Commodities of the Future - Crunch the Numbers with Rick Rule

[Music] when natural resource companies big ones are selling at very low price earnings multiples and they seem cheap it's because commodity prices are unusually high so when the companies seem their cheapest they're their most expensive when commodity prices have fallen apart uh and companies free cash flows are constrained by low commodity prices and their earnings their price earnings ratios are negative or very high assuming that they're relatively low cost producers of the commodity in question which is itself underpriced when these companies seem very expensive they're often very cheap so it's important to look behind the numbers and see how the numbers are constructed if you're going to be in the in the natural resources business hello everyone welcome to the crunch the numbers podcast my name is glier i'm currently the president of lisbon investment society which is a finance club run by university students here in portugal well this is a special one with a very special guest that doesn't need any introductions for sure but well for the nose that for the ones that don't know him it's one of the greatest natural resources investor of all time it's a reference in the commodity sector it's a speaker in several conferences and it's also the former ceo and president of sprott us holdings recruit ladies and gentlemen welcome to our podcast guillermo thank you so much for having me on i appreciate it no the pleasure it's all on our side valerie first of all at a personal side i would like to to thank you in the name of all the members of our association for accepting our invitation and sharing your vast knowledge with us well starting with the first question and assuming that our viewers are not like experts in the commodity sector um i would make a more broader question so can you identify which are the main commodities and natural resources they're going to be an essential part of this green future green economy the well apparently it's what actually is going to be the future uh i'll back off any editorial comments about the efficacy of green uh green is very much in the eyes of the beholder um and i think i'll segregate between the commodities which will be essential for our future and the politically correct commodities uh that the big thinkers in the world the world economic forum as an example would prefer to have if you look at the uh electric economy which i very much believe in by the way not as a consequence of electric vehicles but more as a consequence of economic growth population growth and the urbanization of the world you start with copper uh it's an enormously important commodity one where demand will grow but supply will fall as a consequence of society's underinvestment in copper for a very long time you move from there pretty easily to nickel a very essential commodity the glamour commodity among all of them is probably lithium and i would begin by telling my young student friends that contrary to popular belief lithium isn't scarce i grew up in the geothermal oil and gas business thinking that lithium was a waste product the truth is that the world has an awful lot of lithium what happened is that demand for it increased so fast that we don't have sufficient processing capacity we don't need to find it we just need to bottle the bottleneck pardon me the means of production cobalt is interesting too uh cobalt is the odd commodity where the price could go up if the supply increased because fabricators are holding back on the utilization of cobalt because they're unsure of being able to obtain supplies that unsure nature goes mainly to the fact that cobalt is produced in fairly unstable countries congo uh quite unstable and russia less unstable but still a a country that makes the mainstream investors nervous uh although this is very very unpopular i think that you need to consider uranium in an odd way as a green metal too simply because if we're concerned about carbon the most efficient way to generate base load electricity without flooding vast riparian terrains with hydroelectric is nuclear uh people are terrified of nuclear that not withstanding uh it is a very important part of the existing energy mix in the world and it's a fuel whose utilization is growing in societies that don't have a second choice it's interesting too that when we talk about the earth's future the green narrative ignores oil and gas if you visit with people who talk about what they want as opposed to what they can have what they seem to want is a world without oil people need to be very careful with what they ask for my suspicion is that oil utilization in 2040 will be effectively on par with oil utilization now its market share among energy materials will be lower but the aggregate demand for energy in 2040 which is by the way not that far away 18 years away the aggregate energy demand worldwide will be up by 35 or 40 percent which is to say well we need more solar yes more wind yes more electricity yes and more oil and gas yes too so the question that you ask really goes to all the stuff of mankind the narrative that is to say the green narrative is different but i think what you'll learn in finance over time if you haven't learned it already is that the narrative and the reality are often very different the narrative is a trading vehicle and the reality is an investment vehicle awesome that's really interesting because i had like here three or four questions about some things that you've already responded but that's that's really awesome like my my first my sorry my second question like a follow-up question would be so you mentioned a lot of commodities um natural resources like what which are the ones that you consider that are still undervalued or that the market hasn't fully priced in like the importance that they will have in this transition and if you were in your 20s there which companies would you be looking at to gain exposure to well let's back let's back up a little bit uh and give your members a base thesis in resource investing first of all natural resource businesses are amazingly cyclical and capital intensive um what happens is that when a commodity runs up in price the industry can't increase supply very fast because it's capital intensive so prices always overshoot to the upside uh and then when supply does come onto the market and high prices constrain demand commodities overshoot to the downside the upshot of that is that and your members need to really get this in their brains in to be a successful investor in raw materials you either need to be a contrarian or you are going to be a victim that's the choice you can do what's comfortable and lose money or you can do what's uncomfortable and make money specifically what you look for is a commodity where its utilization is essential to the lifestyle that we live and poor emerging markets people aspire to where that commodity has been in oversupply and the global average industry selling price of the commodity is less than the glo than the global average cost of production which is to say an industry in liquidation in that circumstance either the price of the commodity goes up or it becomes unavailable and global living living standards fall so as an example guillermo were you and i talking uh in early summer when oil was in oversupply around the world and the price of oil fell to 20 us dollars a barrel i would have told you uh the case for oil goes like this the total cost of production fully loaded including prior year write-downs exploration cost of capital not the lifting cost but the total cost hovers between 55 and 60 us dollars per barrel so they make the stuff for 60 and they sell it for for 20. they lose 40 a barrel uh in demand constrained times 65 million times a day that gets rather boring the investment thesis then is very simple if your members believe that five or six years from now when they go to start their car assuming they have cars will the car start if the answer to that is yes if they believe that the car will start then they believe in u.s 60 oil what you're looking for is a circumstance just like that where the cost of production worldwide total cost of production worldwide exceeds the price that the industry is selling the product for do those products exist today uh not in oil anymore the market forces worked much more rapidly than i thought they would by the way but certainly uranium uh is a classic example of that the stuff sells for 30 bucks a pound to cost 55 bucks a pound fully loaded to make the industry loses 25 bucks a pound 80 million times a year that one's a no-brainer greta doesn't like it merkel doesn't like it biden is of mixed minds but it doesn't matter even in a country like the united states which believes erroneously by the way that it's rich enough to be stupid uh uranium produces about 15 percent of total energy demand and 20 percent of base load demand and in the united states the equation is simple the price of uranium goes up or the lights go off those are the two choices my suspicion is the price of uranium goes up uh another example uh might be phosphate fertilizer uh well pardon me not phosphate but potash in the case of potash what you have is a is a two-tier global production system the russians can make reasonable money at today's potash prices but nobody else in the world can do the russians continue with their advantage and drive the rest of the world out of business or do potash prices rise my belief is that potash prices will rise so in that circumstance assuming that we want to eat five years from now six years from now if your viewers will look at me they can tell i like to eat uh you believe in fact that potash prices will increase okay so those would be two easy examples but the thesis is really understood really easy to understand really hard to employ if you think about your financial analysis what you need to do in the resource business is adapt a new paradigm when natural resource companies big ones are selling at very low price earnings multiples and they seem cheap it's because commodity prices are unusually high so when the companies seem their cheapest they're their most expensive okay when commodity prices have fallen apart uh and companies free cash flows are constrained by low commodity prices and their earnings their price earnings ratios are negative or very high assuming that they're relatively low cost producers of the commodity in question which is itself underpriced when these companies seem very expensive they're often very cheap so it's important to look behind the numbers and see how the numbers are constructed if you're going to be in the in the natural resources business that's definitely insightful because yeah i think this is one of the questions i was going to make like for finance educated people but that are not experts in the commodities field for example uranium what would be like a simplified process to analyze these kind of companies but you've already explained it and it's really interesting because it's a little bit different so what we could expect right looking at those multiples but really insightful i don't know if to get exposure to those to those kind of commodities we have a couple of ways to to do it right uh would you prefer to like if you are entering the market like you you would recommend us to to go to through royalties companies or through actual mining and export exploration companies buying physical commodities like uranium it's impossible it's impossible but gold and silver we could also do it how would you get exposed exposed to this to these commodities there is no one-size-fits-all answer i'm afraid uh it depends first of all on the individual how much risk is he or she willing to run how much work is he or she willing to do what is the time frame involved and where are we in the market if you are prescient enough to be in natural resources early in a sector i would argue with you that the bull markets that you experience are profound enough that you don't need to outperform the market uh that you really just need to participate in the market and i would argue early in the cycle or before the cycle begins that the largest lowest cost producers with the best historic uh ratios of return capital employed that is the most boring companies are the right way to play it when the generalist money comes into a sector it looks for the biggest most liquid companies first so they move first the second thing is that these big companies often pay fairly handsome dividends which means that if you're early in a sector which i always am it's a flaw in my personality uh the time value of money argument uh is accounted for by the dividend you know if you are discounting uh the net present value uh of a cash flow stream at five percent and you're three years early uh one argues that you aren't early you're wrong but if you're offsetting that discount with a three and a half or four percent dividend uh then you can afford to be much more generous with yourself in terms of being early and deploying contrarian strategies amazing amazing that's really a great point um i would like to change a little bit the the topic and make like a question that might be a little bit less asked or or something like that or ask less frequently but do you think that water can become a focal point in the commodity business in the future that's a great question i've been a water investor for 40 years uh and i begin with equip that water as an investment asset is unfortunately illiquid uh water is believed to be a human right so rather than having the market dictate water that is rather than water flowing uphill to utility water flows downhill to votes it's allocated politically water is almost always subsidized which is why we almost always have shortages because you encourage waste and water i i don't know enough about portugal or spain to criticize their water law i'm sure if i did i could but i know a lot about investing in water in the united states and as an example in my home state california 85 of the water that's used by humankind is used in agriculture which generates 2.5 percent of gdp the highest and best use of water although it's inelegant is brushing teeth and flushing toilets instead we grow rice in the desert we grow massive crops of alfalfa involving 10 acre feet per acre and we ship the alfalfa in returning containers to china to subsidize their dairy industry what you say in terms of water as an investment theme is probably the most important investing theme of your lifetime but it will involve a political fight which will be extraordinarily nasty water should flow uphill to utility there should be a market in water but markets are messy uh politics are nests are messy in a different fashion there's a wonderful phrase describing politics admittedly in english language quote quip it says that you understand the process of politics by looking at the origin of the word poly from the latin for many tick from the english colloquial for small blood sucking insect if you think about the process of water law around the world as involving many small blood-sucking insects each trying to steal from the other while preventing the other from stealing from him or her you will understand how water law works around the world okay that's really good a really good thing a really interesting point of view um and yeah water i i usually don't listen to people talking about this because it's always about gold silver uranium of course but water right so thank you very much for your your answer um now also because we're talking about sustainability this thing of green future clearly institutionals are looking more and more for esg driven companies and and there is like a lot of green washing as we also know but people eat people usually are focused on renewables or on green friendly companies uh what about game changers in the oil and gas and mining sectors you've talked about oil and gas and night we have to get use that it will not finish tomorrow but and we we need the oil and gas right but in these sectors that might be less green friendly as i was calling them um but that are still like mitigating their impacts they this might also be potential candidates for impact funds or something do you think that there is any company that fits into this description from these sectors you know esg is rapidly uh evolving uh if you unpack the word e uh from a technical point of view probably means the elimination or the reduction of deleterious materials exiting the mine site but that isn't what it means uh mining turns out to be unsightly it's odd in my country and i suspect in yours that uh things like golf courses which people enjoy or soccer pitches get a pass a big monoculture like a golf course or a series of small monocultures like a soccer pitch or a very large vineyard or a very large almond grove or olive grove are very environmentally destructive uh the farmer takes a vast chunk of land which might have housed 50 or 60 species of flora and they kill everything except for the olive tree but because olive trees are green that gets a pass on the e irrespective of the destruction what's important in the near term is the narrative the politician who praises oil part pardon me olives and dams mining when in fact the surface footprint of the mine is tiny relative to the economic impact is one who gets uh re-elected uh you understand where i'm going with this uh in terms of trying to understand the politics of esg we are early enough on that it's going to shift an awful lot and i will tell you too in my career that the consumers tolerance uh for the price aberrations that comes from politics are very limited uh i i remember as an example in the previous uranium bull market uh in 1998 1999 going up to 2006 when i was first advocating the purchase of uranium companies audiences live audiences in those days it was pre-zoom uh weren't merely bored by the concept because nobody made money in uranium for 20 years they were actively hostile they thought this guy's advocating hiroshima chernobyl nagasaki three mile island what a despicable human being you know now from a contrarian's point of view this is wonderful i know i have no competition it isn't just that the audience is bored they hate it it doesn't get better than this what's interesting about that is five years later when the uranium price had gone from eight or ten dollars a pound to a hundred dollars a pound and the price of the uranium juniors that i had been talking about had uniformly risen 20-fold or 30-fold all of the people who had in prior incarnations been hostile to uranium were looking for stock tips [Laughter] so i think that the esg debate will vary germany would be a wonderful example the germans believed that they were rich enough that they could consign their energy future to solar the problem is in northern germany the sun doesn't shine and they also wanted to use power at night now they did something from my point of view that was very very funny they started importing massive amounts of low-grade us high sulfur high ash lignite coal which is to say they blew they blew apart any chance that they might ever have uh of making their green protocols by abandoning a green fuel which is to say uranium in favor of coal they also began to import massive amounts of electricity from france generated by nuclear and poland generated by coal the upshot of this uh narrative-based cynicism was that the utility rates paid by germans are about three times the utility rates paid by french and my suspicion is over the next five years that the tolerance of the german rate payer and the german taxpayer will change and so the esg debate in france will change too the current nature of the g of the esg debate varies country by country and need by need so it's going to be a very difficult theme for you to apply yourself to and it will be a theme that doesn't go to your skill set your skill set is finance your skill set is numbers to pay attention to the esg theme your skill set is going to have to be sociology political science uh and hollywood which is to say story and i don't know about you i'm i'm incompetent in those realms no that's definitely a point i was just asking also because i'm seeing that also in our field right finance a lot of funds a lot of people are a lot of asset managers are starting to trying to create frameworks in for the csg thing and it will consistently change i think in the near time it's probably a very good uh career alternative the idea that you can forecast future trends in esg around an investable theme involves a skill set that doesn't include finance that's interesting that's an interesting point of view you would be better off being a movie critic in a sense uh for myself i haven't owned a television as an example for about 30 years and i'm singularly unable to anticipate uh future narratives i think i said that as politely as i'm able okay that's pretty interesting but still do do you believe that like mining companies are oil and gas companies can some of them at least fit into these descriptions these narratives or do you think that it must it must be different like differentiating well i mean a wonderful uh test case for your young members would be to go to the website uh and look at the town hall meeting for lundin petroleum there's almost no substance on earth as reviled as petroleum and the landines have met this head-on they will lower their carbon footprint per barrel of oil produced to zero uh this is a company that has come to understand the narrative but has also come to understand the technology around obviating the narrative uh and they've done this while being one of the lowest cost full cycle producers of oil and gas in the world so the question that you ask could be illustrated very well for your members if they would pull up the website of londine oil and play the most recent town hall meeting where lundin talks about its development plans in the context of quote sustainability and dsg and you'll see a company that has gone way way way further than most in the practical application of society's concerns around extractive industries that's really really interesting and i'll definitely recommend and i will see that that thing that you're seeing um but i get your point regarding esg um i don't know also about nuclear and uranium i believe that at least for many of our members even if your viewers that might also be viewing this i might find strange that for for some of our members might be the first time they're actually listening to someone advocating for uranium how could we get exposed to to this sector in which ways there are certain companies that you would recommend i'll tell you this the the investment narrative around uranium uh at least the speculative side of it has become attractive enough in the market that the uranium juniors the non-producing companies the explorers are uniformly overvalued right now the story has gotten ahead of the reality so participating in uranium uh involves probably two strategies they're not mutually exclusive there are physical uranium trusts trading on the london stock exchange uh yellow cake which holds physical uranium okay uh there is a larger one trading in canada called uranium participation corp uh which also gives uh investors the ability to hold by proxy physical uranium it's not the kind of stuff you want to throw in your basement frankly so owning it in certificated form is probably preferable to loading it into a truck and bringing it to your home there are really three companies on a global scale that are investable for uranium they are as follows kazataprom uh the kazakh producer which trades in the london stock exchange the largest and best uranium company in the world by the way it also pays a five and a half percent dividend uh to make the weight tolerable uh the canadian producer kamiko uh which i would regard in second place uh it's had a 100 price increase in the last 18 months which makes it from my point of view 100 or 50 less attractive than it was before the price ran uh and the future comer in the uranium space china general nuclear or cgn mining uh traded on the hong kong stock exchange uh in terms of investable themes a portfolio that was constructed of those three companies or those three companies and one of the two physical trusts depending on the investor's domicile would be something to look at that's really insightful yeah i will i will give a look at that because i'm listening to some of your to some of your interviews recently and yeah you talk a lot about uranium but sometimes i have this feeling like if i'm not an expert how can and if my friends are not experts how can i like recommend them to start with you know guilherme i would argue that supposing yourself an expert believes that you can get it exactly right okay uh and in 48 years of resource markets i think that the search search for perfection is a form of procrastination uh bull markets and resources uh are traditionally multi-year affairs because as we've described uh the industry can't uh in the near term increase production to meet pricing signals in the market uh so what would in a normal industry be a two-year cycle in the uranium business or the gold business can easily be a ten-year cycle uh and the dimension is much greater uh these sectors when they move uh often generate six or seven hundred percent index gains the point of all that is that you don't have to get it exactly right you just have to participate uh you are if you follow my lead sadly you're always going to be early which means that you have to be a little more patient than people your age normally are and you don't have to worry about getting it exactly right you just need to buy good capital allocators that are very low on the cost curve that are big enough that when the generalist money comes into the sector they'll move first as you build your expertise in the sector when the big money comes into camaco you can go down into the smaller companies before the big money finds its way there and you can let them chase you down the quality scale and up the leverage scale throughout the sector there will become a time when your pals look at the money that you've made in uranium and they say guillermo you're a genius and when that happens you need to sell everything when it becomes popular uh then then the sector is past its prime that's wonderful and of course getting in earlier it's better so i would definitely follow the advice and okay since we are like students okay like at least our members are students i would like to to ask you because you've given a lot of tips during our conversation so right now but if we want to to start to understand these cyclical things of commodities how to invest in them what would you recommend like we have these as i was mentioning before we started recording like we have this department of commodities they produce articles in this in the sense where should we start be looking at to educate ourselves in the commodity space five books uh i assume well you're you're aware of my familiarity with portuguese so i'm assuming that the audience speaks english substantially better than i speak portuguese uh five books the first would be economics of one lesson by hazlitt which will teach you how the economy works as opposed to the way that you're taught it works in university which is largely fraudulent um it's an easy to read book the important concepts are simply that markets work and people act of their own volition having read that the second book that you should read is the best investment book ever written relative to the time required to read it which is the intelligent investor by ben graham pay attention to two chapters in particular margin of safety uh and mr market uh mr market is the best chapter on contrarian investing that i have ever seen uh written uh and uh mr market is the part of natural resource and best investments that ninety percent of the participants get wrong okay once you've suffered through the intelligent investor uh absolutely the best investment book ever written from my point of view is securities analysis the concept of net present value which you'll never get right but you can get closer than other people do relative to enterprise value is from my point of view the heart of investing and securities analysis also by ben graham does the best job of showing through various asset classes how you calculate the ratio between net present value probabilistic net present value and enterprise value of any book i've seen uh then uh i'll give you a fun book uh anti-fragile okay by taleb um i'll just leave it there uh i'll give you a little bit of a vacation before the final book which is the most impact impactful book i've ever read in my life uh human action by ludwig von mises uh it is reputed to be an economic text but it's not uh it's a discussion of individual psychology and mass psychology as it relates to volition or human will and when you read human action and you come to understand the way that humans act economically as individuals and as groups you will really truly be psychologically prepared to take on markets it isn't to say that you won't make mistakes you'll just make considered mistakes now it's a very difficult book it was written in turgid german and translated into turgid english and if english isn't your primary language uh and you're reading a doubly translated turgid work uh your your listeners will either curse me or use the book uh to induce sleep you know i understand i understand your point but let's give it a try i would say that that's that's really interesting and like i don't know but you didn't mention any commodity specific books or technical most interesting most people move themselves into commodity related study before they understand the basics of cyclical industry and before they've dealt with their own personalities dealing with your own personalities is prerequisite i think for any financial decision human action as an example talks a lot about the fact that all human beings believe themselves to be dispassionate rational analysts which in colloquial english is horseshit it's not true we believe that the process that we engage in is taking information from all sources analyzing that information making rational decisions what we actually do is we scan the horizon for information that supports what's comfortable for us our thesis and bias we very seldom challenge ourselves it's okay but you need to understand the process the second thing is recency bias it's ironic that circumstances that have happened in the immediate past have much more impact on our actions in the future than a sense of history does although history which is to say 10-year performance is much more important than 10-day performance 10-day performance is something that weighs much more heavily on the human mind and finally the fact that many financial assets are described in obtuse english as geffen goods which is to say we like stocks that have gone up the price action justifies the narrative if you if you have a stock as an example that sells for 10 euro and three months later it's selling for 20 euro with no particular change in the affairs of the company the fact that it's doubled makes people love it but it's arithmetically precisely half as attractive and wrapping your mind around that paradigm is an important part of understanding any type of investment but particularly understanding investments that are so cyclical and so uh capital intensive i would argue that when you have uh if you have a basic understanding of finance which i'm certain that your students do uh and you've talked about the five books that i've talked about the best way to understand the resource business would be uh to go on to the sec's edgar site and pull say five years of annual reports and quarterly reports from exxon mobil and look at uh the write downs they took and why they took them look at their cash generating capabilities in various oil price scenarios but read the proxy and decide how the decisions were made and if you do that if you did it for uh rio tinto a name that should be fresh in the mind of iberian students it is and exxon mobil uh i would suspect that you would learn more than you could from any publication on earth concerning how to invest in natural resources i wouldn't give that advice to a generalist audience but a group of students who are already skilled in balance sheets and income statements and the interplay between balance sheets and income statements would do well to construct their own theme from real world as opposed to supposed data yeah definitely and that's a great advice that's a great advice so well i think i don't want to take you it's like to take you longer or to take your time so thank you very much for coming but i still have like a last question here and it's more like if i made a more philosophical question because like i've noticed that you said in past interviews that one of the best things that happened to you was to lose all of your money and that's why that might be a little contrary to it might be a little bit counter-intuitive but actually i see the same pattern for example in ray values principles book the work and life principles from ray dalio and my question is should we always lose all of our money at some point in our lives or at least what should we understand in the early steps of our careers that you understood clearly by having passed through this experience my hope is that by talking to student groups that i i can share the circumstance that caused me to lose my money uh and armed with that knowledge young people won't need to lose theirs um it was useful for me in two fashions uh i lost my money by overstaying a bull market the decade of the 70s was the most extravagant bull market that resources have ever seen as a young man in those markets making a lot of money early when most of my competitors weren't making much money at all i came to confuse a bull market with brains i didn't realize that i made money because i was in the way of a market the oil price went from two dollars to twenty twenty five gold price went from thirty five to eight hundred fifty the silver price went from a buck and a half to fifty and i thought i was smart what i forgot in spades is that markets work the cure for high prices is high prices the cure for low prices is low prices and i didn't understand that recency bias permeates all elements of society the international energy agency was as stupid as i was as was barclays bank as was the central intelligence agency as was the eec the truth is that most organizations and most minds individual or collective take existing data and they extrapolate it ad nauseam they forget that markets work the fact that the commodities markets collapsed uh was something that anybody who had been through markets before would have understood but i hadn't and i didn't and in my hubris being a young man wanting to believe it was smart uh i took the words of the big thinkers to heart because it confirmed what i wanted to be true and i learned a truly ugly lesson but i learned a lesson that would shelter me from making the same mistake ever again i'm not trying to say i get it right exactly but i get it way less wrong than most people do the second thing i learned and unfortunately i didn't learn it concurrently with the first lesson when a little later in my career as i had you know rebuilt my business rebuilt my reputation rebuilt a bit of my fortune my wife said to me don't worry about making money uh worry about doing something that you like to do so much that other people can't compete with you because they won't put in the effort or the intensity worry about generating utility for other people and if you worry about generating utility for other people i suspect they'll want to pay you for it and you'll make more money that way and she turned out to be exactly right when i stopped worrying about making money when i stopped worrying about when i started worrying about generating utility for other people my own personal fortunes turned around immediately it it won't appeal that my next statement to your how would you say let's just say that it won't appeal to some of your students but the truth is if you want to be rich yourself the easiest way to do it is to make other rich people richer rich people contrary to popular opinion are quite generous they like money and they are willing to pay to get more if your reason for studying finance is partly your own personal fortune the surest way in the world to get rich is to make rich people richer okay that's that's a great advice actually like i understand also and as you were saying that some people got into finance and that's perfectly normal also uh to try to make the poor better or i don't know to invest the capital of people middle class and trying to make them rich but that's definitely one of the of the main ways of getting richer as you said right you know i myself i'm quite active philanthropically not politically with other people's money but honestly with my own and i have been a backer of micro credit as an example lending money to very poor people without collateral for a very long time that's different than getting rich philanthropy is a consumer good and i don't think it's something that you ought to consign to the politicians or society because they confuse attracting votes or serving a narrative with doing good when i do good i want to actually do good i want to invest more than money so i participate in students for liberty a worldwide student libertarian group i participate in various micro credit things i personally consider those to be consumer goods it's what i do with my money uh it makes me uh yeah it's a consumer good i enjoy it i think it's worthwhile but i don't believe i have the right to do it with other people's money i believe i have an obligation to do with my own that's that's awesome and i was also thinking that you have the the way of making money right but then you have the way of distributing your money so it's the other end of the of the equation so of course you can earn your money by making rich rich people richer right but then you can also do what you're saying so philanthropy you can help people around you you can can do a lot of stuff with your money so for for the general goods so and i also believe that having more money gives you more opportunities right absolutely absolutely it also comes with some bad things of course but it has everything in life so by the way i've made as many mistakes in philanthropy as i did investing uh it takes a long time to understand how to give money away responsibly uh there are more charlatans and finance pardon me more charlatans and philanthropy than there are in finance yeah and so i would urge urge your young listeners who get in the position to give money away that they invest at least as much time and toil as they do treasure that makes sense because people when they when they when they give money away there's always the maybe the mistake i would say of being like subsidizing people right so in subsidies maybe they're not the most efficient way or productive way to help other people so yeah look at the balance sheet the income statements of the philanthropies very often over 50 percent of the money raised goes to money raising and gna which is to say that less than 50 percent goes to the ascribed purpose uh if you saw a a private sector company where g a and cost of capital exceeded 50 a book you'd say what like what are you smoking but in philanthropies it happens all the time because they have a glossy brochure you know they tell you some story about one woman who benefited from their project in some part of india and they neglect to say that they've missed that they wasted 50 million dollars a year uh on on their main scheme yeah well this has been truly amazing to be speaking here with you so thank you very much for your time uh i don't know at least for me it was outstanding i learned a lot and i'm sure that the people that were here in portugal not right now but afterwards that will be that will have access to this video i'm pretty sure that they they will find it pretty insightful as well and well for your more regular viewers that might be watching us as well i hope that we were able to add some value maybe it wasn't the mainstream interview that usually people do it wasn't that technical also but well i hope that we have discussed some relevant topics that might be overlooked sometimes i don't know but thank you very much always pleasure thank you

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Rating: 5 out of 5

Keywords: Rick rule, green economy, commodities, podcast, uranium, investment, lisbon, lisbon investment society, crunch the numbers, money, sustainability, future, green future, Contrarian, natural resources

Id: vb9eSLwBowg

Length: 47min 39sec (2859 seconds)

Published: Tue Mar 30 2021