Chuck Yates Needs A Job

0:19 Hey everybody, welcome to Chuck Yates needs a job, the podcast. It's only happened once before where I haven't been the coolest person on the podcast. This is the second time. So do you know who

0:30 Jane Stricker is over at the Greater Houston area partnership? I do not. Okay. Jane's awesome. She's cooler than I am. She came on the podcast. This is the second time it's going to happen. But

0:40 my guest today is Bill Perkins. I don't even know where to start I mean, energy trader, Hollywood mogul. I don't know about mogul, but yeah. I made movies. You've made movies exactly. I mean,

0:56 friends with Dan Bilzerian, owner of the Sugar Shack. And so again, man, I don't know where to poker player, but let's do this. How did you get into energy trading? Yeah, it was quite

1:09 serendipitous I was in college and school of electrical engineering and really just kind of like chasing women run around and playing football.

1:19 My Godfather gave me a call, he's like, kind of one of those, what are you gonna do at your life calls, right? Just checking in on me. I said, at the time I saw this movie Wall Street and I

1:29 really loved engineering in terms of like learning it as when I was actually studying and the idea of it, but I didn't wanna do it for a career. That part was kind of death to me. So I saw the

1:42 movie Wall Street and I was like, I wanna be rich. So I told him, I think I wanna go into stocks. I wanna be a stock broker, right? Something like that, I wanna trade stocks. Everybody wanted

1:51 to do it. I wanna trade stocks, right? Like I didn't wanna be the evil guy, but I just wanted to be the rich guy, right? Like the guy had like this big giant mobile phone and I was like, this

1:57 is so cool. Like, this guy's not worried about anything. Like how do you get a house like that or apartment like that? So, because I don't know anything about stocks, but I know about this firm,

2:06 commodity firm, I didn't know what a commodity was at the time,

2:11 that they're looking for screen clerks my like introduction of kind was that And. And

2:17 I was kind of like, well, I'm about to be - broke, jobless.

2:22 Let me get out and I, I, I, I, you know, called and secured an interview.

2:30 So, so that is circle kind of what you're, because I think you and I, it's got to be 1990.

2:39 Okay, because I'm 91. 91. 91. Okay. Yeah. So, so you're doing that. And then how do you kind of advance along the way? It was kind of weird because I was a very, very big slacker in college

2:53 and through most of my life, kind of like the definition of underachiever or unmotivated and going out in the real world and having no money, not being able to get dates and, and, and living at

3:06 home with your mom really little fire into my ass kind of like necessity as the mother invention and I was like, I don't want to be, I don't want to be poor And so I was a screen clerk making no

3:17 money like assistant assistant P on Kind of actually had to like hustle my they didn't even want to hire me They like wanted to hire another guy Eddie Gagekins But I just kept being persistent and

3:28 they they you know staying down at the doors and like where am I starting today? Am I saying my best art fine come come out of your screen card, right? making no money, but but I Decided at that

3:37 point I would be the

3:43 most valuable person in any organization that was in So I wasn't gonna just do the job. Well, I was gonna redefine the job at each point Where I was now? I didn't I wasn't like all of a sudden hit

3:57 a switch and I was always consistent with that but I was consistent enough that I Never showed a resume to get a job. I always got recruited

4:07 and I Just kind of like a baseball player just moved up it up and up and up You know, I'm in the sea league and then you whatever leagues they have the AAA AA single a majors on the bench, starting

4:20 rotation, signing a big contract, that journey - And so you joined St. Tourus with John Arnold, 2001, 2001 - Whenever we started - For Cradle to Grave - Cradle to Grave - Except for one time,

4:34 John fired me in the middle for a great story - Did he - That's a great story. That's a really great story - Lay it on me - So I guess we'll jump ahead.

4:43 So John started St. Tourus and I was like, oh, I'm looking, you know, I'm gonna start this hedge fund, et cetera. And I said, well, I'll come work for you as long as I get X of my book,

4:53 except I have all these other projects going on, trying to do an export LNG, import facility in Central America. I had all these other crazy ideas, very entrepreneurial, kind of crazy guy, doing

5:02 a bunch of stuff. So I'm kind of like this contractor, not really an employee. I don't even care about the salary, just give me the maximum percent, fuck the salary. I'm a, I'm a, I'm a live

5:13 and die by the sword type of guy Don goes, OK. To come in, we're trading. You know, and John is very meticulous, diligent, grindstone type of guy, right? And I'm the same way in trading,

5:27 except I have other things. I'm not in the office till nine o'clock night. I'm gonna be obsessing it at night, et cetera. And I think very differently. And so I had this big, big run up and then

5:37 a drawdown. I was still positive, but John was like, just doesn't work.

5:43 You can't work here. And so I was like, okay. And then I started trading on my own, but I had all this desk and equipment sitting there, right? I started trading my own PA, but inside the

5:54 office, I was so notorious. And I'd be grinding it out of my own, you know, making money, making good money. And you know, they hired another guy or whatever. And I think it was Greg Wailie

6:03 had a conversation with John, the other people was John, and he's like, so he doesn't work here, but he's here. And he's gone. And I think the kind of logic was, is that,

6:14 and I may be paraphrasing this, John maybe call in. You know, this was live you could call in and get John because I wasn't privy to this conversation. But the summation was like basically, you

6:24 know, John was like, Nobody thinks like him. Like nobody. And Greg was like, That's exactly who you want - Right - So they hired me back.

6:33 So I was breached it. And I wasn't really hired 'cause I was never really employed. I just had another, I'm back under the, part of the Centaurus team again, was Centaurus book - So this is me

6:43 and Digital Wildcatters. I mean, I don't work here - Yeah, yeah - Yeah, yeah, yeah - Show 'em up every day - Show 'em every day - Yeah. And then the rest is kind of history. I just, I was the

6:52 second most profitable trader in Centaurus and made them a one point something billion dollars over my tenure there. John obviously was the most profitable trader - Well, and I - And then, you know,

7:03 he called him to retired.

7:06 Called him to - Right. I've been called in, right - No, so

7:10 snarky me as a young investment Centaurus starting. John's, banker

7:16 And I think my offhand remark was, well, you know, if I owned every energy asset in America, I eat Enron, I'd be a great fucking trader too. You know, we'll see how well this works. And what

7:28 was interesting about that?

7:32 You wanna trade out chairs? Trade out chairs. Yeah, trade out chairs. You know, Colin, who you just met, I've made a whole career of followers on Twitter by claiming that Colin's short Right,

7:44 you know, people will come into the office and they'll tweet out, oh my God, I just met Colin. He's not as short as Chuck says he is. So anytime the chair goes out functions, well, he's a short

7:53 guy, you know, so what can we do? But, you know, so I said that about, you know, Sintouris, the startup and all, what I found really interesting was John came on Colin and Jake's podcast,

8:07 and he said his biggest fear in terms of going on in his own was could he replicate the information had for his model and he said. going out on his own, he knew the certain filings he needed to ask

8:20 for, and he was able to replicate 95 of the information in his model. And he said, that's what gave him the confidence to actually go start trading on his own. Was he was able to replicate the

8:32 information? And he figured that out because he had all these assets at Enron. Yeah, investors in the world didn't have that, didn't have that same confidence, right? There was a lot of people

8:44 saying, oh, yeah, we'll be there day one, we'll show up with the money, but they didn't show up. Yeah, nobody ever shows up. Then they showed up with John showed up with his money. And then

8:51 after three months, people were like trying to flocking. And then that's right because we were just killing it. Yeah. No, it's, yeah, it was funny when, when I got fired from Kane, they

9:04 started the conversation with, well, you know, we've had such a good partnership for 20, some of years, Chuck, that, you know, we're willing to wave all the non competes How is Calam? Well,

9:13 oil's at minus 37 and nobody's going to invest in first time fund anyway, just when you go out on your own. I was like, here's my position. I'm willing to take a lifetime ban from the industry.

9:24 That's my side. Let's start the negotiation there. But yeah, no, it was interesting listening to John talk on their podcast about how he had his model, and it really was kind of fundamentals

9:38 driven. And so I'd love to hear how you think about trading - Yeah, we're - I don't get it. I'm a private equity guy We're very, very much a fundamental shop. My hedge fund is a fundamental shop

9:48 that came out of it. We're, you know, I'm not as much a university Chicago type guy, you know, efficient market guy. I think the market is actually fat and quasi efficient. But we believe that

10:01 at the end of the day, a willing buyer and a willing seller have to meet, and the fundamentals drive the price in commodities, and that delivery is a forcing function, right? And

10:13 so when you say that and you believe that. If you're going to trade that market, it's really a combat upon you to know every single thing about the market that can drive those fundamentals. That's

10:24 supply and demand balance. And so we invest a lot of resources, time, neurons into understanding the fundamentals, what's currently going on, and also a lot of what if, right? What will be the

10:38 thing that causes it to move in the future? The trends, the trajectories, and kind of like probabilistically thinking, which is what I did a lot I think that was a little bit different from, now

10:49 I think everybody does that, but back in the old days, a lot of my positions were

10:55 not a favorite to happen, but a high positive expected outcome. And so when they did, it was kaboom. And it was a lot of fundamental analysis and going, these options don't represent the price

11:10 distribution correctly. I understand, you know what I mean? Like whatever it is, the skew is incorrect, et cetera. these puts a two cheap, these puts a two cheap X, one, Z. There's, you

11:22 know, maybe there's a different options model that should be covering, et cetera. And I would just use whatever tools we're in the market to express that view - Give me one example of that, 'cause

11:34 I've always been markets are efficient, they're billions of dollars, there are tons of really smart people, you know, trading on both sides. How can you find this - Now I will also be the first

11:46 person to say, if you look at the oil futures over time, they've only been right 30 of the time, but - Yeah, I think there's billions of dollars and I think there's smart people, but that doesn't

11:55 mean they're directing their neurons to that problem in the way that actually gets to the correct answer. And so when you're a specialist and you've really hoovered it in and you got some

12:07 macro-strack guy come in or the permanent length of the hedgers, it creates distortions in the curve and opportunities. I often say that we're insurance agents, right? We are risk warehousers and

12:20 we are induced to put on trades based on what the market is doing, right? Whether it's hedging because they're, don't wanna take the risk of a cold winter and the price is going up, they're

12:34 producers rateably selling the summer and it's too cheap relative. There's distortions based on the flows in the market, inflation hedgers who are perm along the front, there's all kinds of reasons

12:46 why people are interacting with the natural gas market and that leaves a footprint and that footprint overlaid, we overlay our fundamental analysis on that footprint and when it gets out of a certain

12:56 range and a certain amount of edge for us in our minds, in our model, we put on the trade. We're not out there, yeah, who? You know, so that's right. We actually get induced, every position I

13:08 have I'm induced to put that position on. Yeah. Right? I'm like, oh, oh, you wanna sell it now? No. like, this is ridiculous. Like, how could that be? Look at the SD here and the weather

13:20 and the so-and-so and the outages and the supply and the solar installs and the wind and everything that's going on all layered out. And I'm like, OK, I'll sell it here. Right. Right. That's how

13:31 it happens, right? Or I will buy it here, right? You know, these things and you have to know about how supply changes and how demand changes were respect to price and you have to know it well So

13:43 if you were and I told you, you didn't have to dummy something down for the audience, you have to dummy it down for me. Unfortunately. But if we were to think about you trading on top of your

13:54 fundamental analysis, is it a chicken pecking for corn and you hope you get 51 of the pieces of corn or more like a lion sitting there waiting for the caribou to walk by and jumping on top of it? So

14:12 or is it somewhere in between? When I first started, I used to be a market maker in options in derivative products and exotic products. This was before they even cleared like things called spread

14:21 options in CSOs. I actually got the exchange to put those products on there 'cause I used to make them over the counter in derivatives market. And my reason was is that the, you know, these were

14:31 tools but I am way ahead of everybody's understanding of it particularly the banks 'cause the banks would look at it like a financial commodities, a currency market, right? And you put it in models

14:42 And, you know, March, April, and commodities have different distributions than the normal distributions they put in their model, right? Even the floor and, you know, made at the time a

14:54 relative killing trading CSOs. Now everybody gets the trick, right? And it's done. And so I used to make markets, scrape edge, et cetera. And then I realized like when I'm making markets

15:05 relative to what I think I can get out, you know, making a penny wide, a 10 ticks wide, the mid let's say is you know. That means at most I'm getting five-text edge plus brokerage plus

15:17 maintenance plus whatever. And then I could be wrong because this guy is executing all of our information he has or something or flows etc. And I was just like this is not the real game. I don't,

15:28 you know, there's guys out there with HFT algorithms and charts etc. I was like let me speak to the fundamentals and the natural gas, the primary instrument that I trade, we also trade power.

15:39 It's a seasonal game. We have an injection season and a withdrawal season Right? And because storage is limited and infrastructure is limited here in the United States, you can have scenarios where

15:51 the price goes very, very high in the winter. Right? If you don't have to induce demand destruction or we can have a thing called containment where there's not enough storage for the gas. Right?

16:03 Your minus thirty seven dollar crude thing, which I really think was the exchange's fault with liquidity and

16:11 limits on people and basically the last three days because it'll limits and they don't wanna have to deal with regulators. Like, why are you trading? Why are you doing this? They don't have time

16:20 to answer a thousand questions about their trading, right? And so everybody was out of it and there was a liquidity crisis that goes negative and then it pops up on the last day correctly as it

16:29 should, right? And, you know, delivery is many, many days after it goes off the board. There's no version of the people delivering negative crude to the tuition. So it was just absurd. But

16:41 anyway, in natural gas, you can have containment issues, right? For a month, it's not gonna go negative for a month. One day, it's something pretty negative, it happens all the time, right?

16:51 In certain locations. And so these containment scenarios or these run out scenarios, right? And the probabilities associated with them drive a lot of the positioning, right? It's, you know, the

17:05 juicier trades or when there is like, wow, there's a significant chance of containment and the market is not pricing this. Or there's a significant chance of, of metric fuck ton of demand and the

17:17 market's not really pricing this correctly. So I have like kind of like battleship positions. I put them on and I sit on

17:26 them. Because you know, saying that makes a lot of sense. I mean, I understand kind of storage. I understand pipelines, right, and it does some degree.

17:36 But I just asked myself a question while you were saying all that. How many times does that happen a year? And I'm gonna ask that question of you because if you answer it happens once every three

17:46 years, I would believe that. If you told me it happens 47 times a year, I would believe that too. No, no, no, no, no, no, I don't know. It's usually wrap my my head around that. I mean,

17:57 you know, what happens is is that let's just let's just forget this winter for some. Let's look in next summer, right? And I think there's a I'll just go say it. I think there's a significant

18:07 chance of containment. And also I think the containment, the level in storage where prices start to happen. to go lower to induce demand and then possibly induce shutoffs is actually lower. And

18:20 the reason why is because the infrastructure that we put down on the Gulf Coast has lots of LNG export facilities. And these LNG export facilities have long-term contracts and whatever, but things

18:30 break, which means they need no notice storage and they need some salt storage just in case shit goes awry at the facility and they got a jam a bunch of storage underground So let's just say,

18:43 over the past five years, a significant amount of storage that the market may have used to balance itself is unavailable

18:53 to the market. It's sitting there and must be available to the salt guys. So the effective storage is actually lower. And so I'm looking and I'm like, well, we got the winner and the winner, you

19:04 know, weather can cure all And so I'm like, you know, that's actually something in the kids that listen to my podcast. probably don't even know, 'cause you know, kind of the shale revolution to

19:15 some degree, winter kind of went away is a big factor on natural gas. Guys, back in the day, it was real - Yeah, it gets back to being real because we've

19:27 shut down a lot of coal plants. We put down a lot of intermittent generation, including wind and those, you know, there's kind of like these correlations between low wind and cold weather. You

19:38 have freeze-offs - Right - Right - And now we don't, you know, now when you go up 3, you don't all of a sudden induce a whole bunch of more coal gin, right - Yeah - You know what I mean? Like,

19:50 you don't have the coal capacity, right? Maybe you get a little bit of ethane rejection, but the ethane rejection tends to be split between the hub and west and they're at a different prices. So

19:60 you don't get as much ethane rejection as you thought. So the brakes on the way up, or they're kind of missing, right? So we get to global gas prices we leave some LNG here. those global gas

20:12 prices are almost infinity for all intents and purposes, right? If you're sure, past year point of blowing up, right? And so, and then on the, in the summer, you know, 'cause we were talking

20:27 about next summer, you have kind of this reduced capacity to inject and you have a lot of gas flowing into the gulf, right? And things go wrong and we need to, you know, we need to induce demand

20:41 It's like, well, we're already running all the gas we can.

20:44 Right? I mean, we may run a little bit more, as you know, I guess down on coal switching channels, you get a couple of bees, maybe BB and a half, down at a down,

20:57 450, 350, and then you would have got shut-ins. Yeah. And so, you know, that's a great trading environment because what, what? And that's kind of what we do, and that's kind of what we look

21:11 at. Is this a fair spread? We look at the outright price? Is it seem right? We're going to go to containment? Are there spreads properly priced for the risk? How are these interspread relations?

21:23 What does volatility look like in the scenario? How does it manifest itself? What could go wrong with our forecast? We're constantly measuring, making a forecast, measure, measure, measure,

21:30 measure, measure. Yeah. And

21:35 pulling in data. There's the engineer in you coming out. Yeah, yeah Measure, measure, yeah. I mean, we pull in tons of data. We use

21:44 lots of tools.

21:47 I've built lots of tools. When I was at Tintour, I was pretty proud of that. And I've built tools inside Skylar. And I just recently took my CTO

21:60 out of Skylar to actually build those tools and make them available for sale. And it's kind of like, well, people why are you doing that? And the reason is, is that my AUM, like commodity long

22:13 short fund, really hard to raise money. People just want to be in stocks. Avadec, what stocks you got? Well, every time I go on CNBC, they want to talk natural gas and they're always like,

22:22 well, what stocks? And I'm like,

22:24 what stocks are you gonna recommend to us? So I always have to give them a couple of stock recommendations for whatever view I have. But really, I'm just like, put your money in a long short

22:35 commodity fund. It doesn't even have to be mine, right? It could be copperwood, it could be myself, it could be geo-soul, it could be any one of these guys. You know, like that's where you're

22:43 gonna make

22:45 good long, uncorrelated, good returns uncorrelated to everything else. It absolutely kills me and I may get the day, I may be off a day or two of this, but I believe on April 21st of 2020, the

22:59 second most googled question in the world was, how do I invest in oil? And the number one answer was a USO. And the USO is such a shit, shit. I hate to say, I hate to speak ill of a product.

23:12 Maybe I should. Yeah, I mean,

23:15 that is kind of my soapbox since I've been out of the game, if you will, is probably about, I'll make this up, 80, 85 of all the dollars invested in energy need to just be based on beta. If

23:30 you're a taxi cab company in Las Vegas and oil prices go up, your business is gonna suffer a little, you should probably be long oil You know, it ought to be used if you're Amazon, you ought to be

23:41 long oil, you got these trucks running everywhere, delivering stuff. And probably 20 should be out chasing alpha. And unfortunately, I think it's the rest. You know, you got 80 or 90 of all the

23:53 dollars in energy chasing alpha, drilling, hedging, and it just distorts it into a big mess. Yeah, yeah, it's, and that's good for, you know, that big mess is really good for guys like me,

24:05 right? Right. Yeah. We're doing long short discretionary commodity traders and these curves get all kinds out of whack. Right. And, you know, it's a golf game. I'm not competing against any of

24:15 the other hedge funds. I'm competing against the course, right? The market's huge. I'm a nat on a screw with a machine. Right. Relative to the size of the market. And so, you know, but it is

24:25 what it is. I guess the benefit is is that because, you know, using the analogy that we're insurance agents, there are so few dollars. In the insurance agent table, the premiums are extremely

24:39 fat. So my theoretical edge has really gone up. Like back in the old days, when there was a diner G and an entomron and everybody in their brother was trading commodities. It was every single

24:51 thing that had any kind of positive expected outcome. It was driven down to like nothing. Right. Like you'd really have to get your, you'd really have to be a probabilistic trader on like, well,

24:60 if this happens, this is what they're missing. Right. That type of thing And I think that's part of the reason why I would have those types of on. Now it's just really, really fat, really fat.

25:13 Lots of edge. More dangerous because there's a lot of liquidity, but the

25:19 margins are super fat. And am I thinking about this right because oil and gas companies are out there hedging, etc. So, and let's face it, a lot of that's just Management Preservation Acts,

25:33 right? If I hedge and put down my debt, I've got a job in five years. And the like, and so the pure person like you that's sitting there saying, hey, I think going long natural gas in the summer,

25:47 going short natural gas in the summer, there's so few of that. That's what you're talking about. Yeah, I'd say like, listen, the producer on your premium, like every year the producers sell

25:55 like 13 million lots rateably in a calendar year, somewhere around there 12, 13. You can look at the hedge ratios of public companies, plus there's some privates out there, etc. It might even be

26:05 higher. And there's the permanent length, right? Goldman Sachs Commodity Index, right? They're always along the front, right? There's the inflation hedgers and all the funds that mimic them and

26:13 then there's small non-reportables. And these are, they're always long, right? I think the shortest they've ever been is flat, right? Like they're like T-boob pickens. I mean, the long-arm

26:23 flat,

26:25 right? So that's kind of like the structure of the market, right? And so the general job of the risk-warehauser was to take this rate of a length and convert it into shorts in the front, right?

26:37 At some price and watch it roll and make money, right - Okay - And then you would put that, you would do that or not do that or maybe even go the opposite way based on your fundamental overlay,

26:47 right - Right - That was like kind of like what paid us all, right? And so, you know, there's still hedgers out there still having to protect their cash flows, satisfy the banking, right? I'm

26:60 not loaning news fucking money to go drill these wells unless you hedge X percent of your portfolio, right? Satisfy investors or whatever it is, right? And then you also have, on the other side,

27:09 now you have some demand side hedging. You know, in the winter, you have utilities do some hedging. They usually like to do weather swaps because they have kind of like this weird relationship

27:19 with weather. They wanted to be cold, but not too cold. You know, that's a big deal. And then you have now the new LNG the, hedgers buyers industry coming out trying to offset some of the

27:27 producer hedging. And so you get, and you have different infrastructure coming in at different times, right? The pipeline comes in, but the LNG export plan is in there. You know, the gas plant

27:37 comes in, but all the gas fields aren't gone. So like this creates distortion in the curve, both

27:44 with the hedging environment. And it also creates distortions and kind of fundamentals because they're lumpy. It's never smooth. It's never perfectly executed. So supply and demand matches

27:53 perfectly. And you need risk warehouses for that. On top of that, like the big, big, big coup de gras is the penetration of renewal.

28:05 which essentially, whether you agree with it or not, the market is pushing that volatility, we have this cheaper source, but higher volatility. So the net cost is really the same. Somebody's

28:20 gotta pay it - Right - Right - And we pay it in volatility. So you see it when the wind doesn't blow and Urkop misses their forecast, like power prices go skyrocketing, right? 'Cause we gotta like,

28:31 turn on everything you got, turn off that, turn off this, we're going crazy, right? And then or, you know, one day it was like, well, everything looks fine, but happened to be cloudy in West

28:40 Texas. So we didn't have the solar we needed - Yeah - So it was a hot day, but when it was weird days, et cetera. And so these things, you know, people that are in the weeds trading power, like

28:50 they're all over it, right? I'm not in the weeds trading power, but I'm keeping an eye on it for demand. And this volatility is going to more and more fall directly on the natural gas market

29:02 'cause we're getting rid of coal, right? We're shutting down cold plans. like the ESD movement out of crazy. So it's like all the coal, all the gas is doing all the heavy lifting. It's handling

29:12 those power plants are handling the volatility. Our storage facilities are handling volatility, right? And

29:19 thus the risk wear houses myself, right? And all the other fundamental traders, we have got to absorb that volatility and we're like, okay, but you gotta pay us - Yeah - We're gonna get a fat

29:30 charge out of this. And you know, the LNG aspect,

29:37 the volatility associated that was amazing. Like it was extremely bullish until FreePort LNG blew up, right? And they were just like, wet blinking on that fire, right? And then it's like, holy

29:47 shit, now we're bearish, right? Supply is now doing what we expected to do. It's growing, growing, growing, growing, growing. Freeport's off. We've kind of like filled the gap and, you know,

29:58 it's not like producers aren't gonna try and take the money that's out there. It's gonna keep growing, maybe not at the same rate. looking at a bear set up going into 2023 in natural gas, right -

30:07 Well, and it's, I think it's something that's scary that I haven't seen heavily reported out there. There are a whole lot of shutdowns on LNG refineries and the like of a fire. I've got a theory

30:23 this is some cyber attack thing going on. People I know in the industry are like, No, it's just we fired all the old guys at the downturn. Now we've got a bunch of kids running the plants and they

30:34 don't know how to do it. But I think stuff like that happens more and more in the future than previously - I mean, things break. I mean, when you read whatever you can get your hands on with the

30:46 LNG, what happened at FreePort and we hired two consultants, we have tons of data. We're always flying around and taking pictures of stuff to understand when they're gonna come back on. But

30:60 it really was like just kind of like management neglect, right? Not properly trained people. training program was like, hey, just follow this guy around and then you learn it and then you're the

31:08 guy. But you don't really have any institutional knowledge. Like when the pipes are banging, like, hey, this is a sign of something's wrong, we gotta shut it off, right - It's bad wrong - I

31:17 think any seven year old will know, if like if you have the pipes clanging, like something's wrong, right? Like you don't just ignore that, but I don't know. You know, so, and you just see

31:26 things like industrial, these complex industrial facilities, things go wrong parts where out they're break, they're near water, they're near salt water for God's sake So like it doesn't just, a

31:36 lot of things could go wrong. And when they go wrong, it's a lot of gas that all of a sudden has to find a home, right? And if it's extended out, it's like a hurricane or you know, at time when

31:46 we had the hurricane and the anchor drag, and it sunk a ship and it blocked the channel. I mean, just weird stuff happens all the time - How was that in your model - Yeah, that was good - Didn't

31:57 have that on the weekend - I don't know how many satellite imageries I bought to kind of track that and look at like the draft of LNG ships and search the world, but like, all right, what's the

32:07 most minimum draft? 'Cause they restricted the draft. You know, you just do a lot of homework to try and figure out what can and can happen when these events happen. And, you know,

32:16 most of the time, you know, when the event happens at first, we have this like, oh shit, right? Like especially when your position is the opposite of what happened happened. But then I'm always

32:25 like, kind of thankful for some of these events as long as nobody gets hurt because that creates the market tends to overreact - Right - Or underreact, right? It never gets it perfect. And that

32:36 creates edge for me - Yeah. Yeah, no, it's amazing how these pieces fit together 'cause I will be the first to admit, I totally miss the associated gas story. You know, oil's at 125,

32:48 shit, hell, hell, hell, hell, hell, we're losing. We're drilling and I keep going, why are we not getting anything for our gas out in the Permian Basin and all our CEOs go, I don't even give

32:57 a shit. We're making so much money on the oil. And it took me a while to figure out, oh, okay. Yeah, I think it's more the environmental aspect of it and it's saying like you can't be Flairness

33:08 or putting out you got sticking in pipes and ship it and they'll be happy to To ship it once the infrastructure is there, but that's the great play like, you know, just kind of like a marketing for

33:19 Risk warehouse in general not even my fun like fuck me. Yeah, like just in general like We always used to say the joke is the name of the game is a stand-in game right don't blow up the market will

33:30 present outsides opportunities and outsides returns and If you look at kind of like what's going on in energy in general both crude oil natural gas renewables lng Power

33:44 you have massive amounts of steel going here going there doing this whatever affecting supply demands that lumpy Right and it's going to create these massive bull and bear scenarios where you're going

33:58 to be able to profit because You're the guy in paying attention, right? Like you understand it more than anybody else, right? Other people have their other reasons for why they sold or bought,

34:09 right? Which are rational to them. But when you look at the curve, the curve is completely out of whack - Yeah - And it's gonna be more out of whack on a go forward basis - Yeah. Now that's

34:21 interesting. I think you almost talked me into markets aren't efficient. I've always been in a market division, got my whole life - I mean, it couldn't be a centaurus if they were efficient,

34:31 right? Like how did we make all that money - Yeah - How did I consistently make money for 10 years straight? Now another 10, 20 something years, I had like one or two down years - Yeah -

34:43 You know, they're just, they're just fat - Yeah - No, and my snarky response is, Oh, you fill where I stayed in and you flip a quarter, somebody's gonna flip head - Somebody's gonna be, so

34:54 maybe we're the head flippers, you know, 20 in a row, You know, I've just seen it. Like the guys who stayed in, the guys who really do their fundamental homework, the guys who I respect their

35:04 opinion when I ask them what you're into season or what are your power burns or what do you think is gonna happen here. You know, they seem to be fairly consistent, the reasoning and everything

35:13 makes sense. You know, that's what they thought about John. Like, oh, with Enron and the machine, you can make a bunch of money, you can't make it on your own, you know? And I think John is

35:25 kind of like this, just kind of this like, schism about him 'cause he's a market efficiency guy, but yet he exists - Yeah - Right? So how could you exist if the market's efficient, right? Like

35:38 if John, John, and we used to say that if John was an outsider, he would have never invested in himself - Right - 'Cause he's such a market efficiency guy. And it's just like, we would have these,

35:51 we'd have so many philosophical debates in Suntaurus, it would just make your head spin - Well, in the. The snarky response you can make back to me is, yeah, she spent 20 years convincing

36:03 institutional investors that there's boots on the ground knowledge in Houston and that those Wall Street guys don't know what they're doing. You know, right? Yeah. Because I mean, we tell a story.

36:12 I mean, we all have our biases. We sell the story. I'm just kind of like, I've, you know, in the beginning of the natural gas days when do you start first start happening? I mean, the markets

36:22 would just look ludicrous like that, right? And the broker just reflected that right The broker just be like half a penny or something like that, you know, and

36:31 there's just lots of hedging and stuff and slop and the market didn't have the infrastructure it needed. It was not enough storage for the way that industry was growing. So we have scenarios where

36:42 you could have containment, right? Too much gas and then that very, the winter following, not enough gas, right? Because the system didn't have enough storage, right? And because of the way

36:53 we're building our infrastructure and the way we're layering things on, we're heading towards that again. And if you look at the last five years, we really haven't added that much storage. But

37:01 look at what supply has done - And I don't even, I mean, and so now I'm gonna put you in kind of forecaster role here. I don't know that we really can build a lot more infrastructure. I mean, you

37:11 know, the FERC is now three, two, well, it's two, two, 'cause Manchin, I think, is gonna withhold the approval of the third guy. But you know, they've changed for the first time in 20, some

37:23 odd years, the approval process And now they can look at what it does to climate change. And that kind of gives the Democrats, and I hate to be political here, but it gives the Democrats the

37:36 ability to say no to stuff. So I just wonder how much infrastructure we truly build going forward. I mean, you've got a better insight into that - I have, you know, so I've done a development

37:47 project in Nevada called Townside, which is now owned by a Revon, they bought it out, which was originally capital dynamics. And we built this large solar facility. And I was quite amazed at how

38:01 difficult it was to permit and get that facility up and running. We had like a - What was that - It was just sold, did I sell it like three or four years ago - So you maybe are permitting eight or

38:14 nine years ago, something like that - Yeah, I mean, start with the dev, et cetera. And now I'm working on Townside too, a smaller, you know, just facility, working with the BLM, et cetera,

38:25 but like the chart of things Like I remember one time they called me, this is kind of funny. They go, well, I said, well, we done, we've done with this, or have we gotten this approval? He

38:34 goes, no, we got a pet cemetery issue. And I was like, Stephen King, the fucking book. Pet cemetery. He goes, well, two miles away, there's a pet cemetery. It's not a historical site, but

38:47 it may be a historical site, they think. So they want the historical society of so-and-so to comment that our solar panels - won't reflect and interfere with the eyes of people at this pet cemetery.

38:59 That's cool, like a cat cemetery. And I was like, you're fucking kidding me, right? We're being held up and oh, on top of that, you can't be done electronically, it has to be done stalemate.

39:08 We have to write the guy, send it to him, he has to send it back. They will not accept email PDF or Gaki sign or whatever. And I'm literally pulling out my eyelashes or something. Like I'm like,

39:18 what, are you kidding me? And I'm like, are they really like, so think about how many ways a nefarious person on the other side can kind of delay your project and delaying a project is killing

39:33 your project - It's killing it, yeah - That's what the game is, right? They know that ultimately if you're willing to go 15 years, you may get your project, but you just run out of money. Like

39:41 you just delay the game. And so I'm cutting you off real quick just to commiserate with you. The bane of my existence for about 10 years was the Bluntnose Leopard Lizard. We had Kettlement North.

39:55 Cattleman Dome or a Cattleman Middle Dome in California, this old oil and gas field, chevronated band in it. We put it all back together. We're going to go in there and drill and it pops up that

40:07 we have the Blunt Nosed Leopard Loser, which is an endangered species. We literally had to have higher a biologist. Every time one of them died, we had to have an autopsy on it to make sure our

40:17 oil and gas operation didn't kill it. Oh, they'll go grab them and put them on your land just to fuck with you. Oh, yeah. I'm sure I'm not sure. I'm sure it's in that the Blunt Nosed Leopard

40:26 Lizard is endangered because it's the dumbest motherfucker on the planet. Chucks would come in and they'd run and jump into the side of it. And we're just going, Darwin talked about this. Yeah.

40:37 But anyway, I mean, it's there. So I don't think people really understand how

40:42 hard permitting is and how much the administration can make it hard or impossible for you. And to me, it's concerning as like an American citizen because energy security is national

40:56 But as a trader, I'm like, you be motherfuckers.

41:00 I'm like, it's on. You know what I mean? Like, I don't care what you do, you build too much infrastructure, too little, you put this here, whatever. Like, I am in the weeds, I understand

41:09 everything that you're doing, I, Hoover and data, I'm here to like make money. You're just gonna create volatility, which makes guys like me fat - Yeah - Right, so, and let's, you know, I

41:20 don't have to brag about me, just the whole squad of us, right - Right - Like, we get fat - Yeah - Because you guys are fucking around playing politics with lives - Yeah, and I mean, you're right

41:31 about that, 'cause I say on the podcast all the time, when we buy energy from authoritarian dictators, bad shit happens. I mean, it just does. Wars happen, people die, people freeze, all that

41:42 sort of stuff - Look at Canada, right? Like, somebody was tweeting, Oh, you know, look at all the LNG guitars going, we have all this gas and we have 15 LNG permits and they didn't put up. And

41:51 I just, I was being snarking It's just like, Didn't you get the memo? Canada's job is to send cheap hydrocarobiums to the USA and that's it. Get the fucking work.

42:02 And that's kind of what they do, right? Like 'cause their whole body politic is about

42:10 like, more about, and I'm not saying it's right or wrong, but it's more about like some global concerns than the local concerns - Yeah - Right, China doesn't give a fuck there, but like, they'll

42:19 build the whole US worth of coal plants in a year, right -

42:24 That's - They're like, they don't give a rat's ass. Go ahead and do all the things you want. Like we're about our energy security and people here, right - Yeah - And they're doing it with the

42:32 worst hydrocarbon, right? In terms of emissions, radio emissions, radioactive nucleotides, carbon emissions, nitro-troxide, particulate matter, et cetera. The worst one, right? And you know,

42:45 you got guys in the Northeast, like, they may run out of gas. And then Marsalis is right there 'cause you can't get a pipeline in And so like these things just, I'm. You know, you rack your

42:56 brain. You just, you hate to see it happen, right? Like it's like, oh, you don't have to die. You don't have to kill these old people. And people think I'm joking when I say you don't have to

43:04 kill old people, but like being cold in the winter is a huge factor in elderly death - Totally - So when they were talking about lowering the thermostat in Europe to like 67 degrees, I was like, do

43:17 you understand? Like there's little recommended, and she's like, you cannot do that if you're a certain age - Yeah - Your body cannot handle that and it creates stress and you die. And there's so

43:27 much so, there was a public, I remember it's quite a while ago, but

43:32 there was a very mild winter and there was a public funeral home and they had bad earnings. And they was like, because of the mild winter we had less dust than expected. So literally they can

43:42 weather hedge for their deaths going through their funeral home - Yeah - And so, you know, these are real, these are real, these, you know, everybody thinks these decisions, you know, they're

43:55 signaling and they're virtually, I was like, there's real world consequences immediately for some of these decisions. From the trading perspective, 'cause this isn't a political show, for a, you

44:06 know what I mean? All right, from a trading perspective, all I see is opportunity. Like I have to be, I have a responsibility to my investors, my LPs, et cetera, that they pay me to put on

44:18 risk and to make them money. And it's the opportunity. So I look at everything from like, okay, how am I gonna extract value? What does it say about the market, et cetera? So I'm very stoic and

44:29 very robotic about it. But as a human, as an American, you know, I'm pulling my hair out. Well, I don't have any hair out. But I like she's up - Yeah, no, that's right. We, so Colin and I

44:39 do another podcast, we call BDE. We call it the weekly summary of the energy business for people that think Jim Kramer sucks - Right - No offense, Jim. I actually like Jim. But anyway, and we

44:51 always end the show with finger of the week We've got this old video of everybody shooting. the rod and we always give it to somebody that has maligned the energy business and what we believe is an

45:00 unfair way. We've had to retire the award because Senator Warren would win it just every week. She would say something or do something. Yeah, she's up. Because I mean, they had a date to your

45:14 point. I mean, okay, so we import LNG in the Massachusetts, which is ridiculous because in effect, what we're doing is we're basically taking from Russia. We did from Russia. But even if even

45:31 we're taking it from in effect, Trinidad, and it should be gone to Europe. I mean, the Europe we do for today, we do for Russia, we do for replays. And well, it's because that's because of the

45:39 Jones Act. And so there's a lot of Jones acts horrific. So there's it's horrific and it costs American consumers. And it's a it's a anti national security act, in my opinion. It needs to be

45:52 abolished. But yeah, tomorrow. Probably one of the most polluting things besides biodiesel. Yeah. But is the Jones Act. There's so much trucking and stuff that goes on, inefficient shipping

46:07 that goes on because we do not ship from port to port. So this is a wild thing, Colin, and I've talked about on the podcast. And I actually kind of believe this, but I haven't researched it

46:17 enough. So you can punch holes in it is one of the greatest decarbonizers on the

46:26 planet besides the tree is a whale. Because when the whale dies, it's got about 33 tons of carbon in it and it just sinks to the bottom of the ocean, right? And so one, we've taken our whale

46:40 population 200 years ago, let's say it was 5 million. Today it's about 12 million. And it's hard to really grow that whale population because all the ship's going everywhere because a young whale

46:50 is always curious. It comes up to the ship, gets hit and dies. So it's hard to grow our whale population. So not only are we losing the decarbonization of a whale dying and taking the carbon with

47:02 us, what they've figured out is about 40 of getting rid of

47:09 CO2 out there is plankton. And the best thing for plankton on the planet is whale ship. I mean, because of all the nutrients that come out. I mean, that's the big. And so we have less plankton,

47:22 we have less whales because of the ball of the ships going everywhere. Yeah, I can't push back on that. I would have to research it. But what you're really pointing out, and I've seen some

47:31 documentaries and stories about how interconnected our ocean is and our environment, et cetera, and that fucking with the environment and these systems causes consequences. Yeah, to your point,

47:44 it's second order effects on all this stuff. Yeah, because I mean, it's crazy They had a day last winter where 25 of the heating. in the Northeast was driven by heating oil, 'cause they

47:57 don't have a pipeline from the Marcellus. You know, we had to send out an generator - They got a burn coal, they got it whatever. And the thing that's really decarbonized America, the reason why

48:07 without carbon caps or any kind of rules or regulations, et cetera, the reason why our carbon emissions have flat line and gone down is because of natural gas - Yeah - Cheap natural gas - Yeah -

48:18 Because natural gas has eaten into the coal stack, which is the most carbon intensive fuel. And natural gas is more efficient, you get more electrons, you know, out of it through the turbines.

48:31 It's cleaner burning and there's less carbon, nitrogen, oxides, et cetera, PM10, all those things. And so that has been an amazing accomplishment and have saved literally hundreds of thousands

48:43 of lives - I was gonna step the other day that we are per person at CO2 emissions that are kind of rivaling us coming out of World War II. Yeah, so that we

48:56 declined our emissions that much - So I'm not saying we can't do more, but one of the ways we can easily do more, the low-hanging fruit is more natural gas burning plants - Yeah - Right, that's

49:06 easy. And they're energy dense, not as energy dense as a nuclear plant, right? You'd rather have a nuclear plant than an actual gas plant, but they're energy dense. They serve a lot of homes,

49:17 and when you bring in cheap natural gas in a lot of regions, say that you obviate the need for coal - You can basel it these things - The

49:26 marshal plant, if you will, of the current day to deal with CO2, and I don't know that you could pull it off with China just because of the geopolitical tension there, but we could do it with

49:36 India is, you gotta just go finance the US government ought to finance natural gas infrastructure in India - It says, Hey guys, skip coal - The problem is, is that like the,

49:49 this is my opinion, and my observation is that the The true environmentalists have been hijacked by radical lefties. They really kind of have this like anti-human, nihilistic, narcissistic

50:06 approach. It's not really true. Let's put in policies that really affect the environment. Actually, a lot of the policies and the things they support actually hurt the environment. Yeah.

50:15 Actually, lead to bigger, just look at Germany and their situation. It's burning coal like it was going on a style despite the wind additions, etc

50:26 They shut down their nukes. That was for some environmental reason, which is like, I didn't really understand that. I still never understand that.

50:35 You have that here, right? Like, wait, but why? Let's look at the net impact you're going to have here. Then this kind of idea is like, well, let's look at the net impact of solar

50:44 environmentally and what happens here and the mining and the minerals and the carbon that goes into it. When do you get the return and all these things, right? what happens when the sun's not

50:53 shining. and then you have these batteries and then you have to go to some other fuel. And you just wind up, you know, they just do a lot of things that are not necessarily efficient and sometimes

51:02 counterproductive. And so I don't, I see chaos ahead - Yeah - Right? Like when people say, oh, we're gonna meet the CO2 targets, I'm like, fuck, no, we're not. I mean, if there's one bet I

51:16 can bet on, I would bet against that. Because I look at the policies, I'm like, these are not effective. But if you just told me, hey, the policies is, we're gonna launch, you know,

51:26 20, 30, 40 gigawatts in natural gas plants, I'll be like, oh, we're gonna fucking crush carbon emissions - Yeah - 'Cause there'd be no coal burn - You know what I mean? Like, we're gonna

51:34 replace every coal plant with a gas plant. I'm like, oh, we're gonna cut our carbon emissions, et cetera. So, mostly all our carbon emissions reduction has been from natural gas - Yeah, totally,

51:44 totally. We, replacing coal - So here's a digital wildcatters story that I love to tell and I will give props. So we just did our Fuse conference. use was if you make energy, a oil and gas solar,

51:57 whatever, show up, if you move it, distribution pipelines, if you use it, everybody show up. Let's all talk and quit shitin' on each other like we normally do. Let's actually talk, we'll talk

52:08 technology and how we can solve all this. So we had Toby Rice come and talk and he's really incredibly eloquent about natural gas and what it's done And I think he's done a really good job of

52:22 educating. So anyway, he does a speech and then from the stage at Fuse, he does a CNBC interview and the reporter ended the interview with, that was Toby Rice, CEO of EQT from what appears to be

52:37 a rock concert. So we're not okay, cool. Our energy conference was a rock show. But yeah, no, you're absolutely right I mean, if we could sit here for days and just talk about all of these

52:51 small little policies in the second order. and now really we're running in place - Yeah, and I think in certain ways, definitely in localized places, we're making it a lot worse - Yeah - Well, I

53:04 would say, let's just say, we're volatile and more opportunities. Like let's just keep bringing it back to trading - We love the trader - Back to the trading - I'm ready, you know, private equity

53:13 kicked me out of the club two and a half years ago. I'm ready to be a trader - I mean, private equity or equity guy's trading stocks, they're like, oh, it come out as this is too volatile. I was

53:20 like, wait, what? This meta printed this These things are down 70. This is down 25. I'm like, what are you guys afraid of - Yeah - I thought that natural gas was volatile. I was like, come on

53:30 guys, like, what is fine - So when I was at Cane Anderson, you know, private equity side, we had traders in LA that would look at stuff. And we'd always talk about who was taking more risk and

53:40 they would sit there, you made an illiquid investment, you know, 95 of a company, when something goes wrong, what are you gonna do all this? I can sell tomorrow. If I'm wrong, I'm out - And

53:51 that was always like, You have no idea what that company's doing. You're reading at 10K. And so it's interesting how you think about risk 'cause they thought what we were doing is the riskiest

53:59 thing on the planet. I couldn't fathom how they would buy an oil and gas stock, not having seen a log, you know? But anyway - Yeah, they're out there. I mean, it's

54:10 a strange world,

54:13 but I think at the end of the day, the end customer is probably usually some pension fund or individuals, et cetera And their whole lives, they've been talking like, how you invest as you buy

54:26 stocks, how you get rich as you buy a stock, not sell a stock and then buy a cheaper, but buy a stock and then sell it later. And so that's ingrained in kind of like the culture. And so there's

54:36 just this huge bias for those instruments, equities, huge bias with equities. No matter how much I can paint the most, like believe me, we are the house and this casino and we print money and

54:49 look at the edge look at this trade, where do you ever see it? 85 trade in your life. Yadda yadda yadda. You know, and they'd be like, What's not going by?

55:00 I'm like, Okay, buy energy transfer. You know what I mean? You know, buy energy transfer, you know, that type of thing, you know, so whatever. You know, I just like, Okay, fine. They

55:09 never, they never, I mean, I've been in here long enough that

55:14 it's really hard to

55:18 raise capital in the discretion of long short, in our market It's funny because I'll see these hedge funds. They'll be like, We had it down 50 or down 24, and they'll get another 4 billion. You

55:27 know, they'll just start fun too. 4 million, here you go. And I'm like, Can we get a 25 million allocation? You know, here? I mean, I got 170 return. You know, can I get a little money? I

55:40 used to always be shocked. 'Cause there's a, you know, the chief investment officer, the CIO is sitting there, and there's always this, I want a small loop. I want somebody like Bill who really

55:54 is down in the weeds on this, understands it. Gosh, it's just easier to give BlackRock 2 billion or not. To ship it. Because I don't get fired if I hired BlackRock. No, right. Yeah. It's like

56:05 the old adage, like nobody gets fired for buying IBM, right? Like nobody gets fired for just being lost stocks. Bill, Bill loses my 10 million bucks. I'm not getting fired, but you know, yeah.

56:13 I did some sort of herd mentality too. Like it's like, well, if we're all losing, it's okay. Yeah. We all lost We're down 21 or 30, whatever. Things go wrong, right? Yeah. We also like,

56:24 there's no, like this, if you invest in a commodity guy and he happens to have a bad year, a pull of vortex, get some, whatever. Who knows what gets you? Right. Things do get us, right?

56:33 You know, it's just hard to explain. Yeah. That's funny. Now, I got to ask because I will fess up. We become such good friends here over the last hour. My crush growing up, I used to race home

56:46 from school so I could turn on good times - Yum - Yum, Janet Jackson. Oh my God - Oh yeah, for sure - Right, I mean, you're my age - Charlene, when she was Charlene on different strokes, that

56:56 was kind of my, my, like, yeah. I was like, yeah, she was amazing. You think about Penny on good times - I think about Penny on good times - Penny on good times. I like there is Penny on good

57:05 time. I loved her, Charlene, on different strokes - Gotcha, yeah, there you go. So, but the picture, sugar shaft - Sugar shaft - So I'm good times - Yes - So I think this is one of the coolest

57:16 things in the world - Yeah - You bought this thing. Tell me that story - Yeah, so

57:22 we're actually gonna bring up John again. So I always kind of wanted that painting, you know? Just kind of my collection. And John introduced me to Ernie Barnes and, you know, John's a serious

57:35 art collector. I don't even think he's an amateur. His house is like a new theme, but a great, great works. And, you know, I always ask him for advice. And I was expanding on my bigger

57:47 collection. He says, you should look at this guy at Ernie Barnes So I bought a couple pieces. you're cheap, like relatively speaking,

57:55 right?

58:02 Because given the significance of his work and who he is, and just basically that narrative, right? The narratives he's painting in America are distinctly American, right? Like if you're painting

58:07 flowers in an ice skating scene, it could be in France, it could be anywhere, right? If you're painting whatever, but the like stories or narratives about black love or back joy in the segregated

58:18 South, et cetera, in those experiences, they're nowhere but America. So it's truly American. Forget the, don't feel guilty about it. Don't forget, it is what it is. Like nobody feels guilty

58:27 about, well, the Mayans were wiped out 2, 000 years ago. It's like an event that happened, right? And so when you look at it, it's like, this is a distinctly American art, right? Around here.

58:37 So this is a narrative, can't be recreated. He's one of the early masters. You

58:47 really don't get African American artists until 30, 40 years after the end of slavery, right? 'Cause you have to have community, right? to buy brushes, et cetera. So with that backstory in,

58:55 and the fact that, you know, it had to be crazy to try and be an artist as a black person, an artist anyway, and then as a black person in the 40s, 50s, and 60s, right? Like, who the hell

59:04 thinks you're gonna make money selling art painting black people, right? Like, it's just kind of nuts, right? So you're really passionate about it. And I see this, you know, growing up, good

59:12 times, every day - Yeah - Right? And so I'm like, I want this painting. And I do some Googling, and if I know Eddie Murphy has it - Yeah - So a call, Eddie Murphy's assistant. First thing she

59:24 asked me is, how'd you get my number? I have my waist.

59:29 And so, like listen, I just wanna buy the painting. I'm willing to offer, I'm serious, I'm willing to offer a million dollars for this painting, right? 'Cause the highest print on Ernie Barnes

59:40 was like 400, 500, 000, and I know that because I bought it. So I was the highest print before the auction, right? I know I am the high bidder. I didn't even get the dignity of a call back.

59:53 You know what I mean? Like nothing like eat a bag of dicks, Bill Perkins.

59:58 That's kind of like the response I got, right? And so I was like, all right, well, maybe, you know, later he'll sell it or he's not feeling it or whatever. And so

1:00:08 John messages me. He goes, what's the name of that piece you wanted, whatever? And I go, sure, Shaq. He goes, it's up for auction. Southern one, they're Christie's I go, you're fucking

1:00:18 kidding me. Sends me to link. I look at it. I'm like, oh shit. Oh shit, oh shit, oh shit. And so I'm like freaking out. I'm like, I gotta get registered. Call, count, sworn money to sell.

1:00:30 So you know, like get my credit ready. I'm ready, but I'm like, wait, fuck this shit. I cannot have my computer go down or whatever. I really like this is the piece. I'm going to go get it.

1:00:42 And given that, and it was kind of weird because they put it in the night auction, which is where all the expensive pieces go, the Monet's and Pacasos. but it had a low estimate of like a couple

1:00:52 hundred grand - Yeah - And I'm like, John, what's going on? Like why, and he's like, yeah, they know something's up. Like something's up - Yeah - They just said, we're gonna go with a low

1:00:59 thing and let people go crazy over it, right? And so I told my sister, I said, your job is to make sure I'm at this auction. I gotta be there in person. I don't want anything to go wrong. So I

1:01:12 fly to New York with Lara and we go visit some art galleries and look at things And I'm like, I'm not gonna buy anything 'cause what if I need the money for this painting? And I'm thinking it's

1:01:23 gonna go for like three million, right - Right - So I come in, I walk into Christie's, it's amazing. They have some of the works that are going up for auction. It's really like a beautiful museum

1:01:33 when you go and you see these works apart. That better, either gonna be auctioned or have been auctioned that night. And sugar shacks right there. And I walk up to it and look at it. I'm like,

1:01:43 you know, Lara and I have a plan. Like don't act - Real quick, 'cause, 'cause, so this is the, on this. Yeah. So Eddie Murphy has the original Ernie did a duplicate of it by hand 76 or so.

1:01:57 Right. Right. And that's the that's the one we're talking about. There's two of these things out there. Yeah. So, so the one that he has, I think

1:02:07 Eddie has the one with the Marvin Gaye painting on top, like the radio station on it because it was on on the album. I think I think the album's has I want you on it. So after the dance, I think

1:02:20 the name of the album, right. So it's on an album. It's on good times. It's in the culture. It's it's it's it's because Ernie changed it up after Marvin Gaye put it on the album. Yeah. He

1:02:31 wouldn't know. He changed it for the album. And so when you buy the album, it has like, you know, some radio fake radio station on it. Yeah. Okay. Yeah. Like that banner hanging in the sugar

1:02:38 shack. Right. That's so cool. Yeah. And

1:02:44 so Cody, the guy who did the documentary for a genius about Kanye West. right? Is there and this other guy I didn't I didn't know him at the time, but they're they're like kind of sitting there

1:02:54 with Cameron. I'm like, Oh my god, they're looking at this painting. Guy comes up to me and goes like, do you know this painting? Um, yeah, of course it was on this, whatever. And he's like,

1:03:03 yeah, well, we're doing a documentary on Ernie Barnes and his life works. And I'm like, I'm thinking, Oh, that's great. Whatever. And I'm just like, Oh, fuck. If he's here doing a

1:03:13 documentary, some shit's going to pop up and then yeah, right? Trader Bill. I got so I'm like, fuck, it's going to pop off. It's going to pop off. So I go in, somebody took my seat. I had to

1:03:23 go sit over in some other area. You know, there's a press behind you. The press row in the back, a whole broker row elevated over here. Hong Kong behind on the screen, right? Big giant screen

1:03:36 with Hong Kong brokers with phones. You can see them on telephones and a auctioneer up front and in this pit, right? And his whole row of press. I go in and it's kind of, it's kind of nice.

1:03:46 Achtsha Monet, you know, 10, 000, 50-minute per car. How so this week, whatever. And then there was a painting just before it, I think it was a Monet, it was like a shagal or something. I

1:03:56 was gonna bid. And I said, Don't you fucking dare do it, Perkins. You may need the money. This thing could pop off. Thank God it didn't. And so,

1:04:06 we go through and you know the auction and mowgoth collapse where your time, whatever. And then this thing, you know, the announcement says, So this work, whatever, important, whatever And we

1:04:15 have 21 or whatever bidders that registered. I'm like, There was never 20. Like, and he goes, I'll start to bidding off at 100, whatever. And then it was like, Buh, buh, buh, buh, buh,

1:04:24 buh, it looks like the trading floor back in '93 and the heating wall pit. You know what I mean? And I was just like, Buh, buh, buh, buh. And I was just like, Holy shit, two million. You

1:04:34 know, I just yell it out, right? And then everybody's like, Two million, two million, about three million. So it just goes crazy, like that. And then finally, I'm just like, I gotta clear

1:04:43 these people out. Yeah, I went this and I was like, all right, we were already past what I thought it was gonna go for.

1:04:50 And it just keeps going. And finally there were three, and then there were just two of us bidding back and forth. And the guy just happened, and stance to be two rows in front of me. And there

1:05:01 was kind of empty chairs in between us. And he's on the phone talking to whoever is the other buyer. And

1:05:08 we're going back and forth. And it gets up to around six

1:05:14 million, or six and a half million. The guy turns to me and he goes, I'm not gonna stop. And then I go, well then I'm gonna make you pay -

1:05:22 Everybody says laughing, right? 'Cause you don't, you know, you normally like the etiquette. You don't turn to the other bidder, you don't say anything or whatever. And they're like, he does

1:05:29 what he's like, Pessent. You know what I mean? Like, god damn it - Yeah, one of those guys - It's exactly pesky kid. You know, whatever, whatever. And so we're going back and forth, you know,

1:05:42 slowly then quickly, small jumps, then high jumps. And I'm sitting there thinking, taking pause, I turn to learn, I go, wish I do babe. She's like, you're on your own. I can't say anything.

1:05:55 'Cause before this, I said, hey babe, if anything happens to me or I pass out or anything like that, don't fucking worry about me, keep betting. Literally told us where it's

1:06:06 before we go in there. Do not worry about me, keep betting. And so we keep going in and now it's just like, oh my God, like I'm thinking about what am I going to sell in order to buy this piece

1:06:15 I'm like, well I can sell this and I don't really need that house over there. Do I? You know what I mean? I'm like, how much cash do I actually have kinda I? have to borrow some money from John

1:06:24 in the short term. You know what I mean? Like these thoughts that go right there in my head, right? Like it's, 'cause I only put a certain amount of credit and actually, I wonder what have

1:06:35 happened had I been online? Because I would have broke through my credit limit right around three million, right? Oh wow. approval in time before the hammer dropped, right? Whereas you're live,

1:06:49 they're just like, well, fuck it. He's here, we think he's got it, you know? Which I did, but so we keep going. And then finally at around at 13 million, he just goes bad luck number, I'm

1:07:02 out. And I got it. And the place went fucking nuts - Oh man - The place went nuts. I mean, I was like, I don't know what's going on. And I was just ecstatic. I was like, it's so happy. Like I

1:07:14 stole the police I was just like, amazing. And then people went nuts and the art world was like, what the fuck? And everybody in Hong Kong is like kind of staring. Like everybody else is quiet.

1:07:23 It's me and this guy and everybody's kind of like, who the fuck is there any Barnes?

1:07:27 You know what I mean? They don't know, right? Like 'cause the art market is biased, right? It's biased against American art, except for like the super majors, right? And it's definitely biased

1:07:35 against African American matters and American arts. And it's just what it is. It's cultural, like there's not this big education and not into the narratives. weird and I think that's also partly

1:07:45 because I've said this, partly because of the black community. Like a lot of people congratulated me and they were like, we're glad a black guy bought this work. And I'm like, you guys are

1:07:52 fucking crazy. If you want to support black artists, it cannot be just black people buying them - You know what I mean - That's like you gonna go sell your house in an auction. I'm like, I hope

1:08:01 two people show up - Right - Like we meet two people. I mean thousands of people, right? Really what you want is the Chinese to buy it. Or the Russians to buy it. Or some French oligarch to buy

1:08:11 it. And then when he has it on his wall, he tells a story to everybody's exposed to the artists and the narratives and they want to collect it, right? That's how you support black art, black

1:08:19 narratives. Not by just the small amount of African American collectors collecting African American artists. Art is for everybody. These narratives for everybody - And you want Ernie to get that

1:08:30 payday in the future - Correct - Yeah - And so you know, my belief is that things based on a lie eventually rectify themselves and may not be in my time, but this market is distorted and I'm just

1:08:40 buying it cheaply So I'm buying a hundred million dollar painting. for 15 million bucks. And yeah, the market doesn't show that right now, but eventually get there. It's kind of like when I sell

1:08:49 March, April in the winter. Yeah, it's 20 now, but it's gonna go out at zero or is it? I mean, like that type of thing - And you walk in the walk on this 'cause we can go see it at the museum of

1:08:58 fine arts - Yeah, yeah, I have it. I think it's a treasure and that people need to see it and the museum wanted it and they wanna display it. And then somebody also asked to display it. So it's

1:09:09 gonna go from the museum of fine arts and use into kind of like a sugar shack display, other earning bonds work in LA, other people have hit me up to display it. And I want people to enjoy it. And

1:09:21 my kids kind of were like, Dad, you can't bring that in here. I'm like, why? People know you, they're gonna come try and rob it and steal it. We don't feel safe it's in here. So I gotta deal

1:09:30 with that issue and put it somewhere. I gotta find a good place to put it in one of my places where people don't know it, but I just am ecstatic about it I'm happy for the Barnes estate.

1:09:42 There was another painting called Storm Chasers that was for sale at the evening sale. My plan was to pick up both. But I didn't even show up to the evening sale the next day 'cause once I put that

1:09:53 print up, I knew, like the secret was out, right? And so that thing should've went, you know, it had the barns not gone first. I would've been able to buy that for like 150, 000 maybe. You

1:10:02 know, it went for like, was it two million bucks? I think it went for two million bucks and it was two Asians betting against each other - Yeah, that's awesome - So, you know, kind of I was like,

1:10:16 well, the gig is up, I can't be stealing Black Art - Right, like people think like, oh, we thank you for buying Black Art. I'm like, guys, I'm a thief. I see, I'm a trader. I see relative

1:10:26 to the art market. I see value and I come and buy it and I enjoy it. And I get to enjoy it and get joy out of it while I'm alive for relatively cheap rent. You know what I mean? I was like, you

1:10:37 can't tell me this Warhol's 100 million and this is 15, this guy's crazy - Right. You know what I mean? Like you guys are nuts. You guys are nuts. It's like your biases have distorted your

1:10:47 appreciation. And I think ultimately those biases will come out in the market, maybe not my lifetime, but they will - Yeah. No, it's interesting because you hear discussion like that and oh,

1:10:58 somebody sold out or whatever. And it's totally, totally wrong for me to try to quote snoop dog 'cause he's so much cooler than I am. But I love his quote about, no, no, when you the OG, you

1:11:12 get paid - Yeah - And sell out - Yeah, you didn't sell out. So no, I think that's just an awesome story that you did. That's so cool - I mean, I still, everybody's like, so cool. And my guys,

1:11:24 I fucking stole the painting and brought daylight. I bought everybody's like, oh, 15 million. I was like, if I bought a G650 for 15 million, you'd be like, good deal. Problem is you just don't

1:11:33 understand the art that I bought. And when you do, you'd be like, fuck, he stole the G650 - Yeah - So that's how I look at it But I mean, yeah, people want to thank me fine.

1:11:44 but it's like thinking the thief that comes in and steals your car - Yeah, no, it's really cool. And you've been kind with your time. I want one last thing, we can be really quick about this - I

1:11:56 think this rolls into the book you wrote, Dive was Zero - Right - You were kind enough to come talk to my breakfast club, I don't know, month after

1:12:06 a year, and anyway, it was interesting to hear us. Give us the punchline on Dive was Zero - The punchline of, you

1:12:14 guys got a sophisticated audience, so it's a counterfactual regret minimization algorithm solving for net fulfillment. Okay, so I'll re-say it. So basically, I take three variables, your wealth,

1:12:24 your health, and your time left here on earth, and those are the variables, right? And with those variables, I solve for net fulfillment, because I believe the purpose of life is to be fulfilled.

1:12:36 And your purpose of your life is to have the maximum fulfillment while you are your

1:12:41 journey. your vacation here on Planet Earth, right? Your vacation on Planet Earth is going to end. And so using those three variables and how they changed throughout your life, the regret

1:12:54 minimization is for maximum fulfillment, right? A chess algo's regret minimization is for checkmate, not to lose, right? A lot of people are running regret minimization for maximum wealth. And

1:13:08 I'm like, I don't give a fuck about maximum wealth I care about maximum fulfillment, right? Wealth is just a tool to help me fulfill myself. My health is a tool to help me fulfill myself. My time

1:13:20 that I'm allocated is something they use up to help me fulfill myself. And I'm like, based on your own values, not my values, the things you like, you want to do, I give you kind of a mental

1:13:32 models in order to get the maximum amount of your life - Yeah, no, it's great to think about 'cause I went through divorce college. seven, eight years ago and get my ex wife plenty of money. But

1:13:47 you know, I was still, we'd just raised the largest fund in Kane Anderson's history. So riding high and as stupid as this sounds and as boastful as those sounds and I hate to be arrogant, but

1:13:59 whatever, I'm so glad I went bought two planes during that time. I flew around. I, you know, I went out on tour with Jewel and Thomas Rhett and all these people. I was their roadie, you know,

1:14:09 and all that sort of stuff And yeah, when I get fired, I'm like, Oh, shit, I can't really have a plane anymore. That's not practical, but I'm so glad I did that. Yeah. I mean, I've been

1:14:19 matching like, you know, I've been rich. I've been broke. I remember broke. I've been rich, you know, and you know, I had a plane that I had to sell them. I actually sold one to John.

1:14:29 And John, it was a hard bargain. Like you're, but you still just bit. No, I'm this bit now. No, you still just bit. No, I'm this fucking soul. And I

1:14:38 will not, you know, John is a very, very robotic when it comes to money and trading. He cuts, there's no corner for friends whatsoever, right? Anyway, but yeah, I get it. Like you, at that

1:14:50 time period in your life, these experiences you wanna have, they fulfilled you and now you have memory dividends associated with those experiences that still fulfill you - Yeah - And you're happy

1:15:01 about it. You don't have a regret about it. A lot of people, they have periods in their life where certain things are meant to happen, whether it's spend time with their daughter, go on trips,

1:15:10 go on vacations, et cetera. They don't do them, they get to another period of their life and either it's inefficient

1:15:18 or they're unable to

1:15:21 do those things and then they have regret. And so I look at it at each segment of your life and then the totality of your life so that you die with the least regret as possible. Really zero, die

1:15:27 with zero regrets - Yeah, no, and that's really good advice 'cause one of the article I'd read in the Wall Street Journal called it 20 years ago had said psychological research. shows, if you make

1:15:40 your money versus giving your money, it usually leads to more fulfillment than if you're just giving money. And then the other thing it said in there is that generally speaking, life experiences

1:15:53 with that money lead to way more fulfillment than objects - I agree with that - I agree with that. But I don't tell people that don't buy the object. I'm like, listen, fuck Bill Perkins, whatever

1:16:06 fulfills you fulfills you, just be off autopilot, be intentional about it, and then hear the mental models on how to get the most fulfillment, how to allocate it over your life. Nobody's saving

1:16:17 up to go partying at 96. If you are, you got problems or you have much of drugs - You're gonna live to 150 or 200 - And so intuitively, there's a time, there's a season where we should be max

1:16:31 spending and enjoying and allocating certain experiences And so this book goes into that concept a lot further.

1:16:39 and gives you the mental models about how to think about the league gratification or gratification now, how to allocate these experiences, how to get off autopilot, how to defeat default mode

1:16:49 network, right? Like we all have a default mode network. Like when you drive, pretty much in default mode network. Like when you first started driving, you were like, Ah, signal, light,

1:16:59 break, whatever, go ahead, whatever. And now you're like, Doo doo doo doo doo doo doo. You know what I mean - You're gonna make up, right - Right, right - 'Cause your body takes over and you

1:17:10 have this default mode network and you do things without thinking. This also happens in work, right - Yeah - And actually the habit of going to work. And all our other habits, we go into kind of

1:17:19 this default mode network for survival. Where surviving is not thriving - Yeah - So we start accumulating wealth, accumulating habits that don't necessarily serve our fulfillment. And not only is

1:17:33 life finite, with each period in your life is finite.

1:17:38 You know, I speak to that and other things in the book. I don't want to do the whole goddamn book, but you know, that helps you save your own life. And people go, Bill, what the fuck are you

1:17:51 talking about? Save life. And so I use this 'cause I'm kind of a zealot about this. And I've said it a couple times. So if somebody's drowning on the beach, okay? And you can't come out of the

1:18:04 water and you give them out the mouth and water comes out and they start breathing. They're like, oh my God, you saved my life. Guess what? They're still going to fucking die. They're just not

1:18:14 gonna die that day, okay? They're still 100 gonna die. So what did you give them? You gave them more experiences, more I love yous, more walks in the parks, more things that they want to do,

1:18:25 right? You just give them a little bit more, right? And so when you optimize your life, you get off autopilot, you implement these mental models You get more experiences where I love you. Boy,

1:18:35 the things you want. Same fucking thing - Yeah, the thing that nailed at home for me, and I'm gonna go buy the book and read the book, is when we were talking, I think you were talking about

1:18:47 wakeboarding, and you're like, I forget what you said, but my knee's not gonna be awake - My back, my back - Your back's not gonna be able to wakeboard in two years. Fuck it, I should do it

1:18:55 today. How I doing this? You know, I've only got so many more days that I can do it. And that really struck a chord with me that morning, sitting in breakfast that I'm looking down, eating all

1:19:05 the bacon and clogging my arteries - Yeah, it was kinda like - Yeah - It was kinda like - And it was right - It's funny how like, I always say like, the book is not complex, it's not rocket

1:19:15 scientists, life cycle hypothesis has been out there, which a lot of this is basically life cycle hypothesis. It's just, you have to get the message across and gets away and sinks into people so

1:19:26 they can apply it. And so for you, the light switch for you was, holy shit, wakeboarding, you know, I won't be able to do it And then it kind of makes you think about it and you open to it.

1:19:39 Because that's what I think, people are like, well, what's a good book? I said it's one that goes past people's egos and gets them to think about the world differently. And so sometimes you have

1:19:50 to explain the same thing 50, 100 different ways to get in a sink in. And I'm glad I came and I'm glad I spoke. And you're gonna get some of your life back. You're gonna have a more fulfilling

1:19:60 life - Oh yeah, I like that. Well, Bill Perkins, you were awesome to come on. This has been great - Yeah, it's fun - I mean, I'm happy to come on again. It was great, great blathering. I

1:20:10 love blathering energy or all things. I like blathering, fuck it - Yeah - And I was about to say it was nice being on our podcast where I wasn't the coolest guy in the world - Yeah, I appreciate

1:20:20 that title. I don't know if it's true. I mean, my kids would be like, this guy doesn't know what he's talking about. But yeah - Well, you know what the story on that is. So Bono and his wife

1:20:30 have Jay-Z and Beyonce over to dinner. And I forget who it was Rolling Stone magazine, somebody interviews. Bono's daughter. And, 'cause how was dinner last night? Jay-Z and Beyonce came over

1:20:43 and the daughter goes, Oh my God, I'm just so embarrassed. All Dad did was talk about Africa the whole time. I'm so embarrassed. So Bono can't look cool for his kid. None of us - No, not of us

1:20:52 - Exactly, I agree - I agree - None of us have a kid - True story, that gives me, that lists my spirits a little bit. So, I appreciate you having me on.

1:21:02 Absolutely.