In this hard-hitting, no-nonsense Speak Up episode, value investor Sven Carlin joins Anthony Scaramucci to expose the financial risks threatening your portfolio, from U.S. debt compounding at 8%, and overvalued markets, to investor psychology shaped by years of Fed and fiscal bailouts.
Drawing from his childhood in hyperinflation-era Yugoslavia, Sven warns that money printing is the only way out of the West’s massive debt burden, and that the endgame is hyperinflation. He explains why traditional inflation hedges like gold may not offer cost-effective protection, and what real assets he believes investors must own to protect their wealth from what’s coming.
Key Topics:
- Why Sven won’t touch the S&P 500 at current valuations
- The hidden costs of Trump’s tariff strategy and trade wars
- Why food stocks and real businesses beat speculative assets
- The “buy the dip” trap enabled by Fed policy
- How China may outlast the U.S. in economic warfare
Whether you’re a cautious investor or market bull, this conversation will challenge your assumptions and help you prepare for what’s next.
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Sven Carlin 0:00
If you look at the debt and then Hyperinflation is the the only solution, because you are not going to cut entitlements now. So the only solution is printing, which leads to hyperinflation. The cycle goes over, from the Roman Empire, from this, from that, there is simply no other solution for protection from that you need real assets.
Anthony Scaramucci 0:31
Welcome to speak up. I am your host. Anthony Scaramucci, thank you so much for joining us here on the wealthion network. Joining us today is Sven Karlin, he is a value investor researcher. He’s the author of modern value investing, 25 tools to invest with a margin of safety in today’s financial environment. It’s great to have you on the show. I want to talk a little bit about the whiplash that’s taking place in the markets. And so before we get to anything super specific, let’s talk about the macro situation. Is this how you thought the Trump administration was going to go? Did you predict all this? Are you a 5d chess player like Donald Trump? I mean, tell me what’s going on and tell me where you think we’re all going. I
Sven Carlin 1:20
think it’s impossible to predict these things. We don’t know what will happen tomorrow when we wake up, but as a value investor, we always look at the fundamentals and the risks. So the fundamentals, if you want to talk about the macro economy, I have just looked and perhaps it’s the most powerful compounding idea that I could find, and that is the interest payment on the US debt. If everything remains as is, it will compound and at 8% annual rate. And when I see 8% annual compounding, I know that something that’s going to grow fast, so that would be a key fundamental macroeconomic perspective. And then you can try to impact it with tariffs, with this, with that, but the fundamentals are simply there.
Anthony Scaramucci 2:16
Let’s go to your big intellectual mentor, Warren Buffett, right? You love Buffett. You talk about them all the time. You and I have talked about them. We’ve We’ve read your book. I know you love Buffett. He says that this is a declaration of war. Do you feel that this is a declaration of war? Like what Warren Buffett feels or or no.
Sven Carlin 2:37
Well, when you slap put such tariffs that’s, yes, that’s a trade war, but when Trump retreats after a few weeks, then it’s more negotiating, trying to get a deal. But that is not how things work in politics. When you’re in business, you can go and risk it all on something. You declare chapter 11, and then you go to the next venture. But when you are with governments and people and the economy of a nation, you cannot really risk it. So
Anthony Scaramucci 3:15
Sven, I have buddies in mind that I went to law school with that have been ustrs, Mike Froman, who’s now the president of the council foreign relations, was Barack Obama’s US Trade Representative. He has said publicly that it takes 18 months to do a trade deal with one country. We’re trying to negotiate 70 different trade deals in three months. Do you think that that’s possible, or you think that that’s I don’t know. Are we? Are we? I mean, I know we have a 5d or 14 D chess player like Donald Trump and stuff like that, but is that possible? I
Sven Carlin 3:55
don’t think that the second or third level consequences have been taught before going into this, because there are myriad of factors that you can look at, how the other countries are going to react long term, how it brought uncertainty to businesses, because a business now says, Okay, I’m going to wait with investments and all that are factors that it’s impractically impossible to contemplate. And then also, countries are saying, oh, let’s wait with the negotiations. Let’s see how things are evolving. Maybe we’ll get some other investments that are backing off somewhere else. And so it is just opening Pandora’s box with, where will this go?
Anthony Scaramucci 4:45
Bullish, your long term bullish
Sven Carlin 4:50
on what let’s
Anthony Scaramucci 4:51
say US stocks? No, okay. Are you long term bullish on European stocks? No, okay. What are you? Are you bullish on anything?
Sven Carlin 5:04
Not really that bullish on just specific niches, like perhaps food. Stocks that are have been beaten down with trade, some commodities, but we are not yet anywhere close. We have seen, seen some volatility in the markets, but we haven’t seen any structural pain. We have not seen a recession. We have not seen a recession for 15 years. So give me a proper recession of two, three quarters, then trying intervention, then reaction on that. Give me some proper the private equity bubble bursting and things like that. And then I’ll start to tilt towards bullishness for now, if the markets come, if volatility comes, I’ll be most bullish on out of the money options for hedging.
Anthony Scaramucci 5:56
So I have a question for you, if you if you know this is more sort of a meta question. This is a meta question, and I’m gonna play the devil’s advocate here. We have a 35 $37 trillion deficit, depending on how you’re accounting for there’s maybe another $50 trillion of liabilities thereafter, we’re really thinking about the social security situation and other entitlements going on in the United States. We have debt a debt laden society around the world. We’re cheapening our money everywhere around the world. You know that? I know that. You just look at the m2 numbers and so forth. You’re a bear on Bitcoin. We’ve talked about this. You don’t like Bitcoin. Do you like gold? Do you not like gold? What would you I mean? So I, if I, if I was a doom and gloom person, I’d say, Okay, wow. This thing is getting out of control. And I will submit to you, and you can push back on me, but I think if we’re going to have a recession that that recession has been exhaust, exacerbated by the Donald Trump decision making and also the unpredictability of it, you can push back on me if you don’t agree with that. But, but, but? What about gold or what about Bitcoin, given the circumstances that we’re seeing? Okay? So
Sven Carlin 7:26
when it comes to gold or Bitcoin, we can call them as hedges. However, I need to have cost effective hedges. As a value investor, I want things that are there give me a safety not that depend on someone paying more for that. So if I buy now Bitcoin to gain on it, I have to see people buying more of it and pushing the price higher, similarly with gold. And yes, there that might happen in a crash, but might also not happen. And I don’t know whether that will happen three years from now, five years from now, or seven years from now, plus then there is how much money should I put into that? 1% 510, 20% what if I put 20% in gold, and tomorrow I wake up, it’s 50% down. So that is really not a cost effective hedge. A business that has a peer ratio of 10, that has, I don’t know, a food business a dividend yield of 5% protects me from inflation. People are going to eat no matter what, and over time I should do well, for example. So I prefer as a value investor, value certainty and not things that go up and down depending on whims of other investors. Okay, all right, but I’m not saying it cannot happen. I know you. I read your book so I know you’re big on Bitcoin. I’m not saying it cannot happen. I’m not saying Bitcoin cannot go to 1 million, it can. I’m just looking at the risk and reward, and how do I position myself in a life cycle of 40 years of investing.
Anthony Scaramucci 9:12
Okay, well, so now that you said that Bitcoin could go to a million, we’re ending the interview. Is very nice to talk to you today. No, I’m kidding. I’m kidding. I want to talk about investor sentiment and psychology. We we’ve had essentially a roller coaster going on. I think, right? We have a we’re oscillating from fear to greed back and forth. What size are you seeing in the investor behavior right now? And what do you like about it or not like about it. So
Sven Carlin 9:42
when you look at behavior, especially if our humans, it’s determined, but what by what has happened recently? So over the last 15 years, we have had a Fed intervention at every hiccup. If there is a recession, we will print money that. The last issue was the pandemic. You were sitting on your couch. You were getting money to play with Bitcoin, with whatever. So everyone expects that whatever the hiccup next is, there will be more money printing, there will be lower rates, that will push stocks higher. So the predominant mentality is just buy the dip, no matter the price. Okay,
Anthony Scaramucci 10:23
um, that’s been the right you mentioned 40 years you’ve been an investor. Me, me too sort of hard to believe that’s been the right thing to do, though. And Warren Buffett, you know, Warren Buffett said that the smartest thing that he did was believe in America, by America, by America in DIPs. Obviously, you and I know he very famously bought into things like Goldman Sachs and Bank America GE during the 2008 financial crisis, and they were prescient. Is that gone? Is that over? Is America over?
Sven Carlin 11:01
Let’s put it into this perspective. I think America and the SAP 500 has the greatest businesses out there, no question about it. But if I have a million now, and I put it into the SAP 500 the dividend yield on that is 1.4% which is 14,000 on my million and all being the best, no recession in the next 10 years, that dividend yield, with the buybacks, with the growth, with everything, will likely grow on average 6% six 7% which means that in 10 years at best, I will have 28,000 per year, 14,000 now, 28,000 in 10 years, with the Fed printing money, with low interest rates, with this, with that, it will not be worth much. So the problem is not the businesses, and that’s why also Warren Buffet sold. The problem is just the price, because if I’m paying a P ratio of 2530 it’s simply too much downside for the potential upside of just doubling my small dividend yield over a decade.
Anthony Scaramucci 12:15
Okay, well, well, well said. And I think I think, I think it’s a really important thing to emphasize. And I think this is the reason why people like your business and your investment philosophy Sven, because it’s very common sense. Let’s go to the US trade tussle with China and these sweeping tariff decisions, and let me make Donald Trump’s case for a second, and let me ask you if the policy that he’s implementing is going to be reaching the outcome that he would like. So Donald Trump is making the case that there’s been an uneven or unfair trade relationship with China for three decades, a result of which They’ve plundered the US. We’ve lost manufacturing. We have a very large trade deficit with them. There’s a trade imbalance, and this trade imbalance needs to be corrected, and we need to bring manufacturing back to the US. So the way to do that is we’re gonna have massive tariffs, a result of which it will incentivize people to build factories here in the US, so they won’t have to deal with the tariffs. Is that strategy, something you agree with? Is that strategy, something you think will work? Is that strategy, you know, you evaluate the whole situation for us,
Sven Carlin 13:29
I think, as we already discussed, there is first, second, third level thinking, and then you really need to play 100 dimensional chess here to understand what will be the consequences of this situation, but when I look at things, you want to bring manufacturing back to the US, but the US has a natural rate of unemployment. It’s 4% Where are you going to find all these job people that will do those jobs? If you go to China, if you look at those factories, those are Chinese mentality factories. You cannot really transfer them to the United States. So there are not just, I’m going to increase the price through tariffs, and everything will change. There are so many other things that are simply from the culture, from this to that that have to be thought about, from finding that labor that is simply not available at the these costs,
Anthony Scaramucci 14:34
if you were the dealer in a card Game, and there was a trade war between the Chinese and the United States. Who has better cards?
Sven Carlin 14:48
I think that the Chinese can endure more pain. Okay, tell us why. So I have a Chinese friend and his parents grew up on sweet potato. Those in the 1970s came to Italy with $50,000 given from 10 families from that village. They turned those $50,000 into, I think, 500 million through importing Chinese stuff to into Italy. They have two kids. Both. Both have finished Cambridge and Oxford, and now that guy has received the second round on Sequoia financing, and his 10% stake in his Chinese startup is worth 100 million. If I look at though that work ethic, that ability to endure pain, China has no issues with ratings, no issues with next elections. They have their own mission so they can just simply wait it off. Trump will be gone. China will still be there, and they can endure the pain, plus work on the other 86% of the global economy that’s not related to the US.
Anthony Scaramucci 16:06
Okay, I, I want to switch it to Europe, if you don’t mind. So Europe is sort of the flyover situation for the Chinese and the Americans. And of course, the Chinese are smart, long term thinkers. They’re gonna go reach out to their European potential counterparties and see if they can do different trade deals. How do you think Europe is positioned, and how would you position Europe if you were their trades are now
Sven Carlin 16:35
first from all the free powers in the world. When you look at Europe, Europe is the weakest. So demographics are terrible, and economic growth has been non existent for the last decade, and there is such a sluggishness in Europe, we don’t have the tech businesses pushing us forward as the US, and we don’t have the growth that China has. So there might be some benefits, but that is not something long term or durable, that it will revive you the European economy, or help with debt payments, or help with the aging of the population or things like that. So I don’t expect miracles from Europe.
Anthony Scaramucci 17:26
Um, let me ask you this, Has Trump woken them up a little bit? Has he said, Okay, listen, you got to get more defense spending. Will they do more capital expending? Will they do more venture capital expending? Or will they or they, are they heading on a in a slippery slope that there’s really no way to get get out of.
Sven Carlin 17:46
In Europe, there is more and more government investing, so maybe governments will start spending more capital, but the return on that capital, when that, whenever governments spend it, is questionable Everywhere I look, here in the south of Europe, there are so many projects financed by the European Union. But if you look at the economics of that, apart from giving jobs to the people making that, there is no real economic long term return, or it is very, very small, and they are happy with that smaller return because they can print free euros, okay, as they have been doing over the last 15 years.
Anthony Scaramucci 18:29
Let me ask the question this way you have a great ability to analyze data. There’s a economic dashboard. You’re flying your plane, which is your portfolio. There’s an economic dashboard in front of you, and right now, I think you see some cautionary lights and some cell signals. I think you’re bearish on a lot of things, but what would have to change to make you bullish? Meaning, where would PE ratios have to be? Where would GDP growth for Europe and Asia and the US have to be. Where would multiples PE multiples have to be, where that dashboard says, Okay, there’s clear skies ahead. This is a buying opportunity. So
Sven Carlin 19:13
there are some pockets where the multiples are around 10. So you have this company in the US Archer, Daniel Midland, so if you have eaten something today, it some of it likely came through that through them, they are now paying a 4.5% dividend yield. Food has always a cycle. So those stocks go up, and then those stocks go down as food prices decline. And now we are in a food downturn cycle, as we have had two years of inflation. And there the average long term cycle P ratio is 10. The global economy will grow 3% we have 789, 10 billion people. So. The business will grow over time. They have been increasing their dividend for 51 years consecutively, and I can buy that at the P ratio of 10 and a dividend yield of 4.5% with all the growth from inflation, because food commodity. So I’m protected there. So I have these small pockets that I would say, Okay, this is now already interesting. I’m searching for value where I cannot lose much and I have a good return. So if I look, compare it to the SAP 500 it is a good business, good return, but the risk is simply too much, or for a lower return. That’s it.
Anthony Scaramucci 20:45
I get I guess what I’m I don’t know. Maybe I’m getting old, maybe I’m getting about maybe I’m overruly Recognizing a pattern. But I’m going to push this on you, and I want you to react to it. M2 is swelling. The Fed’s got movement. It could go 234, 100 basis points. The Fed could implement again, we know this quantitative easing. At some point, the bubble will burst. But you’ve said we’re in a super bubble. Maybe the we both know that sometimes a super bubble can become even a bigger super bubble.
Sven Carlin 21:22
They’re they’re going to print. I have, okay,
Anthony Scaramucci 21:26
so you agree with Okay, so, so, so let me just push back, just from a timing perspective, if they’re going to print, and I think you agree that they’re going to print, and I agree they’re going to print, which is why I’m big on Bitcoin, and I understand your buffet reasons why you’re not into Bitcoin, so we don’t have to debate that, but, but if they’re going to print, won’t that provide risk on opportunities in the stock market? Yes,
Sven Carlin 21:53
but if they delay that printing for a year, I can be 50% down with the stock market because of inflation, of things like that. So it’s always about when the risk is at the bottom. So
Anthony Scaramucci 22:10
you’re looking at returns. Okay, all right. So the
Sven Carlin 22:14
best option, if I have a million dollar SAP 500 portfolio at this moment in time, maybe I just wait two weeks for the volatilities to settle for Trump to go on vacation so that the VIX is below 15, and then I look, okay, I will put 1% of my portfolio into some out of the money options, so if all hell breaks loose, I am protected From the downside. If the Fed prints and stock double over the next five years, I take advantage of that upside. That is the best value investment idea I can come up. So now, so I need insurance, and I need to have the upside from being long.
Anthony Scaramucci 22:57
Okay, well, I’m going to give you the last word. What is the last word? Sven, what should I do
Sven Carlin 23:04
with your Bitcoin? No,
Anthony Scaramucci 23:06
not my bitcoin. You and I disagree on my bitcoin. What should I do in general? Should I get in a bunker? Should I get the cash? What do I do?
Sven Carlin 23:15
I think that it depends on the strategy. First expect anything, and when you go with an open mind, okay, the stock market can be double in the next five years, but it can also be 50% lower. How does that affect me? I don’t like the 50% lower, okay, how much does it cost for be for me to be protected on that okay, if it can be lower, is it better that I go into cash like Warren Buffett? But that is, again, a risk if the Fed starts printing heavily. So I don’t like Warren Buffett’s cash position, but then he’s so big that he cannot insure it with options or things like that, all
Anthony Scaramucci 24:00
right, but you’re, you’re, you’re, you’re the most I love talking to you, because you’re like, the most realistic of all the people I talk to, but, but there is a scenario where we go up 15 20% not talking in real terms. I’m just talking the stock market could melt up as a result of all this money printing. Right? Look, I,
Sven Carlin 24:18
I was born in the former Republic of Yugoslavia. So when I was a kid, when I was six years old, we had hyperinflation, which mean I was a billionaire when I was six year old, you are talking 15% I can tell you one 50% 1,500% if you look at the debt and then Hyperinflation is the, the only solution, because you are not going to cut entitlements now, if Trump, if Trump comes and says, or whatever US president says, Okay, people, I’m going to cut entitlements by 15% now. So. So, so that we solve the debt issues. He’s going to be out of office tomorrow on some kind of impeachment or something. You will invent some. No, I understand. The only solution is printing, which leads to hyperinflation. The cycle goes over from the Roman Empire, from this, from that, there is simply no other solution for protection from that you need real assets. It can be businesses, it can be land, it can be real estate, homes, things like that.
Anthony Scaramucci 25:29
Well, listen, you’ve been a terrific guest today, and I love talking to you, and I owe an apology to our viewers and listeners because I didn’t get to their questions. And so I didn’t do that Sven, because I enjoyed talking to you, and I was the one that wanted to push you today, but we’ll get you back on, and we’ll get our viewers and listeners to ask you questions as well. But thank you so much for joining us today on speak up. I thought it was you’re you’re one of the brightest minds out there. I know you have a terrific business, and I wish you great success. Thank you again for joining us on speak up.
Sven Carlin 26:00
Thank you. It was a pleasure being here.
