Transcript: The Refresh 15 Ep. 1 – John Gillin

Amanda Cuocci:         Welcome to The Sunday Refresh‘s interview series. My name is Amanda Cuocci. I am one of the co-editors of The Sunday Refresh. I’m really excited to get this interview series started. And with me today is John Gillin. He is an analyst here at Stansberry Research. He heads up the Stansberry NewsWire service. With that is the Investors MarketCast podcast and a lot of other great things. John, thank you so much for sitting down with me today.

John Gillin:                 Amanda, great to see you. And a happy Fourth of July.

Amanda Cuocci:         Happy Fourth.

John Gillin:                 Happy Fourth.

Amanda Cuocci:         So the idea here is just to get a little bit of background on you and then to see what the NewsWire’s all about, maybe give us some direction for the market in these troubled times.

John Gillin:                 Be my pleasure. So, quick background. I’ve been at Stansberry Research for just 16 months. I heard about it 15 years ago and unfortunately I wasn’t paying enough attention but I am here now and loving life. Background: I worked for 6 different Wall Street firms over the course of 23 years on trading desks. So I have seen a lot of ups and downs. And it’s remarkable when you do see the downs. I then had my own investment management firm for about four years and have moved on to be with you lovely people.

Amanda Cuocci:         Great. And we’re happy to have you here.

John Gillin:                 Thank you.

Amanda Cuocci:         So just going back even further, The Sunday Refresh – we have a lotta folks who might be starting out in finance or they’re trying to get some new lessons as a refresher course. So I just wanna ask you: what was your very first investing experience?

John Gillin:                 Terror.

Amanda Cuocci:         [Laughs].

John Gillin:                 Pressing that button to buy or sell, in the case of buy. And, thinking back, I think I bought some Disney ’cause I’d been to Disney World. I ate a turkey leg and a vat of cotton candy and I thought that was my reasons for plowing in. And I do remember buying some Cisco network. Unfortunately, Cisco has been a very quiet stock over time. It’s a good investment. Financials look terrific. But like Microsoft, it sat for years and years. So not the cutting edge of bought Apple at $8.00 or somehow read the tea leaves for Microsoft. I’ve owned them in the past but I have not owned them for the long haul and that’s the problem.

Amanda Cuocci:         Gotcha. So, following up on that, what would you say is the most important lesson you’ve learned since that first Disney stock that you bought?

John Gillin:                 Okay. Well, lessons every day. But this is I think a good one. I’m gonna take you back to a television show called Kung Fu, which may be a little bit out of your age group. But it was the adventures of Kwai Chang Caine. And the line that was used every show was, “Patience, Grasshopper.” I’m not sure why anyone called him Grasshopper. But patience is key. And that means: find good management structure. Porter talks a lot about capital-efficient companies. Porter, Doc, and Steve. And that’s growing cash and growing dividends. And that’s gonna reward you.

And the counter-argument to that is: also recognize when you need to get out of the ring. And there are bad stocks. There’s bad management. There’s bad luck. And hanging around in those stocks doesn’t make any sense. You will sleep well at night when you have good investments. And things that are just making you shake your head – move on. There’re much better opportunities.

Amanda Cuocci:         Right. That makes a lotta sense. We always talk about sleep-well-at-night stocks, and that’s exactly what we want. So what is one piece of advice that you’d give your younger self? So like 25 or 30-year-old John Gillin – what would you wanna tell him?

John Gillin:                 Open mind. Change is inevitable. As society moves forward, it’s about efficiencies. And when the internet cropped up, that was an experiment amongst geniuses in the military and also college professors to share information. Not enough attention was paid to that. If you had been clairvoyant, you would have had your own island off the coast of Tahiti. But things like solar power, biotech, cloud computing. I remember when I first heard about that, a friend of mine was at a conference in San Francisco, and he’s like, “Dude, Microsoft has got this new business called Azure. And you gotta pay attention. I’ve never seen anything like it.” And the stock was at $48.00. We know it’s now in and around $100.00 a share.

So are we in the golden age of investing? Every age is golden. There’re always opportunities. There are great minds working on solving the problems of the ages. And one of those of course – and this is going to happen: autonomous driving is just gonna happen. And the technology is probably five years away, which means it’s three. And it’s gonna come from – it’ll be from here. It’ll certainly be Tesla. Could be Google. Even Ford, General Motors working on those incredible businesses. Problems – solving incredible problems to make it all work. But if we pass one more person on their phone or watching TV in the car, you know it’s time.

Amanda Cuocci:         Absolutely. And speaking of all these new innovations, and of course speaking about great minds, I know you and Scott and Greg are part of the NewsWire service I mentioned. I was wondering if for our listeners you could just explain: for someone who’s never heard of the service before, what exactly is NewsWire? What do you guys do, say on a daily basis?

John Gillin:                 Yeah. So it was Scott’s brainchild. And he and I have been friends for a long time. So Porter brought him in and I followed with Greg. So what we’re trying to do is provide up-to-the-moment financial information. For lack of a better word, a blog, in a lot of instances. If it moves, we’re gonna write about it. We also are working on the Stansberry Terminal, which is brilliant. And I can’t wait for investors to see that going forward. And we are providing a lot of the newsfeed for that. And that’s certainly important as Stansberry Research evolves.

We will talk about economics, geopolitical, stock gyrations of course. We’re gonna deliver ideas. We’ve got a portfolio that we do manage. We sell a lot of puts. Because at this point, where markets have become volatile, people have to put hedges on. And you’re kinda forced to – “I don’t really want to buy that put, but I have to because I’ve got enormous position.” Therein lies some opportunities for selling puts and receiving premium. So that’s what we’re up to.

Amanda Cuocci:         Yeah. And that makes a lotta sense. I mean, I listen to your MarketCast every week and I just love the up-to-date stuff that you talk about. I know right now we’re covering a lot on the trade war. I know you guys were talking about that this week. What other big topics should we be paying attention to right now?

John Gillin:                 At this point in the cycle, markets are volatile. We see that. They should be. The backdrop for the US is fine. Think about second quarter GDP. There’re numbers as high as 4.5 percent. If you get between three and four, that is a step in the right direction. We’ve got unemployment at 3.8 percent. We’re gonna get data out tomorrow on that. And that’s at an historic low. Wage growth, tax cuts, consume sentiment has been terrific. But quantitative easing is over. We have pulled the punch bowl. So we’re not buying assets any longer. We’re letting the bonds run off. And that’s what should happen at this point. Again, back to the cycle.

But with the booze outta the punch bowl, many investors – when this was ongoing and you knew the Fed was gonna be there each and every week, each and every month with the pocketbook, it was like reading tomorrow’s newspaper. Everything was predictable. And now with tax cuts and programs, our debt is sky high. I don’t find that to be a problem. I don’t think we’re gonna have any difficulty paying our bills certainly.

But Europe is slowing down. Their gross domestic product growth has definitely downticked. And the populist shift that has moved right is concerning because it’s as if people are closing ranks. And we’ve talked a lot about Brexit. See what happens in Spain, Italy, Turkey. The list goes on. And Asia flat-out has – they backed off as well. As far as growth. Those projections have been as high as 7.5 percent. It’s probably in the neighborhood of 6.5 percent now. And their rules are opaque. So while the snapshot of the US market – you should feel comfortable with that; but we live in a global environment.

Amanda Cuocci:         Right. Yeah. We certainly can’t just focus on the US with everything else going on right now.

John Gillin:                 No. And the rest of year, think about midterms coming. It’s not even getting anybody’s opinions. It’s just looking at the facts. And facts show that into those elections every couple of years, markets don’t do well. So I think we’re choppy in front of those. And I’m also a big believer in the economic cycle. I don’t necessarily think – look, the administration had made some good moves. The previous administration made some good moves. It goes back to Bush. It goes back to Clinton. It goes back to 41. Everybody has tried to do the right thing for the economy. And certainly tax cuts have been a big win. We like to see that. But with polarization, you worry: can we get infrastructure done? Which we need. What’s gonna happen with trade and tariff? Full-on trade wars? I tend to think that that’s overblown because the guy in the White House is always working on the next deal.

But recessions are inevitable. It’s been a long time. And a recession, just to define it quickly, is two consecutive quarters of less than – or a downtick in GDP growth. Doesn’t mean gross domestic product’s gonna go to negative two percent. We go from 3.5 to 3 and then 3 to 2.75, that’s your recession. And markets don’t get wiped out by things like that. They just take a break.

Amanda Cuocci:         Right. And certainly not – doesn’t have to be the signal of a huge downturn either.

John Gillin:                 No. Not at all. Back to: it’s kinda normal.

Amanda Cuocci:         Right. Well, that’s reassuring to hear at least. So what are you most excited about right now? We’ve talked a lot about the possible recession. But what are you interested in? What kind of investments are you looking at right now?

John Gillin:                 Think about how efficient the market – back to efficiencies – the markets have become. When I first got in the business, stocks traded in eighths, if you can believe that. And with technology, with people working on complex problems, and the ability to tighten that up where it trades at less than a penny at this point has been such a good thing for investors. So the ability for just everybody to be part of this process – if you have a good idea, you can invest; you can invest quickly, and see everything at the touch of a button on your screen. Exactly what your exposure is. I think that’s fantastic. And that’s so important for the health of the market going forward: just transparency. So I’m excited about that.

Cryptos blow my mind. Certainly the downfall in bitcoin is astounding. But down but not out. Down but not out. So there’s gonna be massive opportunities, particularly in fintech. And getting into blockchain. Blockchain is going to absolutely dominate what takes place in the future. And being able to track exactly where your food came from, exactly where your drugs came from is – not opioids [laughs]. But that’s so important. And back to transparency, efficiency. And look: there’re a lotta complaints about the Fed. But we engineered our way out of a depression in 2008. And that was quantitative easing and that was TARP, Troubled Asset Relief Programs. And synchronized central banks. So what I do like is: everybody is talking to one another. We’re trying to stay on the same sheet.

Now, granted, we are further ahead in the cycle with GDP growth. We’re now letting our bonds run off. Europe’s in a little bit of a different situation. But I still feel like everyone’s got one another’s backs. And that’s why the trade wars will be a skirmish.

Amanda Cuocci:         All right. Well, that’s about it for me. If you are interested in Stansberry NewsWire, I highly recommend the service. Like I said, especially their Investors MarketCast. They really break things down and keep you up to date.

John Gillin:                 And we just would love for everybody to take a look at it. It’s not gonna waste your time. It’s up to date, up to the moment. Thoughts about individual names, trends, sectors. And it’s fun. Our MarketCast, Investors MarketCast, we’ve got 22 shows in. We interviewed Buck Sexton last week. And he was terrific. Talk about a smart dude. Check in to that. And we’re gonna try and have other people join us throughout those MarketCasts and it’s gonna be fun. So I really appreciate you dialing me into your show today. And nothing but success to you and Doc and everybody else going forward.

Amanda Cuocci:         Great. Thanks so much, John.

John Gillin:                 My pleasure.

Amanda Cuocci:         All right. That’s a wrap for today. Thanks for listening.

John Gillin:                 See you, Amanda.

 

Recorded July 5, 2018. Listen to the interview here: https://www.youtube.com/watch?v=_xx11qDJbfc