet. It’s gonna come though. It could be, it’s gonna start like price increases are probably gonna start now-ish in anticipation of these impacts, but we’re not gonna feel the full impact for up to a year. So there’s some real data.
Um, what do you make of that? And then maybe you can try and apply your can philosophy to that as well.
[00:31:46] Krzysztof: I think, I think, uh, con could, could go back to, I don’t think we need him for this. Uh, two questions for you. I remember during [00:32:00] the early-ish stages of Covid when car prices became. Nuts. You know, I was able to sell a used car for like, way, way, way more than I, I could have, you know, uh, predicted. I was like, what the hell?
Why? You know? Is it the same? Do So do you think a similar thing’s gonna happen? Like, put it this way, uh, should I put my older Tesla model three on the market? Should I sell it now or should I wait? Let’s say like six months or a year. What do you think the price is gonna go? The supply demand thing is going to increase the price of something like a Tesla because all these other imported cars, cars will no longer be
[00:32:47] Luke: that’s complicated, right? Because I. Tesla is specifically complicated for a couple of reasons. And the car industry is specifically complicated, like in North America, um, like [00:33:00] most cars are in are man, like majority of cars like sums are manufactured domestically. Most though have parts that come in internationally.
And then you’ve got like all the cars from Germany, like Mercedes and the BMWs coming in, which are gonna fill tariffs. You’ve got like Chinese cars or cars being manufactured in China. Um, like a lot of the Asian manufacturers, like the prices of them are gonna go up significantly. But Teslas facing its own unique challenges for all the reasons we talked about at the top of this episode.
So, and I couldn’t make a confident prediction, but if you were just to be really simple, yeah, the price of new cars will probably go up, like the price of all goods will probably go up and that will. Necessarily you would think pull up the price of used goods if they have like economic value, like a car, a used car is still a very valuable, um, item.
So yeah, in theory, the price [00:34:00] of your used Tesla should rise because the price of a new Tesla is almost gonna have to rise, or Tesla are gonna have to sacrifice their own margins because of their own increased costs.
[00:34:11] Krzysztof: Yep. Now, the other, uh, the other piece of this is. I mean, I, this is so, so reductive, but if part of, if part of this strategy is to increase US-based manufacturing and buy good old us of a, instead of, uh, importer, then there are products, right? That won’t be going up in price, all the products that are facing these tariffs.
So I’m wondering, you know, that’s a US-centric, I think view because of how much we do bring in. Like you, coffee is a great example, counter example. But what if, to what extent someone like me who, I mean I try to also pride myself on not [00:35:00] buying too much other than books or like not needing too much, you know, like I, I try to live a minimalist ish existence.
What if I kind of reorganize my purchasing towards basics made in the us?
[00:35:15] Luke: Yeah. I mean, that’s what, and that’s what the, that’s what these policies are trying to encourage, right? Because they’re creating this artificial increase in international goods, IE tariffs. So that ideally two things happen, like American consumers, well first of all, I suppose American businesses start manufacturing domestically, um, because that’s, you know, build and buy American.
That’s what all countries really want. They want like domestic consumption, but then, um, like you should see a price difference and that should encourage American consumers to consume domestically. But there are some things you can’t, like coffee, for example, like you can’t manufacture coffee in the us, don’t have the climate for it.
Like most coffee comes in from, I [00:36:00] think Vietnam and Brazil.
[00:36:02] Krzysztof: Yeah. You know what I’m especially worried about Badger, uh, price of bananas.
[00:36:08] Luke: yeah. A monkey. Yeah. Yeah. Come from.
[00:36:12] Krzysztof: I. You know, I can’t, you know, I could, I could probably wean myself off of a coffee, but if all of a sudden I’m paying, you know, nine bucks for a banana, that’s, uh, that’s a hard ask. Uh, point being is I don’t, I haven’t seen the impacts yet. I know they’re coming, but I’m also, I don’t know if I’m being more like a sly fox in this moment and trying to think, well, you know, one way of dealing with a tough situation is to readjust some mental frameworks.
Maybe this is how we bring con back into this and say, okay, what assumptions am I bringing to this? That I have to have this and I have to have this, and it has to come from here, but no. What if I reorganize my life so that I [00:37:00] don’t need this, this, and this, and. I mean, I don’t know, it’s may, maybe wishful thinking.
It, it seems like, you know, there’s that talk that Trump is engineering all this to drop the rates, uh, to basically force the Fed to drop the rates so that businesses boom. Again, I don’t, I think that’s a possible outcome. You know, like once inflation kind of spikes very quickly, then the Fed is forced and then we get back into the quantitative easing part of the cycle and it might be like super bullish for the economy.
I mean, I don’t know. Uh, it’s too complex to predict, but I’m not, I’m not terrified yet. I’m not, I’m not panicking. I.
[00:37:42] Luke: Yeah, I suppose we’re not, like, we in investors are somewhat unique because we look at the world in a bit of a different way and we try and look at the, we think about the future in a slightly different way. Um, and, you know, if you’re a more complex investor, it’s probably more you than [00:38:00] me. You can make money on the way up and the way down.
I just, I just tend to try and buy quality companies and hold ’em a long time. what’s my, what’s my point here? So you’re not panicking because you think you can reorganize in your life around like the changing dynamics and.
[00:38:17] Krzysztof: and actually, to be fair, to be fair, to be completely transparent, because of my investing successes, I don’t have to buy a new car. I don’t have to, uh, deal with, uh, say higher mortgage rates. Uh, I don’t have, you know, like I’m not relying on gas, you know, like, so there’s ways in which I think the, uh, people who have the least.
Are unfortunately going to be most impacted.
[00:38:48] Luke: yeah. But that could, you know, if that goes really badly, that could impact, you, could impact all of us. Like if, like, unfortunately as you said, right? Unfortunately, like it’s people who are [00:39:00] already living kind of like paycheck to paycheck essentially. Or maybe they don’t even have a paycheck that’s living on welfare.
Um, they’re gonna suffer the most because their ba, the cost of their basic goods they need to survive in their life is gonna go up. In general. Um, and so you can, you can ex, you can adjust your shopping basket to some extent. Um, you know, continue to buy like, you know, less bananas, but more, I know oranges ’cause they come from Florida or something.
Um, but there are some things you won’t be able to change, um, that you just have to have. And, um, and it’s gonna hit the poorest hardest. Like it, you know, you say you don’t worry, and this is obviously an extreme view. This could end up in with like, literally like civil war and, you know, God knows what, and like a, a massive, much bigger version of January the sixth that really kicks off.
And then, you know, you might suddenly find you under like armed like curfews and stuff because everyone’s like looting the streets because literally like some [00:40:00] significant proportion of people cannot afford to live their life. And then like society falls apart. Right,
[00:40:05] Krzysztof: Right. That’s the cycles. That’s what we see in historic cycles. Um.
[00:40:09] Luke: And I’m not saying that’s gonna happen. I don’t believe that for a moment, but, um, it’s probably, I don’t think you should panic, but also at the same time, you shouldn’t be complacent. But that’s not to say you should be like stockpiling, like guns and digging like a bunker in your back garden.
Right. You can worry
[00:40:23] Krzysztof: Yeah. And
right, and for us investors, you know, um, things like consumer staples, I suppose are usually thought of as safe and steady sources of income. Uh, I’m not sure if that’s a good place to be looking at versus, you know, if you look at our cumulative portfolios, were tech heavy. Uh, I dabble in the biotech stuff and I’m looking forward to things like energy and the AI stuff because, because in this case, as we’ve said in so many times, AI could be, AI on the back of [00:41:00] tech, could be the sort of.
Hor, you know, night on night with shining armor. That kind of gets us out of this potential depression. But to be remains to be
[00:41:10] Luke: And at the same time, acknowledging that’s like the AI optimist view, which you and I are, but the AI pessimist view is like what we’re going through now, and potentially that people losing jobs and stuff, money being tight and recession may be stagflation, maybe depression. That might be like nothing compared to when AI really comes and like essentially everybody is out of a job.
Um, so yeah, like who knows?
[00:41:36] Krzysztof: Yeah. Uh, and systems, systems theory tells us things take longer to take effect than we usually give credit for. So there’s always a delay. So, um, yeah.
[00:41:48] Luke: But being an investor is a advantageous because if nothing else, it forces you. If you’re good and you’re actually doing your job, it forces you to think about the future and the impacts of [00:42:00] some of these things. And you’re essentially like doing that to manage your investment portfolio. But you’re also learning like lessons about the world that you can apply to your own life.
Like you, you know, saying, oh, maybe I’ll defer selling my used Tesla because I might be able to sell it a bit more, like a higher price, like BlackRock, have something to say about this. Do you wanna bring us onto your BlackRock topic for today?
[00:42:21] Krzysztof: Yeah, I learned something and I learned something Badger this weekend when I was reading Larry Fink, CEO of BlackRock’s letter to investors. And he matters because he’s kind of, I was saying to you like a Warren Buffet figure, because he’s at the top of a company that has the most, uh, amount of assets under management in total.
So, you know, he controls, uh, markets in a sense, right? So when he talks, people listen, because he, his, his words and views have sway. He, what I [00:43:00] learned, well put it this way, his letter was quite optimistic. It was kind of a rallying cry, and it’s actually, uh, similar to what we say on the show repeatedly in terms of how investing as a way of life could really change a normal person’s life.
That if you actually integrate it into what you do and how you manage money 20 years from now, your life will be, you’ll have much more wealth than you would otherwise. Right. So he’s kind of rah rah into democratizing investing. What I learned, and this is kind of shocking that I didn’t know this or know the extent of this is, he’s saying that you probably know this, but the majority of the world’s investments investing markets are private. Like, it’s kind of like, what the hell? You know, because I only deal with public markets myself. So to me, my view of it is like, oh, that’s the majority of it. And every once in a while you have some companies [00:44:00] that, boy, I wish I could have invested in SpaceX or Ikea or Legos, or I’m like, oh, that’s too bad.
Right? But God, I have thousands to choose from. So, you know, but the stat is that in the US, actually guess how many in the us, how many, what is the percentage of companies are private
[00:44:22] Luke: Yeah, well I suppose you’ve given me a, I wouldn’t, I would’ve, I would’ve guessed less than half ’cause I was the same instinct as you. Even though I do some private investing. But obviously it’s more than half because you said the majority. I, I dunno, I’d be, yeah, I’d be cheating if I try to guess ’cause I thought it was low.
[00:44:36] Krzysztof: It’s something like 81% are private in, in the UK and, and in, uh, Europe, they’re even higher than that. So his point is that the majority of the world’s markets remain private and inaccessible to other investors. Uh, and he wants that to change. He basically wants to [00:45:00] bring more access to private markets so that the whole world could benefit.
His side thesis is that the usual way of financing growth and infrastructure is through governments and banks. Right and raising debt. But now we have so much debt that these old ways of doing things are kind of at their end. So we gotta basically restructure and revitalize the entire financial system.
He’s also saying, and I think you’ll agree with this, that we’re on the cusp of immense, uh, investments in infrastructure because we need not just roads and better call it highways and all that, but data centers, for example, right? If the whole world is now gonna live on ai, we need data centers and one data center.
You’re talking like hundreds of billions of dollars. Like these are major, major new investments, so where’s the money gonna come from? Well, apparently we have abundant amount of capital sitting on the sidelines. He names it [00:46:00] at 25 trillion. So it’s like just basically hanging out, not doing much of anything, not investing, just kind of like.
Gaining tiny little bit of interest in some market money market account, right? But 25 trillion. So he wants, uh, to basically democratize markets way beyond what they are, just allegedly the levels. They’re sort of allegedly democratic. He’s saying they’re not really democratic at the moment or not, not to the level they could be.
And this really perked up my ears because one of the fundamental pieces of his whole letter is that, uh, this fits right in line with the chain link thesis, is that he wants to see everything tokenized, all I mean, the equities all ba basically you could live in the world according to his vision in which you could. Buy and invest in pretty much anything. And if everything lives on chain as a token, the friction of buying and owning these things, the [00:47:00] transparency of buying and owning these things goes way down in things like fractional prices for anything becomes manageable. So, you know, like side example, uh, Mercado Libre is 2000 bucks per share.
Not every brokerage or lousy to buy fractional shares. So many investors can’t buy Mercado Libre, right? Let’s say they only have 50 bucks, right? Same kind of idea. Like you can’t buy shares of a new airport that’s about to be built. But what if you could, right? What if you could buy a hundred dollars worth of a new data center?
Imagine a world where everything is literally on chain and tokenized and. Whether the company is, it’s, it’s basically a case for, yeah, Democrat democratizing everything. And I’m excited for Chain Link specifically because that’s the infrastructure that would help make that happen. And, uh, it’s a
[00:47:56] Luke: making a leap. You’re making quite a big leap here. I know you have. I [00:48:00] know in your mind everything go links back chain link. I think it’s just like chain
[00:48:03] Krzysztof: hold,
[00:48:04] Luke: links. Oracle Network is like plugged into your neuro biology and everything. It goes Chain link,
[00:48:11] Krzysztof: well, well, I’m just reporting to you what his, what Larry Link. Uh, Larry
[00:48:17] Luke: Larry Link.
[00:48:20] Krzysztof: busted. Busted. I’m just reporting what the, what this, you know, grand, uh, of, of funds is saying. I connected it to Chainlink because that is the protocol that’s gonna allow all of that vision to happen. But he’s clearly and publicly campaigning for this kind of reality to happen, and he’s no small fish.
That’s kind of the the takeaway
[00:48:50] Luke: Okay. I, I haven’t read the, I haven’t read the, the, the letter you’re referring to. I would, I would not be surprised that we think about his motivations [00:49:00] that he might be calling for increased access to private markets for US investors. Because like in the uk, pretty much anybody can, um. Own like crowdfunding, like you can buy like 10 pounds or a hundred pounds worth of a private market company that is listing their equity and their, you know, they’re not on a stock market, but they might be raising money at like a, I dunno, a few million pounds valuation.
So they’re still private, but you can own a piece of that and you can’t do that in the us I think you have to, there’s more stringent requirements around being an accredited investor, and it’s easier in other parts of the world. So I can understand that he might be trying to promote that. That’s quite, it’s a leap from that to like tokenizing everything and like, you know, me, me being able to buy like a 1% share in your library behind you, right.
[00:49:56] Krzysztof: It is a leap. I mean, that’s kind of the point and it, it [00:50:00] is interesting. see, this is okay, let’s bring back K again. It is fascinating that the world. It’s all about, it’s paradigms and paradigm shifts, and anytime a new paradigm is proposed, the first human reaction is to say, that’s insane, or that’s gobbly.
Go. It can’t be because it’s not the way it is. And it is a major stretch. What he’s proposing is a major new revolution. It would be, it, it, it would be like living, like our current way of doing things would be like the dark ages. But, you know, guess what? Like at some point, you know, uh, the history of the markets was that only wealthy people could invest in.
Could invest their capital because there were no such things as stock markets. Right. That’s only, you know, that was invented something like 400 years ago. Stock markets. And then, you know, in London there was the, you know, more people ha had access and at some point the gatekeepers came on board and say, [00:51:00] no, keep all these peasants out of our, out of our markets because we wanna have all the wealth.
But good sense prevailed and was democratized. And, you know, another stock market floor opened, then we had traders screaming at each other, right. And everything done slowly and mostly, you know, but it is shifting. And so the thought, the, the main paradigm shift is at this moment, only a tiny, tiny fraction of what could be investible is investible.
And it’s mostly reserved for the already. Wealthy and there’s a way, now we have the technology by which that could change. And this guy is trying to sort of make it happen way more quickly than it might otherwise. So from my standpoint, based on the thesis that we teach, that if more people got involved, if there was less friction to get involved, if things were more fractional, you know, and it was less of a divide between public and private haves and [00:52:00] have nots, then I’m all for it.
So it kind of resonated on, on that part. The execution remains to be seen.
[00:52:06] Luke: But knowing, straddling both these worlds a little bit, although I’m predominantly like 19 x percent a, a public market investor, like there are pros and cons to investing in the pub, in the private market, and you’re much more likely to like lose all your money. And it’s certainly illiquid that we don’t need to do like a whole lesson on that.
Um, so there are very good reasons why. Like it comes with a major health warning. And then at the same time, if you look at how I know, let’s go back to Covid and then everyone got paid their like stimulus checks and then a bunch of people made like a ton of money ’cause they were essentially like gambling their stims in like the options market and buying like zero day to expiry options on public market stocks.
Like if you opened up private, the access to private markets to everybody willy-nilly, like in some ways that’s great because it democratizes that and you know, we do [00:53:00] have that in the uk. Um, but um, but there’s also like a massive consequence as well that like a bunch of people will lose their pants ’cause they just won’t understand the illiquidity and the complexity of investing in private assets.
Like there is no market to go and sell your stock. So if you wanna get your money out, even if the company’s doing really well. You can’t, you can’t get, you can’t release your money until, unless there’s like a liquidity event. IE the stock goes public or it gets acquired or something happens. So there’s a lot to be done.
I don’t, and it’s not technology that prevents this stuff. It’s like regulation and you can debate whether the regulation is good or bad, helpful or not. But it isn’t like you don’t, it’s not we waiting for something like Chainlink to come along to make it possible that you could do it today.
[00:53:48] Krzysztof: yes, and I think my optimistic vision of finance living on blockchain solves I think some of these primary, [00:54:00] current problems of, of, um, speed and, and the middle. I call it the, you know, this from our episode, the middleware problem, where like, if that, if the technology just makes that all go away. Then, there’s just more what’s called lubricant for all these things to take place and less money kind of filtering off into the gatekeepers.
And that makes the whole system more than liquid because there’s more reason to use it and kind of flywheel that perpetuates itself. Uh, I’m excited. Look, I’m, I’m just saying I’m excited because there’s a, there’s a direction the world of finance is heading. There’s some big fish backing it. There’s, uh, powerful technology that’s enabling it to happen.
And I say, I hope it happens because it’ll be good for the world.
You know, let you know, let me, let me route you rah rah [00:55:00] in, in one different way. If AI is as good as it seems like it’s going to be. Then the amount of investment that’s gonna be possible and needed is gonna be like, you know, levels higher than when everything was more analog.
So the more capital that kind of gets involved, the better. And as long as we do it smartly, then, you know, sure there’s gonna be mistakes. Sure, there’s gonna be gamblers. Sure, there’s gonna be speculators that lose everything. But like, you know, we don’t close the casinos because some pe you know, like, we wanna, we wanna invest.
so anyway, uh, the world of investing might be getting even more open and let’s, let’s hope that happens.
[00:55:45] Luke: Okay. Yeah. Okay. Fair enough. I, I buy that and I do this today, so I’m like, I’m in favor of it being available to everybody. Um, so yeah.
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[00:56:31] Luke: [00:56:00] Should we, uh, should we come on to, um, a, another big topic for today, uh, which is how US investors can increase their exposure to European markets?
[00:56:42] Krzysztof: Yeah, uh, I need you to school me on this, given that I’m going to be, uh, getting in touch with my polish and Italian, uh, roots more, more frequently than not so,
[00:56:56] Luke: It’s, let’s, let’s,
[00:56:57] Krzysztof: US dollars.
[00:56:58] Luke: let’s talk about, let’s talk about that first of all, right? [00:57:00] Because it was really fascinating. So I’ve got a bunch of North American buddies and one of them popped up on WhatsApp just a couple of days ago and said like, Hey Luke, can you help me think about my own portfolio? And like, I’m, he, he gets paid in dollars.
He’s a US citizen. He travel, he’s like a US guy who travels a lot. So like, he’s one of my ski season buddies and, um, we did our season in France this year, so he’s like spending euros and he, he travels a fair bit. Um, and he’s worried frankly that if the u if the US dollar devalues too much, it might become really expensive to travel.
Um, and, and that is quite interesting if you’ve got, you know, essentially like the man in the street. Um, he’s an investor. Uh, I’m deliberately not naming him. He’s an investor. Um, but in indexes and, you know, sort of more like US-centric kind of products. He’s invested [00:58:00] in the s and p and things like that, and he is got like his Roth and like a good retirement account in place.
So he’s relatively typical of like a typical working American who’s like relatively wealthy, but he’s starting to think about, you know, shit, what if the US is fucked? Like what am I, how do I kind of protect myself against this? And that is interesting that like US citizens are starting to ask themselves those questions.
[00:58:23] Krzysztof: Yeah, so I’m asking myself that
[00:58:25] Luke: Yeah. Yeah, yeah,
[00:58:26] Krzysztof: so, so what do I do?
[00:58:29] Luke: Okay, so I got, I got, I got a bunch of answers for you and I know, I know you’re gonna come in at the back with your own suggestion. I’m gonna let you make it, uh, and we can have a laugh about it. But, uh, let me take you through a few things you can do. Uh, so the first thing is if you, let’s say you want just for simplify it, like European exposure, but you could apply the same.
Arguments, I’ll give some real examples. We can plan the same arguments to anyone who wants, like UK or Latin America or Asia or China exposure, [00:59:00] right? So the first thing is, if you, if you wanna, if you want to insulate yourself against possibly the Euro is strengthening against the dollar longer term. The first thing is you can just own Euros.
So there’s a bunch of ways you can do that. You could have, like your finance, your bank might offer like a multicurrency account. You could literally just have like a Euro account and buy euros and hold a Euro balance. And then like, you know, the, the value of that will be more stable as your dollars, uh, kind of devalue if you’re gonna do that.
Um, do definitely recommend checking out wise, WISE, like. Wise allows you to have, I’ve got like a US balance and a Euro balance and a sterling balance and a few other currencies as I need them. And you earn good interest on like four point something percent on your Euros if you have them invested with wise.
And I did a lot more research to confirm, um, like you, uh, [01:00:00] your, it’s the, is it finra? What’s the name of the um, oh F-D-I-C-F-D-I-C insurance. Um, so it’s like your money is protected when it’s with a bank. Why is it not a bank? But you do get FDIC protection on your euros if wise are holding them for you.
’cause essentially it passes through ’cause wise don’t invest that money themselves. They invest it with a bunch of other reputable real banks that are come under FDIC. So your, your money’s kind of safe with wise. Um, do your own due diligence if you’ve got a very large amount and you could just.
[01:00:34] Krzysztof: So, wait, can I pause you right there? So, as, as far as prac practical suggestions, so right now I have a chunk of bananas living in, in my wise account, but they’re all USD. You’re saying I should take something like, let’s say 25%. Flip it over to Euros, uh, for stability, purpose, something
[01:00:59] Luke: complex. [01:01:00] Well, okay, suppose if you know you are gonna be spending euros this year, can, you’ve got like a relatively big trip to Italy and Poland coming up, then yeah, you might wanna buy your Euros. Now it’s a bit simplistic, but if you think that, if you think the dollar’s gonna go down relative to the Euro, then yeah, why not buy the currency you’re gonna need?
[01:01:18] Krzysztof: Uh, okay. Uh, though that is in a sense, like a little bit like playing the market, right? It is. It would be
[01:01:27] Luke: This whole, this whole sort of segment is predicated on the fact, like if you as an investor believe the dollar is gonna get devalued, what are your tactics? So there’s one tactic, like if you don’t believe that, ignore this whole section. Right. If you think the US dollars can be strong, like skip forwards 10 minutes, um
[01:01:43] Krzysztof: Well, so as a little bit of a, call it hedging strategy, why not? I, I just. Started with 25%, but why not then say, do something like 10%. Just switch over just a little bit and,
[01:01:57] Luke: Sure. Well, you, you are unlikely if you’re, [01:02:00] let’s say, I mean, if we say we’re talking about your retirement account or something, and you know, it’s maybe, I suppose this, this segment is not so much about, I’m gonna go on vacation and spend a few, like a couple of thousand euros. This is more like. If I think the US is in serious trouble over the five to 10 year timeframe, and maybe I might wanna, maybe, I live in North America and I have a vision about moving to Italy in, you know, 10 years time.
Or your ability to buy, let’s say buy property in Italy, you know, that’s like a six figure purchase, gonna get eroded if the dollar devalues. So you might wanna do something more substantial than a couple of thousand euros in your wise account, but that’s like one of the things you can do. Um, so then maybe let’s come on to some of the other things you can do.
’cause you could, you could hold like, you know, a couple of hundred thousand euros in Euro cash and as long as it’s FDIC protected and it’s earning like a decent interest rate, that’s gonna give you like material insulation. But there’s other things you can do as well. So the next thing you [01:03:00] could do is it is quite difficult for us.
Inve retail investors, I think. But you could buy European government bonds. So like in the UK we call them gilts. It’s like essentially the UK version of a treasury, a tbi. Uh, but you have the same thing. I think they’re called buns in Germany. And then like the same thing in France and Italy, Spain, all these companies have government bonds that they issue.
You could buy government bonds. Uh, I think that’s quite difficult though for a US retail investor to buy. But what a US retail investor can buy with most brokerages is a European corporate bond, ETF or a, a European government bond, ETF. So essentially you’re buying like an ETF wrapped like a exchange, trained it like a stock.
ETF is kind of like a stock. You’re buying a stock that reflects the returns of the things that it holds. So you could buy ETFs that hold, um. European government [01:04:00] bonds. Now you want to make sure you are, if you’re doing this, and if you’re doing this because you are trying to protect yourself from interest rate, kind of falling apart on the USD, you need to buy an unhedged ETF, which, and to be fair, the majority of these ETFs are unhedged, but some, so let’s say if you bought an A hedged ETF, then there’s like some financial shenanigans happen within that ETF that all that already kind of neutralize. The currency impact. And you don’t want that because you want the currency impact.
’cause in this particular scenario, like you’re trying to, you’re trying to sort of increase your Euro exposure and decrease your US dollar exposure. So just make sure you’re buying an Unhedged International bond. ETF, and I haven’t done too much research on this, but some examples are the SPDR, Bloomberg Short term International Treasury, uh, also iShares one to three [01:05:00] year international treasury ticket, ISHG.
So like buying one of those as a US investor would essentially give you exposure to international government bonds. Make sense?
[01:05:13] Krzysztof: Uh, yeah, uh, makes sense. Mostly the f only. Um, the only remaining question I have for you Badger, is I. My own sense of say the European Union’s own economic strength is that it too is quite, uh, wobbly and unstable. That’s a whole different issue than say, the US dollars value as the world’s reserve currency and so forth.
But if I, is it possible that I can believe both that one, the US dollar is in trouble, but also that the European Union isn’t doing so hot either? Does that kind of end up like a sort of wash or is it just, [01:06:00] uh, you know, where in the end doing nothing is the, is the right thing or are they
[01:06:06] Luke: I think you need to, an investor needs to answer that for themselves. Like, I’m, I’m trying to, here, I’m trying to answer the question through someone who’s specifically said, like, I think the US is gonna go down, the US dollar’s gonna go down versus the Euro. Like, what are my options to protect myself against that?
So like, if you think that, here’s one of your options, but you’re right. Like, and if you bought, let’s. Let’s give like a health warning. If you bought, let’s say German government bonds, which were ETF wrapped, then you have like a whole different bunch of risks. Like you want the currency risk because that’s the reason you’re buying it.
’cause you want the exposure to the euro strengthening against the dollar. But you have like a, like what if, you know, some European country default on its debt? Like it’s incredibly unlikely, but it’s not impossible. And then what you have like interest rate risk if you buy, um, [01:07:00] if you buy government bonds, and for complicated reasons, I, I think I recorded a special on this.
We never actually got round to releasing. But essentially if you buy highly simplified, let’s say you buy like a 10 year. Bond essentially like a loan and you’re buying, you know, something that pays you coupon payments every six months at a defined interest rate. And let’s say that interest rate is, I’m making this up like 4%, which is sort of broadly what you’d get on cash in the bank.
Well, if interest rates go up because of inflation perhaps, and your money in the bank suddenly starts earning 5%, well the value of your bond still pays 4%. The value of your bond goes down in real terms because suddenly you know who want, no one wants it. ’cause you, if you’re putting new money in tomorrow, like you’d stick the money in the bank or you buy like the new issue of the bond or that pays the higher rate.
So what happens is the actual value of your bond goes down and you can, there’s workarounds for that where you have like [01:08:00] shorter duration you might like, I own a combination of six month on one year gilts, which I hold to expiry by the way. It’s going a bit off the topic of. Anyway, that’s going a bit, uh, far outside the scope of this main topic, but if you wanna hear about that, like message us and I’ll definitely go into that a bit deeper.
So lemme carry on though. Come back on track. You could hold cash, you can hold bond ETFs, which might be corporate bonds, or they might be government bonds, but you also own stocks. And it doesn’t mean you have to be an individual investor. Like if you own, say, VU, VOO, the s and p, like you’re buying, you’re buying like an ETF that has like the s the the 500 biggest companies in the us.
Well, clearly there are non-US versions of these ETFs with different indexes. So one for example to look at might be the iShares core MSCI Europe, which essentially like a whole bunch of the biggest companies in Europe. [01:09:00] Um, and you’ve got other ones which are like non-US. So it might be like global equities excluding US companies.
There might be like country specific ones or eurozone specific ones, but buying those ETFs would be a good way to give yourself Europe exposure, uh, in a, you know, an an or well understood way. And again, you know, good, good practice with buying ETFs is you really want them to be like passively managed, not actively managed.
’cause most active managers underperform the market in the long run. And you want like, the fees to be low as possible. And ideally if they mirror like a well-defined index, then like that’s a, that’s a decent way into picking a, a good quality ETF
[01:09:46] Krzysztof: Right and.
[01:09:47] Luke: if you are an investor. Like my fourth piece is, um, if you are an investor in individual companies and you want like euro income.
Then just go and buy like stocks in companies like [01:10:00] A SML, which is, you know, a European listed company. It’s denominated in euros. Don’t buy the a DR by the actual, like, domestically listed version of the stock. Um, which is what I’ve done with my A A S ML holding, and it’s listed in Euros and it pays dividends in euros.
[01:10:18] Krzysztof: for our listeners what a DR means? Real
[01:10:21] Luke: Uh, American depository receipt. So an A DR is like the local, like the American version of the stock, which is, I’m hand waving there because it’s not really, it’s like, it doesn’t even have to be like affiliated with the real company. It might be artificially created. There’s different flavors of a DR. If you wanna understand more about ADRs, I’ll put a link to a, a article I wrote for seven investing a couple of years ago, which is still relevant on, um, the a, the ABCs of ADRs.
I think I title up.
[01:10:53] Krzysztof: It’s kind of like a deriv, right? It’s kind of like a derivative derivative. So just like people say you don’t wanna buy, [01:11:00] uh, cryptocurrencies like on Robinhood, because they’re not actually really, you are just getting a paper that says you, you have a right to own the actual thing, but you don’t really, in case things go belly up, you sometimes wanna own the real thing.
That’s what Badger’s te telling us. So.
[01:11:17] Luke: and there is like, um, there is talk, I, I think it’s just rumor, I don’t think it would happen that Trump might de-list Chinese ADRs. So like if you, I own BYD, I own the version of BYD that’s listed on the Hong Kong stock exchange, but there is A-B-Y-D-A-D-R. Like if, if that was delisted, I dunno what would happen if you owned that.
A DR. I dunno, maybe you suddenly go to zero if you got caught your pants down. I haven’t got a clue. Um, but yeah, like there’s some risk, potentially some risk because of the geopolitical environment right now. Like, I prefer not to use ADRs, uh, unless I have to. Um, yeah. But, so [01:12:00] anyway, to close out my little sort of four options to my friend who wants Euro exposure.
The last one is if you’re comfortable investing in individual companies, just start buying some European listed equities. And ideally don’t have to be dividend paying ’cause you know, your, if you own a non-dividend payer, but it grows, you know, your, your total wealth in euros is increasing and you can just sell a lot bit if you wanna release some Euros.
Um, but if it pays an income and it actually pays out dividends, then you’ll be receiving those dividends in Euros with your brokerage as long as it supports like a euro kind of allocation in the account. So that’s a way you could get like a Euro income. Like if you literally wanted. A couple of thousand euros a month as income, or you could probably get that by buying probably like, you know, several hundred thousand pounds or dollars worth of European dividend paying stocks.
And then that would give you your European income.
[01:12:58] Krzysztof: Not a bad idea. [01:13:00] Uh, I’m, uh, at the moment just checking in on Badger’s King of the Jungle portfolio. Uh, and I’m looking specifically at your investment in India. The, the, in the, uh, because that’s another called Global D. Diversification strategy, and I could see your, uh, return so far in that is two point a half percent.
So, uh, from where we bought it, what some over a year ago, right.
[01:13:28] Luke: It was actually, it was doing really well up 30 or 40% and it’s has taken a hit in recent couple of months, and now I’m kind of back to my cost basis. I need to refresh my
[01:13:38] Krzysztof: yeah, so,
[01:13:38] Luke: but Yeah,
[01:13:40] Krzysztof: so that’s just another, I suppose, method is don’t limit yourself to Europe when you have an investible country like India. Also on the platter.
[01:13:50] Luke: totally. Yeah. Like you are, I suppose you are, you are asking this question for one of two reasons. I, one is like the, as an investor and you just want [01:14:00] like non-US exposure to be more diversified. But the other reason might be like a real life reason. Like I’m planning to move to Italy, Spain, Poland, wherever, and I want to kind of start preparing myself financially for that over the course of the next 10 years.
So that might be a good reason to go for a particular country. Yeah.
[01:14:19] Krzysztof: Yeah. Right on. All right, well, monkey’s going to gonna look into tip number two for sure, and, uh,
take a look at play around. I’ll probably play around with wise, just, you know, as an initial step to, to create a couple more buckets of different currencies and see how they play out.
[01:14:36] Luke: I, I sort of teed you up to like dive in and say, just buy crypto if you want to like dollar, protect yourself, but you didn’t do it.
[01:14:44] Krzysztof: Ah, yes. Uh, uh. Why didn’t I do that? Uh, because I don’t think it’s necessarily, uh, uh, uh hmm. First of [01:15:00] all, first of all, yeah. Yeah, yeah. Yeah. Uh, uh, I don’t like using the word crypto, by the way. Uh, just because of the, the majority of, of those assets are not investible. Uh, Bitcoin could potentially be another one of these buckets.
Yes. And one that I, I participate in, I.
[01:15:21] Luke: Very good. All right. So somewhat by design, um, I’m about to buy a stock tomorrow and somewhat by design it exactly fits into that category we were just chatting about. It’s a European dividend paying stock. So if you want Euro exposure, maybe buy the stock I’m about to buy tomorrow. Um, should I tell you a little bit about that?
[01:15:46] Krzysztof: Yes, please. I’m surprised by this actually. Tell,
[01:15:51] Luke: yeah. I thought you might be, because it also ties into like our biotech conversation earlier. ’cause it’s kind of a, it’s a pharma company anyway. Anyway. It’s one I’ve talked about on [01:16:00] podcast in recent weeks, but I’ve had on my radar for a few months, Novo Nordisk. Um, so, uh, they’re what they, Danish I think.
Um, and they’re a big manufacturer of, they were originally like focused on diabetes medication then they in world developing. Like another diabetes medication. Some years ago, they essentially, like in one of their um, trials, they realized that like patients on this particular drug were having like significant weight loss, which they didn’t expect.
Uh, and that was kind of when the world discovered pre gonna mispronounce it, semaglutide glutamate, um, which is, and then they branded it as Wegovy, uh, which is their like, weight through weight loss drug. That was one of the first weight loss drugs. Um, and then they did really well as a consequence of that, so, so yeah, they, they kind of invented the, this [01:17:00] category of GLP one agonist, these drugs. Um, went on a crazy run and now they’ve created, their stock valuation has created in recent months, mostly because of competition from Eli Lilly who have their own better competing set of weight loss drugs. Um, and who also are about to release an oral weight loss drug, which is quite interesting because at the moment all of these drugs you can buy are like injectables.
So you have to actually literally like jab yourself in the leg or something. I don’t know, to take the drug every week or month. I’ve, I’ve got no idea. But anyway, whenever you take it, you inject it. Um, Eli Lilly have a pill form coming and so obviously that’s gonna, like a whole bunch of people probably were put off taking those so they didn’t wanna like, have the injection.
I. Well that’s gonna open the market up to all these other folks who have probably sat on the sidelines but wanna use these drugs ’cause they can pill form. It’s much easier to take and most people aren’t scared of taking a pill. [01:18:00] So that has really hurt the stock. But, and it’s been on my watch list for some time, um, because it’s a non-US, I want non-US exposure and it’s a dividend payer.
Dividend yield is about 1.8%. Might even be higher actually because of the stock price coming down recently. Um, and it’s also like, it’s not immune from tariffs. Two thirds of their revenue like they manufacture in Europe. Two thirds of the revenue is then selling into North America, I guess ’cause.
Probably you guys have like significant demand for weight loss drugs compared to Europe. Um, so they have like massive exposure and I think there are special pharmaceutical tariffs still yet to be announced. There’s a whole bunch of uncertainty around this, but they seem to be very reasonably valued historically right now.
And if I do like a simple reverse discounted cash flow on them, analysis on them, um, they’re priced for about 14% free cash flow growth over the next [01:19:00] 10 years using relatively conservative assumptions. And, um, they’ve got some drugs in the pipeline, uh, which I think are gonna be quite interesting. And this is where I’m, I’m not gonna go anywhere deep on this stuff ’cause I do not understand it ’cause I’m not a biotech guy.
But essentially, um, Novo Nordisk have four obesity, uh. Medications in their pipeline, two of which are at phase three, so nearly ready to be released. And these are oral like pill form, anti-obesity drugs. I think one’s called cma. And the other one is called Oral SEMA obesity. Um, so, and then evidently in trials, these have proven to be more effective than Eli Lilly’s drugs.
So if Eli Lilly have a head, like a lead right now, at least Novo Nordisk gonna come to parity in terms of the effectiveness, possibly exceed them. So I feel like we’re [01:20:00] probably at peak pessimism for this company, or at least nearing peak pessimism. So I’m gonna take me a starter position in both my King of the Jungle portfolio and my real money portfolio.
[01:20:11] Krzysztof: I would need more time to dig through all of the facts and figures Badger, but I’m actually a little pessimistic on this one.
[01:20:20] Luke: that’s fair. Yep.
[01:20:21] Krzysztof: Uh, uh, pessimistic might be too strong a of a word. Uh, this obesity segment, I think there’s gonna be lots of winners, but Novo doesn’t have the best numbers behind their, their, uh, offerings, so it still might be fine, but if, so this to me feels like more of a, like I. Safe fish harbor to place money to that where you don’t know what else to do with. But given the market today, I’m not sure how I’m, I just don’t feel tempted at all [01:21:00] because the, you know, the decline in prices and the anchoring bias and all that matters is future growth in the market. And if they don’t have the best product, then, then maybe they’re not just like cheap, but fairly valued rather than overvalued.
And if they’re fairly valued, then, uh, lots of companies, I suppose I could make a case for as being fairly valued,
[01:21:30] Luke: Yeah, I, I agree. I
[01:21:31] Krzysztof: beyond this.
[01:21:32] Luke: Um, so there’s a few, there’s like, most of the stuff in my portfolio today is overvalued. There’s very little, it’s fairly valued. So, and there’s not much on my radar I’m interested in, but it’s fairly valued. So, and I do want to break the deliberate inertia and start. Buying again now, even though I feel like, and I’ve been public in saying it’s still a bit early to start buying [01:22:00] stocks, um, but I’m gonna come off the sidelines and I’m gonna start reinvesting my 25% cash.
And so finding like a rare, fairly valued stock, I think is a reasonable place for someone like me to start buying again.
[01:22:14] Krzysztof: Yeah. Okay. That, that makes, that makes sense. I, I suppose all I’m saying is that I would not expect, you know, terrific returns from this, but your, your mission is not to. Is not to, you know, go for huge gains. It’s to protect capital and employ it, at least to fight inflation and cash. So that seems,
[01:22:38] Luke: like this is not one of your 10 X stocks and we do need to come back and look at your 10 x portfolio soon. Maybe we can do that in the next couple of weeks. This ain’t gonna be like a 10 x return if this goes reasonably well. And they continue to deliver. And if they’re new drugs that are in phase three, hit the market and do start to recapture market share from Eli [01:23:00] Lilly.
This might be like a double over a multiple year timeframe. But, you know, that’s the kind of thing I like to have in my portfolio alongside the, uh, the wild stuff.
Alright. Indeed. I bought, I bought a put on something, but this has been a long episode. Maybe I should come back that next week. I bought puts IEI took a, a sort of, I bet a certain company was gonna go down. Maybe I’ll talk about that next week.
[01:23:26] Krzysztof: Yeah. Uh, yeah, I think we’ve had a, we’ve had a long conversation, so let’s talk about, give us the update on your, on your puts
[01:23:36] Luke: Yeah, why don’t we, do you wanna commit to doing your, uh, a STS update next week? ’cause I’ll be keen to get into that and my put somewhat, somewhat relates to that.
[01:23:47] Krzysztof: Yeah, sure. Uh, whoa. Uh, well this is, uh, my bandwidth is still extremely compressed right now, but it’ll free up in the next couple of weeks. So [01:24:00] if not, uh, if not, next week, two weeks from
[01:24:02] Luke: Alright. Great stuff. Oh, by the way, uh, you might have noticed I use fin chat.io for my novo nor disk analysis. Like I’m still using that tool every day. I’ve got three Fin Chat tabs open right now. Um, it’s a great tool for doing as a long-term investor.
It’s a great tool for kind of understanding financials, and you can get a great discount if you go to fin chat.io/wildlife.
[01:24:28] Krzysztof: Are you ready to become a beast of an investor
[01:24:32] Luke: journey starts here.
[01:24:33] Krzysztof: I. [01:25:00]
