Alastair J. MacDonald is an international analyst, forecaster, speaker, writer and investment consultant. He is the founder and editor of “The Parallax Report,” a subscription-based market, social and economic forecasting service for individual investors, and institutions. His specialty is identifying the dangers and opportunities in global markets, as driven by social mood. His analysis accurately predicted; the decline in the US dollar (2004), the bursting of the US housing bubble (2004-2005), the global financial crisis (2007), the peak in commodity prices (2008), the collapse of Lehman Brothers (2007), the bottom in US stocks (Spring 2009), the bull market in the US dollar (2011), the second term of Barack Obama (Aug 2012) and the election of Donald Trump (July 2016). He hosts a weekly podcast called “Alone in the Crowd.”

Also, Alastair is a business coach to Frank Cava, an exercise in maddening futility.

We don’t often host guests but this episode has us re-thinking our strategy. This was a fascinating conversation about war, historical markets, business cycles, psychology, and surviving multiple hippo attacks in Africa.

You can watch his Ted talk here.

Watch the episode here

Listen to the podcast here


Alastair MacDonald – Investing In Times Of Uncertainty

This is an incredibly difficult episode to name because it is a far-ranging conversation with a fascinating and exceptional person, Alastair MacDonald. He is a business coach to Frank. He’s one of several that Frank employs to keep him on the right path. He’s a difficult guy to keep in line. Alastair is an ex-safari guide, an African expedition leader and a TEDx speaker. He has started and sold multiple eight-figure exit businesses. He’s a one-time commodities trader.

He’s still an active investor, a Jiu-Jitsu black belter and a fascinating person in a conversation where we talk about markets, history, investing, leadership, happiness and trying to find it and not chasing. We go from psychology to some anthropology to about everything you could think of. We had a blast in this conversation. We hope you enjoy it as well. If you do love it, share it with someone you think might enjoy it as well.

We’ve got another guest. We’re on a roll.

We’re on a big-time roll. Our distinguished guest is Alastair MacDonald. He is a friend of mine and someone that I’ve worked with for about six months. I’ve talked on here multiple times about how I have two people that I consider business coaches that I work with. One of which is from Mexico City. Alastair knows him. Alastair hails from Africa. I’m going to let him tell you exactly where because I can point to it on a map but I can’t tell you exactly where he comes from. He’s way more charismatic at it than me. Alastair, welcome.

Thank you, gents. It’s a pleasure to be here. Zimbabwe is my homeland for me. When I was born, it was Southern Rhodesia, a British colony. It declared independence from the Brits in the ’60s and then became an independent nation. That was what I was born into. It became Zimbabwe in 1980 after a pretty violent civil war and social upheaval. That’s where my family is from. I’m a fourth-generation African. My family has been there for about 120 years. I was the turncoat or the one who fled to the United States when I got the opportunity.

You split your time between Arizona and the Caribbean.

It’s 6 to 7 months in each spot.

You’re not a big fan of cold weather being 120 years of African descent.

I am a reptilian. I need to lie in the sun to keep warm. I’ve lived in different spots in the States in Colorado, Maine and so forth. As the Scots would say, I’m just not suited.

One of my favorite things he says is, “The best thing about Maine was leaving it.”

How long were you in Maine? What were you doing in Maine?

I was there for 5 years, which is 4.9 more than I needed to learn my lesson. With all due respect to those that Maine is a good fit, it’s not for me. My son was born there though so that was one beautiful dividend. I was there and my business partner was based there. I originally moved out thinking I’ll be there for a year and then we will have separate offices. At the time, I was living in Boulder and then Fort Collins, Colorado. 1 year turned 5. It’s that old John Lennon line, “Life is what happens to you when you’re busy making other plans.” The next thing is I looked up and I was five years more miserable. I had to get out of it. It’s not a good fit.

It’s like Myanmar in Seinfeld. He’s like, “It has always been Burma to me.” You talked about the civil war. I know this story but it’s going to be more compelling coming from you. I joke about the name of the country because it’s a big deal when a country’s name changes. Take us from that point on and how you got here if you would please.

From the kickoff, I would point out there are surprisingly few Rhodesian/Zimbabwean immigrants to the United States compared to those that ended up in this diaspora explosion around the world. Most of them are living in pubs in the UK or Perth, Australia. There are not many that are here in the States. A surprisingly large amount of them identifies as Rhodesians, which I adamantly do not. I’m proudly Zimbabwean. There are a lot of people that are holding onto a past that barely existed and no longer does. I don’t suffer from that and they do.

I was of the first generation of Zimbabweans to go to integrated schools, grow up in a Black majority-ruled country and go to mixed schools. My experience versus that of my parents was a different universe. Rhodesia declared the Unilateral Declaration of Independence in 1965. The Brits had their thumb on the scale economically. There were some old and deeply ingrained social, cultural and educational systems that were stacked against the Black majority of Zimbabwe.

I’m using terms that we would use back home. We would use the terms White and Black, which are of no consequence to us. We speak comfortably about it. At least, that’s the language we’re comfortable with. There’s no offense to those for whom it abraids but it’s the relevant language for the time and place. The civil war broke out from 1968 to 1969 and then ravaged the nation for the next 12 to13 years. It attracted a lot of mercenaries, oddly enough. We had a lot of ex-Vietnam vets that came out there and Israeli Special Forces. There were a lot of mercenaries coming from around the world.

LMSM 78 | Investing Uncertainty

Investing Uncertainty: The first world is the handle of the whip, but the third world is the tail.


I had them in my family. My uncle or my mom’s older brother, who was very dear to me, was a mercenary. He had the life expectancy that you might expect. He ended up losing his life in 1979. The Brits down tools and walks away. There’s a lot about this that I find fascinating because it’s going to get into some of the stuff we will discuss whether it’s Russia, bear markets, the timing of conflicts and so forth. This was during the period from 1945 through 1970 when the colonial powers of Europe were daily losing their grip on their colonies in Africa and Asia.

Chief among them was India or the Jewel of the Crown, as it was referred to by the British authorities. It was truly the wealthiest of all of their colonies. They lost control of that in the 1950s. There was this cascading implosion of colonialism throughout Africa. The Belgians lost the Congo. The Portuguese lost Mozambique. The Germans lost South West Africa or Namibia. We’ve got to ask ourselves, “How did that happen?” It happened because of the post-World War II economic difficulties of these nations.

They were so distracted trying and having to rebuild their nations. They didn’t have the wherewithal, the actual social or political capital to continue to fight to maintain the colonies, which is what was required. It was a slow process of disillusion except for those that lived there for whom it was violent. That was the experience of my childhood. I grew up traveling in armed convoys, sleeping with guns under our beds and fire drills. My dad was out fighting in the war.

My mom was running the business that my dad had bought that she was technically unqualified to run and at the same time taking care of three kids and shepherding a family through a civil war. It cost us friends and family members. There were periods when I would come in on a Monday morning. We had a mandatory chapel thing in our school, for example. I’m not exaggerating. There were Mondays when I came in and kids weren’t there because they had been massacred on their farm over the weekend by various terrorist organizations all vying for power.

That was the soundtrack of my childhood. That ended in 1980 when Rhodesia became Zimbabwe. What followed was a huge brain drain from the nation because of this old colonial infrastructure that was heavily biased in favor of White privileged authority. All of the engineers, attorneys, entrepreneurs, bankers and financiers all fled because of fear of retribution. We’re talking about the high-water mark of White Zimbabweans. That was about 180,000 against a population of 12 million Black people.

The imbalance of power was so distorted. With that brain drain, the population of White Zimbabweans fell from about 180,000 to about 40,000, almost overnight. I was coming to school and there were suddenly seats opening up in my classroom. If they weren’t murdered, they had packed up and left overnight. It’s a bit of a rabbit hole there. It’s a very different experience there for those of us that chose to stay. My parents chose to stay in the face of legitimate concerns about retribution for justifiable reasons at that time.

We’re going to come back to what all that did. What I thought was a joke about Seinfeld turned into something a lot more serious. This isn’t where I thought it was going to go. The point that I want to drive into is let’s talk a little bit about the business stuff. What we will do is we’re going to blend business with where we are in the world and how you see things through the lens you grew up with, which is fascinatingly different than the mean streets of Coral Springs, Florida or Detroit where Ian and I grew up. We say they’re war-torn because of gangs and stuff like that but we had a fantasy camp in comparison.

Some of the parallels, I’m learning a lot about. I didn’t know much about Rhodesia there. 1968 was a period in the United States of a big clash between Whites and Blacks. I’m from Michigan. Everyone knows the stories of the race riots in Detroit. There’s so much conflict. It’s a big cauldron of frustration on both sides. The same thing happened also in Detroit. You’re talking about how there was a drain. Everyone left the city.

When I say everyone, the Whites left the city because there was so much fighting every day that they all went up to the suburbs and left. There was a brain drain of business owners that had a lot of legitimate power in the city and left. It’s fascinating. As you told that story, I’m thinking, “A lot of that was over the same time that was happening in a city that I grew up in.” Detroit City was a primarily Black city always but there were plenty of Whites that co-existed with them until ’68. There was a long period of ten years of people leaving the city. I found that a very interesting parallel without a lot of murder and civil war. It’s similar frictions.

What we’re describing is the waxing and waning of the motive force of societal change, which is social mood. Social mood drives everything. This comes back down to our appetites, fears, instincts and proclivities. Human emotions are very complex but they’re also finite. There’s a finite range between ebullience or joy and terror or fear. We pretty much spend our lives moving back and forth individually among these. It’s reflected in the individual choices that we make, which catalyzes the herding instinct that allows, induces and gives permission to others to follow suit.

This is what pop means. When we say something is pop music, we’re talking about popular as in the populace is aligned toward this particular artist or political policy. While we know that if you’re driving down the road and your Sirius Satellite Radio is programmed to what you were listening to yesterday but you change the channel, what’s that about? It’s about an endogenously generated mood, which is manifesting in an exogenous action. I turn on my car. When I got home, I was feeling mellow and so forth. I left it on the jazz channel.

That’s not going to happen. I hate jazz but this is to show how ridiculous it is. I was listening to jazz as I casually came home to the wife and kids. The next morning, I’ll wake up. I’ve had a great workout and I want to listen to something completely different. It begins with mood. That small decision to change channels creates a cascading effect throughout. The algorithm suggests that at this time of day in this particular ZIP code for this person, Ian likes hard rock on a Tuesday morning. That, we know, creates data, which pushes the algorithms to say, “You might like this.”

We’re all worried about the algorithm driving our lives. It is simply just the barometer. We have the data and the barometer that shows the waxing and waning of collective social mood. When you look at the 1960s, for example, the United States had emerged from World War II. It’s the absolute bottom. Equities bottomed six days after the attack on Pearl Harbor. We should speak more about this. What happened there was a bottom was formed in US stocks that were never broken again. It’s the greatest buying opportunity effectively in the last century of equity prices.

What followed was this ongoing uptick in economic expansion. We move into the 1950s. Everybody is starting to succeed. There’s a chicken in every oven or whatever the saying was. The nuclear family emerges. We get into the ’60s. Suddenly, we start getting more comfortable. There’s less conflict. We have 350 consultants in Vietnam in 1965, which was an absolute heroically stupid decision to support the French. It had nothing to do with us fighting communism but we get wound up about it.

Fearful people select external things that reflect how they feel. Click To Tweet

We’re so optimistic. Everything changes. We end up with the music, movies, things that we consume and external channels that we’re pointing to as reflections of what it is that we believe. We go from the 1950s and the nuclear family suddenly to dropping the fences on societal norms. Skirts get shorter. We get the boob tube or whatever it was called here in the States. We get more scantily clad clothing and brighter colors. The Beatles emerge, “She loves me.” Everything is great. California is surfing.

Optimism accompanies a massive peak and stock in real estate prices in 1968. Ian, what you’re describing was the spark to very dry tinder in a subcategory of US society that was not enjoying the same benefits of the White privilege and that was experiencing abject discrimination and saying, “The disparity is so large that I’ve had enough.” These were early flashpoints but the bulk of American society was so indoctrinated that as things have been great so they shall continue to be even better. We were so optimistic, this will ring a bell, that we weren’t concerned about our lawns and big cars.

We decided the Earth was not enough. It was a James Bond movie at the time. We put a man on the moon in July of 1969. What that did was show peak optimism. The ultimate expansion of a society’s capability peaked out. As the mood peaks, it then waxes and wanes. We fall into the worst bear markets since the 1930s. There was a double-dip recession in ’72 and ’74. What were 350 consultants in Vietnam is suddenly 56,000 American boys murdered on the soil that most of us had never even heard of. Vietnam explodes. There’s the political scandal of Watergate. The movies change.

We go from Chitty Chitty Bang Bang and Mary Poppins in the ’60s to the worst horror movies of a generation like Exodus, Texas Chainsaw Massacre and the movies that my teenage kids or college kids will watch if they want to be terrified. Why? It’s because fearful people select external things that reflect how we feel. As we changed the channel on the stereo so too do we pick those movies that fit our mood. We get Kent State, race riots, political intrigue, the darkest movies and the darkest music of a generation like The Doors, Jimi Hendrix, “Tune in and drop out,” and on and on.

You picked up on ’68. You’re on a roll. If you would, why don’t you take up ’68? We started this, you and I. I was like, “I got to get you on the show because we got to talk about this.” I’m going to give you a creative license to go where you want. Do you want to start at ’68 or go backward? This whole conversation started with, “What do you think of Russia invading Ukraine?”

The argument that you had back to me, which wasn’t an argument and is more of a statement with a bunch of facts is that usually comes at a very certain point in the cycle. What we have both talked about in ’68 like the mood of the globe was similar to Ian’s experience of it and how it affected his family because he and I were born yet and neither were you. ’68 affected what happened in his childhood and certainly affected what happened in your childhood.

You started off doing things indigenous to your home country in Zimbabwe. You started as an entrepreneur who did safaris, which have led to insane stories. When you move to the United States, you quickly became a commodities trader. One of the things that I am drawn to in you is that you have lived through a civil war, which I never have. All my eggs are in one basket.

Everything I own is within 25 square miles of where I sit. For someone like you who has experienced civil war, that’s not a smart move. It’s having a different perspective. It could be but at the same time, it’s not something that’s proven based on your experience. I love the input. Having someone who understands the commodity world the way that you do, you see things through several different lenses in me. That was a quick puking. We’ll all hand the baton back to you and let you pick it up.

Frank, that’s inaccurate. All of your eggs are not in one basket. You did put a sizable investment in an intelligent tech startup company that Dehawk car alarms. That is not Richmond-based. I just wanted to say that that’s the smartest investing decision of your entire life.

There’s a lot there, Frank. There’s so much that we adopt and absorb. We take narratives without ever looking at the data. One of the things that you and I got a chance to discuss is what would be described as load-bearing fiction. They carry a story. They’re false but they support certain behaviors, instincts, investments and so forth. It gets dangerous when we pay attention to the fact that they are rooted in fiction.

The ice is not as strong as you think. It might hold a couple of kids that are out ice skating but don’t drive the pickup truck out there. We need to be careful about that. It gets to your point, which is to come around to a different form of it, diversification or allocation of assets in hedged positions or ways that can try to reduce individual risk. For what it’s worth, you already do that more beautifully than most people I’ve ever met, regardless of geographic proximity. The nature of it is unbelievably sound.

Equally, I think of the United States and my experiences in the Third World. I started my first business when I was eighteen. It was a safari business. I enjoyed incredible growth very early on and mistook it for genius on my behalf when it was good luck and good timing. By the time I was 20 or 21, I had more employees than years of my life and was living like Pablo Escobar with a swimming pool, a tennis court, a maid, cooks and so forth.

You got to have hippos if you want to be like Pablo.

I’ve had enough of hippos. I’ve been attacked by hippos three times, once with my wife in the canoe. She still married me amazingly.

LMSM 78 | Investing Uncertainty

Investing Uncertainty: People are having a competition to put up their hands and show how unqualified their opinions are and yet everybody’s vying for first place.


Those are about the meanest bastards out there. Hippos don’t play.

They don’t mess around. They are a hell of a lot sneakier than their chubbiness would convey.

Someone reading can’t just hear, “I was attacked by hippos,” and we move on. How did you get attacked by a hippo? How did you survive?

It has been three times that I’ve been attacked. They’re individual stand-alone stories. The first was the most shocking. The third was the most violent. I was on a canoe safari on the lower Zambezi River. I had an American client who lived in Hong Kong. There’s this petite woman in the front of the canoe with about 300 pounds of gear in it. I was seated in the back as the guide of another four canoes. There were 9 clients and 10 of us in total. This tusk exploded right between my feet through the canoe. We ended up in the drink.

There are different versions of what you do when you’re attacked by a hippo. Some say get to and on the canoe. Others say get the hell away from it because the hippos are the first problem. The moment you end up in the Zambezi River, it’s crocodile soup. There are two different schools of thought about swimming to or swimming away because they will come back sometimes for a second bite of the canoe. That can be pretty devastating. A dear friend of mine, Phil Longden, lost his leg doing exactly that.

The hippo crushed his leg below the knee. We’re working in very remote areas. It took him 23 hours to get to a mud hut clinic, let alone a hospital, by which time gangrene had set into the marrow of his bone. His leg is cut almost at the boxer line right up the top. He lost his whole leg. That was the first attack. The second one is not quite as consequential. The third was the most violent. I had my then-girlfriend and now, wife in the front of the canoe. That was a monstrous hit. It’s the power that these things have to lift 2 adults and about 250 to 300 pounds.

Do you see them coming at all? Do you see its back coming toward you at the last second like a shark fin?

That’s a mock charge. If a lion roars, it’s normally a mock charge. If they don’t and they come at you, it’s not a mock charge. You’ve got to take them all seriously. I always joke, “It’s only a mock charge until it’s not.” You’re not saying, “Let’s stand back folks. This is a mock charge.” A friend of mine, Quinn Swales, said that and lost his life years ago to a male lion in front of ten clients. They watched him get dismembered. Quinn and I have been mates since we were kids.

There’s a longer story there with myself and my wife in that canoe. That one smashed a hole in the bottom of the canoe. It was like a bad James Bond movie because I climb on top of the canoe, which has got the ballast of this net holding all our gear. That’s inverted so you’ve got this vacuum. You can’t flip the canoe from in the water with all of the weight of our gear, cooler boxes and heavy stuff and climb back on top of the smooth single-keeled canoe. It’s difficult to try to pull her up. She came up out of the water. It was so violent.

If you’ve ever lifted a canoe at the back, you know that the nose goes into the water. It went into the water and flipped immediately. She was inverted instantly. She didn’t even know what had happened. She came out of the water and there was an unbelievable drill sergeant potty-mouth vitriol spewing at me at what I had done. She had no idea. I’m on top of the canoe and saying to her, “Get on the canoe.” We’re in this little oxbow lake bend in the river. She’s looking up at me like, “What have you done? Why?”

She had no idea. She thought we had hit a rock or a stump and turned over. Quite literally, I’m on all fours and I look up at the bank. Like a bad 1965 James Bond movie, there are two crocs on the bank that slipped straight into the water, which they do for safety anyway. They want to hide in the water. She’s looking up at me and sees me see it. She could see instantly. The difficulty of getting on a canoe is it’s wet, difficult and big. She launched out of that thing like a phoenix out of the ashes and landed on it like she was ready to surf in Hawaii.

Was that it with the hippo? The hippo didn’t come back. Every time, they just hit the canoe and swim away.

It didn’t come back. I felt it hit my legs when I went into the drink. I just got caught on its back or something.

Is it curious or angry at you?

There's so much that people just adopt, absorb, and take narratives of without ever actually looking at the data. Click To Tweet

They’re angry. It’s territorial. In this particular area, there was a real density of hippos. There are 200 to 250 hippos in 1 pod. The battle for dominance among the alpha males is very violent. They will kill each other’s young and babies of their competitors. In the same way, it’s called fratricide.

This reminds me of a story of the three college kids in Massachusetts that were walking along and minding their own business. Out of nowhere, they were blindsided and hit by a hippo with a beard that was running that didn’t like them being on the road and knocked them all over the place. They survived but it was a very stressful moment for them. It was an Italian hippo that hit them.

When I was in Tanzania, we went on a safari for a couple of days and saw a lake with I don’t know how many hundreds of hippos. You get this sense like, “I want to jump in and swim with them because we’ve all got Disney.” We think that these are incredibly docile animals. You could tell. If you sat and watched them, they’re mean and enormous. They’re the size of small VW Bugs.

They’ve got tusks the size of your forearm. They’re huge.

Ian is grasping it. He’s like, “He tells about someone who got killed and someone else lost a leg but besides that carnage, everything else was fine.”

It gets to the point of experiencing Coral Sprigs versus the Rwenzori Mountains of Africa. I think of the First World as the handle of the whip but the Third World is the tail. The slightest move here you notice is 10 miles an hour for us. It breaks the speed of sound over there. With the economic social and political volatility that we live with in the Third World, you can have an entire range of experiences within one election cycle or one year. There’s inflation alone. By the time I left Zimbabwe, inflation was running at 18,000,000%. It gives you an idea of how brutal that is.

When I hear these prognosticators saying, “Hyperinflation is coming to the United States,” it’s as if we’re having a competition to put up your hand and show how unqualified your opinion is. Everybody is vying for first place. It’s unbelievable. With the 18,000,000%, money was worth so little that when you ordered your dinner at a restaurant, you had to pay for it when you ordered it because it would cost more when it arrived. We had to pay employees and laborers twice a day because what you paid them at lunchtime wouldn’t buy them dinner that night and on and on. There are all of these stories.

The velocity of money had gone parabolic as in how fast the dollar travels through the economic machine. While everybody here is unconcerned about inflation, the larger trend has turned up. The hyperbole, which is largely a front to sell products, normally gold and silver coins or Bitcoin or fill in your favorite thing that you have to shill in a civil crisis is to pay attention to the velocity of money. Look at the velocity of money and it will tell you what’s going to happen to inflation.

I’m interested. Russia invades Ukraine. We’re still in the very infant moments of all of this. What do you think in the last many years is the best parallel to this moment?

Is it specifically with Russia or thematically?

What’s going on in the world? We’re at peak euphoria with investments, stock markets and real estate. Everything is up. I’m hearing a lot of similar trends that you were talking about in the ’60s where most people are feeling the effects of a good economy. The government is overstimulated. We’ve got this big moment where the whole world is on pins and needles with a major military power invading another country. To most people and even in my generation, it feels unprecedented in our lifetime or something like that but I’m sure there are plenty of precedents that you could think of.

I’m not sure how granular we should get or stay at the macro. On the granular level, the Eastern section of Ukraine has been under the mercantilistic political social and certainly, financial and military influence of the Russians ever since the Maidan Revolt of 2014. That has been the case for a long time. Eastern Ukraine is saturated with Russian interests. It’s a symbiotic relationship. All that has changed is an escalation of that boundary. A shift of that is a big deal but what it says is not what it foretells.

This is important. We have an instinct as people to extrapolate whatever has most recently happened. We have a great year. We’re sure that next year is going to be even better. We have had a crappy year in our business. We’re sure that we will be bankrupt in twelve months. This linear extrapolation is the most common effort at forecasting. This is why the vast bulk of economists or market prognosticators are worthless because all they do is extrapolate what has already happened.

Every time you see a forecast, what you are hearing is what has already happened pulled out into the future. This works when it works. A forecast or prediction that works 50% of the time doesn’t work. This linear extrapolation works well when we’re inside of a much larger trend that supports it. What it creates is a weakness for us and that is a weakness for change. We’re incapable of anticipating change. That’s what extrapolation doesn’t allow for.

LMSM 78 | Investing Uncertainty

Investing Uncertainty: The government is overstimulated and now people are at this big moment where the whole world is on pins and needles.


We do it individually. You argue with your spouse and you’re immediately wondering whether or not your relationship is going to survive. That’s linear extrapolation. You have the greatest night ever and you’re sure that’s it, “We should have kids and raise a family.” We do linear extrapolation all the time. We do it at the national level too. Unfortunately so do geopolitical influences and political powers. They do the same thing.

There are so many similarities to this Russian situation in Ukraine. The instinct is to think that this is the beginning of something big. Historically speaking, it marks the end of something very big. You captured it perfectly, Ian. Everything is up. Assets are ripping higher. Everyone is optimistic. The government is overstimulating. That’s true in the Western developed world. That’s false or at least not true in the world of emerging markets.

If we dial back and look at the motive forces, there are always three types of problems. There’s strategic, tactical or motive. The motive force behind this is sitting on the backend of a sixteen-year bear market in Russian equities. Wars always occur at the end of a protracted recession, depression or bear market. Let’s go back to the last 100 years. Forget the United States Civil War. World War I was catalyzed by the banking crisis of 1911.

The emergency creation of the Federal Reserve and implementation of the US income tax were completely unconstitutional. All of the stuff we put aside because the banking mechanism itself from 1909 to 1911 went through this absolute systemic breakdown bailed out by JPMorgan. Four years later, Europe had its things going on. The United States was in no rush to get to Europe. Europe itself was inside of its bear market.

We come out of that and go into the roaring ’20s. Everything is spectacular. There are short skirts and opulence. In the peak of 1929, we fall into the worst depression since 1870. The United States has been through several depressions. We talk about the Great Depression. There was a depression from 1865 to 1875 and in 1840. If we could make the case, there was a depression in 1870 and 1860. We have been through these before.

Coming back to individual endogenous motivations, what is it that causes war? Typically, it is a loss. Once we have lost something, we get afraid of further loss. Once we get afraid of further loss, we begin to look for someone to blame. This is at the root of every legislative change in world history. We experience a loss, develop a fear of greater loss and want someone to blame. It’s like we’re first looking for a forehead. As that happens at the individual level so true does it happen at the societal level.

It takes a long time for enough people to get their ass kicked, look around and say, “I’ve had enough. It’s those Jews that have all the money in Germany, those fill-in-the-blanks and the wealthy bankers.” FDR captured the essence of this perfectly. He was somebody who truly came from one of the most elite families in America but was able to position himself as the savior of the masses from his bloodline. It’s craziness. It doesn’t make any sense but the story was sold, hook, line and sinker.

He’s the first president to go through as many terms as he did. The depression lands ’32. It’s a horrific bottom. In ’36 and ’37, there was another double bottom. Europe, oppressed as the Germans were by reparations, decides to do what we or some version of ourselves are going through and nationalizes its interests. It was a huge reinvestment in themselves and identification of a common enemy. In this case, it’s the wealthy Jewish elite. This begins global expansion plans and the destruction of Europe.

We get into World War II. The United States doesn’t join until 1941 because we were starting to make the turn. Bear markets are followed by conflict. It’s not a coincidence that Vietnam exploded in the ’70s and not in the ’60s. It’s not a coincidence that the recession of ’91 and ’92 ended not by but ended with Operation Desert Storm. It’s not a coincidence that the tech bubble and implosion of asset prices were followed by an invasion of Afghanistan and Iraq in 2003, marking the bottom of the bear market.

It’s not a coincidence that after sixteen years of the Russian economy being in a death spiral, now they’re saying, “We’re going to go over there and take those guys’ stuff.” It happens all the time. What Russia is likely to do is what they have always done. The Russians’ strategic program hasn’t changed in years. The Chinese are very different. I deal with this a lot with the nonprofit that I’m the chair of. We protect elephants in high-risk areas in Western and Central Africa.

Counter wildlife trafficking operations are what we shut down. We have watched a rapid expansion of Russian interests into certain parts of the Democratic Republic of Congo, Burkina Faso and a number of these areas for their rare earth. There are deep reserves of rare earth, which as the name suggests, are rare and extremely valuable. The largest deposits are in Africa. The others are in Mongolia. They’re very hard. They’re parts of our cell phones. We have seen an increased encroachment.

What happens with the Russians? The Chinese are a lot more overt. They move in, buy all the local politicians, build a giant timber mill and eviscerate all of the resources in the area. The local villagers have no option but to go and work at the factory that is consuming the resources that their families live off of. The Russians are far subtler. They will sneak in, advance a little bit and pause. Look at what they did in Crimea. They moved in. It’s a slow infiltration. Everyone is like, “The Russians are going to take over Crimea.”

There’s the rapid advancement and bolt down. When everybody thinks that it’s about to get even worse, they hunker down to take one step back. Nobody notices this. They take three steps forward. Their resistance is exactly and embarrassingly predictable from NATO and the United States. They give back one step and deescalate. They camped down. The West gets to say, “We have succeeded.” Nobody is paying attention to the fact that they have advanced 2 major steps and given up 1. This is how Russia operates. They will do the same here in Ukraine.

How long does this go?

Fortune has always favored the brave and those who put themselves out there. Click To Tweet

The long game for Russia is to take over Ukraine but an all-out full-scale land war doesn’t suit their interests. The EU is not ready for it and the United States lacks political will. Ever since 2015 and 2016, the United States abdicated its role as an international police force and moral authority. We decided to put “America first.” When we did that, power vacuums are opening up all over the world.

Those that are wise enough to play the long game, which is usually the East but we haven’t yet figured that out, will make huge progress over the long game before. While we’re focused on 90-day quarterly numbers, DoorDash and six-minute abs, the stewards of Toyota have a 100-year business plan. These are very different philosophies. China’s Belt and Road system is a multigenerational plan. We’re talking about maybe putting solar panels on the White House for goodness’ sake.

There’s no way this doesn’t stay in the news flow for an extended period though. Aside from Russia bringing everyone back, it’s going to stay in the news flow. Does this escalate into other countries taking advantage? When you say you’ve got other power, you’ve got China flying jets over Taiwan. Is that next? Venezuela has been in a depression for decades. That’s got to be a cauldron ready to go. Is Russia the first flashpoint and we start seeing this all over the world?

There’s a good friend of mine. He and I speak about this at length. He’s sophisticated in this regard. These patterns are so predictable. At a private event that I hosted in Puerto Rico in October 2021, we spoke about that. This friend of mine, Mark and I were talking about the inevitability of an increase in North Korea firing missiles back into the straits of Japan. Sure enough, that has happened. This happens with every single down cycle in equities. To come back to your original point, emerging markets have been grossly underperforming US equities for many years.

In the case of the BRIC nations of Brazil, Russia, India and China, they peaked back in 2008. That’s a long bear market for them. When everyone was convinced that they were the future, they dropped like the brick that they are. There’s a late cycle for emerging markets. What all of this suggests is we are projecting the opulence, expansion, growth and asset boom that we are experiencing onto the rest of the world but it’s not true. Russian stocks are trading at four times their earnings. In the US, the S&P is trading at 21 to 23 times earnings.

The problem with Russia though is who can trust the earnings. That’s where I’m going. I don’t trust anything about a Russian company. They tend to make up half the stuff. There’s so much misinformation when it comes to Russian companies, the Russian economy and Russian everything.

There is but there’s real money being made by powerful interests there. I’m not by any means suggesting one should buy Russian equities. There are so many ways to lose money. Why do it in Russia? With that being said, that speaks to supporting the opportunities in surrounding countries. The entire emerging market sector made a powerful turn from a bear market to a bull market back on December 29th, 2021. I’m positioned accordingly.

Within that, there are beaten-down sectors that everybody has given up on. We can find them easily by searching for the worst news in the world. There’s the Chinese real estate crisis and the Chinese real estate financing crisis. Evergrande has the largest potential bankruptcy and potential bailout in history. There are Chinese internet stocks. We’re now convinced, whereas years ago, we were convinced that Jack Ma, who has strangely disappeared, was going to eat Amazon’s lunch.

We’re sure that pretty much Chinese internet companies are dead. I’m taking the other side of that trade. We’re at a tremendous opportunity. Platinum is the same thing. Platinum miners are having their time in the sun. The larger commodity cycle bottomed in April of 2020. This is something that Frank has had experienced with watching the cost of doing business. That larger trend has turned up, which is going to benefit Latin American economies and massively Peru.

Colombia has infrastructure issues like Brazil, Argentina and Mexico. Ancillary, Frank and I spoke about this a lot. The emergence outside of its grossly overbought real estate market Miami has historically been the banking and commerce interface of Latin American economies. If they are entering a multi-year bull market, which I believe they are, one would want to be positioned geographically if they were so inclined to try to capitalize on that.

I always find it hilarious. Stock will start dropping. All of the analysts will keep the same stock price estimate on it until it drops 70% and downgrade it. As soon as they downgrade it, it’s usually the absolute best time to go buy it. As soon as they come out and admit they were wrong, they have switched because it’s the old extrapolation. They see it going up so they believe it will do that. Their reality changes, their cognitive biases start to kick in and then it drops so far that they say, “It’s never going to stop going down.” When they capitulate, it’s normally the time to go buy and dive in. Everyone throws their hands up and says, “It’s got to keep doing that.” We were wrong.

We saw it with a lot of cryptos back into December 2021. Everyone was like, “I don’t know anything about this. I’m going to buy a bunch of all of them,” only to have had a volatile couple of months since then. Capitulation happens on both sides. The bears throw in the towel at the top and the bulls throw in the towel at the bottom. My favorite version of that is Lehman Brothers. Lehman Brothers declared bankruptcy on Sunday, September 15th, 2008. They declared it on a Sunday.

Isn’t it interesting that the board was meeting and decided to announce it on a Sunday? On Monday morning, September 16th, every single major rating agency downgraded Lehman Brothers to a sell the next day after it had been announced that they were going into bankruptcy. I think about that. As an investor who follows these clowns, it’s got to feel like you wake up in the emergency room in critical condition. A cop comes running over to you and yells out, “Look out for the bus.” It’s unbelievable.

It’s the worst. You do the opposite of whatever an analyst comes out and tells you to do. Normally, that works. When they get too bullish, it’s a good time to take your profits. When they get too bearish, it’s a good time to go invest.

LMSM 78 | Investing Uncertainty

Investing Uncertainty: Loss is what causes war. Once you’ve lost something, you get afraid of further loss, and once you get afraid of further loss, you begin to look for someone to blame. This is at the root of every legislative change in world history.


Equally, attending these types of peaks and valleys is the depth of expertise. It is at market peaks like we have seen in real estate where suddenly the expertise that someone like Frank has is decades in the curating. It’s like, “I’ve got this friend who’s into fixing and flipping. I’ll put my capital over there.” It’s washed away by the fact that everyone is doing well no matter how foolish, ignorant and stupid or good and well-formulated your plan is. You’re still being compensated for it. We start to discount it.

This is why Warren Buffett is hated at market peaks and loved at market valleys. It’s a remarkable phenomenon. Who among us doesn’t know some Johnny-come-lately expert who knows how to trade crypto or is getting into real estate? These are evidence of social saturation. The herding instinct reaches a point where there is no one left to buy. Everyone is already all-in.

I’ve told both of you this story privately. I was watching my oldest son. We were on a playground and it was cold. It was late fall or early winter. It’s somewhere between November and January. It was based on the charts. It was earlier. I told both of you, “This is peak crypto.” I’m standing on a playground and hearing people talk about how we all know Bitcoin is going to be $100,000. Within minutes, it got this rate by 40%. Alastair and I have talked about this, Ian. The Staples Center, which is a mega event center in Los Angeles, went from being The Staples Center to the center.

They’re the ones who had the Super Bowl ad that broke the internet. I wasn’t one of the people who put my phone up. I’m like, “I don’t know what the hell this is. I‘m not getting on that QR code.” That QR code was Coinbase. I believe it was associated with it in some way. The point is they had a huge ad at the Super Bowl. We have that bought The Staples Center. Alastair and I are texting back and forth like, “Is this peak crypto?” All of these things are confluences. What I would like to do is talk about how you use these experiences and challenge yourself to not necessarily buy into the status quo.

You and I have talked a lot about real estate and about how I’ve got a hedge fund that I’m working with that wants a 4% yield. That used to be 8% to 12%. Since I’ve talked to you, one of the things I’ve started to think about is how I’ve got a batch of $4 million worth of stuff that I’m not quite refinanced on yet, “Should I sell it? At a 4% yield, what’s my profit margin? Is it 240%” These are things I’m starting to challenge myself with. Are we at the peak? I don’t know but it’s not a bad time to take some chips off the table. It’s not a question but a statement of, “How do you react?”

One of the things we spoke about at the time was that ad with Matt Damon talking about, “Fortune has always favored the brave and those who put themselves out there.” I was at a movie with my son. This ad came on and he said, “What do you think?” I said, “This is telling us things. We’re going to look back on this moment and remember.” I still do. That was peak Matt Damon in a way. For the record, with my private group of clients, I spoke about peak Joe Rogan.

When Joe Rogan penned the Spotify deal, that was peak Joe Rogan as in his saturation. I had said to my class at the time, “He is about to be turned from hero to villain.” Sure enough, that unraveled. We deify people then mood changes and we eviscerate them. This is one of the reasons that you want to be smart about your profile. You could chase fame and actual peril. It’s not a game that I’m interested in playing because I see what it does to people.

It happens every time a famous athlete signs a long contract. They’re darlings on their first contract. Everyone loves them. Alex Rodriguez signs a 10-year $250 million deal in Texas and everyone hated him immediately. They’re looking for it to fall. That stuff happens all the time.

Let’s use that as an example. This is a smart one. We’re going to talk a little bit about baseball, Alastair. I’m sure you’ve got the references. Derek Jeter to me played it perfectly. He was never the Number 1 contract but he was usually between Number 3 and Number 7, which means he’s still fucking rich but he was under the spotlight. He was in New York off the radar where people never focused on him.

Tom Brady did it in a slightly different way but realized in a salary cap league like the NFL, “I’ll take a little bit less so there’s money to be distributed across the platform to others.” He never entered that realm. These are super-rich people who can do things that none of us can. He never got the vitriol like Alex Rodriguez because he was smart enough to stay underneath the radar.

I had to confirm something there. This is captured perfectly by a man named Soichiro Honda. When Honda started his company, he was making small engines, motorcycles, generators, small pieces of engines that will generate pieces of equipment and so forth. He eventually moved into small vehicles and then slightly bigger vehicles and timed it perfectly in the ’70s during the oil crisis. Weirdly, it happened during a bear market. There’s OPEC.

The popularity of his vehicles took off in the United States because we wanted economy instead of size. Vehicle sizes wax and wane according to oil prices. When Honda realized that he was onto something, their stated backstage goal among the board of owners, advisers and directors was to always be number two. This explains everything about Honda.

If I say the word Honda, you’re going to say, “Reliability, good value for money and predictability.” You’re not going to say, “It’s super sexy and great to pick up the ladies.” That is not the game that they play. They do good stuff better than everybody consistently. There’s a lot of wisdom to that. It reminds me a lot of Charlie Munger who was the one that changed Warren Buffett’s life. When Buffett and Munger came together, Buffett’s track record was dwarfed by Munger’s.

Munger managed more money for longer and made a hell of a lot more money doing it than Buffett had. He changed Buffett’s philosophy of how to direct capital to this day. Munger is twelve years or so Warren’s senior despite them growing up in the same town, working in the same grocery store as kids but never knowing each other. He said, “You would be amazed at what you can achieve if you don’t care who gets the credit.” I’ve always loved that. That’s to your point, Frank.

You'd be amazed at what you can achieve if you don't care who gets the credit. Click To Tweet

To your question about selling, buying and how these perspectives might guide us, there’s very little appetite for this especially in the Western world because we are so focused on quarterly numbers and relative comparison. We don’t operate from a total comparison world, which I believe we should. Everything is a relative trade, “How have I done versus my neighbor, the Case-Shiller index and S&P?” Instead of, “How have I done versus nothing? How have I done versus last year?”

It’s total versus relative comparisons and we live in a world of relative comparison. That is the premise of social media, Instagram and the number of followers. It’s all a relative comparison. The moment we’re playing a relative game, our timeline collapses to now, which means we’re never going to plant meaningful seeds for a very long-game harvest. That’s not the game we’re playing. With that said, there’s not going to be much appetite for a philosophy that says, “Ten years from now, we’re going to wish that we had taken a larger position in commodity-oriented economies or countries.”

We don’t want to hear about that. We want to know what the next crypto opportunity is. Right away, you’re going to lose 98% of your audience. It’s not exciting, sexy or fast enough. How do we do? Strategically, there won’t be much of an appetite for it but there is a way for us to tie the two together. Your example is a perfect one, Frank. What do we say when I believe that this business is worth X to me but it’s worth X times five to someone else? What do we do here?

I have this experience. Frank knows this story. I was interested in the veterinary medicine world. I put my wife through medical school to be a vet and got a backstage view of the industry itself. As I looked at it, I had a sense that the future of vet medicine is the same as the future of human medicine, which is integrative medicine of the East and West. You go to acupuncture and got a primary care physician. You see a chiropractor, take supplements and herbs and still get surgery.

I set about trying to build this model and did it using the core essence of a purely holistic Eastern-oriented practice. It’s a tiny 585-square foot cabin with a crazy hippie doc who was only there three days a week in a Hawaiian shirt. All he did was acupuncture on animals and Chinese herbs. Over the years, it bolted on Western physicians. I sold what is now an 8,000-square foot facility at a hospital with 6 docs, full-time surgeries and so on. I sold it for 23 times what I paid for it. This is not about me but it is about how we get to a point where I know because I bloody built it what this company is worth.

If someone is going to show up convinced that it’s worth 12 to 15 times what I think it is then let me tell you who to make the checkout to. This gets to what I think of as the evolution of discernment, which is a much longer conversation. If we are evolving as entrepreneurs then a large part of evolution is ongoing, active and deliberate discernment. When you start in business, you will take any property at any price, take any consumer or customer service and provide anything at any time and price.

We reach a point there where we say, “I’m not going to do those deals, do business with them and sell these products.” We’re not aware of that. We don’t consciously map it out and say, “I can’t wait until the day that I can fire that jackass client.” Hopefully, it should be coming. They should be fired and you should fire them, for example because they are no longer representative of the frontier that your capabilities have thrust you upon. That’s critical. What this has to do with Frank’s point is part of our discernment is letting go of what got us here.

To use your example, there’s this $4 million worth of assets or debt to be refinanced or whatever it might be. Trusting ourselves is at the root of discernment. The absolute bedrock of discernment is to trust our abilities to create something from nothing because we created something from nothing. We’re in a situation where they’re going to give us something way more than we think it’s worth. It’s as if we forget to trust ourselves to take those assets and redeploy them to our new higher-performing and more discerned outcomes.

As you’re saying that, Frank and I often chop up about, “Should I buy more? Should I sell this? I got this offer.” The question always comes to, “What am I going to do with it? Do I have a better and higher use for the capital if I got it after taxes or whatever we do?” That’s what it always comes down to. When you say discernment, the first thing that comes to my head is, “Do I have something better? Do I have a better opportunity? Someone is willing to pay me more for it now than I had before. Do I still like the investment? Is it still paying me cashflow?”

“Does it still give me the same value that it gave me when I bought it beforehand? Do I like that cashflow? Am I using it in a good way? If I were to sell it, would I find something that provided me something better than I’m getting even though it might be a higher price I get than I thought?” What I always come back to is, “What is better?” Maybe it’s buying emerging markets. Now that I’ve talked to you, maybe I need to sell my car shops and go buy Russian oil entities.

I wouldn’t buy Russians but I know what you mean.

If they’re selling at four times earnings, here’s my issue with places like Russia. What’s to stop it from selling at 3 times earnings or 2 times earnings? Is there any floor to how shitty a Russian stock could be? I don’t know.

LMSM 78 | Investing Uncertainty

Investing Uncertainty: Nobody’s paying attention to the fact that they’ve advanced two major steps and given up one.


There’s a good proxy. Hong Kong equities are trading at three times earnings. If you’ve got a practice or a business that’s for sale for $1 million, it’s trading essentially at book value. You could liquidate. Hong Kong equities are a far more robust opportunity that is equally attractively priced for what it’s worth. We don’t have to get involved with Russian oligarchs. To come back to your point about what would I do with the money, at no point I’m imagining in your entrepreneurial journey was that what you were focused on. At no point were you saying, “What would I do with it?”

You are entirely focused on the opportunities that you either saw or saw as your responsibility to create. That hasn’t changed. We get distracted by liquidity. If we pay attention to what’s going on underneath that, there is a sense of urgency, which is to say desperation and obligation that this money must be deployed. It is exactly that sense that has people overpaying for Frank’s assets. We are no different than the person we’re selling to if we’re going to take it, turn around, run and repeat exactly the overpricing errors that they have done. Nowhere in our history did we say, “I’ve got this money.”

One of the things we joke about on this show is if we were a higher-brow outfit, we would have some disclaimer saying, “We’re not a show for investing.” We’re not so we don’t. Use it at your peril. We will get sued in a couple of years. The point I want to drive at is this. One of the things that you said is about chasing deals. We had an all-hands-on-deck meeting with our sales team.

I have 50 employees and 20-plus people in the sales department so I have to tell people to say no to things more than ever before. I‘ve got new people who work for us. They’re like, “Where does the edge of our territory end?” They don’t have the skillset yet and haven’t sharpened their acts as well enough to chop down trees where we do our business.

Those are the periphery where they go first. I was having a conversation with somebody who is a very accomplished acquisitions manager. He’s like, “We’re trading the commission.” I’m like, “We’re going to trade the commission, which is $5,000 to $6,000 for what’s a $35,000 opportunity. I want you to find the noes. I’ll give up the $6,000.”

That’s what starts to happen as a business owner. When you get to higher levels, you have to help other people say no. Sometimes you would have to realize a profit. There’s a combination of these things that you have to be mindful of. There needs to be humility in your investing strategy or your profit-taking strategy because otherwise, the tide eventually goes out.

It’s discernment and hard to teach. It’s typically learned. There are some things you got to learn that can’t be taught.

Where you learn that too is from a leadership perspective. Frankie, you’re not doing anyone any service who’s new with you. This is normally the junior-level person or the rookie. You’re not doing them favors by giving them a couple of exceptions to get their momentum going because the sooner they know here’s what we’re good at, we stick to it and you say no to a few things, their mind quits racing in those things. They will quickly get focused on the key target areas where you want them to spend time. You’ve got to put the limits in place of, “This is where we do business and why we do business there.” I have enough data to say, “When I go outside of this business, I lose money.”

One of the things that we talked about is that we have right around 85 ZIP codes that we can work in. We do more than 90% of our business in thirteen of them. It took me a very long time to understand. Alastair and I joked. When I was in my 20s or even in my 30s, I would have heard of crypto or Russia trading at 3 or 4:1 or Hong Kong trading at 3:1. I would be like, “I need to become an expert in Hong Kong.” I can’t do that. I have the humility to realize I’m not going to become that guy. I don’t have the time, interest and skill. Where can we use those types of lessons inside of our area of expertise to teach, train and help us not make those mistakes and see opportunities? Those are the things that are a higher level of question versus, “I should lever up into Russian equities.”

Alastair said something important. There’s an absolute basis versus a relative basis. Part of the hysteria that happens in any market is, “A friend bought Bitcoin years ago and a kick-ass car. Their car is better than mine. They’re not as good as I am in business. They got lucky and did it. I’m going to chase,” instead of saying, “Good for them. I’m focused on what I’m doing. Nothing has changed in my life. I’m still making money. I’m still successful. I still enjoy what I do. Their new car does not impact my happiness.” To me, it’s much less of an economic issue and more of a psychological issue.

It’s almost anthropology. It’s not following a herd and not getting so excited about what my neighbor is doing. You can force your mindset to say, “Good for them. I’m happy for them,” and believe it, “That’s my friend. They made a smart and great investment. That’s awesome. I hope they buy me a beer the next time we’re out because they made a lot of money.” You can embrace it, “I’m happy for a friend who had success.” You will chase less in your life. You won’t do dumb shit to try to keep up with them. You will stay focused on the things you’re doing and not go out and do something irrational.

Envy is the thief of joy.

“I love my truck until my neighbor gets the newer truck that’s bigger and then I don’t love my truck.” It’s silly. You should still love your truck. It’s a great truck. Why did you change? You saw your neighbor.

This is so central to my ethos because this all orbits around the principle of profound importance to me, which is sovereignty. It’s intellectual, financial social, political and familial sovereignty. It’s the ability to pull up next to your neighbor who’s got the fancy truck and you’re driving whatever it is you drive. This is almost a stoically acquired skill set. I have a 2012 Toyota Tundra. It’s got 220,000 miles on it. I love that truck. More than that, I love that I love that truck.

The best way to have joy is to create it for others. Click To Tweet

I don’t need anything else. It’s the absence of need. Emerson said, “It’s not what you have. It’s what you can go without that is your wealth.” That is so comforting for me. I’ve had several friends over the years take me aside and say, “You’re doing okay.” For example, years ago, there was the VW scandal about VW fixing their emissions and so forth. What happened was there were all these VWs but nobody was buying them. The used market was suddenly collapsing in price.

I went down to Phoenix and bought one of those little VW Rabbits. I bought it for stupidly cheap money, drove it around and said, “This will be fun. I’ve got a feeling I’ll be able to sell it for as much or more in a couple of years if I drive it around.” I had my truck and then this little Rabbit. I pulled up at a friend and client’s house. This guy is a very successful guy with a beautiful home. He’s a dear friend. He has been a product client of mine for many years.

I pull up at his house. He goes to open the front door in this beautiful mansion of his, looks over and says, “Is that your car?” I say, “Yeah.” He’s such a good guy. He said to me, “Tim Ferris owned one of those.” I thought what he was doing was permitting me to go through hard times. He had no idea it had nothing to do with hard times. He was permitting me to be broke or desperate. It shows what a beautiful man he is. It was a deep judgment that was couched in love and kindness and delivered.

I can come back to Frank’s point about how do we pragmatically apply any of these beautiful and broad-ranging things we have discussed. At least, it’s beautiful to me and fascinating. These are all points of real interest for me. I coached and played rugby for many years. My first principle is, “If you want to win, start by not losing.” That gets to what is it that we can do. Part of our whole predisposition to extrapolation is operating as if things will continue the way they always have.

As a business owner myself and as somebody who might guide or suggest things to others and lead conversations with others, what is shifting the changes that entrepreneurs I believe do need to make that is sneaking up on them and that they’re not paying attention to is two profound trends that ended in 2020. There’s one in April and one in July. That was the decline in commodity prices, which have been essentially sideways to bear market since 1981.

The other is the end of lower interest rates, which ended in July of 2020. I was speaking about it with clients in real-time. This is a 42-year cycle that I believe is coming to an end and that bottom remains in place since then. What this means is for entrepreneurs, investors and business owners out there to the extent that you can update your operating system such that you do not count on eternally cheap capital to make deals happen. Some businesses are running with lines of credit that have an adjustable rate of interest.

That is not a durable business model for this next multi-year cycle. Likewise, commodity prices to the extent that we can factor in and hedge our exposure between purchase and sale. These are skills that should be acquired and curated. Here’s the good news about this as a recommendation. You cannot harm yourself by doing this. No damage will be done. The only thing you might give up is 1 opportunity or 2 but for those of us that are prepared and dynamic, opportunities present themselves all the time. That’s not the problem.

What I’ll weigh in on is this. Number one, thank you for being here. I do greatly appreciate it. The other part of it is there’s a twofold. It was brought up about the truck. Do you have envy for others? If you have envy for others, they’re envious of you. Where are you in that cycle? It’s understanding those things and having a true relationship with them. We break each other’s chops a lot but one of the things Ian taught me was to be where you are in life and enjoy the most of it.

Ian as a single guy loved being single. I didn’t know him before he was married but he didn’t have kids. He loved that life. Now he’s a dad and he loves that life. We talk about those things and you can see and feel it. The more that you’re present inside of those functions in your life, it allows you to realize these are the moments to capitalize on. You’re not forcing. You’re taking what the market gives you. The market is giving us these things that if you look at them this way, you have a very different perspective on it.

When the market gave us low-interest rates, that was a time of new things. When the commodity prices are where they are, it’s going to cause inflation. These are things. If you’re honest about where you are and you’re not nostalgic, you get a real chance to capitalize and take advantage or be honest and say, “This is a great time to take some of my chips off the table.” It comes through in everything we have discussed.

I would like Alastair to wrap us up. I think of two things. One, a lot of people think in business about choices of career or investment as predictors of success. It’s also every bit as important where you choose to live. It’s incredibly important what opportunities there are in the place that you live, the people that you surround yourself with, the person you marry if you choose to get married and also friends. I have fewer friends than I had in my twenties but with the friends I have, when I have something successful happen, I genuinely feel like they are happy for me.

They don’t see it as a knock to them down the peg on some ladder we’re trying to beat each other to. I could care less if Frank triples or quadruples my net worth. I’m happy every time he tells me about a deal that he does like, “Good for you.” I’m on a little different track. I’ve got some other things going on. I’ve got friends in Chicago that are doing incredibly way better than me financially and I’m truly happy for them.

I only want to hang around with people that I genuinely feel like when I have a big win, they want to hear about it and are happy. They’re not seeing that as, “Relatively, I went down.” They see it as, “We’re all going up. This is great.” I thought I would say that because we have talked a lot about investments here. Success to me is every bit as important as choices of where you live, who you surround yourself with, your mindset and the things you choose to care about.

My lived experience and constantly recalibrated and reiterated philosophy is, “What is all of this about?” It’s all in the service of one thing, the one KPI or certainly the KPI for my life, which is joy. It is all that I seek. I can afford to make that my KPI because there is no version of that which is hedonic and selfish. I don’t care about competition. Competition is for children and novelty. If you are setting out to be number one, you’ve automatically subordinated yourself. The premise of the competition is, “I will feel okay about myself or joy if somebody else has less or come second.”

LMSM 78 | Investing Uncertainty

Investing Uncertainty: A large part of evolution is ongoing, active, and deliberate discernment.


That’s not how I operate at all. It’s useful when we’re acquiring skills. When I was first learning Jiu-Jitsu, I wanted to compete to measure my progress because otherwise, I have nothing to compare it to. We get to a point certainly, for me, of joy. Everything I do is in the service of joy, the people I have the privilege of working with that I’m very deliberate about as they should be, the friends in my life, my daily habits, the quality of conversations I have and the connection with my kids and loved ones. The best way to have joy is to create it for others. I’m with you.

What I always say to Alastair when we hang up and I tell you, Ian, my wife and friends is this was often the best 90 minutes of my week. Thank you for sharing that with our audience.

I’m cutting that bullshit off. You never say that to me. You’re always like, “I couldn’t get off this fast enough. You’re a prick.” That’s how you end all conversations with me. Maybe you tell Alastair in this conversation but that is not what you are saying to me.

I say that to him. You had never heard those words.

You’re always like, “I can’t wait to get off. Don’t call me again until next Wednesday.” Thank you very much for coming on. This was awesome. I would love to have you at another time.

It’s great to connect with you, Ian and good to see you. Frank, we will talk soon. I appreciate both of you.

We had a lot of fun. Thank you.

It’s much appreciated.


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About Alastair MacDonald

LMSM 78 | Investing UncertaintyNeuroscientist investigating brain circuits controlling breathing and orofacial behaviour at UCSF. Previously a postdoc at the University of Exeter Medical School.