Capital Imbalances And Why David Daglio Is A Reformed Value Investor

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David Daglio says value investing is about looking for capital imbalances, not just reversion to the mean.Protect your portfolios with bonds and consider gold miners.The AI data center buildout is a ...

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Eoneren Listen here or on the go via Apple Podcasts and Spotify. What has been your journey thus far and where are you today?DD: Yeah. I mean, let's start really big here, Rena. I've been a self-proclaimed value investor for 25 years. And it's been a tough place to be for 25 years. 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Eoneren Listen here or on the go via Apple Podcasts and Spotify \n\n\n\n\n\n\n\n\nDavid Daglio shares why value investing has everything to do with looking for capital imbalances (2:00). Go short to get long bonds, miners and how investors should protect their portfolios (5:40). Gold vs gold miners (9:25). Why Jerome Powell has the most impossible job (13:00). Thoughts on the 10-year yield (19:40). AI, copper, nat gas and a huge capital spending experiment (21:10). US vs the rest of the world (28:20). Transcript Rena Sherbill: David Daglio, welcome to Seeking Alpha. Welcome to the Investing Experts Podcast. Thanks so much for making the time. David Daglio: Rena, great to be here. RS: It's great to have you on the show. So share with our Seeking Alpha audience, our Investing Experts audience, what has brought you to the investment world? What has been your journey thus far and where are you today? DD: I was in this job. Right out of business school, Rena and I both went to NYU. And I'm right out of NYU and like everyone else I'm getting into management consulting. I'm a year into it and I realized I love businesses, I love financials, but it wasn't enough of a Rubik's Cube for me. And I became drawn to the complexity and the layers and the thoughtfulness and even the rate of change. And I remember, Rena, my first investor meeting, I think it's run by like Goldman Sachs, big conference. There's 500 people in the room. And everyone's asking these questions. I'm on like day 30. And I look around and I go, oh my God, I might be the dumbest person in the room when it comes to investing. And here I am, I don't know, 27 years later doing this. And I still have those moments of, oh my God, do I really understand this topic? And so the industry has given a lot back to me as far as intellectual curiosity and it still drives that. So I'm glad I ended up there and I'm glad I'm back. RS: Let me ask you, do you feel that your biggest investment lesson was from a mistake or was from a success? DD: We're all getting all these self-help podcasts these days or Instagram feeds and whatever. And look, I don't believe you make any real learning without having a mistake sit in front of you. And so all of my great learnings, the things that are kind of breakthrough thinking for me, the ability to be different, I think, came from making some type of pathological statement or belief that ended up not being the right thing to do. So yes. RS: Do you want to give a specific example just in terms of edifying or articulating it for investors? DD: Yeah. I mean, let's start really big here, Rena. I've been a self-proclaimed value investor for 25 years. And it's been a tough place to be for 25 years. I think David Einhorn was out on the tape earlier saying, value investing is dead. And I would say as a value investor, you wake up with this thought that you can't hurt yourself falling out of the basement window, which is a good concept, right? But the problem with that is we all look to very simple metrics, like what was last year's earnings, last year's cash flow, the assets on the balance sheet, and if we bought it cheap to that, it always worked. And so we became a little cavalier in that, look, if I could buy Whirlpool (WHR), which made washer dryers that compete with the Chinese, I know how hard it was competing with the Chinese. But if I could buy it at assets, why not we'll make money. And I think we were too cavalier in our fundamental assessment that all things would revert to the mean. And so the biggest lesson that has been really hammered into me in different places over the last 20 years is value investing has nothing to do with reversion to mean. It has nothing to do with last year's earnings. What value investing in its heart is, is looking for where there's a capital imbalance. And if we can kind of capital imbalance where fundamentals are improving and we can get an alignment, voila, we can make a lot of money. And so just to carry on this, Rena, like capital imbalances, it could have been in 2008 and 2009, no one wanted to invest in biotechs because you got your head blown off for the last 15 years, but we just uncorked the human genome. So it was obvious that it was a great idea, the fundamentals was going to improve, and there was a real capital imbalance because people had lost so much money coming in. And so I like to think of myself as a reformed value investor. And look, I don't know how long it took. It took at least a decade-and-a-half. So I'm a slow learner to figure this out. RS: So where do you feel like the fundamentals are making the most sense when you're looking at the market these days? DD: Let's start with the obvious. The obvious is this AI data center buildout is the most obvious capital spending boom I have seen since telecom, where we know there's a need and it's going to happen. And what we've been spending time with at TwinFocus is really understanding who might be the winners that haven't already been discounted. Where things become less obvious to me is, I think, we're seeing the end of U.S. exceptionalism. And I know it's consensus that the U.S. is exceptional, but some of that has been exaggerated by the large fiscal spend. And that fiscal spend is creating an inflationary impulse. And so what we're talking to our clients about, and this is a little more controversial, is let's make sure you're protected in an environment when 60/40 ends and/or when inflation is larger than we think. RS: So we've been talking that a bit about that on the podcast vis-à-vis T-bills and gold in terms of protecting investors from these macro kind of volatile measures. How are you articulating for investors how they should be protecting themselves? DD: Yeah, I mean, I really like that question because we've been out relatively strong and fast with advice on how to do that for many family offices that we run. First, first principle is here, 3.5 is a new 2. We've got a guy washing windows. It's going to distract me to no end here. RS: Which is a nice metaphor, I think, about how to invest - a lot of distractions. DD: It is, right. We never know when we're going to get a fire hose blowing in our face to tell us we're wrong. So with that as an apt analogy, I think two trades are not getting discussed enough. The first is simply go short to get long bonds. And what that means is you want to stay much shorter duration than the average maturity curve that's out there in the world because you're getting paid 5.3, 5.5 to stay short and you're only getting 4.5, 4.6 to take more risk at 10 years. And wherever you believe rates are going to go, it is risky to go out the curve. You should get compensated more. You're not. We're advising clients to stay shorter. And then once you've decided to go short, you can decide to do it, spicy, extra spicy, holy moly. And what I mean by that is, sure, you can buy your money market fund, get 5.3. We're doing a private investment with something called mortgage service rights. That would be on the extra spicy, holy moly side. And that benefits from a slowdown in mortgage prepayments, or you could just go along the levered loan market, which trades based on short duration rates. All those make sense to us, all depending on your risk tolerance. Since you mentioned it, my personal passion today and one of the ideas I have, and again, I'm a self-confessed value investor. I think everyone needs to own some gold miner stocks. And I'm being explicit about the stocks themselves. They're trading at their largest discount to net asset value or cash or relative to their potential in the future versus spot. And that's interesting because that means in order to get the gold stocks right, all you need to know is that gold holds its price. It doesn't need to go up. And so if gold holds its price, we think the large gold miners could produce 40% or 50% or 60% returns over the next couple of years. I have a secondary belief. When you and I were at NYU together, I paid for my school by teaching macroeconomic classes for David Backus. He was the Chair of the department. He's written a couple of books in economics. And he convinced me of something that I haven't lost in the 30 years since, which is money is fungible. If you print too much money, eventually, it's worth less. And that's called inflation or reduction in value in the money. When we run a 7% fiscal deficit in the United States, no matter how much flushing of the debt or anything you do, eventually that creates money supply. That money supply is inflationary. I don't know the day, week, and month it will come. But when it comes, you need protection. The most obvious place to protect from is a non-dollar-based asset like copper or gold. Gold to me seems the easiest way to play it right now. RS: What do you have to say about the (GLD) ETF? Or you mentioned the miners, are there specific miners that you want to get into today and talk about? And also I'm curious between the miners and maybe like a gold ETF, why is that preferential? DD: We're putting a white paper out on this topic right now, so it's very much top of mind. So, thank you for it. I think it's an appropriate question. First choice, do we own the gold bars either in person or do we own the ETF itself or the miners (GDX)? I think you own the miners. The relative trade is so powerful. It's the best it's been in 20-plus years. I think you have to own the miners. And then the next question is, what inside of the miners could you own? And I personally like Newmont (NEM). We work with outside experts to pick securities, but Newmont is such a large position, I can just kind of walk you through how that – how we thought about Newmont. So Newmont has done a bunch of bolt-on acquisitions that were largely overpaid for over the last four or five years. That's been discounted to stock. On top of that, they had a tough mine the last couple of years. It was in Mexico that drove up their short-term all-in sustainable costs. We think the worst is behind us on that. And then, again, if we just model out the cash flows, it looks very cheap relative to the cash flows it can produce and then you get a 4% dividend while you wait, right? And this is also very true of Barrick (GOLD). I personally like the Newmont story a little bit better. As we go down into junior gold miners, I mean, here you have to be prepared to speculate. Now the junior gold miners are speculating on assets. When it works, it's kind of like a one in three game. One in three of them pay off, but they pay off so large that they cover the rest of it. So in that case, I would own just the junior gold miner ETF (GDXJ). That makes more conceptual sense to me, unless you have the time to do individual diligence on each security, find a trust level with the management team, understand the mines. That can be hard for most of your readers to do, in my opinion. RS: And why the miners over gold? What's the reasoning? DD: One of the most tried and true ways to value commodities box is to look at the current spot price or the indicated future spot price and then run that through the income statement of the public equities. And when you do that, you come up with a net asset value. And then we can model out the discount or premium to net asset value that gold miners have. Today, we believe that gold miners trade for about a 30% discount to net asset value at the current spot price. That is the highest it's ever been. What you normally see, this sounds kind of crazy, but normally gold miners used to trade at a premium to net asset value because frankly, it was just gold, it was uncorrelated. We're now trading at a discount. That's an entry point for us. If you looked at oil stocks, for example, to compare another commodities industry, they would be more to 10% to 15% discount. Some of it’s warranted. It's warranted because these gold miners the last four or five years, maybe 10 years, have kind of spent like drunken sailors. We think the end of the drunken sailors spending is behind us and they'll start to perform more in line with the cash flows that come out of the business. RS: Speaking of drunken sailor spending and inflationary measures, how are you thinking about how the Fed's attacking inflation or not attacking inflation? DD: There are a lot of people that have tough jobs and near impossible jobs in this world. I think Powell has the most impossible job in the world. And this is just – look, this is just my opinion, but I think we need to start with first principles. First principle was quantitative easing was done as a way to solve a very short problem. We were short liquidity in the system. We couldn't get into the banks fast enough. So we changed the rate regime. And it was Bernanke, correct, at that point. Bernanke said, look, this is a temporary measure. That was in 2009. We are still running effectively yield control management today, which is a decade-and-a-half later. And so Powell's job is so complicated on how we exit this regime. I frankly think it's going to be hard. I think it's almost certainty that either the bond vigilantes come out and kind of run the market like they did in the United Kingdom with Liz Truss about 18 months ago, and/or there's some type of policy mistake because they're forced into a corner. So look, that's an opinion. We don't know for sure, but like this is really hard. And I think that's why the market correctly has become so fixated on what every Fed governor says, because they realize that it's a really narrow balance beam that he's on. Okay, what's he going to do next? I mean, look, this is crazy time, right? Rena, at any point, if we had come in from Mars, and I had told you a few facts, right? If I had said the unemployment rate is at a 35-year low, profits are going up into the right, and the stock market’s within 3% of an all-time high, you would say the Fed's probably tightening rates. But what are we discussing? One or two rates. Well, it was seven. It's now down to one or two. That policy doesn't jive with history. And I think that's why, as I mentioned earlier, our Federal Reserve realizes there's no choice out of this and they've really got to let inflation run hotter. Now, my hope is it stays contained at 3.5%. At about 4%, we want out of all risk assets frankly because nothing much works. So I really hope that that's the speed limit here. But we're watching it. It does look like we're already there. You've seen things like average hourly earnings keep surprising every economist to the upside, then I think that's an indication that we're still tight and there's a lot of stimulus in the system. RS: What do you think are the most important economic data points to pay attention to these days? DD: Yeah, and we built a model in my old shop to really understand recessions, and we refined that over about 15 years. And what we learned, and I think your question is really prescient, is it depends where you are in the business cycle as far as what you're watching. And it depends what the market has discounted to see what you're watching. So let's start with what the market has discounted. We just had the fastest or the largest move in the S&P, non-recessionary of all time. That was from the October lows until we got to the March peaks, but we're only a little off that, right? So that means the market is expecting exceptionalism. It needs to see earnings go up in the right. So when people say to me, well, Dave, earnings are going up. That's a good thing. I said, no, the market just rallied, it knew that. So what people need to look at, I think right now is really the second derivative economic growth,. and are they accelerating, because that's consensus. And if they're not accelerating, I think you get worried because something's a little off here, maybe not horrible, but a little off. And I'm on the camp here that I'm surprised the market hasn't pulled in a little more because some of the second derivatives have started to slow. And let me give you a couple. First, I really like these economic surprise datas, right? It's really the leading indicator of what's happening now. And if you look, the economic surprise is now below the Mason-Dixon. So it is saying it is going negative after surprising upside for about six months. So I would start there. I would also start with – this is going to sound weird, but or almost impossible. In Q1, the average consumer stock beat earnings by mid-teens percent, crazy, right? So – but guess what? The market was disappointed because the average consumer stock was down 2% on earnings. So that tells you that like, we've got a lot of expectations built into it. And then, I don't read press releases for a living. I used to read about 4,000 press releases a month, I think, in my old job as a day-to-day stock analyst. But let me just go through a couple press releases. And it – if I just gave these to you in a background, you'd be like, oh, I want to be worried on the margin. McDonald's (MCD), I read through the whole thing. What did they say about half a dozen times? We have macro headwinds and inflation across the food basket is slowing sales for us, okay, pretty big company, right? Next in line, Starbucks (SBUX). Our occasional drinkers, which would be me, are falling off the map, right? So it's slowing down. That stock was down shortly. DoorDash (DASH), my kids seem to use this too much, in my opinion. DoorDash slowing. Nike (NKE) down 7% sales in the first half. Lululemon (LULU) simply slowing in the U.S. And then Uber (UBER) came out this morning with weak bookings. Okay, that doesn't make a story, but this is telling you on the margin, someone's feeling pressure. And we can see that in 30, 60, 90 delinquency. So the economy is improving. We're going to have a good economic year, but on the margin, I think it's coming in less strong than everyone expected and I want to watch for that. RS: How are you thinking about the 10-year yield (US10Y)? How does that figure into your thoughts? DD: Yeah. I wish I had a really good crystal ball on the 10-year yield. And if I could call that, I could call everything. And frankly, I wouldn't tell anyone. I would just make billions of dollars. So I want to be naive on this and just say, like, I don't think anyone can call it with any precision. I would say this on a three-year basis, which is how I think about the world. I think it's more likely than not that yields are higher than they are today by 50 to 100 basis points at least. I think in the short run though, it's possible we come in a little more. It looks to me like Yellen, Powell and Biden's staff are really doing everything they can to kind of squeeze down 5- and 10-year rates before the election. It's the one voter issue because this influences housing affordability, the banking crisis. So it's one thing they can control for a period of time. But, Rena, I would think about that as like pushing on a balloon, because with an inflation expectations running close to 3, 4.4 or 4.6 on the 10-year is just not high enough, right? Because you're not getting much of a risk premium. So like, I think we can squeeze it down for a little bit. But I think over the next three years, if I had a good crystal ball, my best crystal ball says we're high. RS: At the beginning of the conversation, you mentioned AI, the explosion there, hardware stocks. An obvious point is the Magnificent 7, some recent earnings in the space. How are you thinking about that as it develops in terms of NVIDIA (NVDA), the value that's really in that specific part of the sector? Is there still value there? How do you think about that? DD: Let me tell you the most incredible fact that we just uncovered here and others know this, but the H100, which is the NVIDIA chipset that's being bought today, the B100 is the next one, they consume the same amount of electricity if running 70% of the time as I do in a typical year out of my own home, or Rena, you do in your home. So the power usage here is truly staggering. It's all almost monumental. And the way we've dissected AI is we've said, what do we know for sure and what we hope for, but don't know yet. What we know for sure is this is going to be the biggest capital spending experiment in probably 200 years, maybe since the railroads were built out. And that capital spending means we're going to build these data centers. The thing we don't know yet is whether all this building was necessary or needed or has a productive payback. I have my theories. I think it's pretty cool, but so does everyone else. So this looks like telecom to me, where we're going to build out fiber optic everywhere. We still don't know if we need everything we have. So what we've talked to clients about is let's play the infrastructure of the data center build out. What are the picks and shovels that go into that? And then where can we find price on our side? So we like semiconductors. You can play that a number of ways. We think they're fine and they're safe. I would rather go down into things like just pure copper. The amount of copper needed to run these data centers is incredible. We're going to need new power plants, we're going to need new transmission lines, and it's just starting, right? And we can see that if, as you know, in the last 30 days, copper has moved up into the right. I think that's a signal we're short copper globally. I would just go and buy the miners (COPX) directly there. If you want to go way out of the money, and this is a trade that's already worked, we believe that power demand in the U.S. will increase from 50 basis points growth a year to 2.5% per year. Now that doesn't sound much, but if you're dealing with 100-year-old infrastructure and regulatory agencies that don't change very quickly, that means you're going to be short power somewhere. Solar helps, but it doesn't offset it. So our hunch is that we may build some more natural gas plants to offset this because they can come up quickly. We're starting to see an improvement and you're at the basement floor window as I suggested earlier, like you don't pay anything from the natural gas stocks. And then in addition, we have this LNG build out, which happens ‘25, ‘26, ‘27, ‘28, which has more demand coming. So better chance than not that natural gas could be slightly higher in the future. And it's really a third way to play inside the data center build out. RS: Do you like natural gas ETFs (BOIL) (UNG)? And in terms of copper, why the miners over like a copper ETF, let's say? DD: Yeah, we like all four of those, right? So if you're going to buy natural gas direct, I'm fine with that. If you're going to buy the copper direct through an ETF, I'm fine with that, and then the securities look attractive to us. In addition, I think it's hard to make a distinction between all those trades. RS: Fair enough. What else are you looking at when you're looking at the sectors? We've heard people being excited about, let's say, energy right now. Are you excited about a certain sector or are you thinking about it similarly to copper, like you're looking at the AI space, but trying to get in kind of from a different obvious lane or a nonobvious lane? DD: Yeah. I mean, we started with a simple framework on how we make decisions, which was, is there a capital imbalance? Question one. Are fundamentals as you anticipate them over the next three to five years positive? And can you get an aligned structure? And so with that as a framework, let me ask, Rena, a trivia question for you. RS: Okay. DD: Since Joe Biden was elected, which is 3.5 years ago, what was the best performing sector? RS: I'm going to guess tech. DD: Yeah, that's what I thought too. The best performing sector was energy. What sector had the most outflows? Energy. And so, we kind of look at that and say, we're curious, we're curious what's going on. So that's an area that we're intrigued by natural gas would be one play just owning the equities outright. We're actually looking at a private investment today inside of the oil patch that has unique technology. It's basically a proven out venture capital idea inside of the energy space that we can buy for pennies on the dollar, but that's a private investment. So, we do like that. We've been really thinking that healthcare still has lots of legs for growth, and there's still quite a bit of skepticism. The biopharma revolution we think is real. That's intriguing to us. The prices are still attractive. Inside of tech, I would be more selective than you needed to be the last 3.5 years. The last 3.5 years, frankly, everything went up. And we just looked at the industry data and there wasn't really much of a spread, even from semiconductors the best and software to the worst. Where I'm cautious is I was a tech investor in the late 90s. And one of the biggest learnings for being an early-stage tech investor in the Internet phenom was everyone focused on the winners, but there's always losers too. And I think the market has not been discerning enough about who the potential losers can be from this AI data center, natural language processing, speed up programming that we're all dealing with. To me, the loser looks like it may be big broad-based software companies. And the simple story when you listen to every single AI programmer, is they say, I can create 100x more code than I did last month with the new GPT-4 or whatever the tool is. Well that's not good news. That means we're going to have more and more supply of said assets. At my firm, TwinFocus, for the first time in our history, we were exploring and writing our own code. Rather than buying a CRM directly, we're going to build our own code to build out the CRM system. So what that means to me is that it's potential that the software companies who have been the darlings for the last 25 years struggle a little bit. Now maybe Microsoft (MSFT) is the exception because they have the world's best monopoly or they print a $100 bills for a living. But I think we need to be more skeptical on software inside of the rest of the tech patch. RS: You were talking about U.S. exceptionalism also towards the beginning of the conversation. Any thoughts about the international picture? DD: Yeah. Well, let's talk about U.S. exceptionalism and then see how it reverts to the thinking inside of the rest of the world. So what is U.S. exceptionalism? It's truly incredible, Rena, that over the last 18 months, our economic growth is up into the right, and the rest of the world is kind of stumbling around zero. China is in a recession, maybe Europe is bouncing out of one and we have near a perfect economy. It’s pretty cool. When we look at all the tech and breakthroughs that came from the U.S., then the other thing though I would say to kind of counteract that is, yeah, but we spent 7% deficit to get there, right? So we added a lot to the economic system. So I think the truth is somewhere in the middle. The U.S. is having a nice run. We're outperforming the rest of the world. That already showed up in our stock market. So what now, right? What do you do next? And so I like the rest of the world for two attributes. One, first of all, most of our clients are long U.S. and they're a long the dollar already. So we can come to them just say, just on a risk mitigation standpoint, let's move the other way. The second thing, I know how strong the dollar has been over the last decade, but a purchase power parity or a Big Mac Index, however you want to compare it, it's way too expensive. So over the next three to five years, my hunch here is a dollar's lower, not higher, just on a relative purchasing power parity basis. So that leans you to the rest of the world. Inside of the rest of the world, let me give you kind of a sexy one. I still like it. It's done very well, but we like Greece (GREK). Greece did not benefit from quantitative easing and low real rates because the world said no mas, we're not giving you any money, you spend too much. And then they cleaned up their house. They're running a fiscal surplus. The economy is growing twice the rest of Europe. Their companies are growing at 20%. And you can still get it at a discount to the FTSE and a huge discount to the U.S. So you can just buy a Greece ETF inside of that. We get a lot of questions on, do we buy India (INDA)? Is it too late? I don't know. I really don't know. I mean, it feels a little crowded there. We're seeing technically it soften. So I'm a little more cautious on that. I'd wait for a pullback there. The place we're not getting enough questions on is in China (FXI). And China looks to be forming after 15 years of underperformance, it looks to be forming a technical bottom. Everyone knows it's a very difficult place to invest, but it's potentially the worst is over. And I akin this to a Taylor Swift concert. You know, you're at the Taylor Swift concert, the concert ended, and you want to get the Uber, and you put in that thing, and you're looking for the Uber. And then the thing is running in circles, and you're like, I know the Uber is going to come, I just don't know when. And I think the Chinese market at 6x to 8x earnings, really high-quality companies, it's going to come. These companies are going to perform. They are global companies, Alibaba, all the others. However, there's deep skepticism and we can get them at one-third the price of U.S. companies and/or European companies. So I think we have to work our way through. We do not know the day, week, and month that the Uber comes or when this rallies. But I think when we look back three years from now, that market will begin to perform. And again, I wish I knew when my Uber is going to come. I don't think we can call that. And we're just not getting any questions on it, Rena. And I'm a bit surprised. RS: Why do you think that is? DD: When something doesn't work for 15 years, eventually, the phones stop ringing, I – it’s as simple – it’s simple as that. I think, we want to believe in U.S. exceptionalism. We want to be great. So there's a little bit of a hometown bias inside of that. But that's not my job to have a hometown bias. It's be focused on the facts. What is the story telling? So yeah, I'm personally curious about it. We're looking for interesting ways to play this in a tax-efficient way. RS: Well, we've had some a few great analogies and a lot of great insight. Anything else that you feel like would behoove investors to pay attention to, to be aware of? DD: Rena, I was thinking of your mantra you told me on the way in is we'd love to help investors be better investors over time. And maybe just to close with some of the things I've evolved to in my thinking over the last 30 years as an investor, and it took me 30 years, so maybe someone can do it a little faster than me. When I started being an investor, I thought the only thing that mattered was understanding the fundamentals. Like if you can get those fundamentals right, forecast the cash flows, the next earnings call, et cetera, et cetera, you would get the stocks, right? And ultimately, that's incredibly important. But the thing that no one told me when I started the business that I've now realized now is your shrink or your psychology class or understanding yourself and your own personal biases was equally as important. And when we can understand how we invest as a person, we can express that better in our own portfolio, right? So, as example, if you're going to invest in Bitcoin, which I cannot because frankly, I can't understand it as a long-term value investor. But if you're going to invest in it, you have to understand it well enough. So that if it does fall 50%, you're willing to continue to plow money in. If you're not comfortable with that concept that someone could – you know yourself as a person, I will be selling down 50% and you should never own Bitcoin because the volatility explains, it's going to be down 50% with almost certainty at some point, whatever the lifespan is. So I think really understanding yourself, there's a lot of ways you can do that, Rena. One way is that the simple task, I just go to my spouse, Christina, and I just say, hey, what are my biases? How do I think about the world? Charlie Munger, God rest his soul, had great podcasts on understanding thyself and what type of investor you want to be. Don't emulate Charlie Munger, because you're not Charlie Munger. Emulate who you are as a person and where you want to play and what you're good at and the type of information you're curious about, and you'll make good decisions there. What Warren talks about all the time, who's Charlie's partner, which I think is – was spot on, is also know what you're good at. As much as we want to be good at all things, sometimes as investors, we need to play in our sandbox. And here's Charlie and Warren, they say, look, I have access to every single analyst in the world, but you know, what, early-stage venture, it's not for us. We agree it's a great asset class, but it's not for us. We want to own franchises that have had cash flows for 20 years. That's how we think about the world. So those are the things I've been thinking about. I'm not sure how everyone applies that, but it's influenced me over the last 30 years. RS: Yeah, I think that's good stuff. Navigating the markets is similar to navigating ourselves. We have to kind of know what works and know what doesn't and figure out what our comfort zone is and where we don't want to go. Yeah, that's good stuff. DD: Well said. I’ve really enjoyed the time. RS: I did as well. David, where can listeners find out more about you or get in contact with you? DD: Yeah, go right to the TwinFocus website. We run money for multifamilies, but we're beginning to launch more of our independent thoughts out to the market. So you'll see that in the website in the next couple of weeks. RS: Awesome. David, appreciate the conversation. Hopefully, look forward to the next one. Thanks for making the time today. DD: Great. Thank you, Rena. 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