Green Thumb Investing: A New Way to Grow Your Wealth with SAM

Hello and welcome. I'm Austin Root, Chief Investment Officer at Stansberry Asset Management. And on behalf of all of us at SAM, thanks for joining. With me today is Deputy Chief Investment Officer Mario Valente. Mario, thanks for joining as well. My pleasure. Thank you for inviting me. Now, of course, I'm excited about the topics that you and I are going to cover today. I think we are going to make great use of your time at home. You know, I think that the key here is trying to find or search, you know, I think that search for the Holy Grail, which is investing and growing your wealth, but doing it in a consistent, sturdy, safe way, no matter what the world throws at us, no matter the weather, whether it's a drought or if it's a flood. That's why we're kind of calling this Green Thumb Investing and that's our approach. And we hope to share that with you today, whether you're already a client and we thank the clients that are on today or whether you're considering being a client or frankly, if you just kind of want to learn about more about investing. So with that, what do you say we get going? Let's do it, Austin. All right. So let me first start by passing it over to Mario and you can talk a little bit about who we are for those on this webinar that maybe don't know as much about us. Perfect. Thank you. So I'll talk a little bit about our Genesis story here at SAM and kind of just provide a little bit of an overview of the last eight or nine years, as well as kind of our value propositions. So Stainsbury Asset Management was born in 2016. We have just over 1.1 billion of assets under management. We have 10 different investment strategies with varying degrees of risk and reward. We launched our first alternative investment vehicles. Actually, our first one was just over a year and a half ago. And we did a first close on our second vehicle earlier this year. We service families, individuals and institutions, both for profit and nonprofit. And we're really proud of the fact that we've garnered some pretty impressive accolades from Morningstar Research for a couple of our strategies. And then finally, we're headquartered in Dallas, Texas with offices in both New York and California as well. Great. Thanks, Mario. And we're going to be talking about one of those five-star strategies today a little bit more. Perfect. So there are a lot of slides that I love in the slide deck, Austin. This is one of them. This, you know, very, very easily just kind of talks about the AUM growth here at Stansbury. You can see we've had a pretty successful kegger over the last nine years. But the year I really want to highlight on the face doesn't look that impressive, right? 2022, there was barely a bump in assets under management. But I think it's important to provide some context in terms of what happened during that year. I'm sure most of you remember in 2022, most equity industries, were down anywhere from 20 to 30%, whether it was the S&P 500 or the NASDAQ. And on top of that, fixed income really fell out of bed too, because rates had nowhere to go but up. And as a result, bonds fell precipitously in price. And so in 2022, it was really a bloodbath across equities and credit, right? And I think there were a lot of stories about how the standard 60-40 index was down probably 16, 17, 18%. Depending on how you looked at it. But conversely, right? Here at Sam, we actually weathered the storm pretty well. I would argue extremely well. So much so, in fact, that we garnered a lot of goodwill with our clients, which led to a lot of significant referrals from their social circles. And so I would count 2022 as really the fulcrum point of our firm, because not only were the markets down precipitously that year, but we actually managed to grow assets in that year, which I would argue is a pretty Herculean effort across the wealth management industry. Thank you. Perfect. So this quite simply shows the different strategy offerings that we have here at Stansbury Asset Management. And they kind of fall under four buckets, right? Four different goals, four different primary goals that investors have that we have here at Sam. Number one, there are some folks who just simply want to preserve capital to maintain wealth. And so we have a few strategies, some low volatility strategies to address that goal. We have some folks who really want to generate income, right? Top of mind for them is to generate income flows to kind of satisfy their monthly or quarterly expense base. So we have strategies to satisfy that. We have strategies for folks who have the flexibility to be a little bit more aggressive with their posture. So we have some more moderately aggressive strategies that we offer here at Sam. And then finally, we have some strategies that really offer the best of both worlds, right? Strategies that can participate meaningfully in a bull market, but also offers pretty good downside protection on the way down as well. And then that graphic on the bottom kind of shows you how each of the strategies reside on the risk spectrum, right? With kind of the most aggressive being our venture growth strategy, which we launched about three and a half, three and a half, three and a half, four years ago, all the way down to our strategy, our treasury strategy, which is the most conservative of our 10 different strategies here at Sam. Here's our investment team, the leadership on the investment team. As I'm sure you probably guessed, I'm the smiling guy in the middle. Austin's the guy on the left. And we're also, we also have our code, a deputy CIO, Michael Joseph. And the three of us, I would argue, has, we have a very impressive background in terms of background in terms of where we've worked over the last 20 years, not only managing assets for institutional clients, but retail clients as well. And on top of the leadership team here, and the investment team, we also have a wide array of investment professionals that reside in operations, wealth management, our trading team, etc. Such that I would argue, you know, the employee base here at Stansbury is really second to none. with the professionals that we have with the professionals that we have on board. I agree with that. Yeah, it's a fantastic team. And I feel honored and privileged to be a part of it. Well, thanks, Mario. Why don't we get started on kind of, you know, what we're here for? And that is that investor holy grail, trying to find consistent, safe, sturdy returns. This has been something that investors have been searching for, for frankly, centuries. I mean, it is, you know, to talk about best of both worlds or have your cake and eat it too. If you can generate sturdy, solidly positive returns and do it consistently with low risk, that's what everyone's looking for. The concept of a balanced portfolio or one that has stocks and bonds started to emerge more in the early 1900s around the world and was really advanced and popularized by Harry Markowitz in the 1950s. When he talked about this concept of modern portfolio theory. And, you know, Mario and I know about this, but to give you just the real bare bones on that, it was this idea that if you plot all kinds of investments on a chart, and one axis is the volatility of annual returns from that investment. And then the other axis is the total return that you can get from that. Generally speaking, most assets, the riskier they were, the further they are out on this, the higher they were on returns, or said differently, in order to generate higher returns, you had to take a little more risk. Modern portfolio theory showed that some combinations over time actually did this little bit of this holy grail work where over many years, if you combine some assets together, you could lower your volatility without sacrificing returns. And so the most popular and widely used version of this is the 60-40 portfolio that I'm sure you've heard of. And really what that is, is it's a portfolio that comprises roughly of 60% stocks, and those stocks will generate higher returns for your portfolio. And then 40% in bonds. And those bonds provide ballast or stability for your portfolio because they tend not to drop as much as stocks will in a downturn. But they also generate income along the way. And so as people worked from modern portfolio theory into this 60-40, it started to become widely used and really enjoyed a fantastic 30-year run from, you know, late 1970s or 1980s or 1980 up through 2010. Well, you know, since 2010, the 60-40 portfolio has not fared nearly as well. And as you mentioned before, it failed miserably in 2022, when it felt like seemingly everything did not work. In fact, from the start of 2022 to the lows in the market in October, the 60-40 portfolio, which was supposed to protect you was down more than 20%. So your stocks in that portfolio lost about 25%. And your bonds, again, supposed to support you lost 15%. And so why is that? Well, three main reasons and the first two are related. But in 2022, so the value of bonds, and Mario is going to be a little bit more. So I'm going to go into this in more detail. He's going to go into this in more detail. He's our bond expert. But the value of bonds that you hold tends to, it will go down if, because you have a fixed coupon rate. Let's say you have a bond that pays you 1% interest rate. If the prevailing market interest rate goes from 1% to 5%, then your 1% bond is not nearly as valuable as someone, the market's commanding 5%. So we had low bond yields, we had low bond yields, they were not providing much value. And they're not providing much income. And then as stocks sold off, and as interest rates rose, that point two is very important. The correlation between these two asset classes was very high. In fact, they were both going down together. And I think this is probably an important point to point out that the great returns from the 60-40 from 1980 to 2010 was a little artificial because over that period of time, prevailing interest rates went down. Went down from very high interest rate levels to very low interest rate levels. So you were getting a benefit that was artificial. And so, you know, look, those two combinations were very, very bad. The final piece was, listen, the 60-40 is a static fixed allocation. And, you know, as we'll talk about a little later, if you're in an environment where bonds are providing no yield, you know, interest rates are going up, and you're a little bit worried that default rates might go up, and the spread from safe assets to risky assets is very tight. That's not a period to be owning 40% bonds. And so we'll talk a little bit about how we decided to play in 2022. But it's important to sort of codify kind of why the 60-40 portfolio didn't work. Now, is it dead? You know, I don't think so, but it needs improvement, right, Mario? And so that's what really what we're here to do is to introduce green thumb investing, which in our mind is the balanced portfolio reimagined. It's a way to upgrade that 60-40 approach. That balanced portfolio approach, but ideally with the goal of improving better and having higher long-term total returns, increasing your consistency each year, lowering the volatility and the drawdowns, and then importantly, tailoring that approach to your financial goals and your needs and objectives. Not everyone should be in a 60-40. If Mario, you have, to your point on the previous slide, have different goals and time horizons than I do. So that's our approach. We're going to do that. We're going to make sure our investing thumbs are green, whether we're in a drought or a flood. Now, how do we do that? We have four key points to remember on this. The first is to listen to Jack Dempsey, and that is, even if you're worried about the world, even if you feel like you should be playing defense. And in fact, especially if you're worried about the world, the best defense is a good offense. In other words, the best way to protect and defend your purchasing power is for a portion of your portfolio, own productive assets. Go on the offensive, and rather than sticking money under your mattress, own those assets that are capable of compounding growth, over very long periods of time. And our way of defending and growing your capital that's available to all investors, and we believe should be at the core of every investor's portfolio, is owning world-class businesses. Those ones that can compound their earnings power, very high rates of return over very long periods of time. And in so doing, as owners of those businesses, our capital should also compound it. We're looking for those types of growth for very long periods of time. What kinds of businesses are we looking for? Well, here are some of the attributes below of those types of business we're looking for. We're looking for those capital-efficient businesses. It doesn't have to be asset-light, but it has to generate great returns on the capital that it employs to grow its business. We're looking for durable, growing franchises. You know, I believe that our kids and our kids' grandkids will, even if it's not Coca-Cola itself, will be drinking one of Coca-Cola's brands. That's an enduring, growing business with durable characteristics given their distribution network. We want attractive profit margins. We want to generate strong margins and profits on every incremental investment we make. We want to have talented leaders. We want them to have talented leaders. That's important. We want them to have skin in the game, aligned interest, be good capital allocators. We want to buy these things at reasonable valuations. You know, so the way we want to do that within green thumb investing is allocate to a forever strategy. And to give you a little bit of history on this, you know, back in 2020, I was director of research at Stansberry Research. And running the portfolio solutions products. And Porter Stansberry was quasi-retired. But at that point in time, we talked about, gosh, there are some world-class businesses that people are panic selling. They're selling at fire sale prices. Assuming that the world, short of the world coming to an end, these are going to be some once-in -a-generation type of opportunities. to buy these assets. So we created the forever strategy, the forever portfolio. The Sam forever strategy takes that ethos and puts it into work in real world, in the real world terms. And transition to kind of how we're thinking about this portfolio today. So we still want to fill it up with world-class businesses. There are not that many spots to find those fire sale prices, although some of those occurred in, in, in, in in April or just recently and we picked our spots, but really we're just focusing on the ones that trade at good valuations, fair valuations, and importantly are forward-looking. They're not just today's best businesses, but they're tomorrow's best businesses. They're embracing secular trends like in technology and innovation and consumer demand, like AI, for example. So that's what we're filling in. And so point number one should be own those productive assets. And we think a fantastic way to do that is to own the world's best businesses at the core of your portfolio. How is that strategy done? Well, it's done quite well. So these numbers are through the end of April. So when the market, the S&P 500 at the end of April was down 5%, the forever strategy was outperforming by 700 basis points or 7%. Over a three-year trailing period, also outperforming both on a total return and also on an annualized basis. I think there's two important things to point out. One, obviously the market has come back here in May and so too has the forever strategy and so too is it outperforming the S&P 500. That's point one. Point two is that last column. Again, you want to be able to generate great returns with less volatility. So a beta of one would mean that this strategy was as volatile as the overall market and higher than one would be that it was more volatile. The beta of less than one or covariance with the market of less than one means that it's actually less volatile. So this is a really nice combination of stats in terms of risk-adjusted performance. We're very pleased with this. You're generating more than a market return with less than the market risk. So I'll just share one more thing before sort of handing this over to Mario to talk about point two. And that's to give an example of the type of forever business that we really like. This is a business that folks may not have heard of, heard about, although CRH has built itself into the largest building materials company in the world. They makes and sell aggregates that go into asphalt, cement, concrete. They make branded construction materials to the extent that that matters in some markets. They also are important in building roads and byways. They've done that. They've done that. They've done that. They've done that. Well, they were trading at a material discount to other folks, to other companies, but really they've been able to grow their assets, their profits along with their revenues. Now, why do we like it even with the return that we've seen? Well, gosh, it still trades at a material discount to some of its peers like Martin Marietta, despite what we view is actually a better business. This business is a local business. The value to weight ratio is actually quite low in a lot of the things that they do. So you want to sell, you want to use your aggregates pretty close to where you, you can see it. You want to construct them. They have a global footprint. They have a global footprint. They do this better than anything. But importantly, as we look forward, I'll give you three things. One, CRH was recently listed on the New York Stock Exchange. It is not a part of indexes like the S&P 500, even though it is a large company. There is so much passive investment money out there that we would expect with no guarantees, but it's highly likely likely if history is any guide that CRH would become part of the S&P 500 index and other large indices and then get people to buy the company as a result of that. Secondly, this is infrastructure growth needed to support our country and build back America and large demand for data centers are both secular big drivers for this. business. That last piece is capital allocation. CRH only has a 2% dividend yield. But if you look here, we say 9% shareholder yield. That is because they're retiring 7% of their shares, or at least they did last year. So as a shareholder, not only do I own 7% more of this business, do we own 7% more of this business after the year, but we've also been paid back a 2% dividend. That's the kind of one world-class forever stock that we're looking for. All right. Hand it over to you. Perfect. Thanks, Austin. So, so this second point, optimizing allocation of fixed income, we think it's a core principle for our clients' portfolios and, and for a couple of different reasons. One, right, the ability to generate steady income on a frequent and reliable basis for those, for those who need it. But also to, to own a security, to own something that is simply a lot less volatile than the equity markets, right? That provides that type of ballast in your portfolio where you don't need to worry about increasing volatility due to geopolitical or monetary or fiscal policy that may be hard to see around the corner. But, but, but the hard thing, the difficult thing about investing in fixed income is one, right? It's, it's not always a good time to do it, right? As Austin kind of referenced in 2022, rates were so low that, that bonds had nowhere to go but down because rates went up, right? So that was very much an inopportune time to allocate to fixed income versus today where we think, you know, today is a very fertile environment to be investing in fixed income. But, but, but as long as you do it in the, in the correct way, right? I think for most folks, right, most folks kind of invest through passively, either through a passive vehicle or through a passive manager, but, but there's a lot of difficulty and problems that arise when you invest passively in fixed income. Okay. Go to next, next page, right? So this, this page, kind of talks about the, the, the, the, the, the many different negative dynamics that surround this idea of investing in fixed income when you do it passively, right? What one big negative characteristic is that the bond universe is a very large and complex universe, right? Unlike stocks, which each of them have a, have a single ticker symbol, right? Bond issuers typically have, have multiple issuer issues in the market. And so, so, so what that means is if you have, you have an equity index, like the S&P 500, which has roughly 500 constituents, the B of A high yield index, for example, has about 2000 different bond issuers or bond issues from a thousand different issuers, right? So as, so as a result, investment decisions kind of not only boil down to which companies to own, but which specific issues of the issuer to own. You also have higher trading costs and complexities, right? So, so within fixed income, a lot of those bonds still trade over the counter rather than an exchange. And so as a result, you have a wider, a wider bid ask spread. And with a wider bid ask spread, you have, you have a lot greater trading costs. And also with, with, within passive vehicles, you know, a lot of them involve a lot of short-term positioning that happens as a result of, of bonds, maturing as a result of corporate actions like tender issues, et cetera. So there's also a lot of, a lot of turnover within passive, passive indices as well. And then finally, you know, there are a lot of, a lot of passive fixed income vehicles like ETFs, they impose minimum size requirements. Like for example, you know, the, the, there has to be a minimum of 1 billion outstanding face amount at the issuer level or, or a minimum of 5%. 500 million at the issue level. And so that really kind of, um, um, constrains the universe, uh, for the, for the passive index. And so as a result, as a result of all these negative dynamics, you have a tracking error, right? And passively managed credit strategies that tends to be pretty high relative to, relative to actively managed strategies. And as a result, what that means is it's very difficult for passive fixed income strategies to outperform. Over long periods of time, right? This, this next slide kind of talks about also, it kind of digs a little bit deeper, uh, in, in kind of the absence of fundamental research, right? So, so a lot of, a lot of index rules, what happens is when there's a credit downgrade for in a, for a particular issue, like for example, a standard and pores or Moody's or Fitch ratings, uh, downgrades a particular bond. Let's say from investment grade to high yield, um, the index or the passive manager will be forced to sell. Right. But oftentimes what happens is before that downgrade is that the market already anticipates, um, the credit deterioration. And so you, you see over time, the bond selling off in price. And then once the downgrade happens, the passive vehicle or the passive manager kind of sells after the fact, right? Conversely with an actively at it, with an active manager and fixed income who utilizes fundamental research, right? Those active managers predict or use their fundamental research to ascertain before the downgrade, right? If the credit is deteriorating. And so therefore those active managers are able to sell before the actual downgrade occurs. And then conversely, the opposite is true, right? So oftentimes when a credit is upgraded from, let's say high yield to investment grade, right? Uh, passive, passive vehicles or passive managers can therefore, uh, own the security, uh, own the security. But that's after her. That's after the bond is traded up in price, right? With, with an active manager and active manager can, with their fundamental research can predict quite pretty accurately, whether or not that, that credit is worthy of an upgrade. And so they'll buy those bonds before the actual upgrade happens as standard and pores and Moody's. And so they're, they're buying before the rise in price. So, so all of this kind of is a strong argument for, why passive, why passive, passive, passive vehicles or passive managers are oftentimes selling at the bottom or buying at the top, which is the exact opposite of what active managers are doing. Yeah. And, and this is such a great point, Mario. And I'll add another one, which is to say that, um, you know, when you're a, a bond index and you're, you're tracking the, the, the, the, the index, you tend to have more bonds from a, a company that's a larger issuer of bonds. Um, um, so I, I'm thinking back to the middle two, two thousands when a general motors was still an investment grade credit, but needed more money to, to fund its operations and was, was issuing more bonds into the market. Um, a passive index is going to soak up those, what ended up being pretty terrible bonds. Um, and in fact, uh, got very low recovery. In, in, in, in chapter 11, whereas active managers were like, wait a minute, why in the heck, um, if this is such a great business, do they need to, to be, uh, issuing more and more bonds? That's exactly correct, Austin. Although your reference of general motors during the financial crisis, you're, you're dating yourself a bit if you remember that, but, but I'm actually glad that you do. Yeah, right, right. Um, this, this next slide really talks very simply about, about the policy. That's the philosophy of Sam's active management and fixed income, right? So, so we, we believe that outperformance, uh, amongst investing in bonds can, can be consistently achieved through, through three separate dynamics, right? The first one is through security selection based on fundamental research, right? We, we believe inherently that the corporate credit market is inherently inefficient. And so we, we rely on our own internal analysis to really identify and take advantage of, of, of various, of various, of various, of numerous market inefficiencies, whether of a security is mispriced or misrated, right? Um, and then, and then also, right, the, the, the active dynamic positioning, right? We're, we're constantly evaluating whether or not we should be overweighting or underweighting, uh, specific credit ratings or categories or industries or sectors based on economic trends or relative value assessment. So we're constantly, um, evaluating in our minds, whether or not the bond portfolio has, whether or not the bond portfolio has, has adequate exposure to, to mispriced sectors or industries. Right. And then, and then finally there's, there's kind of the risk management dynamic, right? So, so passive strategies, like you mentioned, Austin, they, they kind of tend to hold, they kind of tend to hold, uh, greater weightings to the larger issuers, right? Like a general motors, which, which may or may not, and oftentimes may not, are not the, the strongest, um, credit issuers in the market, but through an active approach, right? Active managers, right? Active managers like ourselves, we're constantly assessing the, the balance sheet of the issuer or determining, um, the, the predict, we're predicting the likelihood of, of current and future cash flows to determine whether, what, what, what, what companies are best positioned to meet a potential downturn. And we're also, you know, identifying whether or not, um, issuers are doing, uh, bondholder friendly actions, like buying back their bonds in the marketplace, or perhaps eliminating stockholder dividend or, or, or being adverse to bondholders. In other words, issuing debt to buy back stock. These are all kind of this, this falls under the risk management dynamic, which just further kind of, um, strengthens our ability to invest successfully, uh, in, in the fixed income market with an active management philosophy. So with that, with that said, I, this is, uh, the slide where we're going to introduce our new strategy, uh, Stansbury asset management called bond plus bond plus bond plus will be focused primarily on fixed income producing securities, whether it's, uh, bonds across investment grade or high yield, uh, preferred securities or convertible bonds. And the, and the bond plus the bond plus strategy where it sits on the volatility risk risk spectrum. That we highlighted a few minutes ago is kind of just in, but just between treasury and all weather, right? So it's ideal for folks, number one, who are looking for income, steady income generation as a compliment to their portfolio or otherwise, right? And, or, right. And, or looking to, to kind of reduce their risk exposure to the equity markets, right? But at the same time, at the same time, not wanting to go to cash, right? They recognize that they're still a lot of value, uh, in the markets, you know, uh, in fixed income specifically. And so they utilize, they utilize bond plus as a compliment to their existing Sam strategies to, again, to either reduce equity risk, risk exposure and, or generate income to, to kind of, uh, fulfill their investment objectives. Okay. The bond, the plus, the plus component, right. Is kind of, is, is what we're really excited about. Because that's where we're going to highlight how Sam's active management is going to find mispricings within the fixed income universe, right? Whether through, uh, investment, you know, uh, investment, you know, uh, investment, investment grade rate of debt that may be trading cheaply, uh, high yield rate of debt that may be trading cheaply or other pockets of the fixed income universe, like convertible bonds that can add meaningfully to the total return profile of the portfolio strategy. So one of the key fee, kind of one of the key features of, of, um, bond plus is that, um, a chunk about 10 to probably 30 to 40% of the bond plus strategy will be, will be, um, contained with an unrated debt. Okay. So, so, and this is based on the premise, or I guess, I guess I should say the misguided notion that oftentimes, so there's a, there's a big chunk in the fixed income universe that is unrated. Okay. And the, and, um, a misguided assumption within the fixed income universe is that because a bond issue is unrated, therefore it must be riskier than an issue that is rated. Right. And that's, and that's, that's demonstrably false. There, there are many reasons why an issue, my art issuer chooses not to pay standard and pours or not to pay Moody's for rating for their issue. Right. It could be because standard, uh, it could be because the issuer recognizes that the market, um, already understands their business and there's no need to have a rating. Uh, it could be oftentimes, and this happens recently in the last five to six years is that issuers sometimes believe that the ratings agencies, uh, focus on dynamics that don't, um, accurately predict credit worthiness. Like for example, for example, for example, sustainability, sustainability or, or DEI impacts that the issue issue, the issuer might may or may not have. Um, and so as a result, um, you, you have, you have a large swath of the fixed income universe of unrated, unrated bonds that, um, have, um, that have very similar credit metrics to bonds that have, that are rated, but oftentimes trade 50, a hundred, a hundred basis points wider annually than their, than their rated credit brethren. And so as a result, right. But the only, the only way to ascertain that is to roll up your your sleeves as an active manager, look at the financial statements of, of that bond issue and determine really what is the credit worthiness of those issues. And that's what we do at Sam, right? We figure out, we look at that unrated universe where there's pockets of value and we pluck from that universe. Those bonds that we think, um, are probably are most likely investment grade in nature, but are really being neglected by the markets because they're not rated. Right. The, the, the next kind of dynamic that we like within, within bond plus is, is, is busted convertibles. So convertible bonds quite simply are securities that have both fixed income and equity like characteristics. Okay. And it's, it's, it's a probably, um, it's a smaller part of the larger fixed income universe, but in our minds, nonetheless have, have very compelling dynamics. Right. And these convertible bonds, what it, what for a holder, um, as, as the, as the issue of the, the issuer's equity rises, you're able to participate pretty meaningfully in your convertible bond as the equity goes up. Okay. And then if the, if the issuer's equity were to go down, your bond price would go down, but not as much. And so what happens is you own a security that demonstrates convexity, right? So you, you participate more on the way up than you do on the way down. Great security. Those are the kinds of securities we love. Busted convertibles, right? It's kind of a smaller pocket within convertibles, which is what happens when the issuer's equity, uh, declined so much. So in price that the convertible bond loses most of his equity sensitivity and really behaves more like a bond. Right. And now, and now what happens is that these bonds, these busted convertibles are really orphans in the marketplace because number one, most of them, if not all of them are unrated. Okay. So a lot of folks don't, don't tend to look at them. And, and number two, because, because they have little equity sensitivity, the hedge funds that were buying them, you know, six, 12, 18 months ago are no longer interested in owning security that has little equity sensitivity. And so as a result, a lot of these busted convertibles really trade very much cheaply to their, to their rated brethren or to other fixed income brethren in the, in the fixed income universe. And so as a result, those are the, these are the types of securities that we look for. Right. That have, that have, that trade a lot cheaply, right. That have, that trade a lot cheaply, right. Than theoretical value, but we think can add meaningful incremental returns to the overall strategy. Okay. So we started, we started purchasing busted convertibles and our flagship strategy, as well as a couple of other strategies at Sam about a year and a half ago, right? Cause we recognize this dynamic that busted convertibles were simply being mispriced in the market. And over the last year and a half. And over the last year and a half, we asked ourselves, okay, what, what has this sleeve? What is this busted convertible bond sleeve? How has it performed in the last year and a half since we bought them? Right. And the, and what we came up with was actually pretty compelling, right? We discovered that this, this bond sleeve, not equity sleeve, this bond sleeve has generated close to 15% annualized returns for our all weather strategy. Right. So let me, right. So let me, right. So let me, let me say that again. These are fixed income instruments, right? Not equity, fixed, fixed income instruments that have generated equity like returns for our clients over the last year and a half. So what this, what this looking at this really kind of gave us the confidence that, that this concept is, is validated. Right. So we decided, look, we, we have to build this out on a grander scale. We want to add this to our bond plus strategy going forward because we're confident in our, in our, in our, in our, in our skills and assessment that we can continue to find securities like this that can, that can generate and add meaningful total returns to the overall fixed income strategy bond plus. This, this slide, there's a lot going on here, but I'll, I'll break it down into a few main points. Number one, this is our, this is our portfolio as it stands today. Okay. There's a few things I want to highlight. Number one, it's weighted average credit. It's weighted average credit quality is investment grade. Okay. It's not, it's not high yield. Again, it's triple B plus presently, right? So we're not, we're not going out of our skis in terms of trying to, in trying to do something completely risky. We understand that the primary objective for bond plus is to generate steady income and to provide a ballast for our clients. And so therefore, ironclad credit quality for the portfolio across the board is, is, is a priority. Okay. Number two, the, the yields on the portfolio, the current yield right now on the portfolio is just over five and a half percent. The yield to worst is just over 6.1%. Okay. But also what I want to highlight is that the, the two rows in yellow kind of illustrate the two, the two issues right now that are held within bond plus, those are busted convertibles. And those are the types of securities, like I mentioned earlier, that we think can add meaningful incremental returns to the strategy such that on an annualized basis, right? We think the busted convertible sleeve can add anywhere from a hundred to 150 basis points of incremental return on an annual basis, give or take, right? And, and this is the kind of thing that we're excited about at bond plus on top of the fact that we're also buying unrated securities, like I mentioned earlier, that we think are mispriced in the market that can also add add meaningful incremental incremental incremental returns to bond plus. And then, and then finally, the last thing I'll say is you'll note that the, that the, the two largest positions in bond plus are mortgage backed securities and T bills, right? In other words, over, over about 40% is in material liquid instruments. So we're, we're not at all fully invested right now in the strategy. We're, we're kind of licking our chops and waiting for further turbulence in the markets where we can deploy this material liquidity in our strategy. So even though we have over 40% in material liquidity, we right now the current yield and yield to worse in the portfolio is still very much meaningful. Thank you, Mario. I think that's a great point. Yeah. So we have this opportunity to provide that ballast, to provide that sturdy income and still have dry powder. If there is a market dislocation, you know, you'll, you'll stretch in, and do some of those high yield situations when they're priced right, but not necessarily when the spreads are tight. Yeah. So I think, I think it's great. Thank you for that. So as we, as we sort of move forward here, then let's get sort of those first two pieces, which are, look, we need to stay strategically invested in productive assets at the core of our portfolio. We need to, you know, in those world-class forever stocks. We need to provide ballast and income through active allocations to fixed income. But we're not done there. By no means does it mean that we should set it and forget it like the traditional set it, a 60-40 portfolio. Both of those first two pieces are actively managed and can be changed. And on top of that, we want to stay nimble and we want to invest tactically along the perimeter. of our portfolio strategic at the core, tactical at the perimeter. What do I mean by that? Well, one example of that is we can go back to 2022, Mario, where, um, when we saw treasury yields, the interest rates at near all time lows, and we believed, and also credit spreads. So the spread of risky investments over those perceived to be safe investments, uh, was very narrow. Um, and, we felt like it was, we felt like it was, it was highly likely that interest rates were going up and, and there was a decent potential that default rates were going up. That is not a period that you want to be invested in fixed income. So we believe very deeply that investing is seasonal. Um, our allocation to bonds went to exactly zero across our main strategies. And that resulted in material relative outperformance. We had some questions from clients, Mario, about why we were sitting in cash. Um, but that proved to be the prudent thing. Um, but that proved to be the prudent thing. In fact, just thinking about a safe investment, a, if you were to buy a 30 year U S treasury back in that end of 2021 yielding 1.7%, you would have lost more than half your value of that perceived to be safe, uh, security as the 30 year went from 1.7% yields to 5% yields. So, avoiding those losses is key. So you need to be tactical and nimble, um, for part of your portfolio. How else are we tactical? Well, we have a strategy that is focused on being invested in the right securities at the right time. Uh, we call it tactical select. So Sam tactical select, we believe is the best of both worlds where we start with our favorite investment ideas. They're investments that we've done the due diligence. We like them so on. We like them so much that we own them in one of our other strategies. Um, we know this business and we've done the company analysis, uh, and the industry analysis to, to, um, to own it. Then on top of that, we overlay a quantitative risk measurement tool and what that does. And, and, and this is our own proprietary tool, but part of it does draw from some of the great tools, um, from, uh, tradesmith. Um, among others, um, check in analytics is another tool that we look very deeply in. Um, what that does is it allows us to identify the right time to be in the right, uh, uh, investments. It also provides a governor for when markets lose momentum, uh, and when there are times that we should be, we should be pulling out of the market. So this is a way to reduce exposures at the right time. Um, and, you know, as we, Mario, as you and I and Michael worked on the back test of this, it was really demonstrating fantastic results. Um, so we, we launched this in earnest in February of 2023, very hopeful that we were to generate real results that were in line with the very favorable risk adjusted results that we were seeing in our back test that went back over many years in both good markets and bad. Um, fast forward to today where we we've seen both good markets and bad and the returns have been frankly, fantastic. So, um, since that February 1st start date, um, the tactical select has more than doubled, um, the market return, uh, it's, it's benchmark is S and P 500 equal weight. Um, in particular, if you think, if you look at that annualized, um, return of 14% versus short of 7%, that is a huge huge Delta. And again, as I pointed out when we were looking at the forever data as the market has gone up since, uh, this, this was, uh, through April 30th. So too, has tactical select gone up. So it continues to outperform materially and doing it importantly with lower volatility. So three fourths of the volatility of the market, but double the S and P 500 equal weights market return. Um, we're very pleased with that. And, you know, that's just an important thing. So when you, when you put it together, we're going to have, uh, part of your portfolio in the forever strategy, the world's best businesses, part of it to ballast and bond plus where you can generate sturdy income and in certain markets generate equity like returns, um, at much lower risk. Um, and then finally we want to have a tactical select piece. That, um, that will be, that will be allow us to be more nimble and more tactical and be more fully invested when the timing is right. Um, there's one final piece to that. And that is that the strategy should not be just for every person the same. It should be optimized and tailored for your goals and your specific financial situation. So, um, again, Mario pointed out and showed the chart that if, if you're focused on capitalization, capital appreciation and someone else is focused on capital preservation, um, you should have very different investment strategies and, and, um, tailored, uh, mix of investments, but that also goes for your risk tolerance. And it also goes for your time horizon. The longer your time horizon, the more willing you are to handle and be tolerant of risk. Um, then we can, we can invest a little bit more, um, forward looking for you and a little more aggressively. Um, So why do I say that? Well, I say that because this is an important piece that, um, I learned and why I left Stansberry research and joined Stansberry asset management. It's to provide this individual tailored approach and really help folks get to where they want to go. How do you do that? Well, you work with someone to put together a full financial plan and kind of understand where you are. And then by understanding where you are, and we can, we can get you to where you want to go. So what I'd like to do here is we want to offer, um, for, for those folks that are watching that are not yet clients, uh, a complimentary review from a Sam investment professional. So if that is something that you'd be interested in, in the Q and a, um, box, just, just, uh, type in a review and, and we'll come back to you on that. What I would say before we sort of close and move to Q and a is our baseline. So sort of, if I'm looking at the, the, the, the average, um, person that's looking to, to build wealth, um, in a, in a green thumb, very solid, um, sort of middle of the road way, we would suggest 40% of your portfolio in the forever strategy, 30% in bond plus. And 30% in tactical select. And if you backtest the returns and, and, and we, we apply an estimate, um, for what we think bond plus can do, that's going to provide some world-class returns for folks. But again, you may be someone that is more risk tolerant and more focused on growth. And so we would, we would ratchet up the, the equity portion of that, or you might be someone that has less risk tolerance and, and, uh, a shorter investment horizon. And then we're going to want to ratchet up, um, the fixed income. Um, with that, Mario, let's just wrap up and then move to questions. Um, uh, as green thumb investors, we want to make sure we're invested in productive assets. We own those world-class businesses. We optimize our allocations in bonds for ballast and income. We do that actively. Um, we stay nimble. We invest tactically around the perimeter of our portfolio. And then importantly, we tailor that mix of those three asset classes, um, based on what our goals are. Um, I think that's kind of what all I had to say. Did you have any, anything you wanted to add before we, we, um, move to questions, Mario? No, I've got nothing to add. I'm pretty excited to answer some of these questions in the Q and A. Great. So, so someone says, I believe you do your own, uh, research. Um, this is Thomas. I assume you do not trust, uh, Washington and the federal reserve. So there's two part question there. Um, the first is yes, we do do our own research. Our team, um, is not just the three of us. We have investment analysts, um, as well working for us. I will say, um, we, we very much value, uh, the independent research that's being done at places, um, like Stansbury research, um, like, Chaken analytics, like Altimetry, like Porter and company, like some other of their sister companies like Brownstone research. So, um, we feel like we can provide that, that team provides us leverage utilizing some of those independent research sources, but we are, we are conducting our own research. So that's that first piece. And that that's, that's mission critical. Um, do we not trust Washington and the federal reserve? I, so I would say, two parts to that, um, you know, Mario, you and I, and the most recent investment committee kind of talk through it's, um, you cannot take at face value what's being said, um, in this administration or in price prior administration, certainly not. Um, you know, we, we want to understand the goals and figure out how Washington is going to get there. But a huge challenge is the huge fiscal deficit that we're going to get there. We're all dealing with. Um, so the, the, um, government debts that we have built up, um, is making it, it more and more difficult for, um, investors because you, you need to own productive assets. We know the purchasing power of your dollar is going to be eroded by inflation, by the only way, if, if our, if our political system does not have the will, to reduce spending and reduce the deficits, then, then the debt will grow over time. And the only way to not suffocate from that is to have productivity growth and grow the economy. And for us as individual investors, we need to own productive assets that will grow their earnings power and their value at a faster rate than that inflation. So, um, I don't know what you would add to that. Um, the only thing I would probably add is, um, you know, even if we did believe, um, a hundred percent Washington, the federal reserve, we would still be doing our own due diligence and also, um, utilizing third party resources to aid us in decision-making with the portfolios. Uh, so, so our, our belief system in, in the government or whatever administration happens to be in the executive branch, uh, is doesn't, doesn't influence how we research our companies and our securities for our clients. Yeah, I think that's, and that's, that's well said. Um, I'm going to let you take the beat in the meat of this next one, but Donald asked, is bond plus similar to Stan Britt Sandsbury credit opportunities? I thought we might get this question because, um, I, I love Mike DBS and I think they do a really nice job in Standsbury credit opportunities. I'm going to, I'm going to provide my answer, but you're, you're the expert. And so I want you to, to correct where I'm wrong. What I would say is that Standsbury credit opportunities, and frankly, Marty, Fridson at Porter and company provide some world-class research on bonds that we utilize. And in many cases, I'm guessing we will, um, potentially invest and we will invest in some of the recommendations. Um, one nuance is they focus solely, uh, or more, more specifically and mostly on high yield. Um, and there are some world-class high yield opportunities at times, but if we think that bonds in general, um, um, are seasonal high yield and more specifically is even more seasonal. And so right now we're in an environment where we think investment grade or near investment grade, where you can find these, um, these unrated bonds and, and, uh, are, are more attractive than some of the highly distressed high yield. Um, so I'll stop, stop there. And what do you think about that? That's exactly right. I think our goal, you know, while we have a lot of money, a lot of respect for, for credit ops, um, it's a different animal in the sense, in, in terms of where they invest, invest in the fixed income risk spectrum. Um, that's not to say we'll avoid that universe necessarily. Right. But I think there was a time and a place for everything. And we'll, we will be opportunistic when it comes to selectively adding, uh, those types of high yield, uh, opportunities to the portfolio. Furthermore, you know, I love Marty Fridson. I, I remember Austin, last year when you said, Hey, Marty says to look at these Peloton bonds and, uh, shame on me for kind of, you know, not taking it seriously. And now those bonds are at 40% over the year. Again, a fixed income instrument up over 40%, right? So, so Marty Fridson is the guy who, you know, I read voraciously. I think he has a lot of very interesting trade ideas. And frankly, I wouldn't be surprised, uh, if we start to implement more of his, uh, research, uh, research inside bond plus, but again, selectively and opportunistically. Great. Yeah, no, I, I, I totally agree with that. And again, we're, we're going to get into markets where we're going to be super excited to utilize a lot of the credit opportunities. By the way, they almost say that, um, Mike DBS is very bearish on the world right now. And he he's like, look, we're going to, there's going to be a period when I'm going to find a lot of things to buy, but right now I'm struggling. And, and, and our view is, let's just be a little bit safer and less fully invested so that when that, and we can, we can make hay right now, but we can do it safely. And then we'll, we'll ratchet up the, the, the risk profile when we see the opportunity. Um, so I'm going to do this again where, and I'm going to try not to talk as quite as much, but, uh, Peter asked a question. So if you're putting bonds, um, from smaller issues into separately managed accounts, how do you allocate and who gets, what issues? So let me just, there's a lot there. So I, I, I think for folks that, um, that don't know, um, when you invest with Stansberry asset management, you will have your own separately managed accounts, um, where we follow a strategy, but your blend of a particular set of strategies will be unique to you. You're not invested in a commingled fund or in a mutual fund, where, you know, it's, it's, it's, it's, you're part of something else. It's your own separately managed account that has a huge advantage, um, both for operationally, but also taxes. You don't have tax co-mingling or anything like that. Um, that's first and foremost. Secondly, it's a great question to sort of try to understand. Um, but you, you mentioned this off the rip, Mari, that buying bonds can be difficult. We have at Stansberry asset management relationships with bond houses across the street that gives us access, um, um, to some inventory of bonds that may not be available to you, uh, individually as you, at your broker or set of brokers. We also utilize, um, a service called trade web. And this is similar to market access. Market access has been talked about in Stansberry publications before, um, where, whereby we can trade one to one with a bond holder and use trade web as the intermediary. Um, that enables our volume to be much greater. Um, and it enables us to be able to buy smaller issues in for individual investors. I did, I failed to be short on that answer, but anything you'd add to that, Mario? Um, the only thing I guess the only like logistical procedure I would highlight is, you know, let's say for example, you know, we purchase, uh, Microsoft bonds and the bond plus strategy at a 5% allocation. And, um, so when we get filled, if, if, and when we get filled on the Microsoft, Microsoft 5% bond allocation, we would allocate 5% of bonds to the bond plus accounts, whether it's a hundred thousand dollar account, you'll get $5,000 of Microsoft bonds or a million dollar bond plus account. You'll get $50,000 of Microsoft bonds. So it ensures, right. That everyone is allocated equally, right. On an equitable basis at the same price. Perfect. Yep. That's exactly right. Um, we have some questions on gold. Um, what, what is, uh, Tom asks, what are your thoughts on gold? And Scott asks, uh, is the gold portfolio or gold strategy act would be managed? So I think it's a great point. So, um, we are, we are positive on gold. Um, and, and, and Bitcoin too, for that matter, um, as better stores of value than the U S dollar, or frankly, any fiat currency for that matter. We see the U S dollar as the best neighborhood, best house on a bad neighborhood. All of the fiat currencies are going to be debased, um, over time. And so gold should, um, could be a better store of value, uh, over time as it has been in the past, uh, than fiat currencies. We, we, we, we, we're, we're, we're Boo. And so. believe that going forward. Now, how does that manifest itself in our investing? Well, we do have some strategies that own physical gold through GLD or more specifically GLDM, which has a lower fee. But we also do like, and as it relates to the gold strategy itself, gold, physical gold, there are three other allocations for us. One is to the senior miners that generate a solid return on investment. There are plenty of mining operations that do not generate a productive, a solid return on investment. Second are junior miners that have great pounds in the ground, if you will, great resources and great opportunity if prices go higher. I think the largest allocation for us are those great businesses, the royalty and streaming companies that really provide an asset-like, capital-efficient way to own a gold miner or a gold operation to own gold that can generate better returns than the physical gold in a strong gold environment. And so if, and these are rough numbers, if gold is up 20 or 25% this year, our gold strategy and gold miners in general are up much, much more than that this year. As it relates to the green thumb strategy, we do have a fantastic gold royalty company in the Forever portfolio, and we have many gold investments in our tactical select strategy. Both of those are, are, are, are, are, that we're excited about. I see a few, uh, administrative questions, Austin, that we could probably bang out pretty quickly. I'll just rattle them out of here. Three, for example, that I see is number one, what's your fee structure? Uh, number two, what's your minimum investment? And number three, what kind of funds do you accept? Go for it. So, so fee structure, let's start with fee structure number one. Uh, it ranges from one and a half percent to 0.75, uh, as a percentage of AUM based on, um, based on assets that you decide to bring over to Sam. And so, um, be more than happy to have a more specific conversation with you about specific pricing based on assets that you opt to bring over to Stansberry. Uh, minimum investment, minimum investment for a household is 500,000. Um, but that can be divvied up into several accounts, whether it could be, uh, one taxable account at 250 or one IRA account at 250. So as long as the, the separate, as long as the separate accounts for a household add up to a minimum of 500,000, uh, that's the minimum investment. Okay. Um, and then I guess I just answered my last question, which is we accept both taxable funds and qualified assets in the form of an IRA, traditional IRA. or, or, or, or Roth IRA. Fantastic. Um, yeah. And I guess the only thing I would add to that is, um, many investment fires advisors have, um, sometimes they take transaction fees. So if they're a broker and if, and they, they do transactions, they, they take fees for that. We don't have any fees like that. And then oftentimes you have a second layer of fees where you have their advisory fee. And then you're also paying the fund fee. And then you're also paying the fund fee, the mutual fund or the ETF fee. You're not paying that here. So, um, we're, our man, we're actively managing these portfolios. And so the one fee, it's the one fee you're talking about, not multiple ones. And we are a, we are, um, an RIA, a registered investment advisor. And as, as such, we're a fiduciary and we're, um, focused on what's best for you as the client. Um, and some broker dealers, you know, uh, therefore we don't charge, uh, any transaction fees as an RIA. So, um, one is our mix between U S and foreign stocks. Um, so our strategies have done better than the market, broadly speaking, um, this year for a couple of reasons. One, um, we do own gold more than, and go some gold related companies more than, um, the market. We own certain types of stocks and businesses that we really like that are more durable, um, above the market averages. I'll give you two examples. One, we really like property and casualty insurance companies. They generate really great outsized returns and they're less correlated to the market. When the world goes haywire, they can raise their prices because it shakes out some of the other property and casualty insurers. Um, so oddly enough, that actually, sometimes their business gets better after, a hurricane or, or a national disaster. And then another one was, um, our financial exchange businesses. When, when the market gets volatile, those businesses actually do better. So we like those types of businesses that have done better for us. But one area of outperformance for us is international stocks. So we do own more than, than the average, than the S P 500 average or the U S market average in international stocks. We don't own a huge percentage. We don't own a huge percentage because we also own businesses that are based in the U S that have very large international, um, businesses and exposure. So I, I think of something, um, like a CRH that I brought up that is actually was a domiciled on the Irish company, but they felt like it made sense to be, um, focused in, uh, to be listed in the U S or Coca-Cola that has 62% of the U S market. And it's revenues internationally, even though it's a U S listed business. So we, we trust U S, uh, uh, accounting, um, U S rule law far more than we do internationally. So we will always sort of tend to have, uh, more U S businesses. Um, you know, I think that the last question here that we can get to, and I'll, I'll hand it to you is, you know, what, what are next steps if you want to get started? So I, I think, um, great first step is to simply go to our website, uh, www.stansburyam.com. There's a, there's a get started link there. And, and, uh, it's very easy to schedule a conversation, uh, with one of our wealth managers or business development representatives. Um, and then lastly, I probably shouldn't be doing this Austin. I'm probably going to regret it, but I'm going to give out my email address. And for those of you that have questions, feel free to contact me directly. I'm Mario.Valente. That's V A L E N T E at Stansbury, A M S T A N S B E R R Y A M.com. More than happy to address any questions you might have if we didn't get a chance to get to them today. And hopefully, uh, we, we can, we can pursue the dialogue further. All right. That's fantastic. I appreciate you doing that. And, and, um, you know, if he can't answer those questions for you, then maybe next time I'll give you my, my information, but I'm sure, I'm sure that he will. Um, thank you all for joining us. Uh, we hope this has been a, of, of, of real value to you. And again, reach out with any questions that you have. Um, we really encourage you to be a green thumb investor. Um, it's going to work and help you, uh, through the good times. And the bad. Thanks very much. Thank you. Have a good night.