7 Ideas for Investing in Uncertain Times | Louis-Vincent Gave

Welcome to Bankless, where today we explore the frontier of investing in these uncertain times. I got a solo episode for you today, it's just me. I'm here to help you become more bankless. In today's episode, we have Louis Vincent Gav. He gives us seven ideas for investing in these uncertain times. So Louis is a macro analyst. He's got some hot takes, I would say, some of which are contrarian, all of which are actionable, which are the best kind of macro takes, if you ask me. And if you own assets, if you're an investor, and that's probably everyone that listens to Bankless, uh, I think you're gonna love this episode. Even if you don't agree with everything that Louis says, and maybe especially if you don't agree. A few things we talk about. First, we open things up with the recent market mayhem, the yenkeri trade. You're probably familiar with everything that happened earlier in the month of August, all of these shenanigans. What does Louis think? Are we headed for a bear market? Then we get to his core ideas. These are the seven ideas on how to invest in these times. I will list a few of them. These are my paraphrased words. Number one, you gotta avoid the bond market train wreck that's coming. Number two, avoid duration at all costs. Number three, 6040 is dead. And he gives us what's replaced it. Number four, US equities, why they're expensive, and non-US equities are cheap. Number five, don't worry about the recession. Buy value. Number six, Asia as king. And number seven, why the dollar will devalue and what that looks like. At the end, we also discuss our favorite subject, which of course is crypto. He's got some spicy takes on that too. Bankless Nation, I'm very excited to introduce you to the first time to Louis Vincent Gav. He is a macro investor who co-founded GavCal Research. And I think uh David and I, when we have podcasts like these, we really enjoy macro investors who do two things. One, they have something to say, and secondly, they make sense. And Louis is definitely one of those. He also wrote a book a few years ago, which I haven't had the chance to read, but I enjoy the title. It's called Avoiding the Punch Investing in Uncertain Times. And I think I want to steal that theme for today's episode, Louis. I I think what we're trying to figure out is how to avoid the punch and invest well in these uncertain times on the episode today. So, Louis, welcome to Bankless.

Well thanks uh thanks so much for having me. It's uh it's a real pleasure to be here.

Uh thanks for plugging my book. It's a bit dated now.

To be honest, I I wrote it at the time. The main thesis of the book, it was published back in 21.

The thesis of the book was

how how'd you put in cushions in your portfolio in a world in which bonds are

slated to get destroyed? And of course, you could argue that since then bonds have been destroyed. I think we're just at the beginning of the destruction of the overall bond markets.

But uh

that was the thesis of the book uh three years ago when it was published.

Uh

yeah, uh I guess it'll be uh

time will tell whether it's now outdated or just at the beginning of a new trend.

I mean, I I think that's a killer theme. And I think uh according to you, this is the beginning of a new trend. And we're certainly we haven't changed from that subtitle, which is like investing in uncertain times. Maybe it always feels like this, but it feels like the 2020s, particularly when I talked to you in on August 14th, 2024, these seem like very uncertain times. Let me just like ask maybe that question. Do you think this time in the markets and investing is more uncertain than other decades that uh you've been a player in this game?

So I'm 50 years old. I don't know.

And I've been through a few crises. I actually started

my career more or less during the Asian crisis. I was working for a French investment bank and they sent me out to Asia

just at the time where Asia was imploded.

And to be honest, you know, back then you'd have currencies such as the Indonesian Rupiah, the Malaysian ringgit, that would fall 5 or 10% a day.

And um,

that felt like the whole world was collapsing.

And

of course, the 2008 crisis, it did feel like all of a sudden you were wondering whether

you'd be able to get money out of the ATM come Monday morning.

You know, again, I'm 50 years old, over three decades.

I've had periods of of deep uncertainty.

Um

I think the uncertainties today, uh, what's fascinating is.

They're not even uncertainties. You know,

the biggest issue I think we're confronting

is the fact that

here we are, you know, at the top of the economic cycle, record low unemployment,

uh, US economy humming along at six, seven percent nominal GDP growth rates.

Um, and the US government is running budget deficits of 7% of GDP at the top of the cycle. Um

you know, this is this to me.

Is it's not an uncertainty because you can see it, you see the numbers.

What is highly unusual, and by the way, this is true of Canada, and this is true of France, and this is true of the UK.

What we're coming to, the big uncertainty is you're looking at welfare states everywhere.

Welfare states that were essentially built as one big Ponzi scheme. You know, it was always, you know, as long as you had more people coming in at the bottom, more new workers coming in and

You know, and not so many old people,

the welfare states worked.

And the reality is the welfare states have stopped working,

and financially they're now breaking down. And you're seeing this

all across the Western world. And you're seeing the manifestations of this

everywhere, where they've been failing public health systems, or there'd been

failing educational systems.

The welfare states are collapsing. Now they're not going to collapse at the same time everywhere, and they're not going to collapse in the same fashions.

But you know, when you look at a US government that is slated to issue,

you know, on a good year,

2 trillion of additional bonds in debt, and on a bad year, 4 or 5 trillion,

the numbers start to get really, really big. So,

you know, the odd thing is that it's not even uncertain. It's there. You know, we see it, the maths are there.

Uh what's what's uncertain is how this will all play out.

Yeah, I think a lot of uh listeners uh to bankless, regular listeners of bankless will have come to a similar kind of um thesis as yours, that things are getting out of hand in like Western welfare states in particular. It's you know part of our our crypto thesis uh in general, of course, which we'll get to. And I also want to get to kind of what does this mean? So what are the conclusions? And Louis, I feel like you have a fantastic perspective on a few key conclusions. In fact, I saw this slide with seven of those conclusions, and I want to like go through them one by one and then maybe work our way back to how you came up with this conclusion. But actually, before we do this, since you brought up uh crisis in uh Asia, let's talk about what just happened on August, I believe it was the fourth. So this is uh uh a couple weeks back. So we've had some dust that has settled, and we had market mayhem, um, chaos, the VIX spike to like 60. Uh, we saw in our world in crypto, I mean, price of Bitcoin was down on a Sunday 15%. Our markets trade 24-7, price of Ether was down 25%. It's felt like a shock. We had some macro investors on, you know, Tom Lee from CNBC, he came in. He said, not to worry, this is just a growth scare. Others have said, look, this is more permanent. This is the beginning of a bear market. What's your take on why this happened now that some dust has settled and like where we're headed?

So my starting point is that.

There are

there was and there are still

three massive anomalies in the world that we live in. Three prices, three that make absolutely no sense. The first is the Japanese yeah.

I think you have to travel to Japan

to realize how the Yenna 160 just doesn't make sense. You know, being able to go to Tokyo

and have by far the best meal of your life