RDFN - KCI Research On REITs Dividends And Contrarian Investing

2024-01-11 07:30:00 ET

Summary

• Travis from KCI Research discusses being a contrarian investor and the importance of not chasing performance.
• REITs, yield and interest rates in 2024; advice for dividend investors.
• Not selling too early and knowing when to get out of a stock.

Listen above or on the go via Apple Podcasts or Spotify .

KCI Research runs The Contrarian and is mainly focused on commodity and value oriented investments but sees opportunity anywhere (2:20). How to capture alpha as a contrarian - don't chase performance (4:45) REITs, yield and interest rates in 2024 (10:25) How to know when to get out of a stock (16:20). Advice for dividend investors (19:40).

Transcript

Rena Sherbill: Travis runs KCI Research. Super excited to have him on Investing Experts today. I’ve been wanting to have him on for a while. Great to have you on Investing Experts, Travis. Thanks for coming on the show.

KCI Research: Yes. Terrific to be here. Thanks for the invitation and looking forward to kicking off, 2024 with a good podcast.

RS : Absolutely. Likewise, likewise. So, talk to listeners who aren't familiar with your work, KCI Research on Seeking Alpha. You also run an investing group called The Contrarian . If you want to share with our listeners what they might expect from you as an investor or as a strategist or as an analyst?

KCIR : Yes. We've, been active on Seeking Alpha for a long time, Eli Hoffmann actually came up with the name, The Contrarian. He and I were in discussions, so that was a nice…

RS : That's a nice throwback.

KCIR : Yes. I would think fondly of that when I think back to that, but we've been publishing on Seeking Alpha for roughly 10-years now publicly. There's a good public archive of articles. Sometimes we'll write more frequently as things come up in terms of their topical or with reference.

And then with The Contrarian, we've been doing that since December of 2015 now. So, there's quite a history there. We're known for our obviously, with The Contrarian, we go against the grain at times. We've been involved heavily with value oriented investments, commodity investments, but we're go anywhere investors.

We will look for opportunity anywhere. And I mean, we were looking heavily last year in November of 2022 at things like Redfin ( RDFN ) that had just been beaten up on the technology side. And so, we're -- we like to say that anything's fair game for us as long as we see perceived value there.

RS : So, looking at the market these days, what are you -- is there a sector, or is there a group of stocks, or is there something that you're particularly focused on these days?

KCIR : Yeah. We're still - our focus is still in the value arena, the commodity arena, and it's - if you go back to the heart of the pandemic, the broader equity market bottomed on March 23 of 2020. And since then the Invesco ( QQQ ) Trust is up a 143% roughly. The SPDR S&P500 ETF, ( SPY ) is up roughly 119%, but if you look at the oil & gas exploration and production ETF ( XOP ), it's up 345%. The large cap energy sector, SPDR ( XLE ) is up 284%. The materials and mining ( XME ) is up 318% roughly.

So, if you look back to that point in time, which I think was a very important time for various reasons, I think you can see that the structural or secular bull markets that are ongoing today, there's been clear outperformance in certain areas of the market, and it's funny because the investor attention is still very much focused on technology stocks and the Qs were up last year. They were up almost 55%, which was a terrific year, but they had been down quite a bit the year prior.

And something like I was looking just before our call, the SPY is only up a little over 2% if you go back to January 1, 2022. So, I think there's a clear area where there's new secular bull markets that are happening kind of hidden in plain sight. And the nice thing is that investors as a whole, their focus is still really not on that arena, at times, because of the performance of certain equities or certain sectors, people will chase performance there.

But by and large, people are still focused on really, what were the bull market winners from like 2009 to 2021, which was a tremendous bull market for the broader equity market.

RS : So, would you say that retail investors are more consumed with, like, you just mentioned kind of recency bias, and so you're able to capture what they're not focused on. When do you, a) would you agree with that kind of synthesis of your strategy?

And then, also, how do you know when it's about to turn? How do you know when your Contrarian is encroaching more towards common approach?

KCIR : Yeah. Those are great questions. And the market trends can run really long. I just mentioned that this last bull market really ran from after the great financial crisis in March of 2009 through 2021 is what I would define it as. That's a long timeframe. And so I think the new bull markets that we're in, I think they're going to run similar timeframes 10-plus years.

So to answer the first part of your question, I think it's natural investors, and I've seen it throughout my career professionally and since I've been at Seeking Alpha, but people chase performance. It's just human nature, right?

And, I mean, it depends when you start chasing performance. If you start buying Microsoft ( MSFT ) in 2012, the free cash flow yield was 15%, and they had this huge runway ahead of it. So, if you were chasing the performance of '09, '10, '11, '12, and buying those type of stocks back then you had a lot of runway in front of you, so you didn't really want to be contrarian, going against the grain of what everybody was buying at that point.

So I like to use the saying that a good contrarian will be contrarian 20% of the time at very important inflection points and 80% of the time you really want to run with the herd.

I still think we're three years in now to what these new structural bull markets are. I don't think they'll be adopted for, it's going to take longer for investors to notice the outperformance. And because of the nature of, we often focus as investors on the calendar year returns and 2022 was just really tough for the broader equity market, but then you had this bounce back in 2023.

And people forget, like, ARK was down, the ARK Innovation ETF ( ARKK ) was down 67% in 2022, and it really topped in early 2021. ARK came back last year, and had a really good year, up 69%. But if you had owned it cumulatively, over those two years, you were still down quite a bit, so it's easy to lose focus of what is really outperforming unless you take the five or 10 year bigger picture view of what is happening.

RS : And how do you approach the macro part of it, or how does that, I mean, I know that you've spoken about it up until now. But in terms of macro data, how does it inform how you're looking at stocks? And how you're looking at the market in general?

KCIR : Well, it's incredibly important, and you saw it in 2022 and 2023. I mean, in 2022, you saw interest rates move higher. And it's -- if you go back, I mean, it's easy to forget because there's so much news and you forget the narrative. I always say narrative follows price.

But if you go back to December of 2021 and you looked at what the Federal Reserve was predicting, they were predicting 325 basis point interest rate hikes in 2022. Three, so 75 basis points in total. And as we know in 2022 at various times they were raising interest rates 75 basis points per meeting not just for the whole year.

So, the macro was important. Sentiment's very important, as well. But 2022 you saw interest rates across the curve really go up. It was kind of the Fed was chasing inflation and rising interest rates, particularly at the long end of the curve and the ( TLT ) was down 31% in 2022. That torpedoed the broader equity market indices.

And then last year, I mean, interest rates - TLT was only up a little bit in 2023, calendar 2023, it was up 2.4%, but it was down more during the year. And when interest rates turned around, and yields start going down, that kind of drove really, it drove the equity rally in the first part of 2023, the first-half and then in the second-half, it did as well.

So the macro is very important, particularly, how interest rates are really gravity for the other asset classes, but interest rates, what they're doing, what commodity prices are doing, then obviously what the equity market is doing. And those three main asset classes interplay and they impact each other.

Another example of that is if you go back to 2007, the market was pretty bullish, because the Fed had cut rates 50 basis points and then really oil prices they took off from the latter half of 2007 into 2008, and that uptick in oil, in particular, but commodity prices, that was really ominous for what was going to happen to the broader equity markets.

So you have to pay attention I think to the macro , particularly what's happening with interest rates and commodity prices and then what their impact is on equity prices.

RS : Which goes especially well into the REIT sector, in terms of looking at yield and interest rates and how that's affecting things, which is something that you've written about in general for 2023 and specifically about REITs and looking for yield.

How would you synthesize for investors how you've been approaching that this year, and how you see it going into 2024, if that approach gets tweaked at all or how it gets tweaked?

KCIR : Yeah, another very good question. So I'm a generalist. I'm getting older now...

RS : Aren't we all.

KCIR : If you had a video podcast, you'd see the age, the wrinkles on my face or the gray hairs. I've got quite a few children that are now approaching some of the older ones are approaching adulthood. But I go back in time to when I was a younger man and I started First American United life in Charles Schwab. And when I was at Schwab circa 1999, 2000 as a broker registered rep -- I was advice registered, and I was working with Chicago Equity Analytics, we were recommending Realty Income ( O ) at the time, and nobody wanted, nobody wanted REITs.

And it was -- it's been eye opening to see the last 23, 24 years play out because REITs went from an unwanted asset class circa ‘99, 2000 to one of the asset classes that were embraced most by investors, particularly dividend focused investors, and they got really popular and so popular that people viewed it as cornerstone equities in the portfolio, and I wrote a piece in 2016 that said -- let me -- specific to Realty Income saying that they were great company, but it was -- the valuation was really high, the opposite what it was in ‘99, 2000, and I said it's going to be hard for them to perform just in line with the market going forward, and sure enough, they've really underperformed since that advantage point.

But fast forward to today, REITs really rebounded the second half of 2023 as there was a -- the Fed essentially pivoted, and Powell pivoted, and long term interest rates came down. And at one point, we were pricing in six or seven Fed fund rates cuts for 2024. That's been dialed back a little bit, but something like Realty Income , but a lot of REITs are really interest rate sensitive, and you have to have a view on what longer term interest rates are going to do.

And so my view there would be that we had a secular bottom in longer term interest rates, and then we made the initial move higher, and now we've had a pullback, and we're gearing up though for another move higher in rates and particularly on the long end of the curve because I do think the yield curve will steepen because there will be Fed fund rate cuts this year as inflation comes in.

But the yield curve will steepen and you could see the long -- the 10 year yield in the U.S. go back above 5%, which would put pressure on REITs in particular. So, I think you have to really be a stock picker there. You have to really pay attention to the trading ranges, and again, keep an eye on where longer term interest rates are going.

RS : And in terms of the -- looking at the REITs and picking it apart in terms of which look better than others, how do you advise investors in that way? What should they be looking at?

KCIR : Well, fundamentals are extremely important sentiment. I know there's some, Avi Gilburt in particular, he's a big advocate of sentiment , and I have to say that he's onto something there. And you saw it this last year.

For example, I mean, the office sector was really out of favor, but some of the higher quality office REITS, SL Green ( SLG ) and Vornado ( VNO ), if you could buy those during the capitulation which was in that first half, end of the first half of 2023, there was tremendous opportunities there.

So, I think you want, like anywhere in the market, you want to pay attention to, if something's over-loved and over-owned, you have to be careful. And if it's -- something's -- there's capitulation, it's under-loved, under-owned, everybody doesn't want to be in it, that's usually where there's opportunity.

RS : And how do you know the difference between there being opportunity and there being less value than the marketplace will ever give it?

KCIR : Yeah. Well, a part of that is you want to focus on higher quality assets and something like SL Green for example was the biggest office REIT landlord in Manhattan. So they had some very high quality assets, and that they could command a premium price, obviously in a premium market.

So, I think in whatever sector of the market you're in, you want to pay attention to owning the best assets, whether that's an oil field , whether that's an office building, or whether that's a shopping mall, for example.

I'm based out of Indianapolis, and Simon Property Group ( SPG ) is headquartered right here. One of the things that has always helped them is, they've owned a majority of the best shopping mall assets in the world, and they've consolidated that position. So, I would say whatever asset class you're in, including REITs, you want to focus on who has the best assets and normally over a full market cycle, if you own the best assets, you will outperform.

RS : And what makes you get out of a stock? Is it approaching fair valuation? Is it something that's changed in the -- I don't know, narrative of the stock's journey or management or what have you? Are there certain things that you can point to? Is it kind of the obvious stuff along with what you've mentioned so far?

KCIR : Yeah. So, if you if you own – so, for example, one of our biggest positions in The Contrarian still today is Antero Resources ( AR ), and we were buying it in the late 2019, early 2020, and it was just -- even though Antero was the second largest natural gas liquids producer, which -- that's things like propane, butane, and at the time, it was a top five natural gas producer in the US, it was just people didn't understand it.

So we bought, and many of us still hold that today with substantial capital gains, and that's part of the reason we haven't sold. Right? Because there's tax consequences to holding that or to selling it, for example. But people will say, well, how long will you guys hold it? Right?

And, we've had to go through a lot of volatility holding it, and we do have a fair value target in mind and we get close. I mean, some of us did take some off the table because it was closer to that at different points. But I think you have to have the mindset, like Buffett, he -- Buffett will say that if you don't want to own something for forever, you shouldn't buy it. Right?

That's an extreme view, right? Because there's -- you have to be really careful of what you're buying if you're going to hold it 10, 20, 30, 40 years, a lot of stocks just simply are not around for that timeframe. But I think if you go through a full market cycle, which I would say is -- or if it goes through a structural or secular market, that's probably -- you're looking at a decade. And from something to go up from out of favor to in favor to really people like it and then till it's euphoric, that can take a long time.

So, I think you have to have a mindset that maybe there's, call it 10 years for that process to play out. And if you go back to Realty Income, nobody wanted it in 2000 -- ‘99 and 2000 because we were at the end of that era's technology bubble. And it really -- it had 15, 16 years of just tremendous performance. Right? So -- but, you could have held on to it, but if you sold Realty Income, and just went back to the S&P 500 in 2016 or ‘17, you would've done better at that point, albeit that's not paying attention to any of the tax consequences that you might have had.

But to answer your question, I think you have to have in your mind that if you buy something when it's really out of favor and undervalued, it could be 10 years until it goes to the other side of that -- the pendulum swinging to the other side where it's over-owned and overvalued.

RS : And what would you add to that in terms of talking to dividend investors who are looking for straight up dividend investments ? What would you add or subtract to that advice?

KCIR : Yeah. My lesson there would be you have to pay attention, like, think of the top companies at the end of ‘99, it was Microsoft and ( GE ), were the kind of top market cap companies in the S&P 500. And if you were a dividend investor, you would pick probably one over the other, right, and probably the wrong one, so -- over the long-term.

So, I think you have to as a dividend investor, you have to be cognizant of what the broader fundamentals are, the broader valuation. Obviously, you want to pay attention to the payout ratio and then what the debt maturity schedule is.

And obviously, if there's turmoil in a sector, you have to be cognizant that even some of the best dividend paying companies can cut their dividends. And we saw that the last year with some really stalwarts, W. P. Carey ( WPC ) would be one that that cut their dividend and I think actually made the right choice, but you just always have to have in the back of your mind, what the overall valuation is, the starting valuation, what the payout ratio is and then is that dividend at risk at any point?

And even if it's not a risk, like, again, going back to Realty Income, if so many people have bought into the story in Realty Income circa 2016, August 2016 was just, it was it was really loved. Right? Well, that starting valuation was poor and they haven't cut their dividend, but your total returns from that standpoint weren't even very comparable to what the broader market delivered because you were -- it had been overbid and over-loved. So, you have to have that in the back of your mind as well.

RS : And sometimes you feel that a dividend cut isn't necessarily a bearish, kind of knock on a stock. It could be the right move by management and something worth…investing through.

KCIR : Yeah, definitely. And a perfect recent example of that and we have in The Contrarian, we have a stuck on yield portfolio. So, we actually bought W. P. Carey and Realty Income on October 4, 2023. And on a total return basis, W. P. Carey is actually up.

The last update I did was this past weekend, but it was up through that point, 25%. Realty Income was up 18%. So I think the dividend cut to realign the business made sense there for that -- in that particular instance.

Obviously, because of the nature of dividends and I think there is value and it's been proven over time of management having a consistent focus on a growing dividend. But the reality of the stock market is it’s so volatile that there's decisions that have to be made sometime for the greater good of the business and you're going to get some cuts that kind of realign the business to a better spot.

So, now having said that, I do think you have to be wary of dividend cuts because that means that something has changed in the thesis and something you know if you've had a company that's had a long history of on a regular basis increasing their dividend and they can't do it, you have to kind of re-evaluate to see what's going on.

RS : Are you reassured by management's explanations? Are there things to parse out in terms of management explaining away a dividend cut or a change in guidance?

KCIR : I think you have to be really careful. Over the years I've learned, I mean, it's a double-edged sword, depending on how close you are to management, right? Because management, they have their own incentives and own alignment. And I've, in my stance as an investor, I've taken the stance that I don't think - I don't communicate with management on an active basis because I think that it gives you, it keeps you distant, right, from the Pied Piper siren song that they're singing, right?

So you do have to - having said that, you do have to parse through their communication and the rationale for why they're doing something. And, yeah, you want to analyze what the decisions are. And but I think, again, it's a double-edged sword. There's been, we have people in our group that talk to management teams as larger investors and it's been very helpful at times of turmoil, right, in particular.

So, but just me personally, I prefer to keep a distance, but I again, you have to pay attention to the regular communication and see if they're holding true. I think that's a lot of value of evaluating management to see if they're holding true to the things that they've said they would do or set out to do.

RS : Of the companies that you cover in terms of what's available to every retail investor in terms of earnings calls and however else management is keeping in touch with the investor community, are there companies that you could point to historically that you feel do a better job than most in terms of conveying truthful information and holding true to their narratives?

KCIR : Yeah. I mean, the ultimate example of that is Buffett and Berkshire ( BRK.A ) ( BRK.B ) and Charlie Munger, right, because they were transparent, but I think some of the, in general, that's the style of management team that you want.

I think Alphabet ( GOOG ), Google ( GOOGL ) was they model themselves after Buffett, right, and how they communicated to the market and to the shareholders. Those are two pinnacles of how you would, if you could say management would operate that's - they're right at the top of the list.

RS : So, looking ahead, we're at the beginning of the year, we're at the beginning of 2024. What other kinds of things are you thinking about or you think would behoove investors to be thinking about or focused on?

KCIR : One thing that's at the top of my mind that I try to remind myself of every day is that we're in the golden age, I call it the golden age of active investing because we went through this, in my career now, my professional career especially, I've seen the prevalence and just the passive investing and passive investing type vehicles and clones have really taken over the market and fund flows have been driven by these enormous companies now that have been the recipient of these passive investing inflows.

But there's a quote I like to use from John Bogle in my articles. He said if everybody indexed, it would be just, the market would stop to function. But before you get to that point the more people that are indexing or using passive type of investments, the more opportunity there is for active investors.

And I think we're in that sweet spot right now. And we've really seen it. If you go back through the last couple of years 2020, 2021, 2022 and even 2023, it's been a terrific environment to be an active investor . And I think that that's going to continue for the rest of the decade here.

And I think we're going to see some of that continued volatility in 2024, and some of the things we've talked about on the macro side. I think interest rates are going to be volatile. I think the yield curve will steepen in 2024. And I think commodity prices are going to continue to be volatile.

There's been an underinvestment generally in the commodity arena. And that's going to drive some of the opportunities and volatility in price action that will, if you're an active investor, they can sit back and just say I have a buying list and I'm waiting for something to happen to bring these prices to me, I think it's a great place to be as an individual investor today.

RS : Speaking of active investing and also using indexes, what are your thoughts on the ETF space? I mean there's a preponderance of new ETFs every day. And there's many ways to make it more make it easier for investors to get into the active investing space. What are your thoughts on ETFs? Is there general consensus on the space that you have?

KCIR : Yeah, well, a lot of ETFs, they're just mimicking an underlying basket, right? So there's not a lot of thought that goes into the investment process. Now, I do think there - as the ETF market has gone it's not the same today as it was three or five years ago as it's evolved.

There is an increasing focus on active fund management within some of the ETFs. And I think that's a positive trend for individual investors. But I would say in general, your advantage as an individual investor, somebody reading Seeking Alpha for research is having a buy list of individual securities. And you can sit there and wait, especially now with the - in the U.S., treasury bills are paying over 5%, right.

So, just sitting and waiting for your, as Buffett would say, you wait for your pitch, you wait for the price that's attractive to you, and then you can put your capital to work. And if you can't find anything attractive to you, the beauty of today is that you're getting paid something where you don't have to go out and take risk if you don't want to.

RS : So, more geared towards the less active or more neophyte investor is how you would categorize ETF investing basically?

KCIR : Yeah, it's changing, and there's certainly - I think the ETF market will look different three, five, seven years from now than it looks today. And it's a function of also remember what we talked about where investors chase performance.

I mean, when I was earlier in my career, if you went to 401(k) plans or pension plans, they were all actively managed because people believed you could get alpha out of those and the underlying funds and these 401(k) plans they were active funds.

But nowadays if you look across that broad complex most of it's passive. And the reason is passive has had a tremendous run of performance on a relative basis. And I think the ETF marketplace, if you have a good 10 years for active investors, I think the ETF market will have more active ETF, active managers in 2030 or 2035 than they do today.

RS : After this year, I think everybody's going to want to get QQQ and SPY in perpetuity.

KCIR : Yeah, well, yeah, not only this year, but if you think of the last, I mean, for a generation of investors that came of age after the great financial crisis, I mean, if you just bought the Qs every year, I mean, you've done really well, including SPY too, right? But the Qs in particular have been just tremendous, right? They're tremendous investments . And I think that era is coming to a close.

It probably has ended and we don't even realize it because a lot of times an era will end and you don't realize it till, because there's nobody ringing the bell, the proverbial bell, you don't realize it till three or five or seven years down the line when you look back at performance. But like the Qs did make a new marginal high, but they were down a lot in 2022 too. So, a lot of these have just effectively gone sideways the last two years. And it's hard for people to realize that right now because we're caught up in the moment of what the performance was in 2023.

RS : And you're not of the opinion that technology is just because it's going to keep growing and it's always going to be relevant and you think that it's not worth getting into? It's something that's going to be, it's going to turn?

KCIR : Well, there's always cycles, right, because if you think of like Amazon ( AMZN ), Amazon came public, I forget, 1997, 1998, but in 2000 to 2002, even though Amazon was growing at a tremendous pace, Amazon stock went down 94% from the peak in 2000 to the bottom in 2002.

I mean, think about that, 94%. So, if you had put money in Amazon and said, hey, this is I know this is going to be a terrific investment the next 10 or 20 years. If you put $100,000 into it, for example, I mean, you would have been down, think of that 94% of $100,000. Not many people can hold through that. Right? It's just -- it's -- it goes against human nature to see that type of negative return in your portfolio and to hold through it.

So we did see a washout in technology, obviously, and really ARK peaked in 2021, the first half of 2021, and obviously, the second half of 2021 and 2022 was really bad. So there was a fertile hunting ground for -- to look for opportunities, but I'm not sure that washout is over yet, right? If you compare it to 2000 and 2002.

So the good news for investors, especially technology oriented investors is, I do think that obviously technology every decade is almost playing a more important role. And that goes all the way back to if you think of the Nifty Fifty in the 1970s. I mean, technology stocks have been a huge part of the stock market for a long time.

That'll continue to be the case, and there's going to be tremendous opportunities to sift through the kind of the rubble, just like if you could have bought Amazon in 2002. But I don't think we're quite to the end of that. I think you're going to have to see the Magnificent Seven kind of have their own correction.

And as that happens, maybe you'll see some of these -- this next generation of technology leaders relatively outperforming though on an absolute basis they still may struggle. But you want to put on your research hat and be looking through opportunities through this kind of turmoil is how I would put it.

And if you can find these terrific companies that are going to lead the next cycle, the next upcycle in technology, I mean, the returns can be tremendous, but it's going to be a hard task to sift through the rubble to find those next leaders because when you should buy them not many people are going to want to buy them. Right? Just like with Amazon down 94% in 2002. If you we're telling people, hey, this is the time. Most if you took a poll of a 1,000 investors, and almost every one of them would have said, we're going to pass.

RS : It's time to build the ark. The time is now. The time is now. I promise.

I'm curious. I have this Cannabis Investing Podcast , and as I'm listening to you talk about, kind of this is on the opposite end of the spectrum to technology, but speaking to burgeoning sectors like cannabis, like psychedelics, is that -- are those spaces that you look at to find, they're so underserved and unloved right now. Are those sectors or those areas of the market that you look at?

KCIR : Yes. Indirectly, because we have guys in our group that are -- a lot of our group have been seasoned over the years. Right? Because we've known each other through the ups and downs, and we get new people in. And it's just a terrific group. But some of those guys and gals too, we have a mix of guys and gals, but they’ll look at something, and we've had some of them look at, because the cannabis space, as you know, from doing your podcast there has been washed out. And we've had people sifting through that looking for opportunity.

So, indirectly, yes. And then people will say, well, Travis, what do you think about this? And I'll take a look at it. But that's, just like we're talking about earlier, when something goes to where nobody wants it after - especially after it was embraced at one point, that's oftentimes, that's often the time of the maximum risk reward opportunity.

RS : And it's the same type of stuff, that is the same metrics that you're using for any other sector or any other stock that's unloved?

KCIR : Yes. A lot of it comes down to just free cash flow. If people said evaluate one thing, it would be, what's the free cash flow that the whatever business you're looking at spinning off. Right? And then a lot of times growth stocks have a - people look at the total addressable market or the market size.

But you want to see what they're doing with cash, what type of free cash flow they're spinning off, and then what the return of capital looks like to investors, whether that's reinvesting in the business, because there's a big growth runway or whether that's returning capital back to investors.

RS : Very good. I was going to end it with asking you your maybe your best investment lesson or your best investment period and then your worst investment, maybe not your worst investment lesson because a lesson is always good inherently, but maybe your worst investment that led to a lesson. Kind of best and worst.

But I also wanted to ask if you think that there's anything that we left out in terms of addressing investors where we are today?

KCIR : Well, we'll delve into the best and worst investment lessons and that'll probably, it might prompt another question or two, but the - when I look back at my own history, the biggest mistakes I've made are selling things too early and oftentimes after I've had a really good return on something. Right? And so, in -- so it's not the zero because you -- as an investor you're going to inevitably have zeros that happen whether a company stumbles upon difficulty and goes through a restructuring. And if you haven't had one listening to this, if you do it long enough, you will. Right. It's just…

RS : Trust me.

KCIR : Yes. It's part and parcel of -- because sometimes you're too stubborn. Sometimes your ego gets involved. Sometimes the business just doesn't operate how you thought it would or the backdrop changes. There's things that are out of your control as investors. So you're going to have things that don't work.

But the biggest dollar mistakes I've ever made is buying something and then having a good return in it and then selling it too early because I -- you don't have the patience to see it through.

And a lot of especially compounding investments, if you buy them at a really low price, you might have a really attractive return, and you think I could do something better with this money, and then you take it and -- but then you look back and say, wow, if I would've just done nothing and left it there, I would've done better off.

So that's kind of eye opening to me that as long as I've done it. It's over 30 years now professionally. Or not quite professionally, but personally over 30, over 25 professionally. The biggest mistakes I've made are always selling something too early. And they say you can never go broke by making a profit in something. But the biggest dollar mistakes have always been selling something too early.

And then the other side of the coin, the best, and it goes right along with what the biggest mistakes are. The best successes that we've had are when we have been able to demonstrate an extreme degree of patience with something. Right? And we've seen it in our group at The Contrarian, a lot of the value that we derive is in, we can moderate some of the impulses that we have to sell or buy something.

And if it doesn't work, we're there to console each other and talk about what the rationale was originally for the purchase and should we add to it? And so, both of those lessons, the good and the bad, I think, boil down to having patients and especially now in today's age, having the ability to stick to something, to be resilient to have stick-to-itiveness, be persistent, it's pretty rare. So, I would encourage investors listening to this to think about that and as you evaluate your own good and bad in what you do, maybe reflect on some of the words that I've spoken here.

RS : Solving for human fallibility. No easy task. No easy task.

KCIR : No. Not at all.

RS : Yes. This has been really -- I've enjoyed this conversation a lot, Travis. I really appreciate it. I think a lot of great nuggets to keep chewing over and assessing our own strategies and how we approach the markets. So, really appreciate it.

Happy for you to have the final word if you want to share anything, but I'm looking forward to the next conversation, I hope, Travis. This has been a great one.

KCIR : I've enjoyed it a lot too. I appreciate your questions, and it's made me reflect back on some things. The final word would be embrace, I use this in my group: Embrace the chaos. Embrace the volatility, because that's going to create opportunity. So whatever comes forward.

And if you look back through market history, there's always things that seem crazy with whatever happens, whether it's a news event or volatility, but particularly in what I call the golden age of active investing, you want to embrace that volatility. And so, even if it makes you think about something or it makes you take a step back just say, hey, this is good because volatility is oftentimes opportunity.

RS : Very well put. Especially in this day and age, may we all have enough strength and sense to get through the chaos and the volatility. A lot of insight, I think, to help us through. So, really appreciate it again, Travis. Thank you.

KCIR : Appreciate it too, Rena. Have a great day.

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