How to Protect Your Wealth (Uncut) 04-25-2025

Sven Carlin: This Ends in Hyperinflation – How to Protect Your Wealth

If you look at the debt and then hyperinflation is the The only solution because you are not going to cut entitlements now So the only solution is printing which leads to hyperinflation The cycle goes over from the roman empire from this from that. There is simply no other solution For protection from that you need real assets Welcome to speak up. I am your host anthony scaramucci Thank you so much for joining us here on the wealthy on network joining us today Is fenn carlin? He is a value investor researcher.

He’s the author of modern value investing 25 tools to invest with a margin of safety In today’s financial environment. It’s great to have you On the show, I want to talk a little bit about the whiplash that’s taking place in the markets Uh, and so before we get into anything super specific, let’s talk about the macro situation Is this how you thought the trump administration was going to go? Uh, did you predict all this? Are you a 5d chess player like donald trump? I mean tell me what’s going on And tell me where you think we’re all going. I think it’s impossible to predict These things we don’t know what will happen tomorrow when we wake up But as a value investor, we always look at the fundamentals and the risks So the fundamentals if you want to talk about the macro economy I have just looked and perhaps it’s the most powerful compounding idea that I could find And that is the interest payment on the us debt If everything remains as is it will compound and at eight percent annual rate And when I see eight percent annual compounding, I know that’s something that’s going to grow fast So that would be a key fundamental macroeconomic perspective And then you can try to impact it with tariffs with this with that but the fundamentals are simply there uh Let’s go to your big Intellectual mentor Warren buffett, right? You love buffett.

You talk about him all the time. You and I’ve talked about him. We’ve uh, We’ve read your book.

I know you love buffett. Uh, he says that this is a declaration of war Do you feel that this is a declaration of war like warren buffett feels or or no? Well when you Slap put such tariffs. That’s yes.

That’s a trade war But when trump retreats after a few weeks Then it’s more negotiating trying to get a deal But that is not how things work in politics when you’re in business You can go and risk it all On something you declare chapter 11 and then you go to the next venture but when you are with governments And people and the economy of the nation you cannot really risk it So sven, I have buddies of mine that I went to law school with that have been us trs Mike froman who’s now the president of the council of foreign relations Was uh, barack obama’s u.s. Trade representative He has said publicly that it takes 18 months to do a trade deal with one country We’re trying to negotiate 70 different trade deals in three months, do you think that that’s possible or you think that that’s uh, I don’t know. Are we are we I mean, I know we have a 5d or 14d uh Chess player like donald trump and stuff like that, but is that possible? I don’t think that the second or third level consequences have been taught before going into this because there are Myriad of factors that you can look at how the other countries are going to react long term how it brought Uncertainty to businesses because a business now says, okay i’m going to wait with investments and all that are factors that it’s in practically impossible to Contemplate and then also countries are saying. Oh, let’s wait with the negotiations Let’s see how things are evolving.

Maybe we’ll get some other investments that are backing off somewhere else And so it is just opening pandora’s box with where will this go? Bullish you’re long-term bullish Uh on what well, let’s say u.s stocks No Okay, are you long-term bullish on european stocks? No Okay, what are you are you bullish on anything? Um Not really that bullish on just specific niches like perhaps Food stocks that are have been beaten down which trade some commodities, but we are not yet Anywhere close we have seen seen some volatility in the markets, but we haven’t seen any structural pain We have not seen a recession. We have not seen a recession for 15 years So give me a proper recession of two three quarters then trying Intervention then reaction on that give me some proper the private equity bubble Bursting and things like that and then i’ll start to tilt towards bullishness for now If the markets come if volatility comes i’ll be most bullish on out of the money options for hedging so I have a question for you if you if you you know, this is uh more Sort of a meta question. This is a meta question um And i’m going to play the devil’s advocate here uh, we have a 35 37 trillion dollar deficit depending on how you’re accounting for there’s maybe another 50 trillion dollars of liabilities thereafter if you’re really thinking about the Social security situation and other entitlements going on in the united states Uh, we have debt a debt-laden society around the world Uh, we’re cheapening our money everywhere around the world.

You know that I know that you just look at the m2 numbers and so forth uh You’re a bear on bitcoin. We’ve talked about this. You don’t like bitcoin Uh, do you like gold? Do you not like gold? Well, what would you I mean, so I I if I if I was a doom and gloom person, I’d say Okay.

Wow This thing is getting out of control And I will submit to you and you can push back on me, but I think if we’re gonna have a recession that that recession has been Exacerbated by the donald trump decision making and also the unpredictability of it uh, you can push back on me if you don’t agree with that, but but but what about gold or what about bitcoin given the Circumstances that we’re seeing. Okay. So when it comes to gold or bitcoin, we can call them as hedges However, I need to have cost effective hedges as a value investor.

I want things that Are there give me a safety not that depend on someone paying more for that So if I buy now bitcoin To gain on it. I have to see people Buying more of it and pushing the price higher similarly with gold And yes there that might happen in a crash But might also not happen and I don’t know whether that will happen Three years from now five years from now or seven years from now plus then there is how much Money should I put into that one percent five ten twenty percent What if I put twenty percent in gold and tomorrow I wake up it’s fifty percent down. So that is really not a cost effective hedge A business that has a p ratio of ten that has I don’t know a food business a dividend yield of five percent Protects me from inflation people are going to eat no matter what and over time I should do well, for example So I prefer as a value investor value Certainty and not things that go up and down depending on whims of other investors Okay.

All right But i’m not saying it cannot happen I know you I read your book. So I know you’re big on bitcoin. I’m not saying it cannot happen I’m, not saying bitcoin cannot go to 1 million I’m, it can i’m just looking at the risk and reward and how do I position myself in a Lifecycle of 40 years of investing Okay.

Well swen now that you said that bitcoin could go to a million We’re ending the interview is very nice to talk to you today No, i’m kidding. I’m kidding. I want to talk about investor sentiment and psychology uh, we We’ve had essentially a roller coaster going on I think right we have a we’re oscillating from fear to greed back and forth Uh, what signs are you seeing in the investor behavior right now? Uh, and what do you like about it or not like about it? So when you look at behavior, especially of our humans, it’s determined but by what has happened recently So over the last 15 years we have had a fed intervention at every hiccup If there is a recession, we will print money.

The last issue was the pandemic you were sitting on your couch You were getting money to play with bitcoin with whatever so everyone expects that whatever the hiccup Next is there will be more money printing. There will be lower rates that will push stocks higher. So the Predominant mentality is just buy the dip no matter the price Okay um That’s been the right you mentioned 40 years.

You’ve been an investor me me me too sort of hard to believe That’s been the right thing to do though and warren buffett You know warren buffett said that the smartest thing that he did was believe in america buy america buy america in dips obviously you and I know he very famously bought into things like goldman sachs and Bank america ge during the 2008 financial crisis and they were prescient uh Is that gone is that over is america over Let’s put it into this perspective. I think america and the sap 500 has the greatest businesses out there No question about it But if I have a million now and I put it into the sap 500 the dividend yield on that is 1.4 which is 14 000 on my million and All being the best no recession in the next 10 years That dividend yield with the buybacks with the growth with everything Will likely grow on average six percent six seven percent Which means that in 10 years at best I will have 28 000 per year 14 000 now 28 000 in 10 years With the fed printing money with low interest rates with this with that it will not be worth much So the problem is not the businesses and that’s why also warren buffett sold the problem is just the price Because if i’m paying a p ratio of 25 30 It’s simply too much downside for the potential upside of just doubling my small dividend yield over a decade Okay. Well, well well said um, and I think I think it’s a really important thing to emphasize and I think this is the reason why People like your business and your investment philosophy spend because it’s very common sense Let’s go to the u.s. Trade tussle with china and these sweeping tariff decisions and let me make donald trump’s case for a second and let me ask you if the policy that he’s implementing is going to be Reaching the outcome that he would like.

So donald trump is making the case that There’s been an uneven or unfair trade relationship with china over three decades A result of which they’ve plundered the u.s. We’ve lost manufacturing We have a very large trade deficit with them. There’s a trade imbalance And this trade imbalance needs to be corrected and we need to bring manufacturing Back to the u.s. So the way to do that is we’re going to have massive tariffs A result of which it will incentivize people to build factories Here in the u.s. So they won’t have to deal with the tariffs Is that strategy something you agree with is that strategy something you think will work? Is that strategy, you know evaluate the whole situation for us? I think as we’ve already discussed there is first second third level thinking and then you really need to play 100 dimensional chess here to understand what will be the consequences of this situation but when I look at things you want to bring manufacturing back to the u.s, but The u.s. Has a natural rate of unemployment. It’s four percent.

Where are you going to find all these? Job people that will do those jobs If you go to china if you look at those factories Those are chinese mentality factories. You cannot really transfer them to the united states So there are not just i’m going to increase the price Through tariffs and everything will change. There are so many other things that are simply from the culture from this to that that Have to be taught about From finding that labor that is simply not available at the these costs If you were the dealer in a card game And there was a trade war between the chinese and the united states who has better cards I think that the chinese can endure more pain Okay, tell us why so I have a chinese friend and His parents grew up on sweet potatoes In the 1970s came to italy with fifty thousand dollars given from Ten families from that village they turned those fifty thousand dollars Into I think five hundred million through importing chinese stuff to into italy They have two kids both both have finished cambridge and oxford And now that guy has received the second round on sequoia Financing and his 10 percent stake in his chinese startup is worth 100 million If I look at though that work ethic that ability to endure pain China has no issues with ratings no issues with um Next elections they have their own mission So they can just simply wait it off trump will be gone China will still be there and they can endure the pain plus work on the other 86 percent of the global economy that’s not related to the u.s Okay, I I want to switch it to europe if you don’t mind so europe is sort of the flyover situation for the chinese and the Americans and of course the chinese are smart long-term thinkers.

They’re gonna go Reach out to their european potential counterparties and see if they can do different trade deals Uh, how do you think europe is positioned and how would you position europe if you were their trades are? now first From all the free powers in the world when you look at europe europe is the weakest So demographics are terrible and economic growth has been Non-non-existent for the last decade and there is such a sluggishness in europe We don’t have the tech businesses Pushing us forward as the us and we don’t have the growth that china has so there might be some benefits But that is not something Long-term or durable that it will revive the european economy Or help with debt payments or help with the aging of the population or things like that So I don’t expect miracles from europe Um Let me ask you this has trump woken them up a little bit as he said, okay, listen, you got to get more Defense spending will they do more capital expending? Will they do more venture capital expending? or will they think or they are they heading on a In a slippery slope that there’s really no way to get get out of in europe There is more and more government investing. So maybe governments will start spending more capital But the return on that capital when that whenever government spend it is questionable Everywhere. I look here in the south of europe There are so many projects financed by the european union, but if you look at the economics of that apart from Giving jobs to the people making that there is no real Economic long-term return or it is very very small and they are happy with that smaller return because they can print free euros Okay As they have been doing over the last 15 years.

Let me ask a question this way you have a Great Ability to analyze data. There’s a Economic dashboard you’re flying your plane, which is your portfolio And there’s an economic dashboard in front of you And right now I think you see some cautionary lights and some cell signals. I think you’re bearish on a lot of things But what would have to change? To make you bullish meaning where would pe ratios have to be where would gdp growth? For europe and asia and the u.s. Have to be Where would multiples? Pe multiples have to be where that dashboard says, okay There’s clear skies ahead.

This is a buying opportunity so There are some pockets where the multiples are around 10 So you have this company in the us archer daniel midland So if you have eaten something today it some of it likely came through that Through them. They are now paying a 4.5 dividend yield Food has always a cycle So those stocks go up and then those stocks go down as food prices decline And now we are in a food downturn cycle as we have had two years of inflation And there the average long-term cycle p ratio is 10 The global economy will grow 3 percent We we have 7 8 9 10 billion people. So the business will grow over time They have been increasing their dividend for 51 years consecutively And I can buy that at the p ratio of 10 and a dividend yield of 4.5 With all the growth from inflation because food commodity, so i’m protected there So I have these small pockets that I would say, okay, this is now already interesting I’m, i’m searching for value where I cannot lose much and I have a good return So if I look compare it to the sap500 It is a good business good return, but the risk is simply too much or for a lower return.

That’s it I guess I guess what i’m, uh I don’t know. Maybe i’m getting old. Maybe i’m getting uh, uh Maybe i’m overly recognizing a pattern but i’m going to push this on you and I want you to react to it M2 is swelling The fed’s got movement it could go two three four hundred basis points Uh, the fed could implement again.

We know this quantitative easing at some point the bubble will burst but You’ve said we’re in a super bubble. Maybe the we both know that Sometimes a super bubble can become even a bigger super bubble. They’re they’re going to print.

I have okay So so you agree with okay. So so So let me just push back just from a timing perspective if they’re going to print and I think you agree That they’re going to print and I agree they’re going to print which is why i’m big on bitcoin and I understand Your buffet reasons why you’re not into bitcoin so we don’t have to debate that but but if they’re going to print won’t that provide risk on opportunities in the stock market Yes, but If they delay that printing for a year I can be 50 down with the stock market Because of inflation of things like that. So it’s always about when the risk is at the bottom You’re looking at the absolute high okay All right.

So so the best option if I have a million dollar sap 500 portfolio At this moment in time, maybe I just wait two weeks for the volatilities to settle for trump to go on vacation So that the vix is below 15 And then I look okay, I will put one percent of my portfolio into some out of the money options So if all hell breaks loose I am protected from the downside if the fed prints and stock double over the next five years I take advantage of that upside That is the best value investment Idea, I can come up now, so I need insurance and I need to have the upside from being long Okay. Well i’m going to give you the last word. What is the last word son? What should I do? With your bitcoin No, not my bitcoin you and I disagree in my bitcoin, what should I do in general should I get in a bunker? Should I get the cash? What do I do? I think that It depends on the strategy first Expect anything and when you go with an open mind, okay The stock market can be double in the next five years, but it can also be 50 percent lower How does that affect me? I don’t like the 50 percent lower Okay, how much does it cost for me to be protected on that? Okay, if it can be lower, is it better that I go into cash like warren buffett? but That is again a risk if the fed starts printing heavily So I don’t like warren buffett’s cash position But then he’s so big that he cannot insure it with options or things like that All right, but you’re you’re you’re the most I love talking to you because you’re like the most realistic of all the people I talked to but But there is a scenario where we go up 15 20 Not talking in real terms.

I’m just talking the stock market could melt up As a result of all this money printing, right? Look, I I was born in the former republic of yugoslavia So when I was a kid when I was six years old, we had hyperinflation Which mean I was a billionaire when I was six year old you are talking 15 I can tell you 150 1500 if you look at the debt and then hyperinflation is the The only solution because you are not going to cut entitlements now If trump if trump comes and says or whatever us president says, okay people i’m going to cut Entitlements by 15 percent now So so that we solve the debt issues He’s going to be out of office tomorrow on some kind of impeachment or something. You will invent something No, I understand. The only solution is printing which leads to Hyperinflation the cycle goes over from the roman empire from this from that there is simply no other solution For protection from that you need real assets It can be businesses.

It can be land. It can be real estate homes things like that well, listen you’ve been a terrific guest today and I love talking to you and I owe an apology to our viewers and listeners because I didn’t get to their questions And so I didn’t do that sven because I enjoyed talking to you and I was the one that wanted to push you Uh today, but we’ll get you back on and we’ll get our viewers and listeners to ask you questions as well but thank you so much for Joining us today on speak up. I thought it was a you’re you’re one of the brightest minds out there I know you have a terrific business and I wish you great success.

Thank you again for joining us on speak up Thank you. It was a pleasure being here