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Joining us today on the Chicks on
the Right podcast is none other than our

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friend and sponsor, Zach Abraham,
chief investment officer at Bulwark Capital Management.

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And you were telling us some stuff
before we even started recording that was brains

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explode, there's tea, and so
we were like, please stop talking.

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We've got to say this. Everybody
needs to hear this and go okay.

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So so we'll start it off with
this. And I think that this is

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so important for retail investors. And
when when I say retail investors, I

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mean anybody, I don't mean that
in a pejorative term, right retail,

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you know, people look down on
it. There's some really good retail investors

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that you know, invest their own
money. But watching what retail investors do

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is a very big signal for us
in any other institutional money manager. And

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the reason why is historically, retail
investors are wonderful contra indicators, okay,

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meaning when you see records selling from
retail. So if retailer just in their

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dumping stocks about ninety five percent of
the time, that's a bottom okay,

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it's a wonderful time to be buying. Conversely, and if we think back

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to the tech bubble of nineteen ninety
nine, right where you couldn't go to

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a cocktail party or go to somebody's
barbecue without talking about the hot new tech

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play that they were in. When
we see peaks in retail investor sentiments,

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so they're very aggressively purchasing stocks.
That typically coincides with either cyclical or secular

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tops, meaning it's it's either you
know, a top for a short period

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of time and the market's going to
correct, or it's the top of a

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cycle. Right, and we all
know this, you know, anecdotally,

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people get the most excited about buying
stocks when they've gone up the most,

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and people get the most demoralized about
buying stocks when they've gone down the most.

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Right, we think inversely to what
we should, So we pay very

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close attention to these indicators. And
we've talked a lot about how expensive this

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market is, right, how interest
rates are going up, bad things are

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happening in the economy, and stocks
keep going up and valuations get stretched.

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Well, some really interesting data came
out the other day that in this so

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far in this quarter, you are
seeing record inflows. So as in retail

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investors have never been more aggressively purchasing
stocks than they have been this quarter.

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Now at this same time, let's
contrast that with what's happening on the other

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side of it. We got a
report out every single year anybody that every

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single quarter, any manager or company
that manages over one hundred million dollars has

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to file something we call a thirteen
F which they have to report what they

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bought and sold that quarter and what
they currently own. And we keep a

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big eye on that, like,
for instance, Warren Buffett or Stan Druck

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and Miller, those are guys who
we watch. They're thirteen apps, part

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of our process, part of our
research process, to just see what some

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of the greatest investors in the world
are doing. Right. So, in

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the same quarter that retail investors are
buying more aggressively than they ever have,

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the news comes out that over the
last twelve months, Warren Buffett has been

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a net seller of thirty billion dollars
in stock and currently has a record hundred

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and fifty billion in cash sitting on
his balance sheet. What does that mean,

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Well, so what it means is
that he has a hundred and fifty

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billion dollars sitting there in cash,
i e. Short term US government bonds

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waiting to buy something. Why isn't
he buying things right now? If you

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don't see Warren Buffett buying things when
he's got a lot of cash on his

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balance sheet, it's because he thinks
they're ridiculously expensive. He does the opposite

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of what retail investors do. When
things get stupid expensive, He sells them.

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He actually, he and Charlie Munger, his long term partner, they

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have a saying, which is,
we want to buy things when nobody wants

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them, and we want to sell
them when everybody can't live without them,

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right, So they are doing when
you see those court Now, look,

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all of this is anecdotal, and
Buffett has been wrong before, right,

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But when we're sitting there talking about
how ridiculous this market is, in contrast

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to the backdrop, all of these
things are lining up. Right. You've

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got the most deeply inverted yield curve
of all time. Whenever it's been like

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this, you've had a recession within
twelve to sixteen months, And we're right

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about that twelve to sixteen month point
from when the curve invertic. If we're

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at the top of the cycle,
we would expect to see record inflows from

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retail check. We would expect to
see really seasoned investors like Buffett, and

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we would like to I'm not putting
ourselves in Buffett's category, but there's a

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reason why we're sitting on about twenty
five to thirty five percent short term treasuries

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too. Why these prices and market
moves make no sense. Okay, companies

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who are losing increasingly more money.
Their stock is going up increasingly fast.

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Okay, So you just look at
all of this stuff, and what I

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will tell people is that look,
and this isn't just the overall market.

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There are some cheap things that I
think need to be in people's portfolios,

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ie the stuff that warn't. And
Buffett has actually been buying. The only

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thing he has purchased over the last
sixteen months, essentially in a meaningful amount,

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is energy companies Exxon and Occidental Occidental
Petroleum. So ironically, that's the

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only stuff we've been buying too,
Because as crazy as these other prices are,

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you look at a lot of that
stuff that benefits from inflation, and

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it is generationally cheap. It's so
cheap it doesn't make any sense, right,

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So you just have this crazy market
that I think people just believe that

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tech stocks can't lose and that's how
they're going to get rich quick. And

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they're being price agnostic, meaning they're
not paying attention to the underlying fundamentals companies

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that are losing money or excuse me, not losing Like Apple isn't losing money.

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But Apple's back to an all time
high and an all time high valuation.

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This is coming off the first period
in twenty years where they've had three

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consecutive quarters of declining earnings and revenue
and rates are going up. Right,

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So to us guys, these are
the kind of things that you see at

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the end of the longest ball market
in human in US history, the biggest

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bowl market in US history. Every
time things went down over the last for

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fifteen years, right, the only
way you lost was but by not buying

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the dip. So is there going
to be I keep hearing the term thrown

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around soft landing, which sounds very
nice. So what's your take on that.

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Are we gonna crash and burn or
is there going to be a soft

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landing? Yeah? So I think
the soft landing thing is hilarious. I

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remember the same terms being thrown out
in two thousand and eight, Right,

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soft. Yeah, not at all. And here's and here's why we think

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now look full caveat and I think
this is just a lesson to everybody listening

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right now. Anytime you hear me
or anybody else that does this for a

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living, tell you what they think. Know full well that me and anybody

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else you listen to does not have
some secret information and does not know the

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future. Right. So I can
be wrong too. But when we look

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at a soft landing, I actually, on the face of it, find

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it ridiculous, okay, And the
reason I find it ridiculous is the whole

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idea of a soft landing is the
economy slows gently and it allows the FED

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to cut. Okay, well,
why is the FED gonna cut if nothing

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bad is happening? Everything it's bad, Everything is happening that's bad right now,

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And they keep raising rates right right
And the reason and the reason they

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keep raising rates is due to what
we call the leg effect, meaning this

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happens every cycle too. FED starts
raising rates, everybody freaks out for four

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to six months. Then they kind
of pop their heads up and go,

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hey, nothing really bad is happening, the coast is clear, and interest

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rate hikes never hit the real economy. It takes twelve to sixteen months for

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them to filter through. So we're
right at that point now. And the

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other part of it is it just
fits all up anecdotally. We look at

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record retail exuberance about buying stocks is
occurring right as the impacts from higher interest

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rates are starting to show up in
the economy. I'm just waiting for the

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interest rates to stop rising. Well, they're We're probably close to it right

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now. I just said that they
were going to do another one, and

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I'm like, they may on the
margins, right, but I mean,

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if they throw another twenty five basis
points at it, what's the difference.

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It's twenty five BIPs, So it's
not going to really matter. Here's the

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other thing that I don't think people
are realizing economically. If the Fed cuts

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fifty to even a hundred basis points, it'll probably make the short stock market

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go up in the interim, but
it really isn't. And it might bring

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mortgage rates down a little too.
But other than that, it's not going

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to really do anything positive. And
the reason for that is is the biggest

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wind economically that's provided through lower interest
rates is the ability it provides consumers and

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corporations to refinance their debt at lower
levels. Okay, well, if the

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FED cuts one hundred basis points,
which would be a very large cut,

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you're still way above where we've been
for the last fifteen years. So it's

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not going to trigger any refinancing because
that means you'd be going into a higher

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rate. Right. So this is
our whole point is we think the FED

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will cut aggressively, but not until
bad things start to happen. And if

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you want to see an example of
that, just look at every recession for

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the last forty years. Does the
FED cut, Yes, but it's usually

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after something breaks, Right. The
FED is reactive. They're not predictive,

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right, They're not getting out ahead
of things, so they're they're a totally

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reactive body. And so yeah,
I just and when you think of it

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that way, it's to me the
whole and to our analysts and everybody that

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we've got here, I just think
it looks like a very It's like a

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children's story, right, a soft
landing. It sounds nice. Is it

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going to happen? No that the
Fed's never pulled it off before, right,

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So I mean, you know,
could that could that pig grow wings

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and fly off the farm? I
suppose it could. I'm not gonna say

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it's impossible, but it's never happened. So that's that's that's the way we

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view it. And I think that's
just a lot of stuff going on right

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now is people are looking at data
points that line up with what they think,

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and I just don't think people are
being very realistic about what we're up

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against. That's great, It's always
such an uplifting conversation with us. Yeah,

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I really, I know it's like, but there is hope here.

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There is there is silver lining right
first of all, And I'm not just

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trying to pump the way we do
things, But first of all, we're

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looking at all these we're looking at
all these great clouds. You can make

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more interest now taking zero risk than
you've been able to for sixteen years.

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Here's the other thing. There are
great bargains out there, you just need

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to know where to look. And
here's the other thing. If we manage

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risk properly, market downturns become opportunities
because we prepare for it, and then

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we can step in there and buy
great assets at cheap prices. So you

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know, we tell all of our
clients. Look, one of the reasons

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we manage risk and we're constantly looking
at protecting your downside is because that means

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we'll have the most amount of money
when things go on sale and so market

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devastation, we'll equal our opportunity.
And I'm not gloating about that, right,

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but we've got to do what's best
for ourselves and what feels, you

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know, what's the most responsible with
our money. And so I think I

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think the upside is you're getting paid
more to wait and be conservative now than

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you have at anytime over the last
seventeen years, and we're probably going to

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see some phenomenal buying opportunities over the
next year to two. So look at

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that. Okay, that's good.
Yeah, I can pull a Warren Buffett.

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Yeah. Well, And unfortunately,
the stuff that I think looks really

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good over the next five to ten
years is the stuff that nobody owns.

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They're all loaded up on video and
AI and ARC and all this tech stuff.

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It's grotesquely and ridiculously overvalued, and
they're probably gonna get smashed unfortunately.

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Yeah, yeah, makes sense.
This is the complete the kind of good

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information that we always learn from you, and that everyone else can too if

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they just go and check out your
website tell people where to find you.

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Yeah. So, and we actually
just started a new one too, so

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yeah, easiest place to find us
is Know your Risk Radio dot com or

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Bulwark Capital Management dot com because we
do our weekly show that airs on Saturday,

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and then we've just started an extension
to that show, so if you're

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a subscriber to the podcast, you'll
get this automatically. So we put out

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00:11:52,320 --> 00:11:56,000
this every day. It runs about
ten to fifteen minutes. It's called Daily

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Dots, and it's just a condensed
down version of everything important that happened in

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the world of finance, investing in
markets and economics that day and the whole

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idea. Yeah, it was just
to make a simple easy people on the

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ride home can get a download of
everything that happened of importance that day in

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a short, concise manner. So
that was fantastic. Yes, everybody should

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check that out. That is awesome, Zach, Thank you and thanks has

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always forgiving us an update and having
a happy ending. That was really really

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important. Yes, hey, there
is hope, right. If favorable what

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is it? Opportunity favors those who
are prepared, and I think it's just

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a wonderful time to get prepared,
all right. Love it, good message,

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Thank you Zach. Appreciate it.
App