May 2, 2025 • 51 mins
The investment landscape is changing dramatically, and Seth Cogswell of Running Oak believes most investors aren't prepared. "People have gotten away with investing without thinking for the last decade," he observes, pointing to fundamental shifts that could upend conventional portfolio strategies.
At the heart of this change lies the potential reversal of globalization—a multi-decade trend that has kept corporate profit margins artificially inflated and supported unprecedented valuations in certain market segments. This shift creates both dangers and opportunities that demand a more thoughtful approach to portfolio construction.
The conversation reveals a critical blind spot in how most investors structure their portfolios. Between large-cap dominated passive funds (where often just eight companies represent 60% of holdings) and small/mid-cap allocations sits an overlooked space with compelling characteristics. Mid-caps have outperformed large caps by 60 basis points annually over 33 years while maintaining lower valuations—creating what Seth describes as "the most attractive asymmetry within the US equity market."
Seth makes a compelling case for disciplined investing focused on three core principles: maximizing earnings growth, avoiding companies that should go down (particularly those with unreasonable valuations), and mitigating drawdowns. This rules-based approach removes emotion from the investment process and has proven valuable through various market cycles.
The discussion also explores how companies that have taken on significant debt primarily to repurchase shares may face difficulties if we enter a recession or if interest rates remain elevated. "You go back to the end of bull markets, that's where the most crowded, most popular trades drop 50% in a few months," Seth warns, highlighting why investors should reassess concentration risks in their portfolios.
Whether you're concerned about potential market turbulence or simply looking to optimize your portfolio construction, this conversation offers valuable perspective on finding opportunities in overlooked market segments through disciplined, logical investment approaches that focus on sustainable growth and risk management.
Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I feel that people have gotten away with investing
without thinking to a largeextent for the last decade.
It's just a good time to think,to invest in strategies that
make sense, that are disciplined, that are focused on risk, and
whether those are small cap.
There's small cap strategiesthat'll probably kill it.
There are mid cap strategiesthat'll kill it.
(00:22):
There are large cap companiesthat'll kill it, or strategies
what won't kill it if we end upin a recession or a bear market
are strategies or portfoliosthat have no discipline and that
are invested in ways that don'tmake sense.
Speaker 2 (00:38):
My name is Michael Guy, a publisher of the Lead Lag
Report.
Joining me here is Mr SethCogswell, one of my clients this
is a sponsor conversation, bythe way, from his firm Running
Oak.
Seth, I've done the intro thingwith you a few times, so let's
get right into the meat of thematter, so to speak.
What's going on with thisvolatility?
I mean, is this something thatyou can say is based on Trump,
(01:00):
based on valuation, based on wewere overdue?
I mean, how do you interpretwhat's going on here?
Speaker 1 (01:04):
Trump, based on valuation based on we were
overdue.
I mean, how do you interpretwhat's going on here?
I think that you couldcertainly say it's based on the
recent policy announcements.
I don't believe it's due tovaluation.
Valuations tend to deflate overtime.
They've been inflated for solong.
I don't, I don't.
And there's also there'sactually a story today that a
(01:24):
record amount of flows came infrom retail buyers.
So clearly, complacency whichis a word that it's worth
focusing on a little bit later Ithink the complacency still
exists in the market.
That sort of false sense ofconfidence has certainly not
disappeared, as evidenced bypeople piling in, you know, in
(01:48):
the last week or two.
So again, valuations probablydon't matter, yet I do think
that we are on track for them tomatter significantly more.
I think we're on that path.
So I'd say, right now,definitely the announcement,
right.
I mean, everything changeddramatically on two Wednesdays
(02:09):
ago, so it's, I'd say that'sdefinitely the driver.
Speaker 2 (02:17):
You've seen a few of these in your career and you
know obviously the familyhistory.
Maybe it's in the blood interms of some of the things your
father has seen as well.
But is there anything aboutthis particular sell-off and the
way that it occurred that wassurprising to you.
A lot of people would argue itkind of went through a crash and
now obviously a fairly bigrebound, but were the
(02:40):
characteristics of the decline?
Speaker 1 (02:41):
odd?
No, I don't think so.
I think that it's funny.
I was kind of combing throughdifferent news sources today and
there are so many people nowcoming out of the woodwork
saying that we've put in abottom, that technicals show
there's a bottom, whatever, butthings have changed.
(03:03):
You know, whatever, but thingshave changed.
We are, I don't know, 20, 30years into this massive shift of
globalization and that seems tobe reversing and that's going
to have monumental impacts ifthat does actually occur, and
this isn't sort of a kind of ashort term negotiating tactic.
(03:27):
So no, I think that what'shappened so far is nothing.
I mean, it's exactly what you'dexpect, right?
I mean, we saw plenty of thingscoming out about hedge funds,
deleveraging.
You know, obviously.
You know, we've been taughtwe've all been talking about
passive investment how crowdedthe trade is in the MAG7 stocks,
(03:51):
and so, of course, thosestruggled some.
But I think this is potentiallythe first inning as people
really digest what this is goingto look like.
I mean, the world may havechanged dramatically, maybe it
didn't, I don't know.
It's really hard to predict.
I was actually looking at the.
I stumbled upon the.
It was a trade policyuncertainty index and it's I
(04:15):
don't know.
It's like 8X anything that'sever happened in history so it
takes a very long time for us.
So it takes a very long timefor us for people to digest
massive changes, largely becausewe all have recency bias, right
, like we're all sort of andthat's what I was thinking about
(04:44):
when I was the last five yearsor so of and assuming that
things haven't fundamentallychanged as of right now.
Things have definitelyfundamentally changed in the
world.
It's just a matter of does itstick or not?
Speaker 2 (04:59):
I want to keep going on with this sort of
declobalization theme, right,because of course, the key is
that it lasts beyond Trump,right?
I mean, if that's going to be along-term play, it's got to go
beyond the current president.
But when you think aboutde-globalization or at least
when I think about it I thinkthat that's going to hurt large
caps the most.
(05:19):
Right, because large caps havea lot of their revenue from
international trade, right,whereas mid caps and small caps
less so.
Do you think that thatdeglobalization is what's needed
to break that large capdominance?
Speaker 1 (05:36):
No, no, I I don't know.
The large cap dominance drivesme nuts for a number of reasons,
not just simply stockperformance wise, but the single
largest driver of our currentstandard of living in the world,
let alone the US, is capitalism.
(05:57):
I'm going to mess this up, butthe prior 3,000 years or so
maybe, the standard of livingincreased 50%, whereas over the
last 200 years it's increased30-fold.
I'm kind of making thosenumbers up, but they're roughly
correct and that was driven bycapitalism.
Capitalism at its heart iscompetition.
(06:22):
Right, you have creativedestruction.
It's capital flowing into thebest investments, best products,
and flowing out of those thataren't good.
That capitalism's sort of beennot killed, but certainly
competition has beensignificantly hindered for quite
(06:43):
a while.
Now, going into COVID, I think,like 50% of small caps were
zombie companies.
Those shouldn't exist but theywere because they were on life
support due to low rates.
And tech is a big part of that,where antitrust has just sort
of been.
There's no pursuit of antitrust.
(07:04):
Now, the moment any kind ofcompetition creeps up, either
the big tech companies gobblethem up or they put them out of
business or they do whateverright, and that's, I think, at
the root.
That's what worries me the mostis because I think that we are
hurting ourselves.
You know, the performance thingis just markets go up, they go
(07:26):
down.
Yes, the market's gone straightup for basically 15 years,
largely due to artificialreasons, and that has
significantly favored Mag7.
And that's going to come to anend at some point.
You can only prop these thingsup for so long until it tips.
So this could be that tippingpoint.
It certainly looks like itprobably is.
(07:52):
Also, I'll say, as far asglobalization goes, I remember I
don't know, let's say 2010,being perplexed at how sticky
high profit margins were,because historically, profit
margins were the most meanreverting of kind of operational
metrics or financial metrics,and it wasn't reverting and it
(08:15):
kind of took me a while of justsort of pondering that and
realizing that's due toglobalization.
All these barriers were eithertaken down or, at the very least
, the world became bigger,whether it was information,
transportation, and so all of asudden a lot of these companies
(08:35):
could source things much morecheaply China and that meant
that profit margins stayed muchhigher than they ever had before
and that might be reversing.
So I think that's one knock-onfact that many I guess most
people are probably thinkingabout it, but we have gotten
(08:56):
used to historically high profitmargins that weren't reverting,
and if we are in a differentregime or if things are changing
and we're moving more towarddeglobalization, then I think we
can expect profit marginsdeclining, earnings declining
(09:16):
and therefore stock price isprobably declining.
Speaker 2 (09:31):
But does that?
Speaker 1 (09:33):
imply that large caps could decline faster because
they have been the biggestbeneficiaries of that labor
arbitrage, of that globalization.
Maybe.
I always come back, certainly Ithink, in terms of Apple.
You know Apple gets a lot ofits components overseas, so
they've certainly benefited fromthat.
Now, whether Google or Meta oryou know, obviously Amazon has
significantly.
Amazon was probably the singlegreatest engine for kind of
(09:56):
monetizing globalization,certainly for Americans, and so
that'll hurt Amazon and sothat'll hurt Amazon.
Now, the truly tech software,where there aren't really goods,
unless of course they areoutsourcing human capital, right
(10:23):
, I mean, if there's a lot of,there's obviously a lot of very
intelligent, very educatedprogrammers in India, right, you
hear that all the time.
And so if that has been asource of higher profitability,
which I'm sure it has, andsomehow now I don't know how
tariffs would necessarily hurtthat but if there's other
impediments, then maybe thathurts software companies too.
I think really the big thingwith the Magnificent Seven, at
(10:45):
least as far, there's adifference between the companies
themselves and the stocks.
They are obviously correlated,but basically the stock is a
derivative of the company.
The stocks have obviouslybenefited, as the companies did,
but also the wave in popularityand passive, the low interest
(11:10):
rates, so many things havedriven magnificent seven
valuations to the level wherewe've seen and you can certainly
see that reversing.
You know things work until theydon't and I think that we have
(11:30):
it certainly seems like we'rehitting a tipping point.
Of course, we've beenpredicting that, many of us have
been predicting that for a longtime.
But if low rates are done whichobviously it seems like it has
been for a few years now if weactually experience a down move
(11:50):
in the market that doesn'timmediately reverse and go back
up to new highs, if confidencein these companies in particular
that they will just never godown I mean, that's just not
realistic, but that's been thecase basically for 15 years If
that changes, then you can seevaluations come back to reality,
right?
(12:11):
So I think even just AppleApple is such a simple example
and I love Apple.
I've got some good friends thatwork at Apple.
So, not hating on Apple, lovethe company.
It's valuation and the behaviorof stock drives me nuts, but I
do love the company, uh.
Its valuation and the behaviorof stock drives me nuts, but I
do love the company, uh.
But you go back.
I guess at this point, 2016,2017 apple was trading at a p of
(12:36):
, let's say, 14 or so.
Right now it's it's around 30.
At that time apple had a.
I think 50% of its market capmight have been cash.
I mean, they had this massivecash stockpile and they had
earnings growth.
Fast forward to today.
We're sitting at 2x that PE,despite technically negative
(12:59):
cash.
Now Apple does generate a lotof cash, so I'm not worried
about declaring bankruptcy.
Now Apple does generate a lotof cash, so I'm not worried
about declaring bankruptcy.
But Apple went on a massivestock buyback binge where they
used their cash to buy backstock and so they're no longer
sitting on any cash.
They actually have net debt,but also their growth has slowed
, especially if we'll see whathappens with tariffs.
(13:24):
So Apple, despite having anegative cash versus a ton of
cash and having lower growthversus good growth, is trading
at 2x the multiple it traded foran extended period of time.
That just seems nuts to me andthe only way that you can
explain that is the popularityof passives people investing
(13:45):
without really thinking moneyjust sort of indiscriminately
flowing into it.
At some point people will thinkagain and I think Apple stock
will be down 50% and thatassumes that the company's
performing just as it is today.
Right, that's just based onvaluations.
That has nothing to do withprofit margin, which, again, if
(14:08):
tariffs stay in place, that willdecline If we end up in a
recession, which seems all butguaranteed, but then again I
would not place that willdecline If we end up in a
recession, which seems all butguaranteed, but then again I
would not say that I am the bestat predicting recessions, which
I guess I could be an economist, since they also fail miserably
at predicting recessions.
But we'll see.
There are so many wonderfulcompanies out there that nobody
(14:32):
pays any attention to.
Hopefully this is that time andwe're seeing that change.
Speaker 2 (14:37):
As you were talking, I was looking at the chart of
small caps relative to largecaps, which peaked in 2012,
roughly, and then the chart ofmid caps relative to large caps,
which also peaked kind ofroughly around the same time
period.
That's when large cap dominanceFANG and now MAG7 kind of
really ended up dominating.
(14:57):
Assuming it's just a cycle anda prolonged one, then we
probably are due, finally, forthe so-called broadening out
right when other areas start toreally outperform the large cap
space, where other areas startto really outperform the large
cap space.
When I looked at your ETF run,runn relative to the S&P 400
(15:18):
mid-cap ETF, you've beenoutperforming it very strongly
actually the last several months.
I know you want to talk aboutrun and we'll do a more formal
presentation here in a second,but let's talk about just the
last several weeks and monthshere for your mid-cap ETF.
What's caused it to outperformus strongly?
Speaker 1 (15:38):
At the heart of what we do is risk or focus on risk.
We are very disciplined aroundvaluations.
I'd say that's really thebiggest differentiator is we
sell companies when we concludethat they should go down,
whereas studies have shown thatmany managers fail to do so.
(15:58):
Passive never sells.
So we are different in thatmanner.
When a company eclipses or getsto a certain point where we
feel strongly that it should godown, we're not going to own it.
It doesn't pay to own somethingthat should go down and then
otherwise the portfolio isequally weighted.
(16:19):
So we didn't have sort of thattop-heavy concentrated risk that
many both the S&P but also inorder to keep up with the S&P
over the last decade, manymanagers had to kind of stray
from what their initial focuswas, just to keep up, which you
(16:41):
know.
It's hard to fault them toomuch because otherwise they'd be
out of business.
We didn't do that.
So I think that's really thebig driver.
That's really the big driverand, yeah, our performance up
until I think a few days ago wewere actually we track number of
benchmarks.
So the s&p equal weight, s&p400, russell, mid cap, sp 500
(17:02):
and then a bunch of our peersand, as a few days ago we were
the only one out of there were14 or so that we're tracking,
that we kind of compareourselves to.
We were the only one that waspositive year to date.
That's changed.
Things are moving prettyquickly over any given day, but
so it has performed especiallywell.
(17:22):
However, that said, I would saythat our focus on risk plays
out over the long run.
The last few months,particularly the last few weeks,
I'd say, is a lot of noise.
There's obviously some sensethat.
I think that some of it makessense, some of it will have
(17:43):
long-term impact, but reallyavoiding valuations Valuations
are still crazy.
It's still going to take sixmonths to a year for those
valuations to truly deflate.
Another way that we look toprotect the downside is
investing away from companiesthat have too much debt
financial leverage.
(18:04):
Over the last decade, companieshave taken on more debt for no
reason other than to buy backstock, for no reason other than
to buy back stock.
That's fine in that, from apurely finance 101 standpoint,
the cost of debt is cheaper thanthe cost of equity.
So certainly in a perfect world, you could argue that you
(18:25):
should have all debt and noequity.
However, in the real world,there's risk, there's recessions
.
You basically have to go backto 2008 for a company or an
individual to have trulyexperienced a lengthy recession
and have actually experiencedrevenues declining and therefore
(18:46):
experience how difficult it isto service debt when your
revenues are declining.
We haven't seen that and that'sgoing to take time as well.
So again, yeah, the last fewmonths have been great, we've
performed extremely well, but Ithink it's just the tip.
Speaker 2 (19:03):
So let's get a little more granular and talk about
the entire big picture conceptaround efficient growth, which
is at the core of RUNN.
And, by the way, this strategyhas been run outside the ETF
wrapper.
So all yours, my friend, I knowyou've got a couple of slides
here- yeah, first of all, I'mglad you mentioned that.
Speaker 1 (19:22):
I think one of the main takeaways is there are ETFs
are relatively new, certainlyactively managed ETFs new,
certainly actively managed ETFs.
There's nothing new about whatwe do.
We launched RUN about 20, 21months ago, so the ETF itself is
new, but we have effectivelybeen managing the strategy, the
(19:44):
philosophy, the process foralmost four decades.
So the only thing that's reallynew is just simply that our
clients can now invest in a VNETF.
You can get it for $31 andsomething cents, as opposed to a
$250,000 minimum, so we've gota few 11 year olds that are now
(20:04):
clients.
That's really what's changed,and that's what you know.
Really differentiates us, Ithink, from the average ETF is
it has such a long history.
So I think I stumbled upon aquote by Charlie Munger the
other day.
That was consistently notstupid, and on one hand, I
(20:28):
thought it was funny.
But two, it actually describesus perfectly and what we do.
Our investment philosophy isvery simple and easy to
understand Maximize earningsgrowth, because nothing drives
price like earnings growth,companies making more money
great.
That's why we're all investing.
(20:50):
The second, though, is, as Imentioned earlier, don't invest
in or don't hold an asset thatshould go down.
There's probably no moreguaranteed way to destroy value
or at the very least lag, thanholding an asset that should go
down.
And then the last is justsimply mitigating drawdowns
(21:11):
however you can.
So again, I mentioned avoidingthe value companies, avoiding
companies that have significantrisk due to financial leverage,
but by mitigating drawdowns itincreases your cumulative return
or your exponential growth overthe long run.
Nothing kills exponentialgrowth like big drawdowns.
So our strategy is very simple.
(21:39):
And then the rules-basedprocess that we employ ensures
that we do exactly what we'regoing to say we're doing.
It removes our emotions and ouropinions from the process, so
we again consistently deliverprecisely what we say we are,
which which makes it morereliable.
Moving on, just as far asperformance goes, one of my
(22:04):
regrets at the moment, as I haveyet to visit the Pacific
Northwest.
I've actually uh, I feel likeI've traveled more than most,
but so far I have not visitedWashington, oregon.
But looking at this chart, youcan say our performance has.
It's very much in the top left,which means that it's higher
return, lower risk over the longrun.
(22:28):
Versus our closest benchmarks,our performance has certainly
stood out, and over the lastdecade it's performed in the top
two percentile or so.
With regard to the S&P, we'reone of few strategies that has
kept up with the S&P 500 despiteminimal, magnificent 7 exposure
(22:49):
.
So over the last decade we wereable to provide clients with
the diversification that theyneeded, which we're seeing today
, but also provide attractiveperformance.
That was it was hard to getboth in the same strategy for
the last decade.
I think one of the mostimportant topics right now that
(23:15):
people are starting to discussmore.
But it's so simple and I don'tsee it explained as simply as it
can be, so I'm going to try it.
Mid-cap stocks, first of all,have outperformed over the last
33 years.
So as of the end of last year,prior 33 years, mid cap had
(23:36):
outperformed large by 60 basispoint annualized.
So you add that up over thecourse of 33 years, that's a
very large number.
And that's despite largedestroying everything over the
last 15 years.
So it's pretty remarkable.
Take that one step further.
Large cap stocks are, accordingto Ned Davis now this chart is
(23:58):
from Bloomberg, but according toDavis, which uses a bigger
number, so I like to quote it.
According to Ned Davis, largecap is, or was prior to last
week, 100% overvalued versus itslong-term mean.
Mid-cap, on the other hand, isactually undervalued.
So it's one of those very raremoments where the area of the
(24:20):
market or the asset class thathas provided the highest return
is the most undervalued.
That's crazy.
It makes no sense, especiallywhen you consider return and
valuation go hand in hand.
If something has a very highreturn, usually its valuation is
going to be higher.
Meanwhile mid-cap'soutperformed and its valuation
(24:41):
is lower, which just goes toshow how significant that
asymmetry is.
You know, when we invest, youalways look at risk and return
and ideally we're shooting toget a higher return than the
risk that we're taking, andthat's basically asymmetry.
And this is the asymmetrywithin the US equity market.
(25:06):
One thing that I've found overthe last two years or so since
launching run, is that manyplatforms, many of the largest
organizations, build portfoliosin the same manner.
They start out with large capgrowth, which makes sense.
You kind of had to, because ifyou weren't in large cap growth,
(25:26):
you were getting fired over thelast 10 years.
So you start out with large capgrowth and then you complement
it with SNID and then value.
The issue is that very few ofus and I would easily be guilty
of the same.
If I'm building portfolios inthis manner, most people don't
look under the hood.
They don't look to see what'sactually owned by the vehicle
(25:49):
itself.
So, using SCHG as an example,because that's the most commonly
held large cap growth portfoliothat I see, 60% of that is in
eight companies.
So you've got 60% in eightcompanies that are at the very,
very top.
This slide doesn't even do itjustice.
It would be a tiny littlesliver at the very top, would
(26:11):
have 60% of your investment,which leaves 40% for the entire
rest of large cap growth.
But then a lot of people uselarge cap growth for core as
well.
So you've got this massive holethat people don't realize they
have, making that exacerbatingthat is.
Many compliment large cap withSmith because it's sort of a
(26:33):
one-stop shop.
For the rest, as opposed tosmall and mid, many go to SMID.
The issue with SMID is that, bydefinition, small and mid, it's
going to be focused around thatline between small and mid.
You're going to get less andless exposure to the upper mid
cap.
So you end up getting this hugegap from the middle of mid cap
all the way up to basically thetop of large cap, where people
(26:57):
own none of and most people areunaware of it.
Understandably, because youinvest in a large cap strategy,
think all right, well, I'mgetting large cap exposure.
They've got 50 companies, butturns out 60% of it is invested
in eight companies, and thatjust so happens to be exactly
where our strategy fits.
We've talked a lot about mid,but I think an important point
(27:18):
is that the line between mid andlarge is a made up number.
Nobody agrees on it.
Morningstar has a totallydifferent number than Evest.
Speaker 2 (27:28):
And none of that, by the way, is inflation adjusted
on top of that, mid cap of todayis not the same mid-cap from 20
years ago.
Speaker 1 (27:36):
Right, right, and some of them have certainly been
static.
Morningstar moves theirs a bitmore, but still you've got this
huge gap that, first of all,that delineation between
mid-large doesn't really matter.
The fact is, people own verylittle of the smaller or even
maybe mid-sized large capcompanies.
(27:56):
Those are big companies.
We're not talking.
We're not saying most peopledon't own small cap.
We're saying a lot of peopledon't own large cap.
Right, they own a tiny bit atthe very top of large cap.
And again, this mid-large spaceis precisely where we fit.
So it's not only what peoplelack, and so you've got this big
(28:18):
hole.
It's also again the spot thathas outperformed over the last
33 years and is undervalued.
It offers the best asymmetryagain within the US equity
market.
Why that matters?
I think a lot of people focuson the past as opposed to
(28:38):
actually thinking about thedecision they're making for the
future.
This is why that matters.
If the market resumes itsupward trajectory that we've had
for the last 15 years, fine.
Our strategy has performedroughly in line with the S&P
over the prior decade.
And if people realize, hey, Idon't have any of this, this has
(29:00):
outperformed great, that wouldjust add a tailwind and it'd be
great.
However, if the market declineswhich right now seems like a
better bet or if the market juststruggles, it doesn't even have
to decline.
First of all, you can't sellwhat you don't own, so people
(29:22):
don't own this.
This is a huge gap.
What people own a lot of, andwhat's arguably the most crowded
trade in history, is MAG7 andpassive portfolios in history is
Mag7 and passive portfolios.
Those even those have a minimalexposure to these companies,
(29:47):
and so if people want to becomerisk averse, they want to raise
cash.
They sell.
That is going to meansignificant selling in Mag7,
significant selling in passivenot in this area.
Selling in max sevensignificant selling and passive,
not in this area.
Um, and then going back to kindof the original part of our
conversation as far as what'sgoing on with trade and tariffs
and, I think, most importantly,treasuries, which I know you
have a lot of opinions on, butthe, where that really matters
(30:07):
is if yields go up which rightnow they're going up that is
going to hurt small cap.
I don't.
Small cap, generally speaking,is quite a bit riskier.
I don't think we're about tosee the renaissance of small cap
anytime soon.
Small cap will probably doextremely well if we see a
(30:31):
recession, 50% of thosecompanies disappear and the ones
that survive, that are atextremely low valuations
skyrocket.
That's where you will see smallcap kill it.
I think value sort of the samething At least.
The value factor is generallyit's low price to book, it's
(30:51):
more distressed companies.
You do not want to be in thevalue factor going into a
recession.
You want to be in it coming outof a recession so you can time
it great.
But neither of those places doyou want to be right now.
I don't believe.
Now, discipline and investing incompanies that are attractive
to the value that's a wholedifferent topic.
But again, if interest ratescontinue to rise, that's not
(31:16):
going to be good for small.
If interest rates decline,usually that happens for one
reason and that's because we'rein a recession.
That is not going to benefit,again, small in value.
It's also not going to benefitthe most overvalued companies.
So again, going back to earlierin the conversation, one of the
(31:38):
reasons why we've performedwell is a tiny bit of air has
been taken out of the mega caps.
But if you go back and we gotto go back a lot Well, actually
we don't have to go back thatfar.
But, generally speaking, if yougo back to the end of bull
markets, that's where the mostcrowded, most popular trades
drop 50% in a few months and,frankly, even though I consider
(31:59):
2022 a little bit of a baby bearmarket, amazon and Netflix had
some hiccups in earnings andthey were down 50% in a few
months.
That is what you can expect ifyou're investing in companies
that should go down, if you'reinvesting in companies where
valuations don't make sense anda recession will lead to people
(32:19):
coming to that conclusion.
That's really it, I think.
Well, I'll touch on this reallyquickly.
We talked about this earlierthe uncertainty index.
The main thing is it's anuncertain time.
I have no clue what the nextcouple months look like, at
(32:40):
least as far as policy goes, butwhat I can say is that our
strategy there's much about ourstrategy that is certain.
The performance is not certain.
I can't guarantee that but theinvestment philosophy we've
invested in that for the lastfour decades and I am certain
that it makes sense that it'sconsistently not stupid.
(33:02):
It's maximize earnings, growth,avoid companies that should go
down at stupid valuations andmitigate drawdowns in a number
of different ways.
The process, because it'srules-based, is also certain.
We do the same thing over andover and over and have for four
decades is also certain.
We do the same thing over andover and over and have for four
decades.
So, at a time when things are,at least according to this chart
(33:23):
, historically uncertain, it'sprobably a good time to invest
in something that you can relyon.
Speaker 2 (33:33):
That word certainty is a good one to play with.
Do you feel more certain thatmid caps will be, or run in
particular will be, up more,down less, or more certain that
the bull market resumes higher?
Right, Because if it's about upmore, down less and relative
outperformance, if other peoplelistening to this are uncertain
themselves, well, you can stillplay a run on the long side and
(33:53):
maybe then do a spread tradeshort the S&P or short a passive
benchmark.
Speaker 1 (33:58):
We're a very boring long-only manager, but that
doesn't mean I don't enjoydiscussing portfolio
construction ideas.
Where our strategy has stoodout over the decades and where
it's provided the most value isthrough downturns or difficult
markets, and again, that'sreally just a result of avoiding
(34:18):
overvalued companies, investingin companies that have more
consistent earnings.
The other thing is we try tomaintain a portfolio that has
meaningfully higher earningsgrowth than the S&P.
That's difficult to do when ahandful of companies are
contributing the lion's share ofearnings growth but their
valuations are so crazy that wecan't invest in them.
That's basically been the lastdecade.
(34:40):
If earnings growth declinesacross the board for the S&P,
that makes it much easier for usto provide a larger gap.
And also, I think, over the nextdecade, the debt situation is
going to be an issue.
Anytime you have people andbehavior involved, things tend
(35:07):
to move like a pendulum.
We go from excited about onething to feared, and so again
over the last decade, companieshave taken on more debt than any
time in history and largelyjust to buy back stock.
My inclination is that theopposite is going to occur
because, frankly, that's howpeople work.
(35:27):
We're probably going to see alot of selling of stock in order
to buy back debt, especially ifthe current trend in interest
rates continues.
Companies are either going tohave to refinance at higher
rates, which will drive earningsgrowth down that might be best
(35:48):
case scenario or we'll seebankruptcies.
Or, if we end up in a recessionand there's a credit crunch,
companies won't be able torefinance and they will have to
go to market.
They will have to sell stockand they and, as opposed to the
you know what was going on overthe last decade.
You'll see dilution ofshareholders and, and all these
(36:10):
things are long term, uh,benefits that we provide.
Right, I don't expect them toto occur day to day.
I expect it to provide thatbenefit over the next one to
five to ten years, um, you know,but again, historically, or
over the last decade, eventhough the market was going up,
we largely kept up with it.
(36:30):
So run run can certainlyprovide value, whether the
market's up or down.
I would expect it to.
Historically, it has, um, andbut also it, this space, forget
forgetting about our strategy.
This space provides the mostattractive asymmetry.
Tomorrow goes up, this shouldprovide more upside.
(36:50):
This, if mark goes down, shouldprovide less downside.
And it just happens that we'reone of the best performing in
this space.
So I was.
I always like to speak inmetaphors.
I was trying to think of thistoday but you know I haven't
gotten a.
I haven't come up with a betterone.
But if your car blows a tireand you need a tire, get the
best tire Right.
I would say that clearly, theaverage client needs a tire.
(37:15):
You know you've got this hugegap and it just so happens that
we're the best performing or oneof the best performing.
Speaker 2 (37:23):
When you happen to your point at the tailwind on
the cap momentum, like you'vehad with large caps, can one
think about this approach or runin general, in terms of being
core as opposed to S&P core andthen kind of tilt more towards
mid efficient growth?
(37:44):
It seems to me that I mean thiswould be my own personal
preference that if you'rebearish on large caps, you don't
want it as part of your coreallocation.
You probably want somethinglike run.
Speaker 1 (37:55):
Again, the line between mid and large Now there
are, I guess, with the creationof ETFs, and when people invest
now they often invest in basketsas opposed to actual companies.
So if you buy large, I guess,maybe you get a swath of large
companies For us, or I guess myopinion is I'm indifferent
(38:16):
toward mid and large.
What I'm not indifferent towardis companies that have been the
recipients of a verysignificant amount of cashflow
for basically no reason.
Not that they aren't goodcompanies, but the cashflow that
flowed into them wasunjustified, pushing valuations
up To a large extent.
(38:37):
Those are mega cap companies.
Um, you know, it wasn't.
I don't really think of as alarge cap phenomenon.
I think it has a little moreinto, uh, you know, company
specific, certainly big tech.
Uh, that's where I could see itstruggling if the market
struggles.
There's there's no arguing thatbeing in larger companies
(39:01):
probably offers a margin ofsafety.
And again, lower large capcompanies people own none of or
very little of.
So, whether it's mid or thelower end or large, which is
sort of where we sit, I thinkthat's a great place to be.
And again, that line betweenthe two is a little fuzzy, but
(39:24):
people have gotten away withinvesting without thinking to a
large extent for the last decade.
It's just a good time to think,to invest in strategies that
make sense, that are disciplined, that are focused on risk, and
whether those are small cap,there's small cap strategies
that'll probably kill it.
There are mid cap strategiesthat'll kill it.
(39:44):
There are large cap companiesthat'll kill it or strategies.
What won't kill it if we end upin a recession or a bear market
are strategies or portfoliosthat have no discipline and that
are invested in ways that don'tmake sense.
Speaker 2 (40:01):
Tell me about sector composition with this investment
approach, because there's adebate right.
Is it large versus mid orversus small, or is it tech
versus everything else?
And tech is obviously much moreon the large side.
So, from a sector perspective,where does run tend to tilt more
towards?
Speaker 1 (40:22):
So our rules, our process drives everything, as
does our philosophy.
So the purpose of the rules areto ensure that we invest around
our philosophy with disciplineand continuously deliver to
clients what they expect.
Now, higher earnings growth isone of those rules.
Another is investing away fromcompanies with too much debt,
(40:45):
and that means that we are notgoing to be invested in real
estate or utilities probablyever I'm not going to say never,
but it would be unexpected andthat's because generally there's
no growth there and there's alot of leverage, so just
immediately they're excluded.
Energy companies because of thevolatility and because it's
(41:07):
historically the leverage,they're usually excluded as well
, which I'd say is a good thing.
Energy is an area where youwant to invest with an expert in
that area, which we are not.
On the flip side, becausegrowth is a priority, we're
going to be invested in moreinnovative areas, so tech,
healthcare.
Usually those are two areaswhere you can find more growth,
(41:30):
more innovation.
Historically, those areas hadless leverage.
That's changed a little bitrecently.
But then we're also going to beoverweight industrials.
Industrials are sort of theposter child of our strategy,
where you can find really goodcompanies with strong balance
sheets that are growing rapidlythat no one cares about, which
(41:50):
means that you're able to getthem at an attractive valuation.
And then our average hold time,uh, four to five years.
So you know, and several yearsfrom now the market realizes the
error in its ways.
Those companies that we'reinvested in appreciate and we
sell because they, uh, theyviolate our sell price.
(42:11):
But right now we are moreoverweight industrials than
usual.
That is again a result of therules, but I feel that it's
largely due to valuations, dueto ai kind of across the
spectrum on tech recentlybecoming higher.
You know, for for a long timeit was mostly just the big tech
(42:33):
and the max 7.
There is still plenty ofattractively valued tech
companies, that's.
That's less of the caserecently.
Speaker 2 (42:41):
I will say, speaking about industrials, I would think
that this entire push towardsdeglobalization and tariffs
could actually be really goodfor industrials overall.
I mean, is there an argument tobe made, just any way that
there's a tailwind around thatsector?
Speaker 1 (42:57):
I don't know way that there's a tailwind around that
sector.
I don't know.
So I would say one I don't lackfor opinions.
But two I would say that thepurpose of our rules is to
intentionally remove us from it.
We do not feel that we're goodat predicting the future.
We leave that to others.
We have created an investmentphilosophy that is common sense
(43:19):
and simple and we adhere to that.
You know, as far as industrialsis just such like a complicated
space, as all the others areright.
So at this point in time Idon't necessarily have an
opinion on that.
My opinion is more around.
You know, certainly don'tinvest in overvalued companies
(43:41):
because they should go down.
Don't invest in companies withunsustainable amounts of debt
because you have a very lowmargin of error that certainly
(44:03):
anybody that imports asignificant amount is going to
struggle with tariffs as theyare Now.
Those could change tomorrow.
So I haven't really one.
I haven't really formulated anyopinions as far as the impacts
of the tariffs are going to have, because they're changing by
the day.
And two, that's also not whatwe do at Running Oak.
What?
Speaker 2 (44:19):
do you think people get most wrong about investing
in mid-caps in general?
I mean, to me it's very simple.
The thing most people get wrongis they think the market is the
S&P.
It's much more than that.
That's my own personal opinion.
But if you were to thinkthrough all the things that you
hear from other advisors,individuals that you might talk
to, what kind of drives youcrazy in terms of how they think
(44:40):
?
Speaker 1 (44:41):
There's a few things that drive me crazy.
One it's shocking how manypeople just don't invest in
MidCap at all.
I think that's crazy.
There's so many people thatinvest in large and then they
invest in small and then theyjust sort of they're done.
Mid-cap is a large space butagain, even the lower large cap
(45:06):
people own very little of.
The other thing is that justdoesn't make sense.
But MidCap to repeat what Isaid earlier, midcap has
outperformed large and it'smassively outperformed small
over the last 33 years.
So if you're not investing inMidCap, actually the only area
(45:41):
that's undervalued Small,according to them, is marginally
overvalued or again it wascoming into the last couple of
weeks Large is significantlyovervalued.
So if you're only investing inlarge and small, you're not
investing in the area that hasoutperformed and provided the
most performance over the last33 years.
You're not investing in whatarea that has outperformed and
provided the most performanceover the last 33 years.
You're not investing in what'smost undervalued, which I would
(46:04):
argue you probably want to buysomething at a good price that
should go up, as opposed to buya lot of large cap at 2x its
long-term valuation.
The other thing about mid-cap isjust simply that it makes sense
.
Small cap companies aregenerally newer, they're smaller
, they're unproven.
(46:24):
Generally.
These are all generalizationsso obviously there's exceptions
product that has performed verywell and that's taken the
company, helped them graduatefrom small to mid Large.
On the other hand, especiallyat the top end of large, you run
(46:47):
into the rule of large numbersor diminishing marginal return,
where it becomes very difficultto grow once you're a certain
size Mid, on the other hand,still smaller companies.
They might have one greatproduct.
All it takes is them coming outwith one more great product and
now it could double.
And so there's mid offers moreupside than large generally and
(47:11):
is a lot again, generally lessrisky than small and people
don't invest in it.
There's so many reasons whymid-cap should be not just a
part of a portfolio.
It should probably be a bigpart of someone's portfolio,
given the fact that it'soutperformed over the long run
(47:31):
and it's undervalued.
Speaker 2 (47:33):
Seth for those that want to learn more about RUN and
the strategy and for those thatwant to just get in touch with
you in general uh, where toreport them to?
Speaker 1 (47:40):
my email is seth s-e-t-h at running oakcom.
I'd welcome an email and andI'll would certainly enjoy
speaking otherwise our websiterunning oakcom or running oak
etfscom both of those can beresources.
We also post all of our lettersto NASDAQ.
(48:01):
So if you go to NASDAQ orsearch for NASDAQ and running
our capital, you can see ourmost recent newsletters.
Most of them are quitesarcastic.
So if you're not a fan of humoralthough it's my humor, I find
myself hilarious but if youdon't like my humor, you might
not like reading them.
But regardless, there's there'sa wealth of information out
(48:24):
there and again, reach out atany time.
I'd love to talk.
Speaker 2 (48:27):
I mean, I find you hilarious too.
Speaker 1 (48:29):
So thank you.
Speaker 2 (48:31):
Again.
Folks, this is going to be anedited podcast on the lead lag.
Live on all of your favoriteplatforms Sponsored conversation
by running, learn more aboutRun R-U-N-N.
And, for those that arestreaming this live, you will
hear me on a space I'm doingliterally in eight minutes.
Seth, you're the man.
Appreciate it, you are as well.
Thanks, michael, and, by theway, follow Seth on X.
(48:54):
He's quite the influencer.
He's gotten at what?
1400?
Speaker 1 (48:57):
LinkedIn, also thanks to Michael.
Speaker 2 (49:00):
Oh no, I'm just trying to help where I can.
Cheers everybody, thank you.
I feel that people have gotten away with investing
without thinking to a largeextent for the last decade.
It's just a good time to think,to invest in strategies that
make sense, that are disciplined, that are focused on risk, and
whether those are small cap.
There's small cap strategiesthat'll probably kill it.
There are mid cap strategiesthat'll kill it.
(00:22):
There are large cap companiesthat'll kill it, or strategies
what won't kill it if we end upin a recession or a bear market
are strategies or portfoliosthat have no discipline and that
are invested in ways that don'tmake sense.
Speaker 2 (00:38):
My name is Michael Guy, a publisher of the Lead Lag
Report.
Joining me here is Mr SethCogswell, one of my clients this
is a sponsor conversation, bythe way, from his firm Running
Oak.
Seth, I've done the intro thingwith you a few times, so let's
get right into the meat of thematter, so to speak.
What's going on with thisvolatility?
I mean, is this something thatyou can say is based on Trump,
(01:00):
based on valuation, based on wewere overdue?
I mean, how do you interpretwhat's going on here?
Speaker 1 (01:04):
Trump, based on valuation based on we were
overdue.
I mean, how do you interpretwhat's going on here?
I think that you couldcertainly say it's based on the
recent policy announcements.
I don't believe it's due tovaluation.
Valuations tend to deflate overtime.
They've been inflated for solong.
I don't, I don't.
And there's also there'sactually a story today that a
(01:24):
record amount of flows came infrom retail buyers.
So clearly, complacency whichis a word that it's worth
focusing on a little bit later Ithink the complacency still
exists in the market.
That sort of false sense ofconfidence has certainly not
disappeared, as evidenced bypeople piling in, you know, in
(01:48):
the last week or two.
So again, valuations probablydon't matter, yet I do think
that we are on track for them tomatter significantly more.
I think we're on that path.
So I'd say, right now,definitely the announcement,
right.
I mean, everything changeddramatically on two Wednesdays
(02:09):
ago, so it's, I'd say that'sdefinitely the driver.
Speaker 2 (02:17):
You've seen a few of these in your career and you
know obviously the familyhistory.
Maybe it's in the blood interms of some of the things your
father has seen as well.
But is there anything aboutthis particular sell-off and the
way that it occurred that wassurprising to you.
A lot of people would argue itkind of went through a crash and
now obviously a fairly bigrebound, but were the
(02:40):
characteristics of the decline?
Speaker 1 (02:41):
odd?
No, I don't think so.
I think that it's funny.
I was kind of combing throughdifferent news sources today and
there are so many people nowcoming out of the woodwork
saying that we've put in abottom, that technicals show
there's a bottom, whatever, butthings have changed.
(03:03):
You know, whatever, but thingshave changed.
We are, I don't know, 20, 30years into this massive shift of
globalization and that seems tobe reversing and that's going
to have monumental impacts ifthat does actually occur, and
this isn't sort of a kind of ashort term negotiating tactic.
(03:27):
So no, I think that what'shappened so far is nothing.
I mean, it's exactly what you'dexpect, right?
I mean, we saw plenty of thingscoming out about hedge funds,
deleveraging.
You know, obviously.
You know, we've been taughtwe've all been talking about
passive investment how crowdedthe trade is in the MAG7 stocks,
(03:51):
and so, of course, thosestruggled some.
But I think this is potentiallythe first inning as people
really digest what this is goingto look like.
I mean, the world may havechanged dramatically, maybe it
didn't, I don't know.
It's really hard to predict.
I was actually looking at the.
I stumbled upon the.
It was a trade policyuncertainty index and it's I
(04:15):
don't know.
It's like 8X anything that'sever happened in history so it
takes a very long time for us.
So it takes a very long timefor us for people to digest
massive changes, largely becausewe all have recency bias, right
, like we're all sort of andthat's what I was thinking about
(04:44):
when I was the last five yearsor so of and assuming that
things haven't fundamentallychanged as of right now.
Things have definitelyfundamentally changed in the
world.
It's just a matter of does itstick or not?
Speaker 2 (04:59):
I want to keep going on with this sort of
declobalization theme, right,because of course, the key is
that it lasts beyond Trump,right?
I mean, if that's going to be along-term play, it's got to go
beyond the current president.
But when you think aboutde-globalization or at least
when I think about it I thinkthat that's going to hurt large
caps the most.
(05:19):
Right, because large caps havea lot of their revenue from
international trade, right,whereas mid caps and small caps
less so.
Do you think that thatdeglobalization is what's needed
to break that large capdominance?
Speaker 1 (05:36):
No, no, I I don't know.
The large cap dominance drivesme nuts for a number of reasons,
not just simply stockperformance wise, but the single
largest driver of our currentstandard of living in the world,
let alone the US, is capitalism.
(05:57):
I'm going to mess this up, butthe prior 3,000 years or so
maybe, the standard of livingincreased 50%, whereas over the
last 200 years it's increased30-fold.
I'm kind of making thosenumbers up, but they're roughly
correct and that was driven bycapitalism.
Capitalism at its heart iscompetition.
(06:22):
Right, you have creativedestruction.
It's capital flowing into thebest investments, best products,
and flowing out of those thataren't good.
That capitalism's sort of beennot killed, but certainly
competition has beensignificantly hindered for quite
(06:43):
a while.
Now, going into COVID, I think,like 50% of small caps were
zombie companies.
Those shouldn't exist but theywere because they were on life
support due to low rates.
And tech is a big part of that,where antitrust has just sort
of been.
There's no pursuit of antitrust.
(07:04):
Now, the moment any kind ofcompetition creeps up, either
the big tech companies gobblethem up or they put them out of
business or they do whateverright, and that's, I think, at
the root.
That's what worries me the mostis because I think that we are
hurting ourselves.
You know, the performance thingis just markets go up, they go
(07:26):
down.
Yes, the market's gone straightup for basically 15 years,
largely due to artificialreasons, and that has
significantly favored Mag7.
And that's going to come to anend at some point.
You can only prop these thingsup for so long until it tips.
So this could be that tippingpoint.
It certainly looks like itprobably is.
(07:52):
Also, I'll say, as far asglobalization goes, I remember I
don't know, let's say 2010,being perplexed at how sticky
high profit margins were,because historically, profit
margins were the most meanreverting of kind of operational
metrics or financial metrics,and it wasn't reverting and it
(08:15):
kind of took me a while of justsort of pondering that and
realizing that's due toglobalization.
All these barriers were eithertaken down or, at the very least
, the world became bigger,whether it was information,
transportation, and so all of asudden a lot of these companies
(08:35):
could source things much morecheaply China and that meant
that profit margins stayed muchhigher than they ever had before
and that might be reversing.
So I think that's one knock-onfact that many I guess most
people are probably thinkingabout it, but we have gotten
(08:56):
used to historically high profitmargins that weren't reverting,
and if we are in a differentregime or if things are changing
and we're moving more towarddeglobalization, then I think we
can expect profit marginsdeclining, earnings declining
(09:16):
and therefore stock price isprobably declining.
Speaker 2 (09:31):
But does that?
Speaker 1 (09:33):
imply that large caps could decline faster because
they have been the biggestbeneficiaries of that labor
arbitrage, of that globalization.
Maybe.
I always come back, certainly Ithink, in terms of Apple.
You know Apple gets a lot ofits components overseas, so
they've certainly benefited fromthat.
Now, whether Google or Meta oryou know, obviously Amazon has
significantly.
Amazon was probably the singlegreatest engine for kind of
(09:56):
monetizing globalization,certainly for Americans, and so
that'll hurt Amazon and sothat'll hurt Amazon.
Now, the truly tech software,where there aren't really goods,
unless of course they areoutsourcing human capital, right
(10:23):
, I mean, if there's a lot of,there's obviously a lot of very
intelligent, very educatedprogrammers in India, right, you
hear that all the time.
And so if that has been asource of higher profitability,
which I'm sure it has, andsomehow now I don't know how
tariffs would necessarily hurtthat but if there's other
impediments, then maybe thathurts software companies too.
I think really the big thingwith the Magnificent Seven, at
(10:45):
least as far, there's adifference between the companies
themselves and the stocks.
They are obviously correlated,but basically the stock is a
derivative of the company.
The stocks have obviouslybenefited, as the companies did,
but also the wave in popularityand passive, the low interest
(11:10):
rates, so many things havedriven magnificent seven
valuations to the level wherewe've seen and you can certainly
see that reversing.
You know things work until theydon't and I think that we have
(11:30):
it certainly seems like we'rehitting a tipping point.
Of course, we've beenpredicting that, many of us have
been predicting that for a longtime.
But if low rates are done whichobviously it seems like it has
been for a few years now if weactually experience a down move
(11:50):
in the market that doesn'timmediately reverse and go back
up to new highs, if confidencein these companies in particular
that they will just never godown I mean, that's just not
realistic, but that's been thecase basically for 15 years If
that changes, then you can seevaluations come back to reality,
right?
(12:11):
So I think even just AppleApple is such a simple example
and I love Apple.
I've got some good friends thatwork at Apple.
So, not hating on Apple, lovethe company.
It's valuation and the behaviorof stock drives me nuts, but I
do love the company, uh.
Its valuation and the behaviorof stock drives me nuts, but I
do love the company, uh.
But you go back.
I guess at this point, 2016,2017 apple was trading at a p of
(12:36):
, let's say, 14 or so.
Right now it's it's around 30.
At that time apple had a.
I think 50% of its market capmight have been cash.
I mean, they had this massivecash stockpile and they had
earnings growth.
Fast forward to today.
We're sitting at 2x that PE,despite technically negative
(12:59):
cash.
Now Apple does generate a lotof cash, so I'm not worried
about declaring bankruptcy.
Now Apple does generate a lotof cash, so I'm not worried
about declaring bankruptcy.
But Apple went on a massivestock buyback binge where they
used their cash to buy backstock and so they're no longer
sitting on any cash.
They actually have net debt,but also their growth has slowed
, especially if we'll see whathappens with tariffs.
(13:24):
So Apple, despite having anegative cash versus a ton of
cash and having lower growthversus good growth, is trading
at 2x the multiple it traded foran extended period of time.
That just seems nuts to me andthe only way that you can
explain that is the popularityof passives people investing
(13:45):
without really thinking moneyjust sort of indiscriminately
flowing into it.
At some point people will thinkagain and I think Apple stock
will be down 50% and thatassumes that the company's
performing just as it is today.
Right, that's just based onvaluations.
That has nothing to do withprofit margin, which, again, if
(14:08):
tariffs stay in place, that willdecline If we end up in a
recession, which seems all butguaranteed, but then again I
would not place that willdecline If we end up in a
recession, which seems all butguaranteed, but then again I
would not say that I am the bestat predicting recessions, which
I guess I could be an economist, since they also fail miserably
at predicting recessions.
But we'll see.
There are so many wonderfulcompanies out there that nobody
(14:32):
pays any attention to.
Hopefully this is that time andwe're seeing that change.
Speaker 2 (14:37):
As you were talking, I was looking at the chart of
small caps relative to largecaps, which peaked in 2012,
roughly, and then the chart ofmid caps relative to large caps,
which also peaked kind ofroughly around the same time
period.
That's when large cap dominanceFANG and now MAG7 kind of
really ended up dominating.
(14:57):
Assuming it's just a cycle anda prolonged one, then we
probably are due, finally, forthe so-called broadening out
right when other areas start toreally outperform the large cap
space, where other areas startto really outperform the large
cap space.
When I looked at your ETF run,runn relative to the S&P 400
(15:18):
mid-cap ETF, you've beenoutperforming it very strongly
actually the last several months.
I know you want to talk aboutrun and we'll do a more formal
presentation here in a second,but let's talk about just the
last several weeks and monthshere for your mid-cap ETF.
What's caused it to outperformus strongly?
Speaker 1 (15:38):
At the heart of what we do is risk or focus on risk.
We are very disciplined aroundvaluations.
I'd say that's really thebiggest differentiator is we
sell companies when we concludethat they should go down,
whereas studies have shown thatmany managers fail to do so.
(15:58):
Passive never sells.
So we are different in thatmanner.
When a company eclipses or getsto a certain point where we
feel strongly that it should godown, we're not going to own it.
It doesn't pay to own somethingthat should go down and then
otherwise the portfolio isequally weighted.
(16:19):
So we didn't have sort of thattop-heavy concentrated risk that
many both the S&P but also inorder to keep up with the S&P
over the last decade, manymanagers had to kind of stray
from what their initial focuswas, just to keep up, which you
(16:41):
know.
It's hard to fault them toomuch because otherwise they'd be
out of business.
We didn't do that.
So I think that's really thebig driver.
That's really the big driverand, yeah, our performance up
until I think a few days ago wewere actually we track number of
benchmarks.
So the s&p equal weight, s&p400, russell, mid cap, sp 500
(17:02):
and then a bunch of our peersand, as a few days ago we were
the only one out of there were14 or so that we're tracking,
that we kind of compareourselves to.
We were the only one that waspositive year to date.
That's changed.
Things are moving prettyquickly over any given day, but
so it has performed especiallywell.
(17:22):
However, that said, I would saythat our focus on risk plays
out over the long run.
The last few months,particularly the last few weeks,
I'd say, is a lot of noise.
There's obviously some sensethat.
I think that some of it makessense, some of it will have
(17:43):
long-term impact, but reallyavoiding valuations Valuations
are still crazy.
It's still going to take sixmonths to a year for those
valuations to truly deflate.
Another way that we look toprotect the downside is
investing away from companiesthat have too much debt
financial leverage.
(18:04):
Over the last decade, companieshave taken on more debt for no
reason other than to buy backstock, for no reason other than
to buy back stock.
That's fine in that, from apurely finance 101 standpoint,
the cost of debt is cheaper thanthe cost of equity.
So certainly in a perfect world, you could argue that you
(18:25):
should have all debt and noequity.
However, in the real world,there's risk, there's recessions
.
You basically have to go backto 2008 for a company or an
individual to have trulyexperienced a lengthy recession
and have actually experiencedrevenues declining and therefore
(18:46):
experience how difficult it isto service debt when your
revenues are declining.
We haven't seen that and that'sgoing to take time as well.
So again, yeah, the last fewmonths have been great, we've
performed extremely well, but Ithink it's just the tip.
Speaker 2 (19:03):
So let's get a little more granular and talk about
the entire big picture conceptaround efficient growth, which
is at the core of RUNN.
And, by the way, this strategyhas been run outside the ETF
wrapper.
So all yours, my friend, I knowyou've got a couple of slides
here- yeah, first of all, I'mglad you mentioned that.
Speaker 1 (19:22):
I think one of the main takeaways is there are ETFs
are relatively new, certainlyactively managed ETFs new,
certainly actively managed ETFs.
There's nothing new about whatwe do.
We launched RUN about 20, 21months ago, so the ETF itself is
new, but we have effectivelybeen managing the strategy, the
(19:44):
philosophy, the process foralmost four decades.
So the only thing that's reallynew is just simply that our
clients can now invest in a VNETF.
You can get it for $31 andsomething cents, as opposed to a
$250,000 minimum, so we've gota few 11 year olds that are now
(20:04):
clients.
That's really what's changed,and that's what you know.
Really differentiates us, Ithink, from the average ETF is
it has such a long history.
So I think I stumbled upon aquote by Charlie Munger the
other day.
That was consistently notstupid, and on one hand, I
(20:28):
thought it was funny.
But two, it actually describesus perfectly and what we do.
Our investment philosophy isvery simple and easy to
understand Maximize earningsgrowth, because nothing drives
price like earnings growth,companies making more money
great.
That's why we're all investing.
(20:50):
The second, though, is, as Imentioned earlier, don't invest
in or don't hold an asset thatshould go down.
There's probably no moreguaranteed way to destroy value
or at the very least lag, thanholding an asset that should go
down.
And then the last is justsimply mitigating drawdowns
(21:11):
however you can.
So again, I mentioned avoidingthe value companies, avoiding
companies that have significantrisk due to financial leverage,
but by mitigating drawdowns itincreases your cumulative return
or your exponential growth overthe long run.
Nothing kills exponentialgrowth like big drawdowns.
So our strategy is very simple.
(21:39):
And then the rules-basedprocess that we employ ensures
that we do exactly what we'regoing to say we're doing.
It removes our emotions and ouropinions from the process, so
we again consistently deliverprecisely what we say we are,
which which makes it morereliable.
Moving on, just as far asperformance goes, one of my
(22:04):
regrets at the moment, as I haveyet to visit the Pacific
Northwest.
I've actually uh, I feel likeI've traveled more than most,
but so far I have not visitedWashington, oregon.
But looking at this chart, youcan say our performance has.
It's very much in the top left,which means that it's higher
return, lower risk over the longrun.
(22:28):
Versus our closest benchmarks,our performance has certainly
stood out, and over the lastdecade it's performed in the top
two percentile or so.
With regard to the S&P, we'reone of few strategies that has
kept up with the S&P 500 despiteminimal, magnificent 7 exposure
(22:49):
.
So over the last decade we wereable to provide clients with
the diversification that theyneeded, which we're seeing today
, but also provide attractiveperformance.
That was it was hard to getboth in the same strategy for
the last decade.
I think one of the mostimportant topics right now that
(23:15):
people are starting to discussmore.
But it's so simple and I don'tsee it explained as simply as it
can be, so I'm going to try it.
Mid-cap stocks, first of all,have outperformed over the last
33 years.
So as of the end of last year,prior 33 years, mid cap had
(23:36):
outperformed large by 60 basispoint annualized.
So you add that up over thecourse of 33 years, that's a
very large number.
And that's despite largedestroying everything over the
last 15 years.
So it's pretty remarkable.
Take that one step further.
Large cap stocks are, accordingto Ned Davis now this chart is
(23:58):
from Bloomberg, but according toDavis, which uses a bigger
number, so I like to quote it.
According to Ned Davis, largecap is, or was prior to last
week, 100% overvalued versus itslong-term mean.
Mid-cap, on the other hand, isactually undervalued.
So it's one of those very raremoments where the area of the
(24:20):
market or the asset class thathas provided the highest return
is the most undervalued.
That's crazy.
It makes no sense, especiallywhen you consider return and
valuation go hand in hand.
If something has a very highreturn, usually its valuation is
going to be higher.
Meanwhile mid-cap'soutperformed and its valuation
(24:41):
is lower, which just goes toshow how significant that
asymmetry is.
You know, when we invest, youalways look at risk and return
and ideally we're shooting toget a higher return than the
risk that we're taking, andthat's basically asymmetry.
And this is the asymmetrywithin the US equity market.
(25:06):
One thing that I've found overthe last two years or so since
launching run, is that manyplatforms, many of the largest
organizations, build portfoliosin the same manner.
They start out with large capgrowth, which makes sense.
You kind of had to, because ifyou weren't in large cap growth,
(25:26):
you were getting fired over thelast 10 years.
So you start out with large capgrowth and then you complement
it with SNID and then value.
The issue is that very few ofus and I would easily be guilty
of the same.
If I'm building portfolios inthis manner, most people don't
look under the hood.
They don't look to see what'sactually owned by the vehicle
(25:49):
itself.
So, using SCHG as an example,because that's the most commonly
held large cap growth portfoliothat I see, 60% of that is in
eight companies.
So you've got 60% in eightcompanies that are at the very,
very top.
This slide doesn't even do itjustice.
It would be a tiny littlesliver at the very top, would
(26:11):
have 60% of your investment,which leaves 40% for the entire
rest of large cap growth.
But then a lot of people uselarge cap growth for core as
well.
So you've got this massive holethat people don't realize they
have, making that exacerbatingthat is.
Many compliment large cap withSmith because it's sort of a
(26:33):
one-stop shop.
For the rest, as opposed tosmall and mid, many go to SMID.
The issue with SMID is that, bydefinition, small and mid, it's
going to be focused around thatline between small and mid.
You're going to get less andless exposure to the upper mid
cap.
So you end up getting this hugegap from the middle of mid cap
all the way up to basically thetop of large cap, where people
(26:57):
own none of and most people areunaware of it.
Understandably, because youinvest in a large cap strategy,
think all right, well, I'mgetting large cap exposure.
They've got 50 companies, butturns out 60% of it is invested
in eight companies, and thatjust so happens to be exactly
where our strategy fits.
We've talked a lot about mid,but I think an important point
(27:18):
is that the line between mid andlarge is a made up number.
Nobody agrees on it.
Morningstar has a totallydifferent number than Evest.
Speaker 2 (27:28):
And none of that, by the way, is inflation adjusted
on top of that, mid cap of todayis not the same mid-cap from 20
years ago.
Speaker 1 (27:36):
Right, right, and some of them have certainly been
static.
Morningstar moves theirs a bitmore, but still you've got this
huge gap that, first of all,that delineation between
mid-large doesn't really matter.
The fact is, people own verylittle of the smaller or even
maybe mid-sized large capcompanies.
(27:56):
Those are big companies.
We're not talking.
We're not saying most peopledon't own small cap.
We're saying a lot of peopledon't own large cap.
Right, they own a tiny bit atthe very top of large cap.
And again, this mid-large spaceis precisely where we fit.
So it's not only what peoplelack, and so you've got this big
(28:18):
hole.
It's also again the spot thathas outperformed over the last
33 years and is undervalued.
It offers the best asymmetryagain within the US equity
market.
Why that matters?
I think a lot of people focuson the past as opposed to
(28:38):
actually thinking about thedecision they're making for the
future.
This is why that matters.
If the market resumes itsupward trajectory that we've had
for the last 15 years, fine.
Our strategy has performedroughly in line with the S&P
over the prior decade.
And if people realize, hey, Idon't have any of this, this has
(29:00):
outperformed great, that wouldjust add a tailwind and it'd be
great.
However, if the market declineswhich right now seems like a
better bet or if the market juststruggles, it doesn't even have
to decline.
First of all, you can't sellwhat you don't own, so people
(29:22):
don't own this.
This is a huge gap.
What people own a lot of, andwhat's arguably the most crowded
trade in history, is MAG7 andpassive portfolios in history is
Mag7 and passive portfolios.
Those even those have a minimalexposure to these companies,
(29:47):
and so if people want to becomerisk averse, they want to raise
cash.
They sell.
That is going to meansignificant selling in Mag7,
significant selling in passivenot in this area.
Selling in max sevensignificant selling and passive,
not in this area.
Um, and then going back to kindof the original part of our
conversation as far as what'sgoing on with trade and tariffs
and, I think, most importantly,treasuries, which I know you
have a lot of opinions on, butthe, where that really matters
(30:07):
is if yields go up which rightnow they're going up that is
going to hurt small cap.
I don't.
Small cap, generally speaking,is quite a bit riskier.
I don't think we're about tosee the renaissance of small cap
anytime soon.
Small cap will probably doextremely well if we see a
(30:31):
recession, 50% of thosecompanies disappear and the ones
that survive, that are atextremely low valuations
skyrocket.
That's where you will see smallcap kill it.
I think value sort of the samething At least.
The value factor is generallyit's low price to book, it's
(30:51):
more distressed companies.
You do not want to be in thevalue factor going into a
recession.
You want to be in it coming outof a recession so you can time
it great.
But neither of those places doyou want to be right now.
I don't believe.
Now, discipline and investing incompanies that are attractive
to the value that's a wholedifferent topic.
But again, if interest ratescontinue to rise, that's not
(31:16):
going to be good for small.
If interest rates decline,usually that happens for one
reason and that's because we'rein a recession.
That is not going to benefit,again, small in value.
It's also not going to benefitthe most overvalued companies.
So again, going back to earlierin the conversation, one of the
(31:38):
reasons why we've performedwell is a tiny bit of air has
been taken out of the mega caps.
But if you go back and we gotto go back a lot Well, actually
we don't have to go back thatfar.
But, generally speaking, if yougo back to the end of bull
markets, that's where the mostcrowded, most popular trades
drop 50% in a few months and,frankly, even though I consider
(31:59):
2022 a little bit of a baby bearmarket, amazon and Netflix had
some hiccups in earnings andthey were down 50% in a few
months.
That is what you can expect ifyou're investing in companies
that should go down, if you'reinvesting in companies where
valuations don't make sense anda recession will lead to people
(32:19):
coming to that conclusion.
That's really it, I think.
Well, I'll touch on this reallyquickly.
We talked about this earlierthe uncertainty index.
The main thing is it's anuncertain time.
I have no clue what the nextcouple months look like, at
(32:40):
least as far as policy goes, butwhat I can say is that our
strategy there's much about ourstrategy that is certain.
The performance is not certain.
I can't guarantee that but theinvestment philosophy we've
invested in that for the lastfour decades and I am certain
that it makes sense that it'sconsistently not stupid.
(33:02):
It's maximize earnings, growth,avoid companies that should go
down at stupid valuations andmitigate drawdowns in a number
of different ways.
The process, because it'srules-based, is also certain.
We do the same thing over andover and over and have for four
decades is also certain.
We do the same thing over andover and over and have for four
decades.
So, at a time when things are,at least according to this chart
(33:23):
, historically uncertain, it'sprobably a good time to invest
in something that you can relyon.
Speaker 2 (33:33):
That word certainty is a good one to play with.
Do you feel more certain thatmid caps will be, or run in
particular will be, up more,down less, or more certain that
the bull market resumes higher?
Right, Because if it's about upmore, down less and relative
outperformance, if other peoplelistening to this are uncertain
themselves, well, you can stillplay a run on the long side and
(33:53):
maybe then do a spread tradeshort the S&P or short a passive
benchmark.
Speaker 1 (33:58):
We're a very boring long-only manager, but that
doesn't mean I don't enjoydiscussing portfolio
construction ideas.
Where our strategy has stoodout over the decades and where
it's provided the most value isthrough downturns or difficult
markets, and again, that'sreally just a result of avoiding
(34:18):
overvalued companies, investingin companies that have more
consistent earnings.
The other thing is we try tomaintain a portfolio that has
meaningfully higher earningsgrowth than the S&P.
That's difficult to do when ahandful of companies are
contributing the lion's share ofearnings growth but their
valuations are so crazy that wecan't invest in them.
That's basically been the lastdecade.
(34:40):
If earnings growth declinesacross the board for the S&P,
that makes it much easier for usto provide a larger gap.
And also, I think, over the nextdecade, the debt situation is
going to be an issue.
Anytime you have people andbehavior involved, things tend
(35:07):
to move like a pendulum.
We go from excited about onething to feared, and so again
over the last decade, companieshave taken on more debt than any
time in history and largelyjust to buy back stock.
My inclination is that theopposite is going to occur
because, frankly, that's howpeople work.
(35:27):
We're probably going to see alot of selling of stock in order
to buy back debt, especially ifthe current trend in interest
rates continues.
Companies are either going tohave to refinance at higher
rates, which will drive earningsgrowth down that might be best
(35:48):
case scenario or we'll seebankruptcies.
Or, if we end up in a recessionand there's a credit crunch,
companies won't be able torefinance and they will have to
go to market.
They will have to sell stockand they and, as opposed to the
you know what was going on overthe last decade.
You'll see dilution ofshareholders and, and all these
(36:10):
things are long term, uh,benefits that we provide.
Right, I don't expect them toto occur day to day.
I expect it to provide thatbenefit over the next one to
five to ten years, um, you know,but again, historically, or
over the last decade, eventhough the market was going up,
we largely kept up with it.
(36:30):
So run run can certainlyprovide value, whether the
market's up or down.
I would expect it to.
Historically, it has, um, andbut also it, this space, forget
forgetting about our strategy.
This space provides the mostattractive asymmetry.
Tomorrow goes up, this shouldprovide more upside.
(36:50):
This, if mark goes down, shouldprovide less downside.
And it just happens that we'reone of the best performing in
this space.
So I was.
I always like to speak inmetaphors.
I was trying to think of thistoday but you know I haven't
gotten a.
I haven't come up with a betterone.
But if your car blows a tireand you need a tire, get the
best tire Right.
I would say that clearly, theaverage client needs a tire.
(37:15):
You know you've got this hugegap and it just so happens that
we're the best performing or oneof the best performing.
Speaker 2 (37:23):
When you happen to your point at the tailwind on
the cap momentum, like you'vehad with large caps, can one
think about this approach or runin general, in terms of being
core as opposed to S&P core andthen kind of tilt more towards
mid efficient growth?
(37:44):
It seems to me that I mean thiswould be my own personal
preference that if you'rebearish on large caps, you don't
want it as part of your coreallocation.
You probably want somethinglike run.
Speaker 1 (37:55):
Again, the line between mid and large Now there
are, I guess, with the creationof ETFs, and when people invest
now they often invest in basketsas opposed to actual companies.
So if you buy large, I guess,maybe you get a swath of large
companies For us, or I guess myopinion is I'm indifferent
(38:16):
toward mid and large.
What I'm not indifferent towardis companies that have been the
recipients of a verysignificant amount of cashflow
for basically no reason.
Not that they aren't goodcompanies, but the cashflow that
flowed into them wasunjustified, pushing valuations
up To a large extent.
(38:37):
Those are mega cap companies.
Um, you know, it wasn't.
I don't really think of as alarge cap phenomenon.
I think it has a little moreinto, uh, you know, company
specific, certainly big tech.
Uh, that's where I could see itstruggling if the market
struggles.
There's there's no arguing thatbeing in larger companies
(39:01):
probably offers a margin ofsafety.
And again, lower large capcompanies people own none of or
very little of.
So, whether it's mid or thelower end or large, which is
sort of where we sit, I thinkthat's a great place to be.
And again, that line betweenthe two is a little fuzzy, but
(39:24):
people have gotten away withinvesting without thinking to a
large extent for the last decade.
It's just a good time to think,to invest in strategies that
make sense, that are disciplined, that are focused on risk, and
whether those are small cap,there's small cap strategies
that'll probably kill it.
There are mid cap strategiesthat'll kill it.
(39:44):
There are large cap companiesthat'll kill it or strategies.
What won't kill it if we end upin a recession or a bear market
are strategies or portfoliosthat have no discipline and that
are invested in ways that don'tmake sense.
Speaker 2 (40:01):
Tell me about sector composition with this investment
approach, because there's adebate right.
Is it large versus mid orversus small, or is it tech
versus everything else?
And tech is obviously much moreon the large side.
So, from a sector perspective,where does run tend to tilt more
towards?
Speaker 1 (40:22):
So our rules, our process drives everything, as
does our philosophy.
So the purpose of the rules areto ensure that we invest around
our philosophy with disciplineand continuously deliver to
clients what they expect.
Now, higher earnings growth isone of those rules.
Another is investing away fromcompanies with too much debt,
(40:45):
and that means that we are notgoing to be invested in real
estate or utilities probablyever I'm not going to say never,
but it would be unexpected andthat's because generally there's
no growth there and there's alot of leverage, so just
immediately they're excluded.
Energy companies because of thevolatility and because it's
(41:07):
historically the leverage,they're usually excluded as well
, which I'd say is a good thing.
Energy is an area where youwant to invest with an expert in
that area, which we are not.
On the flip side, becausegrowth is a priority, we're
going to be invested in moreinnovative areas, so tech,
healthcare.
Usually those are two areaswhere you can find more growth,
(41:30):
more innovation.
Historically, those areas hadless leverage.
That's changed a little bitrecently.
But then we're also going to beoverweight industrials.
Industrials are sort of theposter child of our strategy,
where you can find really goodcompanies with strong balance
sheets that are growing rapidlythat no one cares about, which
(41:50):
means that you're able to getthem at an attractive valuation.
And then our average hold time,uh, four to five years.
So you know, and several yearsfrom now the market realizes the
error in its ways.
Those companies that we'reinvested in appreciate and we
sell because they, uh, theyviolate our sell price.
(42:11):
But right now we are moreoverweight industrials than
usual.
That is again a result of therules, but I feel that it's
largely due to valuations, dueto ai kind of across the
spectrum on tech recentlybecoming higher.
You know, for for a long timeit was mostly just the big tech
(42:33):
and the max 7.
There is still plenty ofattractively valued tech
companies, that's.
That's less of the caserecently.
Speaker 2 (42:41):
I will say, speaking about industrials, I would think
that this entire push towardsdeglobalization and tariffs
could actually be really goodfor industrials overall.
I mean, is there an argument tobe made, just any way that
there's a tailwind around thatsector?
Speaker 1 (42:57):
I don't know way that there's a tailwind around that
sector.
I don't know.
So I would say one I don't lackfor opinions.
But two I would say that thepurpose of our rules is to
intentionally remove us from it.
We do not feel that we're goodat predicting the future.
We leave that to others.
We have created an investmentphilosophy that is common sense
(43:19):
and simple and we adhere to that.
You know, as far as industrialsis just such like a complicated
space, as all the others areright.
So at this point in time Idon't necessarily have an
opinion on that.
My opinion is more around.
You know, certainly don'tinvest in overvalued companies
(43:41):
because they should go down.
Don't invest in companies withunsustainable amounts of debt
because you have a very lowmargin of error that certainly
(44:03):
anybody that imports asignificant amount is going to
struggle with tariffs as theyare Now.
Those could change tomorrow.
So I haven't really one.
I haven't really formulated anyopinions as far as the impacts
of the tariffs are going to have, because they're changing by
the day.
And two, that's also not whatwe do at Running Oak.
What?
Speaker 2 (44:19):
do you think people get most wrong about investing
in mid-caps in general?
I mean, to me it's very simple.
The thing most people get wrongis they think the market is the
S&P.
It's much more than that.
That's my own personal opinion.
But if you were to thinkthrough all the things that you
hear from other advisors,individuals that you might talk
to, what kind of drives youcrazy in terms of how they think
(44:40):
?
Speaker 1 (44:41):
There's a few things that drive me crazy.
One it's shocking how manypeople just don't invest in
MidCap at all.
I think that's crazy.
There's so many people thatinvest in large and then they
invest in small and then theyjust sort of they're done.
Mid-cap is a large space butagain, even the lower large cap
(45:06):
people own very little of.
The other thing is that justdoesn't make sense.
But MidCap to repeat what Isaid earlier, midcap has
outperformed large and it'smassively outperformed small
over the last 33 years.
So if you're not investing inMidCap, actually the only area
(45:41):
that's undervalued Small,according to them, is marginally
overvalued or again it wascoming into the last couple of
weeks Large is significantlyovervalued.
So if you're only investing inlarge and small, you're not
investing in the area that hasoutperformed and provided the
most performance over the last33 years.
You're not investing in whatarea that has outperformed and
provided the most performanceover the last 33 years.
You're not investing in what'smost undervalued, which I would
(46:04):
argue you probably want to buysomething at a good price that
should go up, as opposed to buya lot of large cap at 2x its
long-term valuation.
The other thing about mid-cap isjust simply that it makes sense
.
Small cap companies aregenerally newer, they're smaller
, they're unproven.
(46:24):
Generally.
These are all generalizationsso obviously there's exceptions
product that has performed verywell and that's taken the
company, helped them graduatefrom small to mid Large.
On the other hand, especiallyat the top end of large, you run
(46:47):
into the rule of large numbersor diminishing marginal return,
where it becomes very difficultto grow once you're a certain
size Mid, on the other hand,still smaller companies.
They might have one greatproduct.
All it takes is them coming outwith one more great product and
now it could double.
And so there's mid offers moreupside than large generally and
(47:11):
is a lot again, generally lessrisky than small and people
don't invest in it.
There's so many reasons whymid-cap should be not just a
part of a portfolio.
It should probably be a bigpart of someone's portfolio,
given the fact that it'soutperformed over the long run
(47:31):
and it's undervalued.
Speaker 2 (47:33):
Seth for those that want to learn more about RUN and
the strategy and for those thatwant to just get in touch with
you in general uh, where toreport them to?
Speaker 1 (47:40):
my email is seth s-e-t-h at running oakcom.
I'd welcome an email and andI'll would certainly enjoy
speaking otherwise our websiterunning oakcom or running oak
etfscom both of those can beresources.
We also post all of our lettersto NASDAQ.
(48:01):
So if you go to NASDAQ orsearch for NASDAQ and running
our capital, you can see ourmost recent newsletters.
Most of them are quitesarcastic.
So if you're not a fan of humoralthough it's my humor, I find
myself hilarious but if youdon't like my humor, you might
not like reading them.
But regardless, there's there'sa wealth of information out
(48:24):
there and again, reach out atany time.
I'd love to talk.
Speaker 2 (48:27):
I mean, I find you hilarious too.
Speaker 1 (48:29):
So thank you.
Speaker 2 (48:31):
Again.
Folks, this is going to be anedited podcast on the lead lag.
Live on all of your favoriteplatforms Sponsored conversation
by running, learn more aboutRun R-U-N-N.
And, for those that arestreaming this live, you will
hear me on a space I'm doingliterally in eight minutes.
Seth, you're the man.
Appreciate it, you are as well.
Thanks, michael, and, by theway, follow Seth on X.
(48:54):
He's quite the influencer.
He's gotten at what?
1400?
Speaker 1 (48:57):
LinkedIn, also thanks to Michael.
Speaker 2 (49:00):
Oh no, I'm just trying to help where I can.
Cheers everybody, thank you.
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