A Market "Retrenchment" Ahead Looks Likely | Jonathan Wellum

Obviously, we're watching the market give way each day and we're looking at the bigger

factors out there and it does appear to us that we could be in for a bit of a retrenchment

in the market.

It's just based upon fundamentals.

I mean, you've got increasing energy costs, that's going to cause increasing inflation.

You've got further decoupling going on in the global economy as a result of the war

and Iran.

I've got interest rates actually going up quite a bit and that's going to have to filter

through the economy and that's going to have a very strong negative effect on the overall

economy, given the indebtedness of the economy.

Welcome to Thalphal Money.

I'm Thalphal Money Founder in your host, Adam Taggart.

Today, we have the good fortune of being joined by Jonathan Wellam, who is the founder and

CEO of Rocklink Investment Partners.

It happens to be Thalphal Money's endorsed financial advisory firm up in Canada.

Jonathan, thanks so much for joining us today.

Great to be with you, Adam.

You've picked a great time for me to talk with you, given what's going on in the markets

here.

Yeah, it's not like there's a shortage of things to talk about.

I also want to thank you.

When this video, we're recording it the day before Thalphal Money's spring online conference,

but it's going to run the day after and you're going to be an important part of that conference.

So I'm thanking you in advance while we're recording, but retroactively after this launches

for your involvement there.

It is going to be, well, I know at this point in time, I feel comfortable saying it was

a phenomenal event and I just want to remind folks if you didn't watch it, but you wish

it had.

Don't worry, you can still purchase a replay of the conference folks.

Just go to Thalphal Money.com slash conference and you can purchase the replays there.

All right, Jonathan, like you said, a lot going on in the world.

And I kind of want to make that part of the thread we talk about here, which is, you

know, I think about that, that Richard Kipling, poem, if I should have pulled it up here.

I don't have it in front of me, but it's like, you know, if you can keep your head while

all those around you are losing yours, I think this is one of those times in the market

or feels like it's about to be one of those times where there's so much concern swirling

around here for very understandable reasons, whether it's what's going on in Iraq, whether

it's what's going on in private credit, whether it's people just watching, you know, their

portfolios start to shrink here.

If they've been, you know, natural resource holders, especially in the precious metals,

they're watching those get kind of clobbered right now.

I think only people who are doing well are those who own oil and gas stocks at the moment.

But, you know, how do you, how do you help people kind of just keep perspective and keep

from being their own worst enemies at this time?

Because we know that most investment decisions that are made out of emotion tend to be the

wrong decision at the wrong time.

Yeah, great question.

And that's really what, you know, as advisors, that's how we really earn our keep them

talking to our guys in the office today.

And I said, this is when we actually are really have to work hard and to keep the long-term

focus.

So we go back to why we are invested in the various areas that were invested, why we

own some of the businesses that we own, why, for example, are we in precious metals?

And has the really, as a thesis changed at all, just because there's some circumstances

that are causing a disruption in the markets right now.

And so we always go back to looking, again, out two, three, four years, where we want

to be and look at the underlying reasons for investing in the sectors and in the particular

businesses in the first place.

We have to stay focused.

I've been doing this for 36 years, almost 37 now, believe it or not.

And I've seen tremendous volatility, you know, back in 2008, I remember, I should say,

well, wait, those are financial crisis, but even if you go back to 1998, long-term capital

management, we had a lot of financials.

And they, you know, Merrill Lynch, I think, went from like 80 bucks to, you know, 25.

And I got, you got to look through the long-term, of course, the NASDAQ peaking out in 2000

and so forth.

So the issue is, when you're investing, why are you investing, what's the thesis, is

it still intact?

Can I take advantage of the volatility to dollar cost average and actually increase my

positions?

And for goodness' sakes, don't be buying high and selling low.

That's what, you know, that's what is really condemns a lot of retail investors who aren't

focused.

So that's what we do.

We just go back to our basic thesis, look at the valuations and just stay focused.

Okay.

You know, one of the things that I think a lot of retail investors are guilty of and folks

I've been guilty of this too many times myself is we tend to get an insight, right, whether

it's we've actually done our homework on a specific company or we are reading and we think

we identify a macro trend and think, okay, you know, this company is going to benefit

from that, right?

So we're pretty good at coming up with like a rationale for buying a security.

We're not great at the same time in our mind determining, okay, well, under what conditions

are we going to sell, right, our just general hope is, okay, I'm going to buy this thing.

Hopefully my thesis is right.

It's going to make me a lot of money and then at some point in the future, I'll have

more money, you know, maybe I'll sell it, but we don't really, there's not a framework

or a formula that we're putting together to say, okay, if it hits X within Y zero amount

of time or if this change happens macro, that's going to be my trigger.

We just kind of think we'll in the future, I'll figure out when to sell it, right?

And then we get into a point like this where it's just a lot of uncertainty there when

we look at our portfolio and we obviously didn't realize, yeah, I'm not really sure why

I own half the things I have in here.

I felt passionate the time I bought it, but like, I'm not sure how I feel about it now

and I don't know whether it's worth keeping in the portfolio or not.

So this kind of goes back to the old, you know, know what you own, maximum in investing.

And this is one of the reasons why I recommend people work with financial advisory firms

like yours is because you guys don't have the luxury of just buying and crossing your

fingers.

You know, every decision you make, you have to justify it to everybody else at the firm

and your clients while you're buying it.

And then you kind of have to justify it on a daily basis, why you continue to hold

it.

So you know why you're holding it or why it's time to get rid of it.

How do you help the average person there who is just looking across their portfolio and

seeing a whole bunch of names where they're just like, I don't know if I want to be holding

this going into further uncertainty, but I don't know if it's a bad time to sell or not.

Yeah, I mean, part of that is upfront, upfront education.

So making sure that when clients come in, they understand that there will be volatility

and we tell clients to look, if you're not prepared for a 30, 40% drawdown on some equities,

I mean, not that we want to go down that much, of course, but whenever you buy something,

you can get a drawdown like that if you don't have a stop loss in place and so on.

And so we try to prepare clients for some inherent volatility that will emerge.

You also, when creating a portfolio, make sure that you have some assets that aren't

already volatile, so that if they need money in the short run, they can take from that

part of the basket, if you will.

And so asset allocation is very important.

And with that, if you do have a sector like precious metals that has run quite a bit,

like very quickly, that's a sector you want to take some money off, so take a little bit

of money, take some profits, reallocated, that's a discipline that's very important also.

And then a sell discipline, as you basically are laying out there, if the thesis change

gets overvalued, better opportunity, you sell the security.

The security doesn't care if you own it or not.

It doesn't have, you know, there's no love relationship between you and a stock.

And so you've got to be able to part with it when it doesn't make sense.

And so again, all of those factors come into managing a portfolio, managing expectations

and managing the risk in the portfolio.

All right, I mentioned some big concerns that are swirling out there in the headlines

right now.

I'll get your opinion of them in just a second.

But there's one development that I'm curious how concerned you are about it, which is,

if you look at technical analysis, one of the factors that people look at a lot is daily

moving averages.

And they have started to cross over to the downside.

And pretty much as of the day we're recording here, Jonathan, we've punched down below the

200 daily moving average.

It's looking like we're probably likely going to close there.

You know, TBD was going to happen next, but a number of the folks I talk to, so they

see that as a critical support level.

And so the question is, is, you know, we'll find out we don't know for sure at this time,

but, you know, we could potentially be on the precipice of a fairly large coming down

leg in the markets because we've punctured that long-term support.

How concerned do you about the fact that we are now below it?

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Yeah, I mean, to be honest with you, we don't spend a lot of time on technical analysis.

We're bottoms up, value oriented investors.

I mean, clearly, we also look at some of the macroeconomic trends.

So that's not something that we're preoccupied with.

Having said that, obviously, we're watching the market give way each day, and we're looking

at the bigger factors out there.

And it does appear to us that we could be in for a bit of a retrenchment in the market.

It's just based upon fundamentals.

I mean, you've got increasing energy costs.

That's going to cause increasing inflation.

You've got further decoupling going on in the global economy as a result of the war

and I ran.

I've got interest rates actually going up quite a bit.

And that's going to have to filter through the economy, and that's going to have a very

strong negative effect on the overall economy, given the indebtedness of the economy.

You've got just so many geopolitical factors going on in uncertainties right now.

In terms of the straight of our muses, there's so much important economic commerce goes

through that.

Not just the 20 percent oil, but you've got fertilizers.

You've got the issues of natural gas now that have been interfered with the LNG facilities

in the Middle East.

So, I mean, there's just a number of things that I think are weighing on a global economy.

It's already really leveraged and didn't really have a lot of growth anyway outside of

the United States.

And there's not a lot of economic growth in Europe.

It's very little in my own country in Canada.

And so when you look around the world, if you put these kind of kind of headwinds in

the system, you know, the increasing interest rates, the increasing energy costs, which

you're going to filter through and increasing inflation and so on, I think, you know, to

see a global recession, it can all of a sudden becomes quite probable.

I mean, I'm not saying I'm not calling for that, but these things are going to be big

concerns.

You mentioned private equity, private credit.

Yeah, we're seeing all sorts of issues bubbling up to the surface there.

In my own country in Canada, we just did a quick report in the private real estate market

in Canada.

So about $80 billion has been raised over the last number of years.

So, you know, multiply that by 10 if it's in the US economy, where about one tenth sort

of the US.

So, $80 billion was raised and these are private real estate equity funds and 40% of them

are gated.

40% of that are gated.

And so, again, you're seeing this pressure coming and, you know, people don't talk about

it that much.

You're seeing some of that United States, some of the gating that's going on.

But the gating is there because, again, they don't have all the equity.

People want out.

They want out for a whole host of reasons.

Quite a few of the funds that have been gated have cut their distributions and a lot

of people bought these strictly for the distributions and, you know, maybe a little capital upside.

Yeah.

What comes next at them?

Probably write downs, right?

And so, yeah, so there's all of this swirling around.

I think that is concerning and I think is going to put a lot of downward pressure on economic

growth, not just, of course, in the United States, but around the world.

And so, I think that's why the market's really, really getting heavy.

It's tough going.

You know, we've had a lot of excess.

You've talked about this, the lag effect.

Maybe we're finding getting it in the market.

And so, I think people need to tighten their seatbelt and get ready for some volatility,

increase volatility, maybe some downside for a while.

Okay.

And what's interesting is there's a lot of angst around this right now, but the markets

are down what, you know, a little over 400 points from their all-time highs.

You know, I mean, it's not a lot and, you know, there's a lot of room, there's a lot further

to fall, right?

So, if people are freaking out now, I wonder if there is another down like we're talking

about, what the fear factor is going to be, you know, on Wall Street at that point in

time?

Yeah.

I mean, if you look at the, the TSX in Toronto, we're now just negative for the year and

probably off about four or five percent from the high.

And as you know, in the US market, the Nasdaq might be down five, six percent year to date

or so.

And, you know, the Dow, the Dow, it's a little bit less than that.

So, yeah, we're not very far off the highs and people are very concerned.

But I think that's just because of the overall environment in the world, the unsettledness

that's going on, there's just so much activity every time you turn around, there's things taking

place.

And I think it's just sort of throwing people a little bit, throwing people off.

And yeah, it's unsettling.

People are just not settled, I think, in terms of their stations, yeah.

Well, so at the conference, the keynote is provided by Lacey Hunt.

And he, as he usually does, he does a graduate level walk through a whole bunch of charts

about our current situation in this conference.

It was all about studying how oil shocks have impacted economies in the past.

And you know, in particular, when an oil shock happens, when the economy is already somewhat

compromised, and you know, the short answer, folks, is nothing good.

And so, Jonathan, we could have, we could have, and we were talking about a number of the

concerns that you and I have rattled off here so far before the war was enacted against Iran.

And not only does the war itself put an uncertainty premium on markets, but obviously,

what's been going on with the oil prices is the real big concern.

You know, it's sort of like, hey, we had an issue, or we had an environment that we were quite

worried about beforehand. And now we have this exogenous shock that is quite bad.

There's no real good way to spin it.

How much more vulnerable is that going to make the, the, the fragile system that we had before?

And of course, the big answer to that is sort of twofold.

It's, well, how long does this war last, right?

And then secondly, how much damage is done to the Gulf energy infrastructure?

And that's been, I think, the very concerning development this week is that both sides have started

hitting, you know, oil and gas installments that will take honestly months at best to get

working again in the number of cases they're saying years, right? And of course, that's,

that's what's been done so far, who knows how much it's going to be done going forward.

So there's this big uncertainty factor out there still of just how much more could this be,

right? Could, how much more damage could it be? How much longer could the, the war last in

these, these high oil prices system? So, you know, it, you try to sort of seal the different

permutations of what could happen and come up with a probability distribution. But it's,

it's hard to find many parts of the tail that, that don't have some sort of, you know,

quite negative lingering effect from what's going on right now with this war.

You know, absolutely. I mean, look, we've been facing, you know, the end of a debt cycle.

I mean, we were at a huge debt cycle. We've got an issue with currencies, our whole currency

system. You've got this major political struggle going on now in the Middle East and all

of the implications of that. You now got a, a jacking up of energy costs, who had a very vulnerable

time in the global economy. And as you point out, it doesn't appear that those energy costs

are going to come down that dramatically soon, simply because there's been some damage. And,

you know, the, you know, the world, the world can absorb some of this. But if you've got,

you know, the LNG facility and guitars been hit that they're talking maybe a couple of years

for parts of that to get back up. And, and so the energy assets in Iran are compromised,

other parts of the world. I mean, you, you take a couple million barrels of oil off the market,

and it can have a profound effect. But that runs through as, you know, every part of the economy,

every part of the economy now is going to be increasingly stressed. Also, it's the same time

where you're having this, you know, bipolar world being developed, right? So the same time

that we're kind of getting east and west, in my view, we see, you know, that sort of, you know,

building now, it's sort of China, the United States and the sort of the standoff there.

That means, again, all of these goods that are coming from the east to the west probably less,

that means increasing prices, probably things like that. So there's so many things going on that

I think can feed into inflation or a stagnation environment and that are upsetting for people.

And we just don't know how this is all going to pan out. I don't know how it's all going to pan out.

That's why we come back to our investment thesis. We stayed pretty focused on some of the

precious metals. We stayed focused on businesses that we think, you know, can absorb this pressure

and continue to do well and so on. And also we're trading attractive prices so that we're not overpaying.

But no, it's a world that's facing a lot of challenges and they're all coming to a head.

And then you throw this mess of increasing energy costs into the middle of it all.

And yeah, it's one that I think, you know, investors have a reason to be concerned and to be focused

on what they're investing in and be watching their capital.

So obviously this was a big topic of conversation that yesterday's conference,

and I'm saying yesterday, even though we're recording it the day before.

But I've seen all the presentations and, you know,

when you get a whole bunch of people together, you're going to have differences of opinions.

Right. That's what makes the market. But I will say Luke Roman

is very concerned about all this and made the comment that he is concerned about an outcome

that in his words could be worse than COVID plus 2008 combined, which is a pretty pig statement.

And I'm not trying to freak everybody out and I'm not saying you have to share that as well, Jonathan.

But I'm just mentioned to say, hey, some of these smart people are really concerned about

what these knock on effects could be. Let me ask you a question maybe to the positive upside here,

at least for part of the world. I asked Lance Roberts this in yesterday's weekly market recap,

but I'm curious to hear your thoughts too, especially because you're from Canada.

I think even if the war ends tomorrow, but especially if it lasts for a lot longer and gets worse,

is I think the risk premium to purchase oil and gas through the Persian Gulf

is going to be substantially higher in the future than it has been up until this war.

You know, it's just it's going to be more expensive to ensure ships.

Countries are going to be, you know, once bitten twice shy. I'm not really sure I want to do

this in case my tanker gets marooned inside the Gulf if they close the straight again or

God forbid gets hit by a missile or whatever, right? And if if Iran decides to the regime is still

intact and it starts to try to, you know, enact a toll of any ship going in and out of there,

which apparently it's maybe starting to do now. So we've all heard the staff at 20% of the

world's oil flows through the Persian Gulf, you know, as of right before the war.

I'm one man's opinion, but I'm going to guess that percentage of the world's oil

that the Gulf represents is going to go down or at least as a ship through the Gulf is going to go

down for two reasons. One, I think in apparently we're already starting to see this,

you've got countries saying, you know what? I think I want to start buying a larger percentage of my

oil from quote unquote safer, friendlier parts of the world, right? My pecanadian oil might be

a US oil way wherever. And so I think our countries could could potentially be net beneficiaries of

that and understand that some people watching this might not like that, you know, maybe it looks

like war profiteering or whatever. But I think that could be one of the the outcomes of here.

I also think and we've heard talk of this too recently. A lot of the countries that are on the

coastline there in the Gulf will be working even harder and a number of them have already

built an infrastructure to do this is to provide alternative ways to get the oil and gas out of

their country and getting it on to a ship without having to traverse the Gulf, right? So these

are pipelines that are going, you know, to other to the Red Sea or to other other potential

distribution points. So my point here is is I think no matter what happens, the Gulf's outputs

probably going to be a bit diminished is going to be more expensive and other parts of the world

will probably benefit. And of course other parts of the world too will it's a reflexive system,

you know, those say, hey, look, the world wants to buy a lot of oil, but not from the Gulf,

we'll increase our production here and we'll sell to them. So do you see this? Because I know

you're very resource oriented and you're, you know, the types of companies that you invest in.

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in the credit karma app. Yeah, the new question I think that I think we're going to see dramatic

changes take place. An event like this really sharpens people up. I mean, it's also coming at the

same time, Adam, as you know, where we're getting this sort of decalobilization, right? In other

words, a Trump has really been pushing this that we're, you know, too dependent on China,

too dependent on an enemy or someone that's not exactly your best friend, someone you can't trust,

and becoming much more independent in terms of all of your resources from a Western hemisphere

perspective. So I think it's going to play right into that very, very well. And you're already

seeing that. I mean, you had some of the government officials over in Japan cutting deals on energy

and so forth so they can bypass some of the some of the the Middle East and the Persian.

Yeah, just to that point, it wasn't just Japan, but we had, we just struck a deal for US did

for 56 billion for a number of Indo-Pacific countries, including Japan. So I think that if you

listen to the administration and trust them, they're saying basically the phones are ringing

off the hook right now. Yeah, and I'm up in Canada. I'm just celebrating at that from the point

you guys are doing because in Canada, we've got so many resources, but we have the, you know,

incompetence and lack of initiative on the part of our federal government, particularly, but also

some of our provincial governments to develop these resources. So I mean, we should be getting much more

LNG out of our country. We're doing some small deals, but a few years ago, the Europeans came to us,

the Japanese came to us, came to our prime minister, Trudeau at the time, and he said there was no

business case. You can believe it, no business case. And so I think that's going to change. It's

going to be so much pressure and hopefully the current leadership in Canada or new leadership

will recognize that ability because Canada, especially for the US, we should be developing

stronger relationship with each other because we have all of the resources. Anything you don't have,

we do have, and we're right next door, and it's much safer, of course, and it's all within the

hemisphere. So Uranium, Potash, of course, natural gas. The years of development we have in our

oil and gas sector is much larger than the United States. And so on lumber, aluminum, because our

energy costs, because of hydroelectricity and Quebec and some of our provinces is just so low. It's

a fraction of the cost that you're going to have in the US, but we can, you know, we can smelter

the aluminum, as I say, a fraction of the cost. These are things that we need to start thinking

about and developing, but of course, you need, you know, you need the intellectual horsepower

and people don't want to do that, right? But no, I think it's going to change. It's going to change

quite a bit in the world. Having said that, with all of these changes, as you know, Adam,

that changes the world and it causes increase in prices and dislocations for a period of time.

And I think that's what the markets worried about that we could again. It's fine to say we're going

to change our distribution model, but we're used to a pretty efficient one right now. That's being

interrupted. Now we're going to have to replace it with something else. That means increased cost,

increased infrastructure costs and just all of those changes that will have to take place. And I

think again, that's why the market is looking at this and going on or no. This could be inflationary

for a little while. And without a lot of economic growth, that could be stagflation. And we might not

get, we might not advance very far. And this could be a serious problem. And then with all the

debt, how do we pay for the debt? The interest rates go up as you know, every one percent increase

in the interest rates in the US is another 390 billion in interest costs. Who pays for that? So,

I mean, again, you go back to Luke Gromins comments. You know, I'm sympathetic to what a lot of

what he's saying simply because the numbers do not add up. You can't have a $39 trillion debt

unfunded liabilities, a budget bringing in a little over five trillion spending seven trillion.

You've got a war that's going to cost they say a couple hundred billion. But I think the last time

they said the Iraq war was going to be what someone said, you know, half a trillion half a billion,

yeah, half a trillion or so 500 billion turned out to be three to four trillion dollars. Where does

all that money come from, right? So again, when you all add all that up, you're sitting there thinking,

yeah, you're going to be concerned. You're going to be trying to protect your capital. This

no question. There's a lot of uncertainties. Okay. I want to ask you just a second about,

you know, the potential, well, given this outlook, what an investor should be thinking, but also

how they can position themselves for sort of the period after, where hopefully once most of the

change in volatility and pain in the system is as bloodthrew,

Sun's going to come out again and there may be some really good opportunities to own some great

companies at good valuations. Real quick, let me just ask because you have the Canadian perspective

and I'm not asking you to speak for all your countrymen or even speak for yourself individually,

but what is what is the tenor of what America is doing in Iran right now?

Is it hey, this is the right thing that needs to be done and it's unfortunate, but I hope they

succeed or is it one of these crazy cowboys just gotten a world into?

Yeah, I mean, my view, I'm, as you know, more sympathetic to what the US is doing. Again,

I don't know all the ins and outs and the information that the Trump administration has to pull

the trigger on Iran, but it's been a very bad, you know, global player and a real problem for

the Middle East and uncertainty. I think overall in Canada, it's a little more of a liberal,

it's a bit more and in your terms, democratic, if you will, versus Republican.

And I think I would, I think I'm pretty accurate in saying probably the majority of Canadians

would not be overly supportive of the US going into Iran, but there would be a good size

constituents that certainly would support it. So I think it would probably be somewhat of a split.

And, you know, we've got a large Iranian population in Canada that is overjoyed with it, of course.

And want to see a change in terms of the government there because of the, you know,

the revolutionary government there has just been absolute butchers. I mean, these are just awful,

awful wicked people. So, but I think overall to answer your question, it would be, it would be a mix,

it wouldn't be overwhelmingly in support, and there'd be certainly a lot of people that

wouldn't like it. I mean, some of that I think is fed by Trump Derangement Syndrome.

You know, he can poke, you know, him poking down.

And, you know, Trump, Trump Derangement, or the Canadians, I mean, there's no.

And there's a bit of that going on, unfortunately. You know, and there's nothing I can do about that.

I try to encourage the relationship. I think the United States is our most important trading partner

and most important country that we need to be friends with. And we should continue to work on

that, on that front. In fact, our leader of our opposition, Pierre Paulier, was just down in

the United States recently, just in the Joe Rogan show. And again, it's just trying to get that

more conservative message that sometimes doesn't get out of both Canadians, that, you know, we are

saying sensible people in many regards. And we do want to work with the United States. A lot of us do.

And we've got a lot of great resources. So let's get a deal and continue to work to both of our

advantages going forward. Yeah. Well, and it's interesting. So this will be a conversation for

a different time. But, you know, Canada, very research risk, which, and so is the US, and we're

entering this period of time where both self-sufficiency's got a higher prairie on it for countries.

But also, you know, there's a lot of countries that don't have a bunch of resources. Japan being a

great example when it comes to energy. And the US, Canada, powerhouse, if we are able to find

ways to continue to work even more closely together, you can make, you can make an argument that

there could be, you know, the dawn of a really new, exciting era for that partnership going forward.

But let's save that for a different day. So, to my question that I sort of half-assed earlier,

not saying this is going to happen, but assume for a moment that things do get worse from here.

You know, or maybe I shouldn't even start with that, but like, given the current situation,

what is your firm's general advice to the average investor? So what you're about to say isn't

personal financial advice, and we all know that what matters is your own personal situation. So,

you know, folks take this with that disclaimer. But is this a time to start, you know,

increasing cash reserves, if you haven't started already, is it time to be sort of positioning for

the potential of a material correction? But then also, if you've positioned well, then you have

the drive-how to deploy when there is better valuations around. Yeah, I mean, I mean, I'm reasonably

comfortable with some of the weightings that we have given what we're seeing right now. And that

means we do have up to 25% close to 25% that's in fixed income, very short-term, short duration,

you know, investment savings type, money market type funds. So, we do have liquidity. And that's

larger in people who are closer to the wire or are retired, things like that. So, we have higher,

higher, you know, fixed income portfolios allocations for them. For folks that are younger and

continuing to add to their portfolios, I think as we tell them, this could be a wonderful time.

I mean, we get volatility. You can dollar cost average and you can invest more in the marketplace.

So, we've tried to position our clients, you know, insanely rationally long before something like

this emerges. And sometimes, we'll get the feedback from clients, hey, I want to be more invested

in the market. I mean, can you increase my allocation in that? We say, wait a second, just be patient.

You know, because, you know, when things are going up, they all want to be 100% invested.

Whether I'm going down, they want to be zero invested in the equities, right? And so, again,

is trying to find that balance and just, you know, hold people's hands in a sense that, you know,

you give them, again, a good rationale for their asset allocation. So, we're pretty well positioned.

Now, if things get really messy, we certainly go through and look at different clients that maybe,

you know, we should have a little more cash and depending on their aptitude and their risk tolerances.

But most of our clients that, you know, don't want a lot of volatility, they're already positioned

really safely and carefully before anything like this happens. Because we know anything like this

can happen at any time out of it. It can always come, you know, some exogenous event can hit the

market. That's, this, of course, has been a little more telegraphed, if you will. But sometimes,

you can have a real shock hit the system all of a sudden. And, and so investors have to be prepared

beforehand. That's part of building a portfolio part of, you know, I guess, you know, coming to a

advisor and earning our keep, if you will. Okay. All right. And then, specifically, when it comes

to precious metals, they've had a lot of volatility right now. I want to ask you your thoughts on

their direction. But I guess before I do, from a volatility standpoint, do you have any general

advice for the, the precious metals investor? You know, is it a time to lighten up a

doubt that's going to be your answer? But, you know, is this the time to think about hedging?

What are your general thoughts?

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Yeah, I mean, a couple of things, of course, it depends how you're positioned.

If you were way overweight in the sector, and it's way too much volatility for you,

maybe you should trim back a little bit. I'm bullish long-term, but I'm only saying that,

so that you can have a scene, you know, in good night's sleep. So sometimes people just get

overweighted, and I think sometimes it's better if they just take some off, even if they're going to

sell at a price where they might have a small loss at this point. But I mean, if they were

investing in this sector, they probably still have 30 large gains if they were in a disciplined

weight investing going over the last couple of years. So a couple of things. So nothing wrong

with taking a little off. If you're overweight and you're really nervous and you're just

can't sleep, and people are some people, they just can't handle the volatility.

I think what we're trying to tell people, though, is that, look, if you have a reasonable weight

in it, we, you know, maybe it's 20% of your portfolio, and they're in great companies like

Franco and of that, or wheat precious metals, and some of the ones that we own, you know,

Agnico legal, and things like that. Just stay tight. Don't be jumping around. These companies

are trading at very attractive prices. If you look at the gold price right now, say, 45,

4,600, and you look at sort of $70 silver, you know, some of these companies like Agnico

are trading at, you know, an 8% free cash flow yield if that price holds up for this year.

And Franco and Nevada and wheat and precious metals are trading at, you know, 5% and 6% free cash flow

yields. So they're reasonably priced. And then what we try to get people to focus on is that

we have an intractable debt problem. I mean, we just, the global monetary system is under massive

pressure. And so you want to make sure that you're keeping a certain percentage of your portfolio

exposed to this area. And, you know, just know the companies that you're in, make sure they're

strong companies, make sure they're going to take advantage of volatility and the price also,

and that they're continuing to grow their portfolios. When we look at the companies that we own,

whether it's Agnico or Franco, Wheaton, and assist goal royalties, there's a number of them there.

They have in many cases, it varies growth rates. But over the next few years,

they're seeing 20, 30% growth in, you know, in gold equivalent units and so forth.

And so there's strong growth there along with, I think, opportunity for price increase. So

it's stay focused on the fundamentals, know what you own. If you bought something that's speculative

that, you know, is just gone up because everything went up, yeah, you're going to be nervous.

If there's no foundation to what you own, there's no balance sheet and there isn't resources

being developed, then of course, you should be nervous. But you probably shouldn't have bought that

in the first place. So you want to be very careful and maybe lighten up in some of the junk and

make sure you're in high quality. Okay, well said. And also, the fair amount of talk about

gold at the conference, no huge surprise. But several participants, especially Rick Ruhl,

were saying that even at today's precious metals prices, right, which are off the highs,

you know, silver, particularly so, even if they just stay here at the prices you mentioned,

right, $4,500 gold and $70 silver, that in general, the miners are in their opinion underpriced,

given the jump in profits that these companies are going to see. You know, a lot of these companies

are still being valued as if gold is like $3,200 versus $4,500. And in particular, Rick was

saying that they're royalty sector, which doesn't have exposure to operating costs, right? So,

you know, the rise in oil, it doesn't impact the guys that they're the royalty companies.

He said they look particularly underpriced right now. And he actually went through and shared a

whole bunch of names that are on his radar list. So, again, folks, if you want to find all that out,

go buy the replay for the conference. But Jonathan, you're nodding as I'm saying all this. So,

that sounds like you feel similar way. Yeah, no, absolutely, they're great businesses. And as you

say, their costs don't go up, they're just going to get a percentage of, you know, the royalty or

the, you know, they'll get a piece of the stream that comes off of them, as you know. And I think

the other thing that Rick probably pointed out, which I think is 100% on track, is that,

again, this AI digitization, all these long-term trends, they remain, I'm not saying that you

should go out and buy in a video. We don't own it. But I'm just saying that those trends and need

for power and energy and copper and so forth, those are going to continue to develop. And I think

that a lot of these resource companies are going to look to some of these large royalty companies,

like Franco and Wheaton and Royal Gold, to do more of their deals. We just saw this about a month

ago with Wheaton Precious Metals providing four billion in capital, four billion dollar royalty.

I mean, it's just a massive royalty. And so I think there's more of these coming down the pipe,

which will provide great opportunities for some of the larger royalty companies. It was thought for

quite some time that there are other deals. There's no deals to be done. But their cost of capital is

so low and it's such an efficient model that they can come along and they're really the best providers

of capital and many of these large projects, especially a lot of the copper projects. So I think

there's a lot of different opportunities for them to grow, even if the price of gold and silver

and copper disco sideways for a while. That's fine. Again, we get too caught up with people saying,

you know, silver is going to go to $500. It's going to go to $400, $500. You hear these different

things. Maybe it does. I'm not attacking anybody that says that. But if they can make lots of money

at 70 and you can do your models, if it goes to 500, hallelujah, you know, but you can still make

lots of money even at these current prices. And so when you look at, you know, you look at silver,

for example, again, the demand for that versus what's produced. There's a shortfall. It's been a

shortfall for five, six years. It's needed. It's a strategic resource. It's becoming even more

important in the future. So all of these things give me a good reason why I want to be in some great

companies that can profit from it over time. And yeah, there's going to be price changes. There's

going to be volatility. You have to stomach that if you're going to make a long-term return.

But by high quality, know what you buy and buy them at attractive prices. And I think you can do

exceptionally well over the next number of years because of, again, some of these long-term trends

that I'm going to continue to bet on because I think they're just really large secular

changes that are taking place in the world. If they don't take place, then that's a different

story. But I think it's hard. Some of these trends are hard to reverse. And I think they're

inexorable trends that are moving forward, especially, again, some of these, the need for power and

digitization, AI, robotics. All of these things are continuing to have a big influence on the

materials market. Okay. All right. We'll look in and start in the wrap up here, Jonathan.

Before we turn the camera on, we were talking about an issue that sort of near and dear to your

heart. And that will say, elements have been woven into conversations that have had on this

channel over the past, that take probably a couple of years. But I'm going to give you an

opportunity to talk about it because I think it's particularly important right now.

Well, I'll explain why in just a moment. But I don't want to put words in your mouth,

so you describe this any way you like. But it's important to you to kind of look at

wealth building and the pursuit of a good life. We'll say through a moral lens and not just a

financial one. So elaborate on that. Yeah. I mean, many years ago, yeah, I have a theology degree.

So I do have a master's in theology, actually. But I wrote a master's thesis on John Rawls theory

of justice, actually, back in the, it was a big shot at Harvard and wrote a book, a big

tomb on justice. But what in doing going through that study and also studying theology,

realized that it's really the virtues and values of the culture, which underpin everything else,

the political system, the economic system, the cultural system, and so forth, it's really those

values. And there was one book that I came across that was excellent. It's called The Economy in

Mind. And it's written by Warren T. Brooks. It's a number of essays from Warren T. Brooks,

who was an accomplished author and writer and newspapers through the 60s, 70s and 80s was quite

instrumental, I think, in the Reagan administration. But he had a couple quotes in that book, which I think

are really important for financial people to remember because we get caught up in numbers and

looking at resources. And sometimes you don't step back and say, well, really, what's the first

order of importance when it comes to developing economy? So he has one quote I'll just read you,

I think, which summarizes quite a bit of this. He says, the primary and essential character of wealth

is metaphysical, not physical. And as the result, the direct result of the creativity of mind,

not the availability of raw materials, the some product of individual efforts, not the manipulated

static resources of collective nations or governments or lands. And what he's really saying there,

especially if you read the book in more detail, is that this whole issue of virtues and values and

innovation and creativity, if you don't have that first and foremost, you're not going to develop

the resources of your land. And we see that in country after country, countries with lots of

natural resources doesn't mean they're rich. If they don't develop it and they don't have innovation

and creativity, one of the powerful forces in America, you know, 250 years going from a very

small, rather insignificant country to the world's dominant enterprise has been the free market

system and enterprise innovation, creativity and the investor revolution. Yeah, absolutely.

And he also has another comment we often talk about money and he says, a dollar is not value,

but representative of value and at last moral values. And he has a great section in the book,

again, that shows you any culture that has a real lack of moral values and moral cohesion,

lack of trust, lack of confidence in your institutions, all of these things rule of law

and so forth, you'll find a dollar that is devaluing. It won't stand up. A country with a strong

dollar, strong anchor in value over time will be one that is, again, infused with strong ethical

moral values. And I think this is really important for people to remember that if we want to restore

our currency value, we should look at the values of our civilization, our populations, say,

eight, wait a second, where are we getting our value? And we kind of wonder, where are we going

and really what holds us together as a nation, as a people? What are the ethical values that we

want to hold on to? Can we trust our neighbor? Can we can we actually enter into long-term

contracts with confidence and so forth? And so I think that that's something that, again,

we as investment advisors and professionals need to go back and challenge the system,

where are ethics, where are moral morals? Are we anchoring them in the right place?

And reestablish that secular or atheistic economy will not produce long-term wealth. And so

we need to be innovative, creative. We need to think about our neighbor. We need to show love

and compassion and entrepreneurship and think long-term. Even as we go through some of these

difficulties that we're experiencing now, we should always be thinking intergenerational.

What's going to be good for our kids and our grandkids? Not punishing our kids by spending

over spending and running up our bills, but helping we actually create a better economy,

a better world, a better culture for the next generation. And again, for the one after that. So

those are things often we don't think about as much, but those are the things that are ultimately

are going to strengthen our economy and produce the wealth that we want to produce. If we just

think of ourselves, then a selfish economy will ultimately go down and we'll find our currency

continuing to give up more and more value, which is what we're seeing with all of the printing

of money in the debate that have currency and not owning up to our own responsibilities now.

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dot com slash price match for details. So I think this is a really important topic and forgive me.

I'm trying to pull up a image here. So let me see if I can do it in real time while we're talking.

Yeah, there we go. So it's funny. I didn't know you had a theology degree which explains why you're

such a deep thinker and care so much about so many topics. You know, it's sort of in my study

of the world and all different types of thought paradigms and religions, etc. I do think there's

this sort of common thread coming up and you mentioned the word values several times.

You know, in my opinion, it doesn't really matter, you know,

which which big deed in the sky, you know, you believe is up there. It really comes down to the

values that your belief system holds and there was a great quote from Gandhi that I've repeated

often on this channel, but I'll do it one more time. That's when I'm pulling up here. It says

your beliefs become your thoughts, your thoughts become your words, your words become your actions,

your actions become your habits, your habits become your values, your values become your destiny

and that last line of your values become your destiny. I think this is exactly what you're saying

Jonathan and it's funny because you know, we can see this play out in all

errors of history, but we can't even see it playing out in front of us right now. I just in yesterday's

weekly market recap video with Lance Roberts. I brought this up. You're seeing a tremendous

amount of flight from New York State and New York City to other states right now, particularly

Florida and Texas. And I put up some comparative data on the screen that just sort of compares New

York versus Florida. And you know, on a lot of metrics, Florida just seems way more compelling.

A lot of these are financial metrics. So, you know, it's got New York as some of the highest

state income taxes in the country. Florida's got a zero percent cost of living indexes,

substantially lower in Florida. Education cost is much lower, but performance is much higher.

This is a whole bunch of things like that, right? And it's kind of like Gresham Law where bad money

drives out good, right? You know, if you have bad policies, eventually people will move to a

place where the policies they think treat them better, right? And of course, the decisions we make,

the policies we create, those are all determined by our values, right? And what I find really

interesting about what's going on right now between those states and America is, I mean, you can

look at it and say it's sort of a battle of the ideas between more free market capitalism versus

more socialism in generous social programs, which New York is pushing more for. But you can

also look at it as a really good current manifestation of federalism, which as the founding fathers

intended here in America where they said, look, you know, we're going to try to have a

federal government that does the least. Now, of course, that has changed over time, but their

vision was a federal government that kind of only did a few things. And then we'll let the states

figure out really how to had a self-govern as much as possible. And we'll just have a whole bunch

of running experiments. And, you know, at any given time, people can uproot themselves and go

to a different state. If that state they feel is treating them better. So again, I look at all this

and just think it is the direct outcome of what you're talking about, right? If you have a set of

values, one set of values, it's going to lead to make a certain set of decisions. And, you know,

over time, if somebody else has a different set of values that are leading to different decisions

that the general populist says, I think that serves me better. You know, we're seeing that it works.

We're like literally seeing right now, you know, pretty persistent outflows from one area and

inflows into others for this reason of differences of values and differences of belief. So,

of course, the other reason why I really like how you brought this up was I've talked about the

importance of like knowing your why. Like at the end of the day, why are you doing all this,

right? Why are you pursuing wealth? And why so many of the folks who watch this channel,

you spend a lot of your time either creating the wealth, right? You know,

slaving away your job or, you know, working to grow it through investing or things like that.

It's something you think a lot about. You probably, you know, spend it in an order in the amount of

your your brain power thinking about, how do I grow it or how do I not lose it? Why is it worth

all that trouble, right? And it's not worth all that trouble just to have a whole bunch of dollars

at the end of the day, right? It's because you want to be leaving a legacy of some sort in this

world, right? You want to be providing for your immediate family. You want to be enriching the

life and the way that matters to you, spending time the way you want with the people that you want

to spend it with, right? Those are all the things that are really important about, you know,

to really keep in the forefront of your mind, especially when the world gets kind of walk wonky

like this, because there is no guarantee that you're going to come out through it. Okay. Now,

this whole program is for us to talk about insights and strategies that will hopefully improve your

odds of making it through it, you know, as best you can financially. But as I like to remind people,

look, there's no guarantees. The money can come, the money can go in life. You want to make sure

that no matter what it does, you are still as rich as possible so that you've got this, you know,

the richest relationships in your life. You've got the most meaning in your life when you wake up in

the morning. You've got good health no matter what the S&P does tomorrow, right? So it's keeping that

why like really firmly in your crosshairs. You're nodding a lot as I'm saying this, so I'll hand

a torch back to you, but that's a big thing when you were sort of talking about sort of the

the morality and the values that was coming to the forefront of my mind. Yeah, I mean,

what I would point out that you do want to make sure that you're rooting yourself and what is true.

And of course, the big question is what is truth and that's we have a big argument or big

discussion in terms of that. It's that vertical relationship that I think is important to have

clear. And then once you have that vertical relationship, right, then you can really have much

healthier, stronger, horizontal relationships. That then you know why you're here,

what your purpose is. You've rooted yourself ultimately in the eternity. And that's critical.

Then it gives you a basis to interact on this world with each other and how we are to go about that.

And so I think that, you know, the founders of the United States, they knew that. They actually

made it very clear that unless you had a virtuous and values oriented people, they wouldn't be

worthy of the Republic over time, right? You cannot run maximum freedom in a society without

virtues and values and moral absolutes. And so these are things that I think are really important

that freedom is freedom is not absolute. Freedom has to ultimately have a form. The issue is what

form does it take? And so if you get into like you think of Florida and California and New York,

I would argue that the economic policies being pursued by New York are a rejection of the

created order. They stop on the individuality of the importance of people, the value of people,

and they take away initiative and creativity versus the policies of Florida are trying to reward

people with maximum freedom to be able to operate as human beings. And then you'll see that one

doesn't work and one does work. And that's the beauty of the system. I think it does correct

itself. And so that's where if you spend money and you print money and you think that's going to

produce wealth, it doesn't work. Why doesn't it work? Because you have to work and you have to produce

things if you're going to have any money to be able to transact and things. So that's what I like

about ultimately the world of economics is you can only try to get around reality for so long

and then it catches up with you. Because ultimately there are real real real values and there are

moral absolutes that you have to abide by. And if you don't, pay day will come. And I think that's

what we're seeing a lot in the Western world where we sort of jettison long-term discipline,

frugality, investing for the long-haul family formation, children and other generation investing,

kids grandkids and so forth. But that comes at a massive cost to our society and to our culture.

I think that's what we're facing now. And we're seeing that now embedded in our politics and in our

economics. And so we need to, again, think about these things as you say, think about why we're here,

what the purpose is and make sure you've got a good reason. Otherwise, when things get tough,

you can't take it. Otherwise, you're going to be strong and robust. You have to have a strong

worldview that you can anchor yourself in. Yeah, very important. That word anchor I think is

really important. So great conversation here, Jonathan. My parting bits of advice to the audience here

is, you know, whatever your persuasion, whatever your particular, you know, faith,

lack of faith is, I hope there's something in this conversation that's resonating with you and

recommend that you maybe spend some time, you know, this weekend just reflecting on values.

You know, what are the values that you personally hold highest? And, you know, ask yourself,

okay, am I living in accordance with them? And if I'm not, and none of us is perfect, you know,

where or amount of alignment, what can I do to begin to bring my actions better into alignment

with those values? And then similarly ask yourself those of you with families, you know, what values

do I want my family to embrace as well? And my guess is there'd be your personal ones, but there

might be some additional ones given the family structure. And then make sure that everybody in your

family, you know, is on board with us. And a lot of times we just sort of assume and all the

stuff's unspoken, but sometimes it's actually good just to put on the table and say, hey, as a family,

I think this is what our key values are. Do we all agree if we differ while let's talk it through?

But hopefully, you know, try to get your family a little bit more mindful about following your

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They're calling this a battle for the fans. What do you say to that, Rumi?

It's not a battle. So glad the soldier boys could take breakfast and give our meal the rest of the day.

It is an honor to share. Now, it's our honor. It is our larger honor. No, really, stop.

You can really feel the respect in this battle. Pick a meal to pick a side.

Participate in the dollars while supplies last.

The most important unit in society, Adam, and you'll find that nations that have strong families

have small government. Nations with weak families have a large government.

The family unit is the strongest bulwark against totalitarianism.

And so it is a major investment and incredibly important to invest in our families or children

in the next generation. And there's nothing really more important in terms of driving an economy

as a society and a civil population that was had to get along with one another.

The families, the university of life, that's where you learn all of your basic principles,

morality, and ethics in the home. And so, yeah, your encouragement for people to invest in the

family and think about that is a hundred percent accurate. All right, thanks. And look,

if you're a younger person watching, obviously you're part of a family.

Have these conversations with your family. But I also would say, look the people around you

who are older, who you think are really doing it well, and ask them, what are your values?

And find out what they have in common, and that's something that wasn't already on your list,

you know, consider adding it there. All right, I didn't expect this to get so metaphysical,

but it was really fun to do that today. And I think it was very worthwhile, especially in such a

chaotic time. Thanks so much, Jonathan. So just for folks, first off, please thank Jonathan

for giving us such a great conversation today by hitting the like button, and clicking on the

subscribe button, as well as that little bell icon right next to it. As a reminder, Jonathan

is Thalphomani's, he's the head of Thalphomani's endorsed financial advisor up in Canada,

Rocklink Investment Partners. If you would like to schedule, if you're Canadian and would like

to schedule a consultation with them, you can do so, and I'll tell you in just a second. But also,

if you're in the U.S., and you'd like to talk to one of our U.S. advisors as well, this guidance

will apply to you as well. Just go fill out the very short form at Thalphomani.com. It'll only take

you a couple of seconds. And once you do the firm that you get matched with will reach out to you

right away, and you can have one of the free consultations that they offer as a reminder,

these consultations are totally free. There's no commitments involved. It's just to serve us,

these firms offered to be as helpful to as many people as possible. And if you are a Canadian,

don't forget when you're filling out the form where it says Country of Residence, click Canada.

And if you do, you'll be connected to Jonathan and his team there. Lastly, too, if you again,

if you missed the conference that we just had yesterday, but would like to watch the replay of it,

just go purchase the replay over at Thalphomani.com slash conference. Thanks so much, Jonathan.

Great to catch up with you. I'll let you have a last word here.

No, thank you very much Adam. It's always wonderful to speak with you. Thank you for the work

that you do and the wonderful speakers they have on us. As I told you before, I listened to

probably 60, 70% of the sessions and find them incredibly valuable and integrate many of the ideas

into our own business and practice. So keep it going. These the specialists they have are fantastic

and it really helps. All right. Thank you. And for the folks who are saying, you only

listens to 60 to 70%. It is an 11 hour event, folks. So that's six to seven hours. He's giving

up on his Saturday. So he's still making a big contribution there. All right. Jonathan, thanks so

much. Yeah, I'm talking about your ongoing programs all the time. I'm listening to your day after

day after day. Oh my goodness. And enjoy them. And you have tremendous speakers. And so I really

appreciate all this and all of the speakers eventually on the replays that you're going to have

on the conference. Well, well, thank you so much. And look, I know what a busy life you lead.

And the fact that you listen to that many on a regular ongoing basis is a huge honor. So

thanks so much, Jonathan. All right. Great conversation. And Jonathan, I'll see you again soon.

And everybody else. Thanks so much for watching.