Rich McDonald: What a Former Credit Suisse Trader Actually Checks Before He Buys a Stock

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This transcript was generated from the episode’s YouTube captions (Buzzsprout has no transcript for this episode). Speaker labels are NOT available; all turns are unlabelled.

[0:00]

I tell my mom to stop watching the news stop reading the newspapers the media cause recessions right watch people’s spending watch how busy the restaurants are there is no recession out there consumer spending just hit a record house prices just hit an all-time high the FTSE 100 just hit an all-time high you can sit around moaning or you can you know worry at what you read just go out there on the street and have a look it’s there’s no recession so my name is Rich McDonald I was head of Emerging Markets at Credit Suisse I was a portfolio manager at a hedge fund and now I am the presenter of trade live with IG on YouTube a great company does not mean the stock is going up if that stock is already at 100 times earnings then everybody knows the story

[0:48]

already and there’s a reason the Stock’s gone up so much investing is about predicting the future MH I don’t have a single Dollar in the S&P 500 right now really not one not one interesting no because I I just see hello and welcome back to the Money Gains Podcast we’re here with Rich McDonald presenter of trade live with IG Rich what’s going on man how are you Sammie great to be here mate I am absolutely buzzing for today ready for it yeah we’ve been chatting for a while now haven’t we that’s right first bumped into you at that influence event early this year that’s right in the the great Studios that we had but then we all made it down to Wetherspoons afterwards for

[1:36]

for a pint and a pizza yeah proper went from like the upper echelons of Yahoo Finance to Wetherspoons it was great right was it it really was but you have probably one of the coolest backgrounds well I thank you very much I mean it’s pretty cool when I was hearing about it from you the other day it blew my mind because there’s this kind of like perception you have of someone when you meet them and you know what they’re up to at the moment and then when you actually hear what they’ve been doing before that it’s like but with you I was like there was one thing and I was like wow that’s amazing you were like hang on wait there’s something else as well and I was like what and yeah love to hear about it yeah I i’ I’ve been really lucky I I grew up you know just a we lad in Scotland um from my my father was an accountant my mother um a nurse and uh

[2:25]

yeah was was really lucky dad got me into stocks from when I was 12 years old I used to work for him and he give me i’ deliver letters and i’ you know take the checks to the banks but then on a Friday he’d give me the financial times and he had eight stocks at the time and I had to get the closing price from the financial times of his portfolio and do a onewe update but if he had made money I got double the wages that week Sammie ah nice 20 whole pound so you’re there like come on yeah did you fudge the numbers over no I I didn’t but I didn’t think of that actually yeah that was no uh so it was um that was it that was I I was into this investing thing and you know you’re you’re making money from companies

[3:14]

making money and so as soon as I was 16 years old I went into my career counselor at school and said I want to work in the stock market I want to be a market Maker Now up in Scotland a wee place called Perth no they didn’t know what a market maker was like yeah yeah it was um so luckily I eventually when I was 21 then I got work experience at Credit Suisse and um was just actually I I had the Commonwealth Games the next year and then hopefully the Olympics so the guy on the training desk said look go and do your Athletics and then come back to us when you want a job so you an athlete so I was an athlete I did yeah track and field 400 metre hurdles um I was captain of the Great Britain Junior Team um fastest man in

[4:04]

Scotland uh at 400 meter hurdles and then yeah did Commonwealth Games uh but then yeah had to get into a a serious job after that stop running around in circles and and start uh you know making a lot of noise in a trading floor instead so is that how you started you went onto the trading floor that’s right yeah so I I went onto The Graduate scheme at Credit Suisse um 2004 eventually um we saw the Google IPO uh in New York I was on the trading floor for that and yeah that’s how how long ago it was and um had this yeah wonderful career with with Credit Suisse they moved to a hedge fund they gave me $100 million to run in this hedge fund you looks off to 100 million hundred million dollar and you know just making a portfolio and choosing your stocks and

[4:52]

that’s when you learn about shorting as well M so you in theory have 50 million of long 50 million of short so if the market goes up or down it doesn’t matter you just want your Nike to outperform your Adidas or your Tesco’s to outperform your Sainsbury’s so that that was yeah a lot of fun and then made it back to Credit Suisse and and ran their Emerging Markets Department as a as a director for um for another six years wow and when did you pull the plug so it was 2017 um 2016 sorry they they offered voluntary redundancies and my hand could not have gone up so fast I was just kind of done with a city at that point yeah and um went traveling with a a group called remote year around South America

[5:39]

around Europe and just traded for myself So eventually got into teaching so now I uh teach people to trade a investment Mentor I guess and then like yourself got into the social media side of it and it’s brilliant because you can deliver your lessons or your um mentorship sh to um you know to thousands of people at once I’d love to know um from you a little bit about working in such a big hedge fund like that what kind of toll that takes on you because you see you know the wolves of Wall Street and the kind of glamorized aspect of it as well but also within those stories you see the darker side as well is it as sort of loud and as crazy as it looks the original days in Credit Suisse well you know that was a lot of fun um but then

[6:29]

in hedge fund World especially cuz I was there during the financial crisis so if you watch something like a um The Big Short right that was my life so I I was the the guys that are Morgan Stanley so played by um Steve forget his name Ryan Gosling isn’t it uh well yeah Ryan Gosling’s so he’s oh he’s the connecting guy isn’t he the yeah yeah he’s he’s working for the investment bank he takes them the idea so so that was it you know by the end of 07 we knew what was coming it was just Steve Carell sorry that’s it come to me yeah so sorry the uh so you know that that was it was it was so exciting so then you you see the big short right and you’ve got that theory working behind you incred it was like doing a PhD in economics and markets at this fund just you know

[7:18]

phenomenal intelligent people but then you go into more like that movie Margin Call oh yeah right and my friends were at Lehman’s and I remember um my good friend Selena calling me on the um Thursday and saying Rich it’s not going to go bankrupt why are people saying this Dick Fuld just took us into a meeting and he explained to us um you know that that Lehman’s is strong and it’s got a good balance sheet course the Sunday night gone yeah and it hit the screen on the uh CNBC 11:00 p.m. on Sunday night and we all expected it to be that Lehman’s was saved by Bank of America or somebody like that but know they they let it go and instead uh Bank of America saved Merrill Lynch yeah so it was it was that you know Margin Call

[8:07]

movie where uh you you get that amazing scene you know when he talks about the music stopping and for that brief period it really felt like the music had stopped it must have been wild being right in the center of that yeah cuz when you see Lehman go you’re like who’s next that’s right and it was a bit scary I have thought and we so we were still trying to run positions at that point right cuz that’s your job you you’ve got client funds and you’re meant to be trying to make money but the the head of the hedge fund took us into the room and he said why the hell have you lock still got positions on I don’t know what’s about to happen next and I’m far clever than you are and it was like okay fair yeah cut the books so he just chilled

[8:54]

for a few days yeah yeah yeah while it all sort of sorted itself out semi sort itself out yeah as we got through the real eye of the storm MH um and then the government obviously came in that’s right you had all the bailouts all the rescue of um uh Royal Bank of Scotland of course of Lloyds yeah and even today Royal Bank of Scotland now called NatWest reported numbers this morning and you know they they made4 billion P of profit so it it all comes back into the into the system and you know the the government did well there to be fair um and yeah here here we are today yeah and we’ve seen kind of the aftermath of that was like the super low interest rates and the environment that we’ve been kind of living up until until sort of the

[9:42]

pandemic right yeah and that’s that’s what actually worries about you know there’s a lot of people especially in the influencer world that say you know just keep on putting your direct debit into the S&P 500 buy an S&P 500 tracker and it goes up on average 10. 4% a year and you know that that’s that’s you you’re set you’ll be a millionaire by the time you you’ve got a p you come to pension age it’s not as easy as that if it was as easy as that everybody would be doing it and you know we’d all be millionaires there’s just a a worry that I get that everybody’s going into the same thing M and it’s distorting valuations the S&P 500 is more expensive

[10:30]

than it’s ever been mhm earnings are as high as they’ve ever been margins are high as they ever been which means that companies are um making as much money as possible from consumers right and that’s you know what a lot of people you get in the Press saying that you know companies are are really squeezing out of everything out of us they can even despite the cost of living crisis so there’s just a danger that everybody’s in into this thing and then what happens next nobody tells you well the S&P 500 could drop 30% next year right if we get to the stage where the Trump tariffs come on and you know the all the anti-immigration measures that he puts through suddenly we get a spike up in inflation

[11:19]

again and interest rates have to go up then interest rates do not help the stock market do not help earnings no and so what are you do next you’ve you’ve put all your money into this S&P 500 tracker and it’s it loses 30% of value are you ready to take your first steps into investing we’re thrilled to partner with trading 212 the app that makes investing accessible and straightforward for everyone with trading 212 you can open a stocks and shares Isa that’s packed with features zero Commission on your Investments industry low FX fees and access to thousands of ETFs funds and individual stocks from markets all over the world the app is incredibly intuitive does designed to help you invest with confidence whether you’re a total beginner or already a pro trading 212 is FCA regulated and the client’s funds are protected by fscs protection

[12:08]

honestly I am such a fan of how easy it is to use that I’ve started recommending it to friends who are new to investing them sales it’s simple and secure and it gives you all the tools you need to build your portfolio and here’s the best part right now trading 212 is offering you guys a free fractional share worth up to £1 when you sign up and deposit just1 to grab this offer head to the link in the show notes or use the code MGP when signing up as always remember your capital is at risk when investing Isa rules and T’s and C’s and other fees May apply so why wait start building your future with trading 212 today and now back to the episode on the caveat side to that if you’ve got 20 30 years out ahead of you do you care about that do you just carry on buying and if is that potentially for you is that a good

[12:57]

thing and and this is I I I’m not saying don’t invest you know that is very much the message is keep investing but be very wary of being sold the dream yeah yeah right that all you do is put money in and it goes up 10.4% a year no no no no this is averages over 30 40 50 years it has been the average yes and this is the worrying thing is that none of that is relating to the Future right so maybe gold will be the best performing thing in the future it’s had a great run it’s it’s incredible up more than the NASDAQ in the last year mad isn’t it but you don’t really hear people saying invest in gold invest in gold but all I would um I guess advise um in the terms of from my own experiences was would we have a balanced

[13:47]

portfolio which diversifies over a number of things not all your eggs in one basket the S&P 500 100% 100% and that’s exactly what I do like I keep Global is a majority S&P 500 is in there because it’s just been performing so well but there may be a time when that gets shaved because most of that’s already in the global anyway so I’m super high leverage us anyway that’s right and then UK is sort of a little bit in there but that might get topped up if things start to turn in the UK so and they have they have a little bit this is the great thing that everybody is so there’s a little bit of bias cuz we’re in this country and we all hate the government and we you know we’re we’re so oh no the bias the other way M we think this country is terrible and we think it’s been run terribly and

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we think that the bank of England don’t know what they’re doing so you’re very anti-UK FTSE 100 doesn’t care right the FTSE 100 74% of revenues are from outside we we chatting about your linkx Africa that you wear earlier right a company like Unilever company like Unilever doesn’t earn its money in the UK yeah right so and that’s the mining stocks BP um the credential you know all these huge stocks AstraZeneca that doing the drugs just go they they um they’re boring right they’re not your nvidias and your Palantir and um your apples and Microsoft but by goodness me the FTSE is cheap oh it’s crazy man I’ve never seen it like this that’s it it’s like 50 years since it’s been at this these levels

[15:22]

which is just insane the the relative valuation of the FTSE 100 to the S&P 500 is like having a Starbucks and a Costa Coffee next to each other and you go into the Costa Coffee and you you pay 350 for a coffee or you go to the Starbucks and you pay 122 for the same coffee right now it’s not the same coffee because it’s different companies but you can see what the point is that that it it’s you know just be aware of there are other options out there outside this S&P 500 and it’s it’s fun it’s fun to learn about these things and you know wow okay maybe the UK it’s you know 2025 it is going to beat America it’s going to be a better

[16:09]

perform than America because at the end of the day companies and funds are coming in and seeing how cheap it is and they’re going and buying 4 billion pound stakes in in BP right saw that last week yeah crazy and that’s it it’s it’s because you can turn around and you can squeeze value Unilever is about to sell its uh ice cream division right the the mining companies are trying to buy each other yeah it’s mad yeah they they let the news and the sentiment of political Landscapes influence their investing decisions however they don’t look at the fundamentals which is a big part of what you do right yeah and I guess the the way that I look at it is okay you’ve got your portfolio or you’ve got your S&P 500 tracker right that’s your investment

[16:59]

I think you should rethink that and have a look at it just like you go to the dentist every six months for a checkup right you need to do a checkup am I in the right thing am I um potentially missing out on the huge gains in India right because I’m all about the The Magnificent Seven of Microsoft Apple and you know are uh European is the European Union start going to attack The Magnificent Seven cuz they’re making too much money and not paying enough tax so every 6 months you go and get your check up with the dentist every six months just check and think right I’m 20% S&P 500 I’m 20% gold I’m 10% FTSE I’m 5% India should I have a little rethink yeah you know is something

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looking really expensive or something’s looking like a huge opportunity is there a single stock you want to get in there do you think that Nike is about to turn around the whole company because Elliott Hill’s come back in and he’s going to reinvigorate the whole brand so do you actually want to buy you know 5% of your portfolio and put into Nike this is where we get very interesting because I agree with you like you know but just just sort of on the tracker element and then we can go a little bit deeper if that’s okay because I I think it’s important to note that you know there are Global trackers do you feel like that’s a much better play because that’s still so exposed to US market as it is however it could then grab some of those returns from the indias or UK or Europe yeah there there are and this is the important thing

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about it’s it’s a tough subject right and it’s one that we don’t get taught in schools and that my my main mission from now on is to improve financial literacy from a school level and I I did an internship in a day you know for kids that want to to actually work in the industry but can’t get into um you know the big banks for internships cuz maybe they just didn’t go to a a choice school you know that the um or from an underprivileged background right so it doesn’t mean that you can’t trade doesn’t mean that you can’t sales Trad right the wonderful thing about Finance it doesn’t give a [ __ ] if you are male female black white what country you’re from what upbringing you’ve had you can make money on the stock market

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exactly the same no matter whoever you are so for someone listening to this then who’s been passively investing and that’s all they do what’s the next stage for them because like a lot of these guys perhaps in a 9 to-5 they’ve got kids and like they’re worried about the amount of time it might take for them to actually go a little bit deeper what’s kind of the next phase up do you think that they can do today that could actually start helping them yeah it’s it’s getting that sort of uh grasp of what fundamentals are okay right what actually is a stock what am I buying and all you’re doing is you’re buying the next 10 years of earnings and it’s called a share because you’re taking that share of earnings yeah in

[20:17]

fact where the names come from in the first place is is quite a fun story right so it’s a share some people call it shares some people call it the stock market well why is that well it’s because we used to build those great ships to go to the Far East and we’d swap our gold and silver from from England we take them over there and swap them for teas and spices and you know bring them back but the problem was that one businessman couldn’t fund a ship because it was getting done by Pirates or it was or the weather so they started to sell shares of the ships right so you could go down to the box yeah and you and you could invest in you know a tiny part of one of these ships but what you had the right to was

[21:06]

a share of the stock of teas and spices when it got back it was sold in the market and then you got your profit so it’s the technical term is it’s a share of the company’s stock so cool isn’t it yeah the Dutch East India Trading Company was the first that did that I think it’s like 1602 or something along those lines that’s exactly right yeah Century it’s pretty wild when you look back at how that’s sort of graduated up into like companies and the whole like it Amsterdam basically was the big one and then Jonathan’s Coffee House in London that’s it yeah exactly and we did a we did a sort of Deep dive on this recently and I just it was absolutely fascinating the whole journey of how it’s sort of gone from that to smartphone in your hand yeah and I and I think and that’s what I’m I’m trying to

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do so we we’ve just launched a new TV show okay so I’m now the presenter of trade live with IG which is a YouTube show which is great by the way love it thank you very much yeah it’s brilliant and we’re we’re trying to make it fun and engaging and provide a community every single morning from 7:30 till 10:30 you can come on and you can ask us questions and we can reply to you right there and then you can ask us about um Investments or stocks and we can sort of give our um our view on that if I was you know trading that at the moment maybe you talk about stock and I actually really like it and I’ll buy it right there and then on the on the screen um so it it’s yeah it’s it providing that Community but the fun thing is the studio is exactly right in the middle of the city where the first

[22:45]

um ever stock market was love it so you’re coming out there every morning seeing the bank of England and Royal exchange and everything yeah so going back to our like next level the fundamentals what does that mean and and that’s it is how many so we’ve said that um a stock is a representative of earnings in the future and you want a share of those earnings you want to be paid out in dividends how many years of today’s profits do I have to pay to buy one share right so let’s look at a a construction company for example and if one year’s earnings are one brick how many bricks do I have to position on top

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of each other to work out how what the share price is and that’s all a share price is is it’s a bunch of bricks on top of each other and that’s one year’s earnings two years earnings 3 four five the average for the FTSE is 14 so I have to pay 14 I have to wait 14 years to get my money back if I buy a share today mhm right so in 14 years I’ve got my money back if I buy a share in the S&P 500 I have to wait 24 years to get my money back and that’s the difference just that and you’re thinking if I buy um BP at the moment I only have to wait seven years yeah whereas Tesla’s like Tesla you’ll be dead it’s a it’s over 100 years you’ve got to wait to get your

[24:21]

money’s back so you know this is the and of course that’s the earnings of this year of 2025 that’s one brick but if their earnings double in 2026 then suddenly it goes from 24 bricks to 12 bricks so it’s learning you know about this thing called PE ratio that’s a good first place to start just to get your head round what does it actually mean when I’m when I’m buying that stock so it’s the price of the stock to the earnings in years and that’s the ratio that’s a PE ratio exactly yeah the the share price cuzz a lot of people think if um Nvidia dropped from $120 a share to $90 a share they think that’s cheap mhm it’s

[25:10]

irrelevant because if the earnings have also dropped 25% then the share is exactly as expensive as it was when it was 120 okay okay so you know back back to that coffee if you went in to buy a 4 pound coffee right and then you got a A wage increase by 25% well now going into to buy A5 pound coffee it’s still the same percentage of your wages yeah so the price doesn’t mean anything it’s the price relative to the um earnings of the company right so PE ratio is a really important factor here were there anything else that you look to consider you looking at Revenue increases and net profit and debt and things like this as

[25:58]

well I I would I’d more look at cuz that’s maybe getting a little bit too technical for somebody just on their starting I would look at the hype okay right and just do a little taste test like Palantir at the moment yes everywhere everywhere and everybody’s talking about it if you’re sitting in the pub and your mate tells you I’ve just doubled my money on this thing yes right the natural thing as humans we want to be part of a group and we want to be a successful part of a group so if he’s made 100% on it I want to get involved right I mean bitcoin’s built on this whole Theory right is I want to be involved in this so I’m going to buy it is that the right time to go out and buy

[26:47]

Palantir after it’s already doubled and doubled and doubled again if you learn PE ratios you can see that it’s one of the biggest bubbles of all time in history because it’s something like 600 times earnings 600 now 600 oh my God so you got to be really careful and and just learning that means that okay I’m going to the pub and instead of going oh great yeah it’s like a horse tip yeah I’ll stick a tener on that in the 310 at hok you know you go God do you realise do you is is now still a good time to own it do you think do you think you should be taking a little bit of profit there yeah because it seems like my taxi driver just told about and my mom just said oh what’s this about Palantir here so maybe it’s time you know to reduce your exposure let’s say is I sold a lot

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of my Bitcoin that I had when my mom started talking to me about it right I was like okay this is way too much now and she still got it and at the heist no no she was like shall I get some of this Bitcoin thing and I was like whoa I am done like if you if you’re now talking to me about this this is not this is not a good sign it’s it’s a shortterm warning right maybe it’s just moved too fast too soon and it needs to consolidate for a while that’s what happened to Nvidia right Nvidia hasn’t gone up for 12 months yeah because everybody got on the hype train and it and it moved sideways you know now the the FTSE couldn’t be more opposite of moving sideways right you’ve got stocks like Rolls-Royce that have gone up more than Nvidia right marks and Spencer has gone up the same as Nvidia yeah love bit of

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marks it’s it it’s the same right it’s um you you can walk down the High Street and you can have a real you know look around and feel around as to what when Greggs came out with their vegan sausage roll share price absolutely flew for the next two years mhm so you don’t have to be some kind of tech expert you know you can look closely you can do it based on feeling and what’s happening around you as well and then obviously looking at the PE Ratio looking at his performance having a little Scout around and then making a calculated investment into that with a portion of your money rather than the whole back right that’s right yeah and oh my goodness people that tell me that they’ve got 80% of their wealth in Bitcoin it just it scares the life out

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of me I know I know I it happens to me all the time with my mates and I’ve like slowly managed to get them to phase out and start looking at this and when they do they start getting into it a little bit more now they’re away and I’m like brilliant and they’ve some of them are still 50/50 and they’re comfortable with that and like that’s up to them I’m you know 5% and that’s it and that’s and but at the same time I think everybody should be at least 2% right because crypto in well yeah higher volatile assets you mean yeah 2% in crypto because there is a chance it could be something right now I I believe I believe in Gold very much much mhm so is it dig is you know Bitcoin in particular digital gold quite possibly which means that yeah I I’ve got to have

[30:06]

a proportion and more and more Pension funds are starting to go down that route as well with the the ETFs available and yeah yeah it’s one of those things is like just a calculator so you do that well you know let’s say you picking your marks and Spencer for me I like to keep my individual Holdings between 20 and 30% depending on the amount of time that goes in there but because I the way that I invest I do heavy Global tracker UK tracker and then very heavy in sort of my three to five year growth plays nice I’m looking at the like unicorns of that section of that company I’m heavy fintech heavy and e-commerce because I really understand those models which is perfect using your own knowledge and

[30:56]

experience to you know you’re in an area where you’ve got an advantage yeah and a lot of people have have been um okay they won’t be as lucky to be in the that kind of growth sector but they’ll know retail really well MH and they’ll have been able to play Things um back in the day it was it was Superdry right so I was really lucky I managed to to buy 3% of Superdry of the company when it IPO’d and we and this is for the funds not for myself um and that had a great run it went from 5 to 20 and it was literally because I loved the clothes you know it was um it’s gone off the boil though isn’t it oh it’s terrible yeah he’s um well he left Julian Dunkerton left and then yeah it went

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downhill yeah um but it’s the same you know French Connection we’ve seen Ted Baker yeah um you know on um Zara Z I mean for for anybody out there who loves Zara buy the shares you know it’s it’s been incredible um the company’s called Inditex yeah but it’s the same for H&M you know H&M has had a huge run anything like that that you’ve got your own feel I I say um the front page of my iPhone screen if I’ve got an app on the front page of my iPhone screen then that means I use it and it’s there for a reason and if I’m you know if I’m the the the product as in I’m getting sold things yeah they’re making money then yeah yeah I love that you said that because like that’s what I did with Facebook it got absolutely slammed yes

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and I I I didn’t buy into it because I just had this weird like thing and like I was like I don’t like Mark and I was like okay sorry Mark if you’re listening to this please don’t down yeah I know please don’t mark down in your AI whatever you’re doing um but the end of it was I just didn’t want to get into Facebook just from personal reasons but then I was watching it getting absolutely tanked and it was a very very aggressive yeah and it got to the point where I was like it this is a global Mammoth company there is only a matter of a time before it turns around and so um I got in it did go lower for a little while and then it just went Gang Busters 18 months and it hasn’t stopped and it’s probably my best performing over the past like 18 months now fantastic yeah that’s and that that’s right because it was the end

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of 2022 I was in Colombia um in Medellin and I remember exactly where I was when I was looking and it dipped under $100 yeah that’s exactly what I was watching I was like wow yeah this is a billion dollar business killing it with Revenue like it’s just messed up it’s you know yeah yeah he lost his way with a vision goggles for a while and then but yeah now 660 and he’s the the king of AI so yeah there’s there’s little Beauties like that but you you know you don’t have to to be doing hours and hours of research and that was a gut feeling and 15 minute like okay they’re doing pretty well yeah going to take a little bit of a risk and because you are the king of Instagram so you know all about it i’ would be silly not to it’s the first app I’m in on now but you’re right

[34:12]

that’s exactly but we say as well we say to people like walk CR your house what are the 20 products that you’re picking up every single day and usually within that there’s a good four or five there be really great investment I mean COVID was a classic right the the best opportunity ever to buy hand sanitizer right Reckitt Benckiser yeah and condoms that was the two companies they own Dettol as well and um and then Zoom you could buy shares zoom and you could buy went mad didn’t it ballistic and then Peloton Peloton so it’s a it’s just common sense a lot of the time it really is it really is and I think that’s where people look at investing and they feel like they need to be you know looking at price earnings ratios versus x y and Zed and then the

[35:01]

candles and it’s like and then they go no thanks but actually a lot of it is like yeah I think there’s something in that yeah um and if you get to a certain stage as well it’s just fun you know cuz you you go to dinner parties and and people will be speaking about stuff and you have an idea that um yeah what what’s the the new upand cominging thing to be involved in yeah 100% like the marks one was a big one for me I was like they went when they went heavy on the online retail I was like there was only so much time this stock won’t like carry on under performing for because they are killing it you walk into the men’s I was like I wouldn’t like three years ago you wouldn’t catch me dead in here exactly now you’re dressed in the whole I’m literally marked out to the

[35:49]

max and I have like but it was almost over like they did that whole switch with the retail they started killing it in the food section and like you you you could feel that yeah and like there was only a matter of time and then they started earnings reports earnings reports and they was just going and it’s just they like fantastic and an easyJet right if you stop complaining about your flight tickets going up stop complaining about not being able to buy flights to buy the stock yeah because it’s obvious that they’re making more money if they if you know the demand’s there and the and the seat capacity is at 94% now um actually I think that’s Ryanair so you know buy the stock how do you feel about the UK at the moment because it’s it’s it has had a lot of issues and there has been you know kind of a good 10 15 year

[36:39]

Beatdown brexit it’s Liz it we’ve just been slapped 24 ways of carrot you can you know it’s just been pretty rough and we’ve now had this budget from Rachel Reeves business isn’t looking good hirings freezing it’s all we’ve got to this point do you feel like it’s like it can’t get much worse or could it I I I think I tell my mom to stop watching the news stop reading the newspapers the the the media cause recessions right watch people spending watch how busy the restaurants are see if you can get theater tickets right there is no recession out there consumer spending just hit a record house prices just hit an all-time high the FTSE just

[37:27]

hit an alltime high you can sit around mourning or you can you know worry at what you read just go out there on the street and have a look it’s there’s no recession there’s no recession in your eyes so why are we seeing the 0.1% GDP growth then well okay so interest rates now have been um high right and I get people coming to me all the time saying right when when do we um uh refinance right my sister’s got to refinance she might have to sell her house right so I I kind of I get the the pain that can be out there but at the same time you’ve also had the vast majority of the country receive significant wage increases right now if there was a

[38:16]

problem in actual spending then you would see you know much more of the likes of a BHS going down or um Debenhams that kind of thing right rest in peace yeah I mean well that’s good businesses are are still out there yeah right yeah um Cycles cycles and thankfully now it’s the luxury that’s getting hit right luxury cuz why on Earth are people buying 30,000 watches or 10,000 handbags right so if you go to Westfield now, Shepherd’s Bush, then that luxury area of Westfield has pretty much shut down there’s a whole floor that’s empty now so you know I think people are coming back to you know

[39:04]

the realization and especially with the younger generation spend on the important things rather than um you know going out and Yeah and debts more expensive and when I saw the stats the other day about luxury goods is the people that earning under 125,000 which are the largest purchases of luxury goods so they can’t fund it with de to pay for it that’s a problem I’m on track to have over 5.5 million in retirement and I’m not saying this to brag guys I’m saying this because I am an everyday person just like you so what does that actually mean well it means that it’s actually possible for you to build life-changing wealth too no matter where you’re at on your journey your age your knowledge or even your Current financial situation so Sammie how do I sort that out well I’ve created something super cool which literally takes one minute of

[39:53]

your time I’ve left a link in the show notes to a free money personality quiz which will provide you guys with a free tailored content plan based exactly where you’re at on your financial Journey once you filled it out you sent the steps to start getting you results from day one and then once you’re ready you can then move up to the next step very easily too it’s not judgy in any way it’s totally free to do and it’s actually really good fun too simply head down to the show notes and click the link there where it says to do the quiz and get your free money action plan right now now back to the show and that’s one thing that worried me as well is this idea of taking out loans to invest in the S&P 500 mhm right now that for me Rings absolute alarm bells that were at the top of the market we had Samantha Rosenberg on from you watched yeah that scares the hell out of me really so even on the global side as

[40:42]

well yeah taking out debt to it’s that is somebody telling you the stock market can’t go down mhm taking debt out to invest in a risk asset right your capital is at risk m your loan’s not at risk because your loan yeah those bayts are coming for you you don’t take out loans to invest in in stocks I mean that’s that yeah that’s concerning that for me is a massive 2007 we’ve seen it all before right 2006 2007 we knew it was coming and when hardworking people right that go out to jobs and they’re working 8 till 6 start to take on debt the first thing you do is payoff

[41:30]

debt MH right never have credit card debt you know past the month the free month never have that before you um pay off that before you invest in stocks yeah yeah no one of the things that came back from that episode is probably uh thing from myself as well is that I probably should have questioned that a little bit more than I did cuz actually on reflection on it there is some of the things doesn’t sit right with me I just found it interesting as a concept that it was even allow oh yeah and and one and very very talented you know I mean the University of Cape Town I love Cape Town and um you know you know really interesting business but and there’s a lot of things you borrow money to to invest in your own business but buying you know taking on debt to what’s the difference in your

[42:20]

opinion then cuz that’s like like you’re I say you’re backing yourself yes when you’re taking on to fund your own business but you’re not backing Mark Zuckerberg and Elon when you’re doing that there it’s just and this they really important thing and I I really want to ram this home is that a great company does not mean the stock is going up right because you can love a company um as much as you love a football team or or you know and think it’s incredible but if that stock is already at 100 times earnings then everybody knows the story already and there’s a reason the stocks gone up so much uh so that’s why I think you know if you’re backing yourself and you’re

[43:09]

starting off of your own business you’re starting off at a very your investment is a very cheap level you invest in any of the mag 7 now you are paying for it that’s a great Point that’s a great point so a company can be great it doesn’t mean the stock price will go up again it comes back to this because when they looked at that data it was like very as over a 78e period and it was about holding long so does it come back to this whole like yes okay the S&P 500 might have a tough four five six seven even 10 years but post that point would it K will it kick on I think that’s the question isn’t it yeah and that that’s this idea of um I was actually on a on a a call last night and I was asked how

[43:58]

long my average length of holding period is yeah and I said well to be honest it between 1 and 3 years it’s kind of hard to give you an average because a lot of things are different so yeah my highest was three years he said oh you don’t have any long-term positions then I said sorry three years is a long-term position you know at the most five he said what what about 10-year positions I said investing is about predicting the future mhm right if you can predict what you’re doing in 10 years time then that is impressive as I say every 6 months you should just have a little check of how the world’s looking I mean who knows what happens now in Trump you know 2.0 yeah yeah yeah so you know

[44:47]

it’s yeah it it’s just it’s a constant management of um of your portfolio of your Investments rather than deciding here and now me personally I don’t have a single Dollar in the S&P 500 right now really not one not one interesting no okay because I I just see those warning signs and the US budget deficit is at its absolute maximum yeah yeah and you see big investors like Warren Buffett and same Michael Burry moving into Cash heavy cash positions coming out of big mammoths like apple and that started to raise my alarm Bells a touch as it

[45:37]

should yeah and I’m started building quite a heavy cash position at the moment just simply a war chest yeah 100% And I do it all the time and if I feel something’s going to go I just move things in and out sell down take profits here and there do I really need do I really believe in that position anymore um you know so I got rid of a company the other day had typical had its earnings went up 33% I was like great but uh I’d got rid of it but I’d made that piece you know and that was fine it had already done its job for me and I took the profit and kept that as my part of my cash position those are the game this is the game it could have had the earnings report and gone down 15% and I’d have been going I’m a genius but you know that’s the game we play and this thing comes into the psychology of money

[46:25]

as well and that was another great episode that you did right and it it’s this idea of where am I on the scale of of greed and fear right now at the moment the the whole world is at maximum greed do you think oh absolutely so when you see the fear meter you think that’s a little because it’s like it’s just in the middle at the moment yeah that’s so it’s the the city the city one yeah no this is more in terms of where we are with regards to profit margins right absolute maximum of um ignoring bad news right last night Trump saying right he he could well put 20% tariff on the UK and the foot he went up you know it’s only it’s it’s only today it started

[47:13]

coming down again yeah and um yeah it’s there’s just there’s a lot of a lot of considering we’re at 5% interest rates and inflation starting to turn back up again there are there’s yeah I’m particularly concerned at expensive things I’m not bothered about anything that is 10 times earnings 12 times earnings defensive you know that is going to earn money whatever um like alcohol for example uh although even even then it’s like you know a lot of people turning to to zero alcohol they are they are so yeah there’s I think there’s pros and cons in both worlds and you weigh up those and make an informed decision basically hoping that the pros are massively outweighing right yeah I think that

[48:00]

that’s the only thing you can do because there’s always a con and there’s also a fact that you know some guy might turn around tomorrow write a news article about it and it’s just and it blows up overnight yeah so yeah to to summarize I just how put yourself through the question of the stock market just dropped 30% how do I feel mhm right I’ve I had worked hard for that money and it’s dropped and I had nothing in in reserve like Warren Buffett’s doing like you’re doing yourself same kind of context two of you and uh yeah you know how how would you feel if it happened next week got about a one out of a millionth of his that’s still impressive that yeah no nowhere near $1 trillion dollar bur are

[48:52]

halfway it’s worth yeah it’s nuts isn’t it it’s crazy but that’s what 65 years of compounding and making 22% average returns will get you right exactly it’s that’s the long game right so yeah I think that’s something that people do need to take in consideration but you know if someone’s listening to this and thinking [ __ ] hell rich like that doesn’t sound great right you know we’ve we all say buy tracker funds out there that’s and I’m I’m I’m happily hang my hat on that I do as well and this is something of the last three years right this is blown up and and it’s it’s fantastic I love people being involved in markets right that is just that excites me more than anything and um Junior ISAs and you know but just be aware of

[49:42]

the the the how expensive it is you’re buying and you expect it to still go up 10% a year yeah there you know there’s there’s a lot of other asset classes that um give you a diversified portfolio return stock markets do crash 1987 1997 um 2008 2020 for covid right it happens and the circumstances we’re in at the moment are yeah there’s there’s yeah I get it the thing is not imminent but it’s a concern it’s a concern yeah it is for sure but again hard back to the like if this happens do you look at it like well it was is a good thing because how

[50:30]

expensive it is it brings it back down in line earnings have still been going uph so in that case if that does happen are you like especially when if You’ got retirement in 2 three 4 five even six years ahead that’s potentially worrying yeah but if you’re in your 30s and you not like Christmas oh yeah definitely if you’ve got the cash on the sidelines you know we can do this again in 6 months time time and if somebody you know comes and says to me oh I I actually put 25% into cash or into gold when I heard you talking about it and now it’s dropped 25% so suddenly I can buy so much more yeah yeah and you know that that’s there’s always that

[51:18]

moment literally you think the world’s going to end and the market and it happened in March the 24th I think it was 2020 and you just close your eyes and you go and um in 2008 as well we we literally thought you know that the the banks might not open the next day and that’s when you make your wealth and multiples time your wealth because you can get in and the you know it it that’s where it doubles and doubles again yeah the S&P 500 will struggle to be up more than 3 or 4% for the next 5 years per year per year three 3 to 4% is your prediction and you can get you know 4.6% in a interest um savings account would you say that you would see the same thing in

[52:06]

global as well no I think um yeah I’m very happy with India India looks like incredible growth over the next few years um the FTSE MH the so by owning a global tracker would you be worried about that ex-America, ex-America there we go that’s what I’m hinting at yeah yeah yeah yeah it’s an ex-US global tracker, ex-US, or if look if you’re obsessed with us and you think that Trump is the best thing in the world ever and that he’s going to drive us business there’s an S&P equal weight ETF right now instead of um 43% being 12 stocks and then 488 other stocks S&P equal weight means that every

[52:54]

company is you know roughly um between 0.2 and 2% so you’ve you know you’ve got a lot more um wide exposure I didn’t know that that’s really cool yeah good so it’s so it’s not meaning apples and Nvidia is a four five 6% of that and you’re driven by those seven companies 8% Apple 8% Nvidia yeah you know 6% Google instead of that you know they’ll all be um 0.7% wow that’s cool and is that available on most exchanges uh yeah it should be yeah it’s um I think iShares have got one, Xtrackers have got one yeah it’s it’s not just one ETF it’s yeah S&P 500 equal weight this is the thing with ETFs is

[53:41]

that there’s they some someone thinks of something and they make it and it brilliant yeah is brilliant but it’s also there’s thousands man it’s impossible to keep track of isn’t it yeah you pick but there’s one for everything which is cool but you know I’m I’m a big fan of thematic ETFs I think they’re brilliant you know you think a sector’s going to pop especially if the company’s in there then you can go and make a calculat bit on the sector yeah um you’re not so exposed to perhaps Pi especially like solar energy or electric cars before they did their thing you weren’t so like I’m just going to pick Tesla you had the opportunity to get your NIOs in there and your other companies which sort of had that opportunity as well yeah yeah it’s it’s I I like an ETF’s like going to a tapas restaurant oh yeah okay you know that you it’s not that horrible moment that you just buy one D you you order

[54:30]

one dish and it comes and it’s horrible you know you get that six or seven plates of dishes that you know you you can have a little bit of each you know that that’s I love that so you so if you’re in getting into this now and obviously based on what we’re saying today what would you do if you’re like a brand new investor and you listen to this podcast or you listen to Sam or Michael or anyone that we know talking about stocks online and you’re like oh you know okay I was just going to go and do S&P 500 and a global tracker and split them 50/50 or something like that because that’s what a lot of people do don’t be lazy yeah just because every influencer I mean what um product do you listen to influencer and influencers and

[55:20]

put your own money in and just you know blind believe them right right it’s dangerous don’t be lazy do a bit of reading this is your if you want to get you know to a million pound by for your pension then do a bit of work it’s not just served up on a plate for you with um you know oh yeah just put money in S&P tracker every week it’s worked it’s been fantastic but that’s because the US has printed $8 trillion dollar of artificial um stimulus right and they keep on putting to uh $2 trillion here and $2 trillion there that’s gone that’s done the easy money in the S&P 500 is done and that’s why Goldman Sachs say it’s only going to return 3% a year so unless we go back to

[56:08]

a world where we start do quantitative easing again right and that’s what a lot of people on social media completely Miss they don’t understand the money supply elements of it yeah we’re now tightening the money supply through quantitative tightening we’re taking money out of the system to stop inflation that’s stopping this um excessive moves and excessive earnings jumps in in um S&P 500 let’s just throw another side is could you be wrong oh absolutely yeah that’s why I want to just make sure that we are like touching on both sides here yeah because yes the stock market is going to crash it’s only a matter of time yeah because history will tell you

[56:58]

that and whether it’s in 6 months a year or 3 years from now it’s going to happen that’s it but it’s you can’t be wrong about the valuations and the levels that these companies are at and that’s what we’re getting at right yeah that’s I’m I’m just saying you do your work on um understanding what you’re buying because you do it with your phone you do it with your computers so you know don’t just blind go into this S&P 500 just search waiting and look and make sure you know exactly what companies yes they’re amazing companies how expensive are they FTSE 100 okay am I happier buying a you know AstraZeneca, GSK, Unilever, Royal Dutch Shell BP Rio Tinto um HSBC you know is do I need to

[57:49]

be a little bit more defensive think of it like a weather forecast at the moment um you know you’ve been through those years years of perfect Sunshine if we’re coming into an Autumn do I want to be somewhere safer than a dancing around with an umbrella outside in the the lightning storm B&P yeah I get it I get it I get it well I think it’d be interesting to see your thoughts on I know we spoke about this on the phone and I’d love to know your thoughts about this because there’s being a lot of chatter online about you know interest rates coming down and that potentially drop driving asset prices even higher I’m not going to get into The Who and the what behind it because I know you’ve got an opinion but there’s been a lot of talk about this it’s by some very prominent figures in the space

[58:38]

and they have a feeling that this is going to carry on and you’re worried about that aren’t you yeah I um it’s also which country you’re in as well MH right and it it’s such a it’s a it’s a big space you know making a call and interest rate to I mean you’ve got the biggest funds in the world that don’t know um what are going to happen to interest rates next and they’ve got it very wrong but I would be wary of listening to anybody’s opinion um that has a strong view on trying to sell you something that might also be benefiting from their own sales of things so you know do you

[59:28]

mean books uh yeah whatever it is you know um it’s if if you you know think that you have main character syndrome yeah right then you got to be you got to be wary of of what claims people make to get headlines or to get Podcast sound bites you know it’s the it’s the taking things with a pinch of salt when it when it comes to to claims on financial markets or rates or Bank of England or government you know we we don’t really and even the stock market nobody’s really got a clue right my um Mentor at the moment Tom Sosnoff of uh tastylive right he’s a a 40-year veteran of the Chicago um boards and he

[60:19]

used to trade on the floor right so if that if if that guy doesn’t know what stocks are about to do next that nobody does he’s seen it all he’s been through every single crash and he says don’t do not give me a view because I don’t care because it’s just your view it’s not what’s going to happen that’s what I love about like some of the uh like traders who do just so well is like uh what they all say is like that’s great like oh you’ve got this really individual like theory about x y and Zed that’s great I just do my 10 companies are no inside out and I buy and sell them at certain points as I know this is going to happen and or like they you know they do gold and silver or they do you know Euro versus GBP or whatever like and that’s it and they just so and

[61:09]

that’s all they do all day and then and they they they’re happy with that yeah and then you go and tell them you know oh you know Wreck-It Ben Kaiser is going to come up and do this new 20% and like and they’re like so and I just find that so interesting cuz they just stick to their guns and so you I think it the tendency with investing especially for new investors where it is all new is that Dave down the pub will be like you know by this new penny stock biotech company who’s releasing a cancer cure drug and then it all goes wrong yeah and then you’re left holding the bag with a 50% loss or sometimes even more so I think we’ve all been there yeah there with with the in the city it used to be oil exploration companies everybody would know something was just you know

[61:57]

hit oil down in Ghana or incredible of course they were all penny stocks yeah and you’d buy it at s p it would go up to nine you’d think you’re God and then you know worth a penny wow so it’s you know that’s the important thing as well you know penny stocks whether it’s 9 P 90 P or 9 doesn’t matter it’s the number of shares that are in the company M that makes up the market cap so don’t think because JD Sports is 83 P that it’s cheap right don’t think that um you know I’m thinking of another company that’s like 60 um well next next is is1 a share yeah right as in the the retailer that

[62:46]

doesn’t mean that it’s expensive you know relative to 83 P for JD Sports it’s just they got vastly different numberers of shares in the company totally yeah yeah it’s the bricks that’s right and that’s what you need to be looking at yeah yeah and then the hype and the bricks and the hype that’s your new new coin that term yeah Fe it’s it’s funny because you um we look on the show a lot so of you know trade live with IG we get viewers questions and we we answer these questions and people are so sure of their view it’s always right to take the other you know have a look at the other side and have a look at the risk yeah um I would love for you to come and chat to our community cuz they’re so funny like

[63:34]

we get them to do uh exercise every month and we say go out and find a company and we give them five questions and they have to go and answer them and then the last question is always like a bonus little question at the end is like would you invest in this company and every single one says yes yes of course every single one there has never been a no and we’ve done it you know a few times over now and then every time we go through if we go through them any live at all or anything like that every single time they end up the other way around because we find little bits and Bs did you see this have you looked at this wow and it always finds it interesting occasionally it’s like yeah that’s really good one like Well Done um well but it’s interesting how people get backed up behind their own theories and Hypes about something is completely but

[64:22]

I do wish I’d be more of a yes man because I used to sit next to at Credit Suisse with a guy called Nikolai Storonsky okay and Nikolai was my Russian Futures Trader and so anyway he got taken out of spare bank one day and I Nikolai buy me 10 bucks of uh of Russian Futures so he buys them and books them to me and I looked down I said Danny we’ve lost 15 grand on the Futures already like I it doesn’t make sense like it’s hardly moved so my boss went across and he what’s this Booker what’s happened but turns out we had been charged commission from an internal desk at Credit Suisse right our mate had charged us Commission on on this Futures trade all hell kicked off right so anyway within three weeks Nikolai was

[65:11]

gone so he comes over to us and he says look guys I’m I’m trying to raise money here to to start my own thing so if you if you you know five grand 10 grand if you’re interested you know you could be an investor I’m I’m going to revolutionise um the the banking system in the UK sure Nikolai you you go for your life you good luck with that he started Revolut and that £5,000 would now be worth 14 million and I said no and two guys on the desk said yes did they say yes yeah wow man one of them’s still working the other one’s not wow so he he was on your desk Nikolai was our Russian future Trader

[65:58]

yeah that’s so cool and new fair play to him he’s done so well he is such a ni business yeah oh wow what a story so that was it so I’ve used Revolut since it very first came out do you not open the app now like damn it no it’s you know that’s the like you alluded to earlier it’s it’s dealing with that there’s always going to be ones that you miss now I missed that in a big way uh but um yeah it’s quite exciting that those opportunities come up yeah I know one of my my good friends he married a girl who was offered a marketing job at a new taxi company in the UK and she goes oh I don’t know if I’ve got time I’m got my own t-shirt company and stuff and here she became head of marketing for Uber and when Uber first set up in the country she got stock she got equity and

[66:49]

that was that was horri that’s that now yeah wow these stories are everywhere though it’s so interesting you got that though I think to round this off like we’ve obviously put a bit of Doubt into people’s minds and it’s I think it’s a good thing because it is all usually all the time and investing it’s all about the wins and it’s all about the X Y and Zeds and it that’s exactly what this podcast exists for is making people think and most of the premises to like getting them in and getting them to form these good habits but then we also want to show them about the the things that they really need need to pay attention to and I real like this has done a great job of that is there anything we’ve missed here I I I do think I very much investing habits are you know everybody needs to learn and be

[67:40]

proud of what they’re achieving in investing even if it’s the S&P 500 you know no matter no matter what you’re doing you’re setting up your account you’re doing the direct debits you know this is it’s great and it’s a real achievement what I wanted to do is just balance out that argument that you know 35 other influencers and podcasts that you listen to are buy the S&P 500 tracker or buy the all world with 70% influenced by you know a few companies going to the next stage and learning what that share price actually means and what’s in an S&P 500 tracker do you believe in those companies that’s all I really want people to take

[68:29]

away and know that there are are alternatives out there um because yeah it’s it’s a really fun space to be involved in now we speak about this every single morning so on YouTube trade live with IG 7:30 till 10:30 uh we’ve got there’s about s or eight of us but we get people in Laura an’s going to come in soon oh see um and we would love she here in a second is she really oh fantastic yeah um so yeah we would love to have you in as well at some point it’ be great fun yeah always always wanted to get in the studio Monday 10 a.m. booked let’s go let’s go we’ll see you there um but rich thank you and I think it’s for someone with your pedigree and background and what you’ve seen and um

[69:17]

done in the space and you know how you got your fingers in on the poles I think it’s so important to hear things like this today from people like yourselves that’s why I really wanted to have this conversation and yeah I’ve I’ve really enjoyed it but mate apart from um with IG like where can uh people find you yeah so uh Rich Macro Trades on TikTok on uh Instagram I’m rich on macro so the macro being partly my surname but also of course macroeconomics yeah that we get all this rubbish about interest rates and inflation and you know I I my um you know watching a live football match or watching FA Cup Final is the Federal Reserve interest rate decision right because that’s the real opportunity you’ve got to hear what’s

[70:04]

going on in the world so you know I geek out on on macro my girlfriend’s a macro Economist is she she used to work at the European Central Bank how cool um so you know uh and is German so is very fiscally disciplined um but they’re great investors aren’t they the Germans they do love it it’s ingrained in them oh it’s he’s far better than me she’s had Rolls-Royce from2 to5 80 she’s had Rheinmetall the German defence company two weeks before Russia invaded Ukraine it’s gone up 600% oh my God so yeah she’s a she’s a good she know the stuff yeah okay we’ll get her on next much better idea R has been a pleasure man thank you so much Sammie thanks so much great what you’re doing here for um yeah getting the the word out to

[70:51]

everybody as well because yeah it’s an important huge usually important topic and yeah you really get across well thanks man appreciate it