Episode #37: John Bollinger, Bollinger Capital Management “People Have This Time-Frame Confusion That I Think Does A Huge Amount Of Damage”
Guest: John Bollinger. John is the president and founder of Bollinger Capital Management. An avid researcher, he has developed a number of widely used investment tools and analytical techniques. His Bollinger Bands® and related tools have been integrated into most of the analytical software and charting platforms currently in use. He is known to the public for his many years of market analysis and commentary on television — first on Financial News Network, where he was the Chief Market Analyst — and subsequently on CNBC. He is the recipient of the Technical Securities Analysts Association of San Francisco Lifetime Award for Outstanding Achievement in Technical Analysis and the 2005 Market Technicians Association Annual Award for Outstanding Contribution to the Field of Technical Analysis.
Date Recorded: 1/26/16
Topics: In Episode 37, we welcome John Bollinger, creator of Bollinger Bands, one of the most widely-used analytical tools in investing.
As John is also a market historian, Meb start by asking him about his historical influences – those individuals who helped shape John’s perspectives on the markets and trading. John gives us his thoughts, identifying who he believes is one of the most important figures in technical analysis. This leads to an often-forgotten takeaway – that many of the most effective market concepts have been around for a long time. Some very profitable strategies that still work today were being explored 100 years ago.
Meb redirects, asking John about his background. It turns out, John was in the film business as a cameraman. But by a few twists of fate, he ended up in front of the camera, providing technical commentary on markets for a fledgling financial broadcast network.
This leads into a discussion of John’s famous “Bollinger Bands.” He gives us an overview of the tool, and how he came to establish it. In essence, Bollinger Bands can help investors identify relative market bottoms and tops, helping find direction for profitable trades.
Meb then asks if John’s thinking on Bollinger Bands have changed since the early days. John tells us that the core concept stands the test of time, though he has added some extra indicators.
Next, Meb asks about combining two types of analysis – technical and fundamental – something John calls “rational analysis.” For many people, you fall into one camp or the other. But John was able to find overlap between them. He tells us how, and even ropes in two additional types of analysis to include – quantitative and behavioral. He thinks combing all four works better than using any single one. Meb asks how you actually use them all together, to which John gives us his thoughts.
Meb then asks which sector John is currently identifying as a good source of potential trading profits – but he immediately discounts the validity of his own question. You’ll want to hear why. This leads into a great takeaway – using the right charts for entry/exit in a trade. Specifically, a trader may use a short-term chart to initiate a position, but then not move to a medium-term chart to help him navigate how long to hold the position. Instead, he keeps looking at the short-term chart, which obviously will oscillate, and potentially scare the investor out of the trade. John says “People have this time frame confusion that I think does a huge amount of damage.”
Meb then asks about trade management. John says the most neglected issue is position sizing. People need to know how much capital to commit to their strategy, and there is a mathematical “optimal” answer. In essence, the problem is “betting too large.”
This leads John to reference the trading concept of “regret” – the percentage of time you’re in a drawdown. Turns out it’s about 80% or 90% of the time you’re invested. The only times you’re not in a drawdown are when you’re setting new highs, and that’s pretty rare. But most investors hate drawdowns and just don’t do well with this reality (part of the reason why investing is so hard for most of us).
There’s far more in the episode, including the most influential books John has read, Bitcoin, currencies, how to trade volatility, and John’s most memorable trades (good and bad). What were they? Find out in Episode 37.
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Links from the Episode:
aka Rollo Tape
Transcript of Episode 37:
Welcome Message: Welcome to the Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us, as we discuss the craft of investing, and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
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Meb: Hey, everybody. We are coming back after a two-week podcast vacation. I’ve been doing a lot of traveling, but super excited today to be welcoming local friend and long-time market historian and trader, John Bollinger. Welcome to the show.
John: Thanks for having me, Meb.
Meb: Despite the fact that we both live in the same town in Manhattan Beach, you and I both fairly often are traveling. You do quite a bit of an international. Where have you been lately? You’ve been home for the holidays in New Year? You’ve been on the road?
John: I have been home for the holidays. Last year, I don’t know, China, Japan, Europe a couple of times. There’s a lot of interested in my work, so people are very anxious to meet me and, you know, get the word so to speak.
Meb: Historically, that’s been a lot in Asia too, right? I mean in Japan and in China, both?
John: Actually, yeah Asia, there’s tremendous interest not only in Bollinger Bands and the related tools such like that. But in technical analysis in general, Japan has a very long and deep history in technical analysis. And in China where, you know, things aren’t as clear as they might be because of government ownership of securities, and such like that. Government control of the markets, you often can’t see the traditional fundamental values at work. A technical analysis has assumed a sort of primacy amongst investors.
Meb: And I was gonna ask this later in the chat, but since it’s come up already, you know, I’ve known you for a long time, and one of the things that’s always impressed me is that you have a deep interest in, not just research history, but market history in writers. You look like you read a lot of these academic studies, and they’ll talk about, you know, momentum in reference of all the studies in the ’90s. But I’ve been talking to you for years and you all talk about, you know, looking back to one of the true sort of market historians. Who have been the biggest influences on how you think about markets, and looking back on kind of the ways that you’ve developed as both a researcher and money manager in general?
John: I think a guy who was at the peak of his career, a century ago, by the name of Richard D. Wyckoff. Probably the most important person, I think, in the history of technical analysis, not just in terms of his impact on me. He developed many of the concepts that we think about today in terms of implementing modern technical analysis, even in terms of quantitative analysis, this idea of trying to identify supply and demand, trying to identify what sort of actors they are in the markets and what their conflicting motives are.
You know, he was thinking about these things at the turn of last century, started chalking, you know, prices up on the board, as you might imagine. But really got into the analytics of it, and eventually founded a school called the Stock Market Institute, and edited a magazine for a long time, the Wall Street Analyst. But he was just such a deep thinker that the concepts that he put forward a century ago are still relevant today, and that’s often what you get from studying the history of technical analysis. He finds guys who just saw things so clearly, and so profoundly that even though the times have changed, and the markets have changed, dozens of other things have changed the basic concepts are still viable.
Meb: So, for someone who’s interested in Wyckoff’s work, do I remember…did he write some books or there are books about him that you would you recommend? What’s a good starting point there?
John: He wrote one book under a pseudonym. The pseudonym was Rollo Tape. Following the tape back in those days was a big thing, and he wrote three or four more books under his own name. But if you can get copies of his magazines, and they’re still around in libraries here and there, it’s not that hard to find. Many of them are microwaved, micro-filmed, I’m sorry.
Meb: Probably microwave as well.
John: Yeah. So, you know, that materials available. Those are fascinating. He wrote in-depth articles, you know, as he was developing his concepts again, you can see how he would work through ideas about how the markets work and such like that. And that’s exactly the same thing that we do today, obviously, we have different markets but the process, the analytical process was the same.
Meb: You know, it’s funny because we often talk about a similar thing on this podcast which is, you know, a lot of people talk about value. And we say, “Look that Ben Graham was talking about that 100 years ago as well,” and talking about trend with Charles Dow, and a lot of these guys that at least. We’re talking about this thing, it’s nothing particularly that, you know, a lot of these audience is younger, don’t’ actually know that a lot of the concepts have been around for a really long time, and we link it to the Wyckoff magazine and books in the show notes we published. Is there anyone else off top your head that has been a big influence, you know, over the years in your thinking?
John: Well, you just mentioned another one, Charles Dow. He was the grandfather of trend following. He developed the ideas about trend following 120 years ago or so. You know, he’s the editor of Barron’s, which was another paper that he owned at that time. Hamilton, William Peter Hamilton took those ideas and codified them, you know, in a long series of editorials that basically the foundations of trend following investing as it exists today.
Meb: You know, it is funny because we had taken a look back and said, Dow Theory, there’s a lot of ways to interpret it but at the simplest kind of is a market going up? And he was looking at the industrials and transports, I believe. We would say even something if you simply just laid overlay the moving average on each, and so when they’re on agreement, they actually had the best performance. You know, when it was mixed, not as good, and they were both in down trends it’s the worst. It’s held up so well out of sample over a hundred years later.
John: Exactly. In 1930 or so, Robert Rhea who was the person who kind of codified all of Dow’s and Hamilton’s work. He suggested using the simple 5% filter, just take, you know, the prior highs anytime you fall 5% from them, you mark that average as being in the down trend. You keep track of three or four or five averages and, you know, when they’re all in up trends the market is doing well. When they’re mixed the market is going sideways. When they’re all in down trends, well, you know, what’s happening then too.
Meb: Yeah, you know, it’s funny. Keep it simple. Before we start balancing around a little bit more, you know, looking back in history let’s take a look at Bollinger’s history. You know, you were originally born in Vermont, right?
John: I am.
Meb: And didn’t start out in LA as a trader in market historian, right? Do I remember correctly?
John: That’s, you remembered exactly correctly. I was in the film business as cameraman. I went to the school of Visual Arts in New York, and went to apprentice to a cinematographer which is something I would do again later in the markets. Apprentice to a very fine cinematographer guy by the name of David Coyt, some people will know that name, sort of a cinematographer, cinematographer. I’ve spent the first 10 years in my career in the film business which what moved me from New York to LA., the sorts of films and the sort of work that I wanted to do that was more of it here than there was in New York, so that moved me out here. But all along I’d had interest in markets and my mom was getting ready to retire, she ran a small advertising agency. And she asked me, she knew I was interested in stock market stuff like that, she asked me to look after investments. And I quickly learned how hard that was, and started focusing on ways that I might do that better, started learning about technical analysis and such, and gradually transition from film to the markets by the time I was about 30.
Meb: And, you know, if I remember correctly you started spending a little time on not working the camera but in front of the camera, the predecessor to CNBC. What was that called?
John: It was the Financial News Network. It’s actually a funny story. There was a guy on the radio here in LA. By the name of Ed Hart. And in five minutes in the morning he could tell you everything you needed to know for the day about the markets, what to look at, what stocks to follow, what areas were hot, what areas were not. He was just really incredible. The Financial News Network, it just started up. It was the first cable network that was ever devoted to the stock market.
And they asked him to come down and work with them. And they had asked me about six months prior and I was very happy doing what I was doing. I was trading options at the time. I turned them down. But when I heard Ed Hart had gone to work for them, I said, “Well, it’s good enough for Ed it’s good enough for me.” So, I went down and asked the guy if the job was still open and it still was, they were interested in somebody who could provide some technical content on-air. And they had actually some very sophisticated computer systems that they had built up to analyze the markets.
The chairman of the board, a guy by the name of Earl Brian had written a master’s thesis on technical analysis and implemented it on mainframe computers. So, there was a liking of technical analysis at the network that came from the top down. So, it was very easy for me to integrate in and I started behind the scenes providing material for other people. And then oddly enough one day they were short of a person and a guy came in and said, “You go out there.” At that time, I was terrible. I had terrible stage fright, stuttering.
Meb: Could you find some old tapes with this? Were they archived somewhere?
John: Oh, yeah, yeah. There’s ton even embarrassing material around. But, you know, they liked the content that I provided if they didn’t like my delivery, and they put up with me long enough for me to make the transition to be fairly smooth provider.
Meb: It takes practice and so, would this have been around the same time or would it preceded or been in parallel with, when you really started developing Bollinger Bands? Because I know it’s been about 30 years, right?
John: Actually, it’s coming up on 34.
Meb: Oh, man. But it was around the same time as it to you?
John: Actually, I had just developed Bollinger Bands when I went to the Financial News Network, and probably in the prior six to eight months. I went in ’84 and I did the final touches of Bollinger Bands as they are today, probably 1983. I started on them on 1982. You have to remember, this was in the era before there were PCs. So, we had little, we called them micro-computers but they’re just basically the predecessor of the PC. You had to piece them together with cards, you buy memory cards and stuff like that, put them together. But I put one of those together and I had an early spreadsheet program called Super Cal. I’m sure somebody in the audience will remember that. It was for the old CPM operating system.
I was trading options at that time, and in order to trade options the one thing you have to have is an estimate of volatility. So, one day I copied the formula for volatility down a column in the spreadsheet, and I saw that it was changing over the time. And, you know, that doesn’t sound very interesting now but in 1982 we believed volatility was a static quantity. It was like a property, like the walls as white as the cars blue. You know, IBM’s beta is 1.2 that sort of thing.
And just about then that Robert Engle was doing his work with GE. He eventually get the Nobel Prize for his work on the fact that volatility was volatile. So, it was in the air that sort of idea and I had a trading system that I was using that used fixed parameters. And you constantly having to readjust them, it was a nightmare. And every time you readjust them you’d led motions into the marketplace or you’re bullish you adjust them to look bullish. If you bearish, you adjust them so it looks bearish. I was looking for some way to automate that process and seeing volatility changes that maybe I can use volatility. That was the genesis of Bollinger Bands.
Meb: So, the quick definition of what they are for people if there’s someone who’s been in a closet that’s listening to this podcast. What’s the quick definition of Bollinger Bands and the quick overview kind of in your opinion from the creator, the best way to use them?
John: So, Bollinger Bands are just a type of trading bands. All trading bands are more or less the same in their concept. They provide a relative definition of what is high and low. If you’re near the upper band, prices are relatively high, if you’re near the lower band, prices are relatively low. Bollinger Bands are sort of trading that is driven by volatility that was my contribution to the process. So, they’re automated, you don’t have to adjust them, you don’t have to change them, you don’t have to maintain them as the market regime changes the Bollinger Bands change, they tighten, they expand. They’re driven by a middle band. There are three lines, upper, middle and lower. So, the middle band is moving average, so if stocks are trending up the bands are rising. If stocks are trending down the bands are falling.
They provide that key definition whether the prices are relatively high or relatively low, and you can use that to assemble all sorts of trading approaches. You use them in pattern recognition to try to rigorously define W-bottoms or M type tops. You can use them to, you know, identify oversold and overbought opportunities. You can use them in trend following methods. Or, you know, in congestion range markets you can use them as buy and sell levels to reverse to the other side of the range.
Meb: One of the beauties of publishing like you have for so long, you also have to be one of the longest continual newsletter writers, right? You’re a capital grower, rather. When did you start that? In the ’80s as well?
John: Actually, it started in ’87, not an auspicious year.
Meb: Well, it depends, you may have started November or earlier in the year, but so you’ve been writing for a long time and one of the beauties of writing and John also does a lot of speeches around the world and videos, many videos that are probably people have seen in DVDs, a bunch of websites, Bollinger Bands and a whole book on the topic “Bollinger on Bollinger Bands”. But one of the cool things about publishing is other people taking your work and kind of running with it. What have you seen as kind of innovative or interesting ways that people have kind of built upon and used in ways you might not even considered over the years? Have you incorporated any of those methods?
John: So, I was like one of the original open source guys. When I developed the bands, I immediately put them out in the public domain and allowed other people share the formulation with them, and allowed other people to use them to incorporate them into their software and into their platforms. And the benefit of that is astonishing because over the years people will come to you and they’ll say, “Look, I’ve taken your work and I’ve done these fantastic things with it.”
I remember the first time that it really occurred to me what a treasure trove this sort of additional information was in Hong Kong, many, many years ago. A Chinese guy who was running some active trading approaches inside a hedge fund was using Bollinger Bands on the equity curves of the different approaches to allocate funds between the approaches. If the equity curve was trending up towards the upper Bollinger Band he would take money away from it and put money into a system that was trending down toward the lower Bollinger Band. So, he used it to allocate funds within a fund. It was just amazing.
Meb: Which is funny because it’s the exact opposite what we’ve seen in the literature of what most individuals and institutions wanted to, which is put money into the funds that are doing well and take money out of the performance chase.
John: Well, you know, Humphrey Neill the founder of contrary in opinion said you should do the opposite. And I found out in my career more often than not that he was correct.
Meb: Have you been working with these for 30 years, any general ways that your thinking is changed on using them in general? Are there any major takeaways that you use now that you wouldn’t have maybe 30 years ago?
John: Well, the first thing is that the bands themselves haven’t changed. They withstood the test of time. The basic idea turned out to be a first principle sort of idea, a robust idea that’s as useable today as it was when I developed them. I’ve added some extra indicators over the years that are related to them but other than that they haven’t changed very much.
In terms of my approach to using them the very first system that I built to use the Band, or actually the system existed before the Bands, the very first system I modified to use the Bands I still use today. So, some things have stood the test of time. Some things haven’t stood the test of time because market dynamics have changed a lot. I think years ago, it was a much simpler proposition, especially when trading individual stocks to simply try to sell the upper Band and try to buy the lower Band. The sort of success rate of that was much higher years ago. I think you need to be more sophisticated, you have to bring a little bit more to the party these days. You have to add, you know, some supply and demand information or some market trend information or some group and sector information. You have to add a little a bit more if you want to be as…
Meb: That is a perfect lead in to kind of the next topic that I would like to talk about. And, you know, so many investors in our world are severely what I like to called siloed, you know, they say, “Look, I’m dividend guy” or “I’m a pure trend fall.” And, you know, that’s fine. I think there is many approaches in the markets that work and, you know, people find the one that they’re attracted to God bless them.
But one of the things you’re known for is investing concept that is probably considered to be accepted today, but may not have been necessarily at the time which is kind of combining this juncture overlapped between technical analysis, which is the study of price trends, supply and demand, but also fundamental analysis, which you called rational analysis, which makes so much sense. Maybe you could talk a little bit about that? How did you arrive at putting those? By the way, John has to be one of the first CFA CMTs, there can’t be too many all around, right?
John: No. There’s actually a lot of us now, but I am the first.
Meb: First ever?
John: The first ever by simple default. When they gave the first CMT exam that’s Chartered Market Technician I was the only CFA that took it.
Meb: That’s funny. That’s awesome. That’s really cool piece of trivia. I didn’t know that. So, there got to be more analogies because there are so many CFAs. But for a lot of people it’s kind of like holding two very different beliefs in their head, you know, and so the prospect of using fundamentals and technical, it’s a little more accepted now. But how do you come around to that way of thinking? And maybe we talk a little bit it about how you possibly used the two of those together in investing approaches?
John: Well. First it doesn’t have to lead to cognitive dissonance. These things can be complimentary they don’t have to fight with one another. You know, I started the way that most people do, taking brokerage research and trying to make money out of that, stock tips from, you know, brokerage houses stuff like that, obviously that doesn’t work. It didn’t work then it doesn’t work now, ta, ta, ta. And then I shifted to technical analysis. But I was always impressed by…back in the day stock quotes are very hard to come by. It was very expensive. If you wanted quotes in your home, you got this thing that was a size of a refrigerator, had to have plumbing, you know, to keep it cool, it was crazy.
So most people who are involved in the markets would go to brokerage firm and brokerage firms would give Active Trader’s Desks, just given to you. You know, and obviously you had to generate commissions too to get one. The idea was that the firm that gave me a desk was a firm that no longer exists called A.G. Becker, and they had really terrific research, I mean really terrific research, both fundamental research and technical research, which was very unusual for a firm in those days.
And I would look at it and I would just go, you know, all of this is pretty good, and if you put the pieces together it’s even better. They had a woman there by the name of Elaine Garzarelli, who did a great group and sector product. They had a guy by the name of Roy Bloomberg who did a great technical analysis in options product and had a number of great fundamental analysts. So, if you could put all those parts in pieces together you could actually gain an edge so that’s the juncture of that idea.
Today, you know, it’s not just technical analysis and fundamental analysis today we’ve got four parts to the puzzle, right? There’s quantitative analysis, behavioral finance, technical analysis and fundamental analysis. So, you’d steal from all those different disciplines take little pieces that work and combine them into an approach that works better than any single one of those approaches individually.
Meb: And so, how do you do your process? How do you decide from which tool you had to draw? How do you put it all together? Do you have a systematic way about it or what’s kind of the combination? How do you go about it?
John: So, the thing that we know that I like the most or the things that I like the most are group and sector analysis. I think this is very powerful concept. Most people regard that as some form of fundamental analysis. I don’t actually know how it should be labeled. But I combine that with technicals, with momentum and such. I’m very interested in growth. I think there are times when the market value’s growth very highly, there are times when the market discounts growth. So that rotation between styles, between growth and value, between large cap and small cap that’s a very big piece of my process. Today, that would be called quantitative analysis, back in the day it’s called technical analysis.
There’s an interesting idea there is that, you know, these pieces have been shuffled around over the years, different groups have claimed different pieces. Much of what we know is behavioral finance today came from Kahneman and Tversky from their pioneering work, but a lot of it came from the work of a guy by the name of Humphrey Neill, who is another Vermonter, right? They called him the Vermont Ruminator and he developed this whole idea of contrary opinion that the crowd could be wrong, that people would go to excess.
And, you know, there were times when you should be in tuned with the crowd and follow the trends and there were times when you absolutely should not, and you should go the other way. So, you know, the history of people making, you know, efforts in analysis in this market is lived with people combined these ideas. It’s nothing that I come up with it’s an idea, you know, that has tremendous steps in terms of history.
Meb: Yeah, I mean it’s a scenario we often talk about that my favorite type of investment is, if you distill it down to the two simplest would be something that’s cheap in entering an uptrend. If I had to pick one thing and it’s interesting because that’s not the way the world has looked on kind of a country or sector level for a while, but it seems to have been changing in the past few months for a lot of what you would assume would be cheaper sectors, industries, countries have really started having great performances over the past six months. But for the prior years, I mean the U.S. has been the number one stock performer since the bottom of the crisis, and the cheap stuff has just gotten cheaper but that’s what creates opportunity. Were you kind of seeing opportunity now and the groups and sectors, is it…?
John: Just to hook back into that for a second, there’s this guy by the name of Bukowski. You know, he devoted the best part of a book to exploring exactly those kinds of ideas. I think they’re really fantastic ideas.
Meb: What’s the book? Do you know?
John: What works on Wall Street.
Meb: We’ll get back to books in a little bit. I don’t know if you can share this or not but is there anywhere like in kind of your research you’re seeing opportunity now? Any groups, any sectors off top of your head?
John: Well, in the short to intermediate term…
Meb: By the way, sorry. That’s a terrible question to ask and one of the worst things about TV is, you know, there is no timeframe and you actually had a good quote not to interrupt you, in one of your pieces talking about timeframe confusion. Where people will look at a short-term chart but will be trading on a longer-term time rising or be trading on a longer time rising but only looking at short-term charts.
John: So that comes from a whole idea I did about task analysis, right? There are certain things that we need to attach our analytical task to the appropriate timeframes. Long-term is our background, it’s what’s happening in the world. You know, it’s money supply growing, you know, are we in a secular economic uptrend that sort of thing. You now, intermediate term is sort of stuff we’ve been talking about. Growth versus value. What groups and sectors are doing well? What groups and sectors are doing poorly? What countries are uptrending? What countries are down trending? All that.
And short-term is really only for execution. And the classic mistake that people make is they make a decision in the intermediate term. They say, “Well, I like France and inside France I like the technology stocks.” All the parts and pieces are fitting together. So, they go to the short-term to execute and get their positions and stuff like that, tick charts and all that stuff looking quotes. And they get their positions and they don’t revert back to the intermediate term to analyze them. They just watch it go, tick, tick, tick, tick, and of course, when something’s going tick, tick, tick, tick, it goes tick, tick, tick, tick against you and you’re flushed out and you walk away. But we had no reason to be flushed out because your reasons from the intermediate term was still valid, so you should hold on to that position. So, people have this timeframe confusion that I think does a huge amount of damage.
Meb: And we see that not just with trading but also investing where so many people will come to me or having conversations with, say they have a long-term investing horizon or plan. And then will often really operate on their emotions and psychology on the timeframe of weeks and months. And, you know, that like you mentioned becomes the biggest problem on, you know, getting caught in the emotions but really losing side of the long-term.
John: The 300-pound gorilla that’s sitting in the corner is wearing a sign says discipline.
Meb: That’s Geoff by the way. For the podcast listeners, Geoff’s in the corner. Just kidding. I wish Geoff was in here right now because he loves trading options, and he would love to hear some of this. Yeah, discipline is the hardest part so along with the trading, you know, I know you’ve talked a lot historically about position sizing. And what’s your opinion on say stop losses or how to exit trades? What’s your, in general, approach to, once you put on a trade? Is it a defined exit? What’s your opinion?
John: So many parts and pieces there. First of all, for the typical person who is an active investor and or trader there is no question in my mind that the greatest thing that is neglected is position sizing. Okay, you’ve gotten an idea how much do you put to work? And you need to have a way to quantify that. You can go to Ralph Vince’s work if you want or there any number of people who have written on the topic.
I don’t think it really matters that much, which of the approaches you use, as long as you use one, as long as you have a rational idea. Because the problem is, here’s how the problem typically works out. You have a very elegant approach to the markets. It generates, say 17% year on average with a relatively small deviation. So, you need to know how much of your capital to commit to that. The problem is, is that there is in fact a mathematically optimal amount, say 7% or 10, 15 or 20, whatever it is that you should commit to that approach.
The problem is that on the down side it doesn’t matter that much, you just earn a little bit less. So, if the optimal position size is 15% and you’re 13% or 12% or 11%, you’re just gonna earn a little bit less, you’re gonna give up a little bit of your edge. The problem is on the other side, at 16% you’re gonna earn a lot less. And at 17% you’re gonna earn even more less. And that curve goes down really steeply, right? So, the problem is betting too large not betting too small. Betting too small, you give up some of the edge that you’ve developed you’re not gonna make as much money as you should. But if you’re over the peak of that curve, if you’re betting too large for your win-loss ratio, for your system dynamics the risk of ruin rises abruptly and that’s something I don’t think that people realize.
Meb: Interesting about it too is that, that’s assuming you actually can quantify the worst case scenario and a lot of times the classic trading phrase is, “Your worst draw-down is always in your future.” So, you know, for a game like Black Jack, it’s probably easy to quantify the correct betting size but investment markets it’s a little harder.
John: That’s why I said that didn’t really matter what approach you use as long as you use some approach so have an idea of where that peak is, and you can, you know, assure that you’re on this side of the peak. The safe side of the peak not the danger side of the peak.
Meb: You know, it’s hard to kind of describe this and the younger investors listening to this that haven’t had that really painful trade. You know, I learned this lesson a couple of times in my early 20’s trading, blowing up an entire account, you know, with that same thing taking way too much risk on one investment. And you learned that lesson once, you know, you feel the very real visceral pain of losing money and it colors you for forever. But you see this take place in echoes where people who haven’t had, and probably worst thing that could ever happen to a young trader is a string of unsuccessful trades.
John: That’s correct that’s absolutely correct especially if they’re their first, second, third, fourth trades.
Meb: Yeah. And that’s why I became a quantant [SP] and said, “Oh my God, I clearly, you know, have no idea how to position size or how to place these bets. And so it’s something that, you know, drove me into quantitative analysis because of the too much risk. But we see it all the time, I mean I even had a young lady from Australia emailed me today and she says, “Hey man, you know, I’m investing that and the other, but I just really hate draw-downs.” And I said, “Well, look you should probably be happily sitting CDs and just move on.” You know, you should be in very short-term bonds and just be happy with it or, you know, maybe half in cash. But the worst case scenario for that type of person is taking on too much risk and for the younger generation who for right now, for the past eight years has never seen a bear mark in the U.S., you know, the expectations started to get out the line. So, we always tell people to try to air on the side of caution. Try to look for what would be optimal and then kind of back away a little bit.
John: So, I run a little open source project. It’s a Python, written in the Python programming language. And what it does is it takes your trading stats whether they can be long-term short-term, it doesn’t matter. And it visualizes them for you so you can see them probably has a dozen different graphing styles. And it really lets you see the dynamics of the decision that you’re making and what they look like. One of them that’s really interesting that people find totally counter-intuitive but once they’ve seen it they never forget it, this is called regret.
And this is simply the amount of time that you spent in draw-down, the percentage of the time you are in draw-down, right? And people if you intuitively ask them, “How of the time are you in regret?” They’ll say, “Maybe 10% or 15% of the time.” It’s like 80%, 90% of the time for most people. Because the number of days that you’re making new highs on your equity curve, those are the only days which you’re not in draw-down.
Meb: So, you know, we actually wrote a post on this not on trading but applied to the brought indices called something like, “To be a good investor you have to be a good loser.” It was looking, I think even at the S&P and it says there’s only two possible states, all time high or draw-down nothing in between. I may get this wrong, I’ll post it in the show notes but I think the S&P was like 60% or 70% of the time in a draw-down, right? Like you…
John: Or it’s got to be higher than that.
Meb: Yeah, all time high is a kind of rare event.
John: Because even if you make it all time high tomorrow you’re down a tick and that’s a draw-down day.
Meb: And that’s hard for people.
John: It’s very hard for people. That’s why we did System View, so that you can just take your trading stats and plug them in and it will graph them out, and you can see this stuff. You know, it’s so enlightening when first time people see it, they go, it’s like somebody turned lights on in the room.
Meb: Can this be accessed through the Bollinger Bands’ website?
John: No, it’s on GitHub.
Meb: GitHub, all right. Well, we’ll post a link if we can find it. By the way, there’s a massive amount of researches on Bollinger Bands’ website. I assume if you’re probably like me, just looking at the website I imagine the vast majority of the tools which you built on the website, which is a lot. I imagine a lot of those you built for yourself because there was nothing else out there.
John: Good. Actually we have several websites the big analytical one is the same title as my book “Bollinger on Bollinger Bands”. It’s got a short name bbands.com. But that was totally built to allow me to trade. Its sister side is a group in sector, analytical site, those two sites were 100% built to allow me to trade. And, you know, we were touching on this before when you asked me about my newsletter. I write my newsletter for myself. It’s a discipline. I don’t write it for other people. Every month I have to sit down and I have to do that, it takes me a week. And it’s when I do my deepest thinking, it’s when I do, you know, when I forced to put everything together and make it in black and white.
Meb: You’re not publishing in Wednesdays, I think, right?
Meb: Because originally it was like for a weekend delivery, do you even mail it anymore or is it just electronic?
John: No, just electronic. No more paper.
Meb: The world is changing. I mean so it is funny because the reason that I started writing on the blog years ago, similar to what you’re talking about was to try to find feedback on a couple of ideas. And very just rudimentary ideas that I couldn’t find, you know, kind of being, you know, sitting in the corner of a dark room, not having an interaction. The resources said, “Hey, look who else is thinking about this and publishing ended up?” The same sort of thing ended up having to build it on your own, but you got a lot of the feedback and that to me has been a much better resource. But the writing certainly I think is a wonderful process to try to really learn what you think.
John: You know that feedback process is so important. When I started it was very hard. No internet, obviously, or anything like that. So, it was very hard to find other people to talk to such like that especially being out here on the West Coast, away from the financial centers and such. Although, we had a vibrant financial center here in LA at that time. It’s still hard to find people and books. You know, there was a guy by the name of Nidam. He ran a company called Nidam Book Finders, and you’d call him up and you’ll say, “I want a copy of Robert Rhea’s the Dow Theory need to say fine, you know, I’ll give you a call in a couple weeks.” He call you back and he say, “Pick it up at this antique store.” You know, he don’t like sort of like buying drugs.
Meb: You know, he reminds me so I just forgot about this. Listeners are used to go over with Pastor John because there was he had archived, someone called hoarding maybe your wife would call hoarding, archived Benz Magazines for, I mean how long you have them, do you still have them?
Meb: Why would you do with them?
John: I gave them to the MTA library.
Meb: I thought that you used it in his kindle.
John: No, no, no.
Meb: I had a number of models that I built off Nelson Freeburg’s work where data series that hit only to my knowledge only existed in Barron’s and John had many, many years, so I spent a handful of days in a storage room writing down all of the data from Johns Barrons.
John: I still keep a big database from Barron’s, each week I enter a whole bunch of numbers out of Barron’s, very useful.
Meb: And I remember Rolf Benz used to keep a good spreadsheet there. And there is a lot of ideas that I think are coming that econometric, rational analysis, time series that I think a really fascinating that there’s a handful of other people that do some similar work there too but there is an area I used so much time in “Fastback” was a great book back in the day Stock Market Logic.
John: “Fastback” was a terrific guy, I mean he was a really deep thinker and he did incredible work.
Meb: And so what would on top of writing in books and by the way you probably know this. But my first whitepaper was actually written to avoid taking the seam to level three. is the only reason I wrote it because they’re getting rid of the paper requirements that “Oh, my God I don’t want to take the test and so I actually have never written a paper before and wrote a paper and lot that’s actually gonna be 10 years anniversary I think this month. Anyway, let’s talk about books for a second because you’re a big market historian in kind of thinking, who are some other books that younger investors may not know about are books that you maybe of most gifted to people other than “Bollinger on Bollinger Bands” but some really good books that have been influential to you, any other ideas off top you end.
John: So there was a statistician at GE by the name Arthur A. Merrill and he retired at 65 as, you know, was the way in those days and he started the second careers of market technician. And he is grown so concisely and beautifully, it was astonishing so anything you can find by Arthur Merrill, you know, it’s sort of hard to find but it’s in the library since about any of his work is really terrific, just to see how his mind worked and how he thought about markets. Another, you know, sort of more contemporary guy is fund manager by the name of Martin Zweig, he had a couple of books “Winning on Wall Street” and “Winning with New IRAs. I think it was some…
Meb: Yeah, I was sitting on the shelf in my brother’s house, I remember that book.
John: Yeah, yeah. So those books are chock-full of interesting ideas.
Meb: Anything about some more we can talk about and let me know. Those are some great ones. I was gonna joking when we said, interesting thing about Los Angeles, I said, “We’re gonna…in the next couple months host to some sort of FinTech Happy Hour Meet up. So, we’ll let you know whenever that’s gonna be. And listeners if you find yourself in LA, we’ll post it publicly. So, along the books, you know, you had a lot of resources on the website. Any other outside tools, website, technical analysis, software things that you used that a thing are particularly useful or is it all just custom built coded up by JB.
John: I do some coding but really only when there’s no alternative. I like to code, you know, it’s a nice discipline, I think it’s actually good for you, makes you thinking in sort of interesting way. But I don’t think that it’s really essential anymore there such powerful tools available. If your client types like yourself are the statistical language are has built, a huge thriving community around R in Finance. And, you know, very helpful people.
Meb: People, is there like a central hub for that, is it a place you can go or is it…
John: There is a group in Chicago actually called R in Finance, they have website. That’s a great start place for that, a very friendly, very nice, very helpful…
Meb: Yeah I mean that’s a good news in those days. You can almost find any type, I mean always above my pay grade, I do, it’s little goading as possible. I think I tapped out on my coding, it was my freshman year in college. But there’s a lot of communities built around basically anything you know there’s some zero for hedge funds, value investing club for those guys, the Bogleheads, who tend to be pleasantly insane about, you know, the Vanguard Investing.
And then there’s a lot of quant finance, Quantopian is the newer one on kind of writing up the algorithm. So there is a lot that we can find out there. One of the my favorites things to do when I’m talking to people is all go grab their Twitter’s stream and you can sort them there’s a really terrible design website but it works. Only one that I know of called Fastroid and you can sword people’s tweets by the most popular. And so we to look Johns and, I mean I already would…it seems your top five all most popular tweets revolved around Bitcoin.
John: You know that’s just an accident, I’m very interested in Bitcoin, no question about that. But I happened early on when I first started on Twitter, one of the first tweets I ever saw was about Bitcoin. And there is a huge Bitcoin community on Twitter, I don’t know why? There’s another huge Bitcoin community on Reddit as well. But I just fell into them and, you know, they’re sort of kindred spirits. So, I random tweets about it.
Meb: So what this is, tell me. Is it one we ever owned or traded Bitcoin? Do you think it’s actually, you know, the same rules apply? Do you think the Bollinger Band has been worked on Bitcoin?
John: Bollinger Bands work fantastic on Bitcoin. And they work fantastic on all forex.
Meb: Yeah. As you did say, currency traders in general ones tend towards lean towards technical analysis in general but often you hear in the circles in the vernacular love using Bollinger Bands.
John: So, there is a reason for that, currency trading is pairs trading, you’re long one and short the other essentially. So, sometimes you’re, you know, you find a stock you like enough stock you hate, you pair them together and that’s a pair. Their portfolios are full of pairs trading. The ideas to earn a return at reduced volatility over time take out the market factor and just capture the sweetness of your ideas. So, forex is pairs trading and pairs have a statistical property, they’re stationary or they exhibit in the statistical parlance, stationarity. And it just turns out that Bollinger Bands in any approach like Bollinger Bands work just a little bit better with series that exhibit stationarity. So, there is sort of a built-in edge to using Bollinger Bands on anything that’s a pair.
Meb: That’s fascinating.
John: And you can create pairs, right? I mean you can, you know, you can be long IJR and short SPY, right? I mean you can create all sorts of pairs and then analyze those ratios using Bollinger Bands and you’ll find this tremendous value there.
Meb: I was listening to, have you remembered Gunlock and sometimes pairs make sense to me sometimes they don’t. I remember listening the Gunlock talk about a pair trade ones and what was it. It was like long Apple short Gold or something vice versa. And I was like, “What in the world those two things have to do with each other.” I have no idea but pairs trading is an interesting area. But Bitcoin is fascinating, I’ve been sharing, I think it’s a very interesting diversion, I never own one. I don’t trade it. But it’s very pleasant distraction.
John: So, we’re just coming up on a point where Bitcoin is really gonna get tradable, we’re gonna get the Bitcoin ETF pretty soon. And that will be, you know, that will be liquid and in and out, you know, for low commissions and low spreads and blah, blah, blah. And I’m really looking forward to that is all I can say. I think it would be great trading in long.
Meb: This is surrounded by so many interesting stories I mean the whole Silk Road story. Just hold on to it in the bio if you’ve never heard of Silk Road listeners, there is great wired story. I think it’s becoming a movie now, straight out of some, you know, a science fiction but so closes to me a marketplace we could buy and sell anything. But Bitcoin was kind of the perfect currency to do that. In the end, the founder eventually, you know, getting arrested because he was trying to put on hits on people while making tens of millions of dollars each month working from a cafe or like a library.
John: So that was the founder of Silk Road not the founder of Bitcoin.
Meb: Bitcoin have acknowledged founder now.
John: There is a founder, you know, nobody really knows who he is? But put it this way, he was a heck of a coder. I mean he supposedly a Japanese guy, I mean we’ll leave it at that.
Meb: As you said I wouldn’t be surprised, I would love to hear one day that turns out that was the CIA that developed Bitcoin as a way to trade, I mean as you said, you can’t track it but to be able to see what’s going on to show you money scenarios who knows I…
John: That makes sense to me.
Meb: Yeah. And, you know, I put it up as a subscription option on the idea form for a while and no one subscribed. Despite being, you know, in kind of a younger tech crowd in Los Angeles I’d only know many friends that use it but then I go to other countries. I mean I remember I was down in Mexico as chatting with a fellow who has a bunch of Bitcoin ATMs. You know, that was his business to put him Bitcoin ATMs.
John: Bitcoin is clearly more popular outside of the states, there’s inside the states. And you know it’s sort of understandable because if you’ve had currency problems in your life then the idea of an alternative currency gets much more appealing.
Meb: It is, you know, for someone who travels a lot until you see this, you know, we’ve seen a lot. In the U.S. most investors don’t traditionally think that much about currencies, you know, being the reserve currency but also the world’s biggest economy, most investors and individuals don’t know anything about occurrences hey it’s a great time to go skiing in Canada now, it’s a great time to go down to Mexico or vice versa when the U.S. dollars is doing poorly. But almost every conversation you have with an international investor is just littered with currency, you know, exposure or ideas and, you know, a lot of the house to do with many foreign emerging currencies, you know, can go through periods of huge volatility and draw-down’s and everything else involved.
John: Well, and, you know, we’ve had the advantage of being able to lend and borrow in our own currency because we have to reserve currency for so long, you know, most other people in the world have never experienced anything like that. So, we have a certain, you know, we perceived the dollar in a way which frankly most international investors simply cannot comprehend because they never had that. So, yeah, you’re right once you get outside of the states forex the exchange rate is a huge part of every decision.
Meb: You know, I assume you trade currency, I mean you trade pretty much everything, right, stocks, currency, is that accurate or not accurate?
John: Yeah, yeah. Pretty much. Actually, what I mostly trade is volatility.
Meb: Oh. I mean you’re getting late into the podcast for that but that is a wonderful rabbit hole to start to go down. I mean what’s your genius when you’re trading volatility expressed through options are you trading volatility funds or you, what you’re doing?
John: So, I’m really interested in all the VIX derivatives that we have now, I think they offer ,you know, really interesting opportunities. I think the thing about volatility is not so much how you trade or what you trade there is many different ways to go after that option is how I learned it but I don’t really do that anymore. The interesting thing about volatility for me is how misunderstood it is. The academic field…
Meb: Go on.
John: Well, the academic view of volatility just doesn’t, get the facts in the marketplace. And since most people are trying to trade it from the academic view that creates tremendous opportunities if you’re willing to sort of look outside the box and take an individual approach to it. So, I just think there’s tremendous opportunity in volatility today and I don’t think that’s gonna be odd way anymore. Because the academy is so attached to its view of volatility and they pounded into all the finance students, everybody comes out with those views and, you know, it’s almost sort of a universal truth and it just doesn’t fit the facts. I mean in nice theories in all that but they don’t pick the facts that we see in the marketplace.
Meb: Interesting. We have to feel like we’re gonna have you on back on like six months to really go down that rabbit hole otherwise we’ll be here three hours. Let’s start to wind down and do quick…a couple quick questions that we start to ask everyone. In these two, I didn’t ask on ahead a time so put them on the spot a little bit. Most memorable trade.
John: So, they tell a story in Chicago. There is God with a small G that runs the pits and it says he has three rules and he enforces those rules mercilessly. So, you’re allowed to buy the bottom tick once in your lifetime, you’re allowed to sell the tick once in your lifetime. Of course, you’re free to do the opposite as often as you would like. I once sold the very top tick, it was Stockholm Home Shopping Network and I shorted it at the all time high print.
Meb: So that’s good. You used to know that you’ve used up that bullet. You’ve shorting and you’re no longer…
John: So, I have one more opportunity, you know, at sometime in the next decade or so I have to find an opportunity to buy the bottom tick, I’ve never even gotten close to doing that. But it was happenstance it was not skill or anything like that, I just happened to be in the right place at the right time with the right idea and got.
Meb: Yeah. That’s funny. This is the way that it works. Do you have a memorable worst trade?
John: Yeah. I absolutely have a memorable worst trade. I was pretty active in the CMO markets, there to be collateralized mortgage obligations when that market blew up. So, that was a series of really, really awful trades. They all worked out in the end, this was before there was credit risk involved in these government securities, so it’s like absolutely there was no credit risk. So, in fact, they all worked out in the end and we were eventually made whole. But there was some really hard going for a while.
Meb: Yeah. For some reason, I don’t why this popped into my head, it reminds me of going back to your idea on losing was the concept of trading systems in designing and kind of what everyone and this has nothing to do with what you just said really. But it’s you could design a trading system that’s not particularly profitable but has a 90 some percent win rate which is to buy a security and exit on the first profitable trade. You know, and that has like a 90 if you want to great exit one to be certain but then have…
John: So your numbers all draw-down in one tiny little profit take.
Meb: The one that’s in a drawdawn it’s probably a great newsletter, you know, the usage for the little bit of sketchier ones. You could have like a 97% win rate by just never closing out the losing trade.
John: So, you know, there are people who actually do this. I mean it’s fantastic as it seems, I actually know somebody who does this.
Meb: Yeah. No, I mean look there is even many legitimate ways we’re talking about this with some friends about the, you know, even in investment side there is plenty of legitimate ways to build track records that, you know, are accurate but not necessarily ethical, right? And this goes on the newsletter or goes on everywhere but there’s, you know, as always buyer beware, again, going down a whole another rabbit hole. All right, last question we ask everyone, something beautiful, useful, somewhat magical maybe that people may or may not know about, you got something for us?
John: Well, about seven or eight years ago, I started to build a design and build tube amplifiers, it’s vacuum tube amplifiers as in the sort of stereo equipment that was popular in the 30s, 40s, 50s, and into the 60s when the transistor finally took over and solid state amps took over. So, I find these things to be absolutely magical. If you get a really well set up tube amp, vacuum tube amp, and a couple nice speakers, and a good recording, and you have yourself a time machine. You can get transported back to that moment in time, you can be there.
Meb: And so give me a little bit. So this is you listen to, this is just for listening the music.
John: Yes, just for listening the music.
Meb: What’s your go to style?
John: Oh, I listen…I’m an incredibly eclectic music listener. But I probably listen more jazz than anything else.
Meb: Yeah. I think I remember that about you. Who’s your favorite or best album, best artist? Do you have a go to?
John: I think, you know, I’m really love John Coltrane.
Meb: This is coming from someone who is, somewhat of a I just never gotten into, not gotten into never really spent the time to really explore. But I don’t know what a good starting point, I don’t know what the…
John: But I have world music too, I mean there was a new huge amount of world music. There’s a sort of music from the Rajasthan deserts in north of India, called Qawwali Music. It’s devotional music with, you know, six, seven, eight people sit down and, you know, have a couple drums and they have these beautiful little hand organs that they use. It’s just absolutely transcendent music.
Meb: Is this we come to your office where we find you blasting this in the background?
John: You won’t find it blasting in the background but you will find to play in the background.
Meb: That’s great. You know, I go through cycles on that. There’s times when I’ll be listening to music almost throughout the day, but I feel like it’s very cyclical for me. I didn’t go months without doing it. I need start plugging some in. Spotify has a pretty decent random called Discover Weekly that they look into the music and…
John: Yes or no about this.
Meb: It is pretty good, I mean I think I need to update some of my music because it gives me the same sort of stuff all the time. But I think that’s a pretty good resource.
John: I have a shorter musical cycle than you. I go in and out, you know, listening music on a much shorter term. Like I listen for a few hours and then I have to think in.
Meb: What’s go to resource if someone wanted to build their own, is it back tube amp? Is that you describe it?
John: Yeah. There is a very popular board, you know, on Internet, message board called DIY, do it yourself audio. And it’s a filled full of people.
Meb: So can you buy like, can you use the stuff you can buy from my Crutchfield, or there is a much more like a boutique’e [SP]
John: fifteen years ago you really couldn’t buy tube amps. They were very rare specialty items, but they’ve become really popular again. So, today in any decent hi-fi store will have a selection or tube amps …
Meb: Just not RadioShack anymore.
John: Not RadioShack anymore. The question is where do you get the tubes or that’s the question everybody asks. And tube manufacturers are starting up again. The key was is that Russia used tubes in their technology much, much later into the game even, you know, like the middle range MiG fighters had tubes in them. So, they kept two factories running far later in the history then, you know, the West. So, there have been some vacuum tube resources maintained. Now China is becoming a vacuum tube manufacturer, and there’s a new vacuum tube factory in Germany now.
Meb: Where are your travels taking your next, you hear for a little bit or you, you know, are you getting down the rain, going somewhere?
John: Next, I’m going to Japan. I’m gonna visit a couple of the Southern Islands, so I want to kind of get away from it for a little while.
Meb: There is one of the Southern Islands that I’ve seen photos of and it looks like a Caribbean Island, it’s unbelievably beautiful. I’ve spent a handful trips to Japan, but it’s been mostly in the north skiing on the mainland and then up in Hokkaido, but I’ve never gone south. And one of the southern islands looks absolutely gorgeous, I can’t remember the name off my head. So ill have to download later and see what you thought about it. Anywhere else, is that main for 2017?
John: No, no that’s my next trip. After that it will probably back to your land in the middle of the year.
Meb: Good. Go kick up the animal spirits. We are bullish on European equities so I’m particular in Eastern Europe.
John: But my big trip from last year was Tasmania, which I recommend highly to anybody, it’s fantastic.
Meb: Good one.
John: Good one, nice people, beautiful place. Clean…
Meb: I always popped over there, it was down in Melbourne and Torquay for an investment conference.
John: Just take the ferry.
Meb: I was either gonna take that road towards Adeline, I murdered the pronunciation or go to Tasmania. And I think we even have some fly fishing in Tasmania, I may get that wrong.
John: Oh, no they have a lot of fly fishing.
Meb: And so now I’m having a little bit of regret that I didn’t go. But I travelled fair amount that. I was finally, you know, I’m just gonna set up shop in a city for a few days relax. And so I just kind of hung out in Melbourne and pretended like I was a local, and just kind of went to the coffee shop went to join the local gym and worked. But the funny thing about a lot of Australia is very similar vibe to California. And Tasmania, I think is even more remote than most of the places.
John: So, Tasmania is actually pretty remote but the key is that it’s relatively unpopulated, the population density is very low. So, people aren’t frenetic, you know, they don’t have that big city vibe to them at all. They’re warm and welcoming and they live in a sort of, you know, or reasonable life pace and such like that. Food’s good, the scene was extraordinary and pristine.
Meb: …to do list. John thanks so much for coming by today. I don’t want to take up anymore time. Where can people go, they want to find more information?
John: Sort of go to site as bolingerbands.com has links to everything else that we have. If you’re interested in Bollinger band analytics, the go to site is bbands.com, B-B-A-N-D-S.com.
Meb: And of course on Twitter B bands talking about Bitcoin and [inaudible 01:06:49]. Thanks so much for coming out today. Podcast listeners we’ll post all the show notes with links to many of these esoteric books, vacuum tube vampires and everything else and mebfaber.com/podcast. You can always find the show notes and links there, as well as subscribe to the show and iTunes, Stitcher, Overcast, my favorite listening app called Castro. Thanks for listening friends and good investing.
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