David Lin of The David Lin Report dives into the hidden dangers in today’s market, from soaring debt and geopolitical risks to Trump’s tariffs, unusual asset correlations, and the evolving roles of gold and crypto. He shares his investment philosophy and offers actionable insights for navigating these uncertain times. Join Wealthion’s Andrew Brill and David in this in-depth Speak Up conversation—essential for anyone aiming to thrive in the financial landscape of 2025 and beyond.
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David Lin 0:00
One cannot discount the effect of geopolitical tensions having volatile impacts on the financial markets. And the other thing we have to keep in mind is fiscal policies. We’re living in a time where fiscal dominance is front and center, the concept that fiscal policy is more important for growth and inflation than monetary policy. And so what the White House and Congress ultimately decides to spend their money on will have a direct impact on which sectors may do well and which sectors will like. Not all asset classes that have historically moved in opposite directions are going to stay moving in opposite directions, likely into 2025 you
Andrew Brill 0:45
Hello and welcome to speak up. I am not Anthony Scaramucci. I’m sitting in for him. Once again, I’m your host. Andrew brill, our guest today is David Lynn of the David Lynn report, welcome to Speak up, David, thanks for joining us.
David Lin 0:59
Thanks for having me back. Thank you, Andrew, good to meet you now. David’s
Andrew Brill 1:03
a distinguished financial journalist and market analyst renowned for his comprehensive coverage of global financial markets. Tell us, David, how you got into covering financial markets, and now you have a YouTube channel. We just found out you have over 40 million views, so congratulations on that as well.
David Lin 1:23
Totally, yeah, I learned something about my channel today. Thanks for taking that stat up. I didn’t even know I got into this because I was well, I started my career off doing macroeconomics research, and then I was at a firm called BCA research for five years, and then I joined a firm called kit CO as a producer, and then I didn’t use for them, ended up being their anchor for three years, and I decided to start my own channel last year. So that’s kind of my career transition in a nutshell. What led I like, what I do,
Andrew Brill 1:54
coming up, what led you to coming up with the David Lynn report. It’s phenomenal. If you haven’t checked it out, check out David’s YouTube channel, because he’s got over, like we said, over 40 million views, 214,000 subscribers, and it’s an, actually, it’s a great show, and with awesome information, and you get wonderful guests. So what made you start the David Lynn report? Yeah, I
David Lin 2:18
started my channel last year in March 2023, like you said, I I have a lot of really interesting guests that I interview on a regular basis. I cover mostly finance and economics. I average between 2.5 3 million views a month right now. But anyway, I I started my channel because I realized there was a there was a niche for for law firm financial interviews that are kind of unbranded, so to speak. It’s like independent journalists doing their thing. And I wanted to just start my own channel and go off my own and and answer only to my own editorial content policies. So that’s worked out pretty well so far, and I wanted to kind of embark on this journey of bringing financial information to the masses on a regular basis. And I wanted to cover something without any sort of editorial constraints or guidelines that I had to follow, which you would have to do if you’re working for somebody else. And I think that was the experiment I wanted to do. And so far, yeah, I’m loving it. Have you
Andrew Brill 3:25
encountered and you’ve been doing macro, you’ve done analysis and research for a long time? Have you encountered such a strange time as what we live in right now?
David Lin 3:36
Yeah, I’ve been covering macro for quite a while. I think there have been strange times in the past. I’ve been now working in macro research ever since 2012 you know, 2014 China air shares collapsed. 2020 was the pandemic. 2011 right before I joined macro research, was a debt crisis in Europe. 2020 was probably the strangest time for all of us living the last decade. I don’t think right now is stranger than 2020 I think there are some irregularities that people like to comment on. I think there are some phenomenon in asset class behavior which we can talk about later that’s unique to this time. But I don’t think it’s I don’t think it’s stranger than the last two great financial crises that we had. So
Andrew Brill 4:22
you’ve interviewed, and like I said, on your channel, you get phenomenal guests. You’ve interviewed many influential figures in finance. Are there recurring themes or trends from these conversations that stand out as essential to investors, that they should consider?
David Lin 4:37
Yeah, I think the trends change depending on when we’re having this conversation, right? So right now, I think two interesting trends come to mind. One is that you have the steepening of the yield curve at a time when the Fed just cut rates by 50 basis points. The 10 year yield is rising faster than the two year and it’s not common that we have the long. The end of the curve rising this much immediately after a Fed cut. Actually, I think it was Jim Bianco who tweeted this recently. I’ve had Jim on this on the show a couple times. He’s great Bianco research, but he’s tweeted this recently, and he said that never before have we seen the 10 year yield rise this much after a Fed cut. The 10 year yields also been following, well, I don’t know which following the one or the other, but coincidentally, rising along with the 10 year break even inflation rate, which is the expectation for the inflation rate going up. Now, that’s unusual, because the inflation rate, as you know, has been going down. The latest reading was 2.4% down for the previous month, and that’s just been on a continuous down, downward trend ever since its peak at 9.9 point 1% and so with the actual CPI inflation rate going down, inflation expectations are going back up, which is something of an irregularity. The inflation break even typically has a lead over the actual inflation rate. So it wouldn’t be surprising to see inflation rate stabilize around here if you assume that the expectations are going to be correct. Also, if you overlay the US dollar with the 10 year yield, it’s been a perfect correlation all year round. Now, all these forces have meant that if you look at some of the class, asset classes that traditionally have not been correlated with each other for a significant amount of time they have so the dollar has moved in tandem with gold in the second half of the year. It’s also gold has also moved in tandem with stock markets all year round, and and Bitcoin has had a great year as well. The last time we saw major asset classes that typically don’t move together. Move together was back in 2020, when the Fed launched unlimited QE. And so there was monetary stimulus, money injection. And so all asset classes moved together. Monetary stimulus from the Federal Reserve was the was the tide that lifted all boats. We’re not seeing stimulus on the same level again right now, but we are seeing rates starting to fall, and it’s just interesting how asset classes have been rising together all year round in anticipation of this, so that, I think that was one of the irregular trends. What this means for investors is that we have to be aware that not all asset classes that have historically moved in opposite directions are going to stay moving in opposite directions, likely into 2025 for example, if you assume that gold typically hedges against equities, well, that hasn’t happened all year round, and so that may not happen again in 2025
Andrew Brill 7:34
so interesting. You brought up the 10 year and that that’s rising. I think the Fed thought that, or conventional wisdom would tell you that if they cut rates, the 10 year should come down, mortgage rates should come down, but mortgage rates have actually climbed, and that’s an anomaly. Wouldn’t it be just strange to see that happen? Well,
David Lin 7:57
the Fed cutting rates would typically have a direct impact on the two year yield, or the short end of the curves, the two year has been following the Fed funds rate downward. That’s why the yield curve has been steepening, which is to say the 10 year money is the two year has been going up. Some of my guests might show up and calling for a bull steepener to persist into 2025 as for the mortgage rate. Consumer rates typically don’t follow the Fed, at least not right away. Mortgage rates move on the basis of supply and demand for housing, more so than what the Fed is going to do. Same with credit card rates. Don’t expect credit card rates to fall right away just because the Fed is cutting rates. In fact, I know several people in the credit card industry who told me, for various micro reasons. Credit card rates couldn’t be expected to stay the same, if not go up a little bit. This is in Canada, partly because the transaction rates, the interchange rate, is falling for a variety of reasons, and so they have to make up for it by charging slightly higher credit card rates. And so yeah, the Fed and the Bank of Canada, for that matter, where I live, cutting rates has nothing to do with consumer rates, at least not in the short term.
Andrew Brill 9:08
Unfortunately, I can’t imagine credit card rates going any higher than they are now. We’ve had discussions on the channel about how usurious credit card rates actually are, and once you carry a balance on your credit card, unless you’ve done it for some purpose and you know that you can pay it off, it’s really, really tough to pay off those balances. Yeah,
David Lin 9:31
absolutely. And I think some people were starting to see credit card delinquency rates go up, although it’s important to note that if you just take a look at the delinquency rate now, it’s it was higher than it was a few years ago, but it’s still nowhere near as high as it was in 2008 and prior to that, I think it’s just normalizing. So the rate at which people are defaulting on their credit card loans are going up, but it’s not at an alarming pace. Just yet. Okay,
Andrew Brill 9:55
just yet. Keyword, just yet. Well, I guess it’s something we keep in. Eye on, though, right? If we’re, if we’re worried about recession and possibly not a soft landing, that’s one of the areas we need to be concerned with, isn’t it?
David Lin 10:08
We have to be concerned about consumer strength deteriorating overall. So retail sales have to go down, the delinquency of credit card rates, or credit cards rather, that is, that is a sign of, perhaps, consumer weakness. But I think more importantly, for me, taking a look at earnings for companies going into 2025 that’s key. How are earnings going to progress? We’ve had pretty, pretty strong earnings so far this year, at least amongst the major companies in that within the S, p5 100. If good earnings persist, I think we could stave off a recession. But keep in mind, the economy doesn’t lay people off. Companies lay people off. So if companies are starting to see weaker earnings for a variety of reasons, then we may see them coming fat and training trimming some of their costs, which could portend layoffs. The unemployment rate, keep in mind, has been on a downtrend ever since July. So July was 4.3% then 4.2 in August, then 4.1 September, 4.1 again in October. So it stabilized around 4.1% for two months now. So it has been on a downtrend, not an upward trend, Non Farm Payroll strength has been strong, except the latest number that came out last week that was the weakest Since 2020 but I think a lot of that has to do with hurricanes. These are very volatile. The hurricane in the south, these are very volatile numbers. So going back to your point about the job market, yeah, I would be concerned about a recession. If earnings among the big tech companies, we’re not tech companies, just large companies overall, start to really deteriorate into 2025 then you could start to see more layoffs. Then you could start to see at the unemployment rate
Andrew Brill 11:42
take up. Hi everyone. I’m one of your hosts here at wealthion, Andrew brill, in these weird economic times where the market is up, then it could go down. A lot of people calling for a correction. Some people think it’s just going to keep going up. But if you need help being financially resilient, head over to wealthion.com/free, and we’ll give you a free, no obligation. We don’t expect anything from you. We’ll just help you evaluate your portfolio and let you know what we can do to help. Again, head over to wealthion.com/free, for a free, no obligation, portfolio review, and let us do the heavy lifting for you, anything surprise you in this earnings season? We’re in the middle of it now. A lot of companies have reported. We have more that are coming in. Anything jump out at you or surprise you?
David Lin 12:31
Not so much. I mean, the earnings has been growing in line with the broader economy. Keep in mind, q3 GDP came out a week and a half ago. No, five days ago, it was at 2.8% which was slightly weaker actually, than some economists expected. But if you ask the bears, it’s still pretty high. So you know, no, nothing really surprised. But the economy is still growing. Consumer spending is still strong, and the stock market being as high as it is, it’s, I wouldn’t say it’s an unfair reflection of what people are spending their money
Andrew Brill 13:06
on. So given the knowledge that you gather from all your research and the interviews that you do, which are quite valuable, what does your personal investment philosophy look like? How it has evolved? How has it evolved? As you’ve continued to do your interviews.
David Lin 13:24
That’s a great question. You know, when I first graduated from school, I experimented with different trading methodologies to try to get rich quick, and they’ve all failed. And one thing I’ve learned about myself is that I am not a good trader, and so I’ve never tried to be a professional trader, and it’s good thing I’m not managing money, because I like what I do it. I like asking people questions, people who are in the professional fund management business. I I’ve always when I was in my 20s, I asked myself, What do I buy? And it’s not and I realized, after talking to so many people, having done having done literally 1000s of interviews, it’s not so much. What do I buy? Which is the question that you should be asking yourself as an investor, is, what do I want my life to look at, look like in the next, whatever time horizon you’ve assigned yourself, be it five years, 10 years or 20 years. And if you’re somebody who wants to retire in a few years, and you just want to preserve your wealth. There are things to do for that, if you want someone to if you want, if you’re somebody who’s making a lot of money right now, and you’re relatively young, and you’re in your peak earnings years, and you want to grow your wealth, you can take on a little little bit more risk. Well, you there. There are assets for that too. So investing is more of a journey of self discovery and what you want your life to look at and understanding what your own, I guess, your real, own risk tolerances are. And you know, that’s not something a financial advisor can figure out for you. That’s something that you have to understand for yourself. And as I’ve kind of grown into my 30s, I’ve realized that my. Own preferences for investing now have evolved, given my own risk tolerance. Right now I’m not in the public markets full disclosure. I’ve said this several times in public, and that’s because I’ve fully invested in my own business. I’m putting all my capital to work and growing my own business, hiring people, expanding my team, because I’m realizing a greater return, immediate return on investing in my own business, which is a startup, then I could be in the public markets. My rationale is, why invest in somebody else’s business when I can invest mine, eventually I’ll start diversifying. But if you ask me what I’m doing with my own money, well, that’s what I’m doing.
Andrew Brill 15:37
I You talked a little bit about risk and the risks that you can take, and how it correlates to, I guess, your outlook in life, where you want to be when you want to be there. What do you see as the most underappreciated risk facing investors today, and how should they prepare for it,
David Lin 15:54
the under appreciated risk that’s not perhaps, factored into the markets? You
Andrew Brill 15:59
mean correct
David Lin 16:02
think the markets pretty smart. Any risk that I can think of is already priced in, but some of the risks that you have to understand, let’s go over all the risks, and then we can evaluate which, which one of these are perhaps underappreciated. First, there’s tensions in the Middle East, which I don’t have to tell you about. You know this front and center on the news, Israel has retaliated against Iran. Iran has then vowed to retaliate against Israel again. They have said that they want to use deadlier weapons. There’s the ongoing war in Ukraine, which has not been resolved yet, and we’ll see how that continues. It’s going to be entering its third year now, into 2025 if it’s not resolved before then. And then there’s ongoing tensions in in the South China Sea, between China and the Philippines and Taiwan that, according to many analysts, could, in the worst case, Nero trigger World war three. So, you know, we’re not there yet, but we’ll see how that progresses. I think politics and geopolitics are topics and themes that all investors need to follow on a regular basis. And I get this a lot. You know, it’s like, why are you covering geopolitics or politics on your channel? You know, we’re we’re here for the financial news, yes, but these, these themes, affect the financial markets 100% so one one cannot discount the effect of geopolitical tensions having volatile impacts on the financial markets. And the other thing we have to keep in mind is fiscal policies. We’re in it. We’re living in a time where fiscal dominance is front and center. It’s a theme that’s been brought up several times on my own show, and probably euros yours as well. The concept that fiscal policy is more important for, uh, growth and inflation than monetary policy. And so what the White House and Congress ultimately decides to spend their money on will have a direct impact on which sectors may do well and which sectors will like and so it’s really important to understand politics. So I think politics and geopolitics are themes that I’m trying to explore more on my show because of how underappreciated they are, I think for a lot of the average listener of financial news. And then, of course, there’s micro news. I think a lot of people investing in macro, thematic issues, you know, they buy an Nvidia or Google or Microsoft thinking, you know, it’s going to be a good benchmark for the market. And then Google gets sued by some anti trust issues, or for some anti trust issues. You know, there are micro problems that you have to be aware of for every stock. We can’t, you know, I can’t tell you what those problems are for every stock, but I think it’s important for the for the investor to understand what it is they’re investing in and what they’re buying it. You’re not just buying the market. You’re buying a series of stocks within the market. So understand each stock in your portfolio before you buy them. No stock is a perfect, you know, perfect proxy for the entire economy. So geopolitics, politics, I think, are underappreciated risks right now, uh, based on what I’ve seen you touched
Andrew Brill 19:10
on the debt, but I’d like to talk about global debt for a minute before we get into the US debt, which is, yeah, kind of crazy, but the IMF reporting that the global debt will reach 100 trillion. Yep. How dire is this? You know, I had interviewed someone who actually educated me a little bit on how the US actually tries to help the global markets in rates and stuff like that, and how important it is that the US share or participate in the global market with respect to regulating rates and stuff like this. But how dire is $100 trillion global debt in in the world? I guess? Well, we
David Lin 19:54
have to look at debt as a percentage of GDP. So as long as GDP continues to grow. And we can, and the countries involved in that calculation can still finance or debt. It’s not a problem at all. Keep in mind that the nominal level of the debt in the US, for example, is reaching new all time highs every single second. People can look at that debt clock that’s live and ticking every single second. I mean that the nominal notion, the nominal value of the debt is not really that relevant. We have to look at the real value as as calculated by the debt over the inflation rate or base measurement from a few years ago, and more importantly, the debt to GDP level. I’ve actually interviewed the the director of this Congressional Budget Office, Philip swagle And we talked about the CBOs projection for debt and deficits in the US. I’m not even talking about globally right now. I know your question is about the global debt levels, but economies operate on their own fiscal, monetary policy. So it’s, you know, it’s difficult to take $100 trillion out of context and say, well, Japan’s doing better than the US, and you know, the US gonna be able to afford this more than more than the UK. We have to just look at each individual country first. And let’s just take the US. It’s projected by the CBO, which is a nonpartisan governmental committee that projects debts and deficit levels into the future by 2034 it’s projected that the US deficit level will reach 6.9% of GDP, and the debt level will reach 122% of GDP. This, according to the CPO, is not going to be an issue in itself, although at some point it will have to. It will be unsustainable. How that looks like? Who knows what that’s unsustainability will look like? Who knows? In the worst case scenario, there may be a failed bond auction, which is to say that nobody will buy any more issuances of US debt, and there could be a lot of turmoil in the markets. That way, the deficit level has been rising ever since 2020 it is now at the highest level since World War Two before 2020 and the immediate impact on fiscal policy is that they’re going to have to probably cut spending on other areas to be able to finance this debt. As you know, net interest outlays now exceed over a trillion dollars. It’s projected by the CPO that the interest expense, uh alone, will will equal roughly a third of of income from revenues, sorry, income from taxes, rather, yep, in the future. And the question is, how the government is going to finance that? Well, the government is going to finance that in two ways, one by issuing more debt and or cutting spending on something else to allocate into interest expenses. We’ve reached a point where interest expenses have exceeded military expenses, or all expenditures on the US military, which has the largest budget of, I think, the next 10 countries combined. So the interest expense when you’re thinking about it in the US is now higher than the military spendings in the next 10 countries combined. Is it sustainable? Probably not. Can the country afford it? Currently, yes. So short answer is nothing to worry about now, but long term, we could see cuts in other areas that could affect people i
Andrew Brill 23:21
and doing what you do and doing over your interviews, you’ve heard what polder tutor Jones has said about the debt. You’ve heard what Stanley Druckenmiller has said about the debt, that they’re very concerned about the debt load. Yeah, you know where other than cutting spending, I and it’s interesting that I interview people probably like you do this out it’s not a concern, like you’ve done already, not a concern, but it is a concern, isn’t it? Well,
David Lin 23:50
I think Paul Tudor Jones and Druckenmiller know a lot about the debt levels and and the economy than I do. So if they think it’s a concern, it’s probably more of a concern. They’re probably concerned about it in other ways. I mean, to the extent that the country is going to default on their debt and roll the markets right away. No, that’s not a concern for me again, long term sustainability wise, it’s a concern to the extent that the government will have to reallocate their budgets to be able to afford that. How it impacts markets is a question I ask many experts, because I don’t really know the answer to that. Certainly, the debt to GDP level has been rising. The deficit has been widening, yet the stock market continued to go up. There is no direct correlation between stock market performance and the deficit level rising, at least not in modern times, the only time in the last 70 years, I believe, in which the government actually balanced their budget was during the Clinton era. And, you know, that was early 90s. So the stock market did fine, then it’s doing fine now, when the deficit level is at the widest since World War Two. So there is no direct correlation between the deficit level and. And the stock market, whether or not there’s a correlation between debt and and and the markets, I think the missing link here is inflation. If you believe that the Federal Reserve is going to monetize some of this debt, which is to say they’re going to buy up some of the debt and issue money to do so, there might be an expansion in the money supply. And if you’re monetarist, you might believe that this expansion in the money supply will lead to inflation. Inflation is related to markets, as we know, markets don’t like very high inflation and and certain asset classes will respond in kind of this inflation. So yes, higher debt levels could have indirect effects on the markets through the transmission of inflation of certain assets,
Andrew Brill 25:51
all this debt. Talk about debt, I can’t help but think about gold and where that might be headed, because that’s a hedge against some of this stuff. And why do you think investors are increasingly betting on it? There’s other countries that are betting on gold, and gold keeps rising.
David Lin 26:11
Why? Why do investors buy gold? Is that your question? Well, why
Andrew Brill 26:15
do you think that it is where it is now, where it’s it’s right around 2800 everybody thinks it’s gonna keep going higher. Is that because of the debt? Or do you think that gold right now is just something that people are riding and think that’s gonna continue to go up,
David Lin 26:31
based on the conversations I’ve had with the people that look at Gold more frequently than I do, they believe that a lot of the premium right now is because of the geopolitical tensions that we talked about earlier. And so gold react to geopolitical tensions by baking in a premium to the price. We saw that when, when Russia invaded Ukraine in 2022 although that geopolitical risk premium did not stay, it went down right away, but gold’s been going up ever since the October 6 attack on Israel last year, and it’s been just in a straight line ever since. There are other factors, of course, that may have contributed to gold’s rise. What we saw last year in China was a big contributor to gold’s popularity in China in particular. So the Chinese economy has been slowing down. The youth unemployment rate has been an all time high. The real estate market in particular has seen basically the biggest crash, one of the biggest real estate crashes of all time. And understand that real estate has been a major source of wealth protection for the Chinese, and that’s basically been gone for the last year, and so they had sought other forms of wealth protection, moving into gold. According to the World Gold Council, a couple months ago, the year on year, change in gold demand from from China was up by 68% over the last 12 months in 2023 into 2024 and so a lot of the demand came from the east for their own reasons, not because of the Federal Reserve or the US dead level rising. You know that’s not it’s not exclusive gold demand is not exclusive to the west. And in fact, actually, if you look at ETF data, up until recently, a lot of the demand in the West for gold ETF products has actually been down. So most of the demand for gold came from the east this year, and you can see that in the gold price, gold share price. So a lot of the mining stocks haven’t been catching up until the last quarter to gold. Why? Because a lot of these stocks are based in North America and some in Australia, and they haven’t but more specifically, the North American gold stocks, they’re, you know, they’re, they’re invested in, were purchased by North American investors who, for the most part, weren’t the ones buying gold in the first place, right? So, to answer your question, a lot of it came from the east. A lot of it, a lot of the price came from a lot of the price appreciation came from geopolitical risk premium being baked in to the price the rising debt level is an ongoing, multi year, multi decade issue, which I don’t believe is immediately reflected currently in gold. I
Andrew Brill 29:12
get into some of your interviews you’ve done about crypto and defi, and I know that you know you have spoken about this a bunch you’ve covered. It, the influence of it all in blockchain. How do you envision these, these technologies, crypto, Blockchain, how do you envision them? Envision them changing the landscape of traditional finance. You know, in the near future, a decade or so,
David Lin 29:38
I don’t know is my short answer, I don’t know what defy is gonna look like in the next because, look, I’ll tell you, defy was, you know, the hot buzzword in 2021 and most of these projects just died. So back then, people were promising the entire world to be revolutionized by defi. You. And maybe it still will be, but like 90% of the industry just dead because there was a huge bust in the crypto markets. As you know, 99% of nfts fell to zero, and a lot of these crypto projects just didn’t survive. How? How will defy change finance? Well, it’s really up to, I think a catalyst for mass adoption could be one day if traditional banks start to issue cryptos, either as a payment rail or as or as just accepting it as a transaction, or if you could invest in Bitcoin with your local JP, Morgan Chase, or something, that could really open up adoption, because it would make it easier for people to adopt cryptos. So if the regulatory landscape were to change such that big banks could start offering that, I think that could really open up a lot of doors for crypto as for defi, which is really the antithesis of traditional banking. So the opposite of what I just said, that’s more of a B to B issue. So if companies want to transact B to B using some sort of crypto, there’s always going to be a need for a intermediary, intermediary merchant that can help facilitate that. It’s interesting how the defy world is kind of evolving into tradfi, except using cryptos, you have all these intermediaries doing payment systems, B to B. Well, that’s just a bank, isn’t it? So I think, I think defy, you know, is becoming more of a misnomer, because it’s really just blockchain finance, and there’s nothing really decentralized about a lot of these products, but Bitcoin, I think, could still be, still has a lot of room for mass adoption. Want
Andrew Brill 31:59
to get into a few viewer questions. If you don’t mind, David, we have people that ask us questions, and I’m gonna fire them away and and see how well you can answer them. That’s not a test, trust me, because I can’t answer them given where I am, but you’re much more versed in finance than I am, so we’re gonna fire off some questions. Mario, if you want to put up the first question, I will give it to David.
David Lin 32:24
Favorite Books on finance or economics? Oh, when I was when I was in college, our one of our finance profs made us read unknown Marcus Market Wizards by Jack Schwager. Jack Schwager wrote a series of Market Wizards books, and I read only one of them. It’s called unknown Market Wizards. It was from the 90s. I interviewed Jack twice, had him on the show, twice on my show. Great Creator, great guy, great author. Everyone should read unknown Market Wizards are not sponsored by Jack. I just like his book. It’s a conversation. It’s a conversation with a lot of top traders and investors. So he, you know, he was basically the series of books, is just conversations he’s had, interviews he’s had with top traders and investors from across America and and him asking all these traders and investors questions about how they do things. And it’s just really fascinating how some of these traders and investors think whole range of different, different guests he’s interviewed. So highly encourage people to check that out, the Intelligent Investor Graham, that’s staple that needs you know that that should be in the that that should be on the bookshelf of everybody who likes finance. So those two books, unknown
Andrew Brill 33:39
Market Wizards and the Intelligent Investor. All right, I’m going to write those down because I need to add them to my collection. Yes, absolutely. Have you ever had an interview that completely changed your view on a financial topic? If so, what was it and how did it shape your thinking? This is made from Florida come
David Lin 34:00
Oh, that’s a good question. No, is the short answer. I can’t think of one example that completely changed my worldview. It’s interesting because I get a lot of different viewpoints on a weekly basis, and I interview pretty much just as many bulls as bears these days. So I get a lot of different perspectives as to one that has completely changed. I would say that when I started interviewing people in the crypto space, it made me rethink the definition of value, especially when talking to Bitcoin maxis. That was a very interesting thought exercise, because I was, well, you know, going into business school, having studied finance at a business school, we were taught that the value of an asset is derived by the cash flows, the future value of the cash flows. So what is the value of Bitcoin? Then? Is the common argument against Bitcoin? There’s no intrinsic value? Well, the Bitcoiners would argue that the value is not from a DCF discounted cash flow. It’s from a host of other things, including its network. Effect, including the fact that it has inherent properties like decentralization, scalability, security, it has its censorship resistant all these things give it value in the eyes of the market. These are not these are not concepts that are are taught to us when I was in business school, and so admittedly, early on, I looked at Bitcoin as an asset that doesn’t make sense to me from a valuation perspective, precisely because it didn’t do anything. It didn’t generate any cash flow. It was in a stock that was a business and made money. So I neglected Bitcoin the very beginning, as I wasn’t an early adopter. Had I thought about the concept of value differently, I probably would have bought Bitcoin early and made a lot more money than I did that I have now. So I wish I thought about the concept of value differently. I would say interviewing Bitcoiners and crypto people back in 2021 was the first time in my life when I started to really challenge myself in how I perceive value.
Andrew Brill 36:07
Perfect. Next question, how do you stay up to date with all the latest market trends in economic news? Alex in Michigan, well,
David Lin 36:16
everyone should have their on their calendar events. Economic data releases. So you know, every month, CPI, every other week, jobs reports, so on and so forth, FOMC meetings. So just follow data releases. You read the news every morning. CNBC for local news, not local, but like business news in the US and markets news, ft for one like a global perspective, and then Bloomberg for everything else in between. So those are my three top sources. If you want macro shots, I recently, sort of macro charts. I recently subscribed on the recommendation of one of my guests. I really, I recently subscribed to something called the daily shot, which is like, it’s very it’s very it’s very affordable. It’s like a couple bucks a month. And then every morning, they send you to your inbox a newsletter full of just like macro charts of the day. It’s really interesting. Just get a fed to you and chat. GBT, believe it or not, you just look it up major news, movie markets today. It’ll give you some headlines. It’ll give you some things to follow. So look at the news. I look at charts. I’m a chart guy, because that was my background. And I look at and, yeah, get chat. GBT get get 4.0 get it hooked up to the internet. Pay for it, but it will really add a lot of value if you’re doing research. So
Andrew Brill 37:37
good old AI, which we’ve heard so much about, what’s the next question? Do you think there’s a bubble for me in any asset class right now? And if so, which one worries you the most? And that’s, yeah,
David Lin 37:50
that’s an easy one. That’s the Vancouver real estate market where I’m based. I mean, that’s that’s been in the bubble for quite a while. But actually, I just, you know, there’s just morning the mail, I got a Real Estate Report from from one of the real estate brokerages here. I don’t know it was just set to my mailbox, but I don’t have it’s on my counter right there. Sales dropped 20% last year. The price, annual price, median household price, downtown, dropped 8% inventory is down. And I wouldn’t say the bubble was popping, but things are definitely slowing. This is a bubble that needs to pop. This is this is, this is, I mean, this is the most overvalued real estate market, probably in North America, by any objective measurement, price to rent, household income, to price, whatever metric you look at, it just doesn’t make any sense whatsoever. So that’s the first asset that comes to my mind. Should you buy right now? Well, people here don’t have a choice. What else you gonna do? Go live in Calgary? Sure, I don’t know. Probably a bubble there too. But other asset classes, I don’t know. Watch the guest on your show. Watch the guest of my show. They’ll probably have a better understanding. You can make an art. This is one thing I’ve learned, Andrew, is that you can make an argument for bubble. For any asset class that you, that you, that you, that you follow, is a tech market in the bubble probably does that mean the tech market is gonna crash tomorrow? Maybe, maybe not. I don’t know. Is gold in a bubble? How do you even objectively measure that gold doesn’t generate any income? You can’t DCF gold and say, well, it’s trading above its net present value. It’s at all time highs going up in a straight line. Could you apply technical analysis and say it’s over? Probably, I which could you say gold’s over, over value just because it’s just because the price is high. It’s, it’s, you know, you could make an argument. You You could also make an argument against that. You could also say it’s undervalued given current geopolitical macro dynamics. I would say, if you were to assess whether or not something is in a bubble, take a look at comparables. Take a look at how. It’s trading relative to its peers. So going back to the Vancouver real estate market relative to its peers of a similar size, sitting in the US or even Canada, doesn’t make any sense. I mean, I lived in Montreal for 14 years. The average household income is slightly higher in Montreal than it is in Vancouver. In the median household price for a single unit, single family unit is 1/3 of the price of Vancouver, and that’s been an that’s been a trend for the last 25 years. So yeah, it’s overvalued.
Andrew Brill 40:31
So I think we have two questions left. How do you see us government policies impacting markets over the next decade? And what should investors be most wary of I don’t know what’s going to happen
David Lin 40:45
in the next decade. I don’t know. Let’s talk about the next year. Let’s say. Let’s just evaluate what’s going to happen, right? Trump’s tariffs. He’s been doubling down on his tariffs recently, and I know that people often talk about tariffs not being a huge issue for the economy overall, but he’s been doubling down on his rhetoric. Do tariffs actually have an immediate impact on markets? They might. They might, although, if you take a look at what happened over the course of his last presidency, between 2017 and 2021 the stock markets have been in a steady bull market. I’m talking about the S, p5, 100. Uh, however, every time he did, every time Trump, during that time, I remember this, when he did announce an increase in tariffs on China and or any other trading partner, uh, markets sold off. So markets don’t like tariffs. They don’t like lower margins on companies that that that would be an immediate effect on tariffs, and they don’t like inflation, which was one of the concerns by economists, although, again, if you just take a look at history, the CPI inflation rate during Trump’s presidency did not increase dramatically. So one could argue as to whether or not tariffs that had any significant impact on inflation overall. But that is one of the concerns if, if things get really out of hand, and Trump wants to eliminate income taxes and replace that with tariffs, which I don’t think it’s possible, because there’s more revenue from income taxes than on trade, but that’s different story. Then we could see some inflation if there’s tariffs across the board on consumer goods, inflation on consumer goods. So tariffs are bad for markets.
Andrew Brill 42:25
So you not taking out the crystal ball for your 10 year view. I don’t blame you, Dave. That’s a, that’s a, definitely a tough question. I think we have one question left, and should I invest in gold? That’s Rome in Canada. And I think that we already we touched down gold and where we think it might be going. But should, should Roman invest in gold? Okay, I
David Lin 42:53
again, I don’t know where the price of gold is going to be, but I’ve been thinking about this this morning. What is gold right for an investor? Is gold a hedge against volatility? Is it a protector of wealth? Is it a speculative asset? I’m in the camp that, and again, some gold bugs might disagree with me, but I’m in the camp that gold is a speculative asset. Why? Because I don’t know where the price of gold is going to be in the next year. Do you? Andrew,
Andrew Brill 43:21
no clue.
David Lin 43:22
I don’t know if it’s gonna go up, down, sideways or, you know, or backwards. I We can speculate. All we can do is speculate where gold is going to do, where gold is going to go based on a variety of macro forces. You know, there’s people whose entire livelihoods depend on speculating where the price of gold is going to be, but we don’t know for sure. So if you don’t know for sure where the price of something is going to be, how can it be a protector of wealth? If that level of uncertainty still exists, if I want to protect my wealth, I would lock in my money in a money market fund, and at least I know what I’m yielding for the next year or quarter. That’s how I protect my wealth with the certainty of return of either a fixed income product or maybe a high dividend stock. Gold is a speculative asset. For me. It’s done very well this year. If you respect if you were to speculate in the price, you would have been up at least 25% year to date. Should you invest in gold? You should invest in gold if you believe that geopolitical tensions will remain, if you believe that inflation may come back. Historically, gold has done well during high inflationary periods, and deflation as well. And and deflation, by the way, comes as a result of recessions, and gold usually does well during recession. That’s what I mean by deflation. You should also invest in gold if you believe that the US dollar is going to lose a considerable amount of value over the next year. I can’t answer those questions for you. We can only speculate as to what these variables may do over the next year. But gold traditionally has been a hedge against real interest rates, so if real interest rates go up, that means the rate of return on your. Interest is beating inflation. And so if the rate of if the rate of return, in real terms, is high, then there are a lot of other products that you should be putting your money into, like fixed income and treasuries, that would yield you a return greater than the inflation rate. And so there’s no need to buy something like gold. That’s why gold typically doesn’t do well when real interest rates are high, and does well when real interest rates fall. So interest rates have been falling, so real interest rates have been rising, rather because the 10 year has been rising faster than the rate of inflation. Interestingly, though, gold has been also rising alongside real interest rates. That is a phenomenon we don’t see very often. If you believe that this correlation will hold into the future, then yes, you should buy gold. If you believe that gold will normalize and that it’s overbought, and that it’s all these factors that have historically pushed gold down while you eventually push gold down, then you should not buy gold. But don’t buy gold because you think it’s gonna preserve your wealth. I think that’s a misuse term by bullying dealers. I mean, the argument that gold has gone up over the last century and it’s preserved, well, yeah, but so have stock markets, right? So have so has real estate, so has pretty much everything else that I could think of. So has Bitcoin in the last 13 years. You know, gold has done well over the long term, but that in itself, should not be an argument for why you should buy gold. Gold. You should buy gold because you are speculating in an asset and you think it’s going to go up in value because of all the reasons we’ve stated. So
Andrew Brill 46:38
David, where can we find you on social media? It’s called the David Lynn report. Where can we find you? On YouTube, social media, if someone our viewers, wanted to find you, where do we find you?
David Lin 46:47
Well, if you want to hear from people who are not a lot more knowledgeable than me being interviewed by me, go on YouTube. The David Lynn report is my channel name, and I currently have, like you said, over 200,000 subscribers. I started my channel last year, so I appreciate everyone’s support. Check out my work there. That is the best place you can find me. And I’m also on Twitter. X now, underscore David Lynn, or at David Lynn, underscore TV, but YouTube’s, YouTube’s the best place. Excellent,
Andrew Brill 47:15
David. Thank you so much for joining me. And again, Anthony, apologizes for not being here, but this was fun for me. I hope you had the same experience, and thank you, see you back soon. Well,
David Lin 47:26
thank you, Andrew, thank you for having me.
Andrew Brill 47:28
Thanks so much for watching our discussion here on speak up on the wealthion network with David Lynn of the David Lynn report. If you need help being financially resilient, please head over to wealthion.com/free for a free, no obligation, financial review. And of course, if you could like and subscribe to the channel, we’d greatly appreciate it. Don’t forget to hit the notification bell. So you know when we post new videos on the channel, and please do the social media thing with us. All the links are right below in the description. And if you like this content, they’re looking for more ways to achieve long term wealth. Watch this video next. Thanks again for watching until next time. Stay informed, be empowered and may your investments flourish.
