Big Tech’s Tipping Point Is Here: Jim Mellon On Biggest Short Of All Time

I think it's the side of a general tipping point in markets and I've been calling it too early. You have seen that the US market has not done well this year actually compared to other markets around the world. And I don't think most people appreciate that although the US market has done well over the last five years. It's been highly concentrated in what it's done. Now it's really looking pretty bad. And I think the main signal for that was the SpaceX thing, which I wrote in the Master Investor letter, was the biggest short of all time. And so it has proved. It's down 50% now from its high, which is incredible for such a big IPO. And it exposed so many weaknesses in the US financial system. I had to choose markets now. I would say UK smaller companies are extremely attractive. And you can see UK companies being picked off one by one three or four a week, which is tragic. But hopefully there'll be other companies that come along and replace them, which is why I'm quite bullish on the UK. But we're talking there about P ratios of between 10 and 11, free cash for yields of about 9%, dividend yields of 4 to 5%. It's extraordinarily attractive. I think we just repeat Muhammad Ali, dance like a butterfly and sting like a bee. You've got to be a gorilla in these markets. If you think that you can lay down your portfolio for the next 20 years and you'll be fine, then I think you're making a big mistake. And if you feel hesitant about the markets, just don't go into them. Don't feel that you have to be involved at all times and just wait it out. There'll be an opportunity to buy much cheaper. Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you our listeners the edge. The Master Investor Podcast is sponsored by LSEG, interactive brokers, the World Gold Council and BNY investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes. My guest today is my great friend, podcast co-founder and the legendary investor, Jim Mellon, who comes back to the podcast for the fourth time. I'm delighted to say, Jim. Very happy to be here. Welcome, I'm very delighted that you didn't use the word veteran investor. No, but you just have. Sorry, I know, obviously I have a sore spot about it. Yeah, that's not a very nice word to use. So I hope the other members of the press don't. But Jim, great to have you back. And we want to get straight into the action. And I didn't know whether to reject things with oil prices pulling back today. But maybe we'll get to that next. But first off, we've had most of the mega-cap tech earnings now for this quarter. Clearly haven't gone down that well with the market. One or two of them, massive single-day sell-offs like IBM and Google. What's your takeaway of some of those earnings and reactions to them? Yeah, well, I just looked up the Mag 7 performance since the June 24th highs. And the average looks like to be down 30%, which is incredible, considering how big they are as a component of the S&P and also in terms of their huge size and funds. And I guess it's basically because those investor fatigue setting in with the whole tech thing, there's an understanding that these companies are moving from being cash low positive. We know this to be generally speaking cash flow negative. And in some cases, it'd be oracle in a pretty precarious place. And an understanding that there is no real sign that they're going to make any money out of all the expenditure they're making. So the business model has changed not for the best. And the business they've gone into doesn't look like being a profitable one for a very long time to come if ever. Do you feel like sentiment, whatever the sort of median investor is, has shifted to be negative towards those business models yet? Or is it just the start of a tipping point? I think it's the start of a general tipping point in markets and I've been calling it too early, but you have seen that the US market has not done well this year actually, compared to other markets around the world. And I don't think most people appreciate that, although the US market has done well over the last five years. And I think the main signal for that was the SpaceX thing, which I wrote in the Master Investor letter was the biggest short of all time. Down 50% from its high, which obviously it's surged to after IPO, but I think critically below its IPO price now, I believe. By a big chunk. Yeah, IPO at 135, it's at about 115, I think, in the morning. Do you think looking back, that will mark the peak of this, this sort of subset of the tech market? I hate to make that forecast because I'd get them wrong generally. So I would say in my heart of hearts, yes, but probably 50/50. But it's hard to see what's going to recatalize it, because you've seen all these darlings of the market, including the semiconductor stocks, which were up so much, falling back quite a lot. The semis are down 20% from their peak now. And they're not displaying any signs of wanting to go back up in a hurry. Do you think there are any cheap US tech stocks at the moment? Yeah, I think there probably are. But it's a bit like the 2000 bust when the US tech stocks really fell a lot. Amazon was down, as everyone knows famously, by 95% from Pete to Trough. It was a pretty good company, but it went down with the rest of them. So the good girls go down with the bad. And I think that we're going to see all of them underperform for quite a while, even though there are great ones out there. And I know that you've mentioned Microsoft as being a great exemplar, and it is. It's a compounding company, but it could just tread water for a couple of years, if not more. Yeah, this business model, the core business model, could be under threat as well at the moment. We shall see. And just finally, one that has moved in the opposite direction in the last couple of weeks is Apple. It's flat from its height. Okay, but that in a relative sense, it's out-performing. And its market cap is as high, pretty much at its all-time highs. And if you look at that, obviously they haven't overspent on AI, which was a question mark for them for most of the last 12 months. It's kind of interesting that the market suddenly decided to reward that in a relative sense, but it's multiples on a traditional price to sales or price to earnings assessment, as high as it's ever been. Yeah, maybe it's the safe haven in the tech area. And the fact they didn't spend, and they're not spending. I think their capital expenditure this year is one tenth of the other mag seven companies put together, basically, which is incredible, frankly. They'll probably just buy in the AI, or they'll buy a failed company. Yeah. I'll switch, there'll be plenty. Let's talk about implications for the Iran war restarting. I mean, it's interesting timing to ask you about this, because we had 11, 12 days in a row of the US hitting Iran over night each night, and then we've had two in a row where they haven't done so. So just to assess for us what you think is going on there, and if this two days is a temporary hiatus, and the war does persist, the straight does remain closed for months from now. How big a hit is that, do you think, to the global economy? I think that the global economy is finding ways of getting around the straits of war moves, of a saddies are managing to find ways of exporting their oil quite successfully. The UAE is building rapid pace and another port beyond the straits of war moves. I think that the straits of war moves could end up being not as important as people think. And already you're seeing China has found ways of producing oil consumption during down its oil reserves and so forth, and the US is pumping large amounts of oil and gas. So I'm not particularly concerned about that, but I do think this war could go on for a very long time, because who's going to end it? I mean, possibly the current hiatus is due to the fact that the US has run out of missiles to do the big attacks on Iran. It's possible. I mean, I've been reading about the fact that they just don't have enough patriots. Iran's sending up these very cheap drones and the US is using million dollar missiles to shoot them down. It's an unsustainable business model or war model. You know, I think it was a full-hardy war to get into. I think most people would agree with that now, but getting out of it is a lot harder than getting into it. And he has his ally Israel, which doesn't want the war to stop, and we'll do everything it can to prolong it, I would imagine. Now, let's talk about oil prices. First phase of the war, oil went from, if we talk about Brent, went from 60, 70 up to 115, settled at 70 when the peace deal was signed and then got up to 99 last week, and it's about 91 this morning. It's pulled back a bit this morning. You last joined us in January, Jim, and very, very loud and clear. You made a big call for energy stocks and oil and gas stocks, which turned out to be a fantastic call, obviously, with the war that then began start a march. Where do you stand now on those energy stocks? Oil is obviously elevated from where it started the year, but off its April highs. Yeah, I don't think oil is going to go to 150. I think demand destruction will be well entrenched before them. As I mentioned earlier, I don't think the Straits of Hall music is. as a big deal as people thought. So we do have oil and gas stocks. I trade the oil market in and out because I feel that every time there's a threat, the oil price goes up, it's time to short it, every time there's a lull, it's probably time to buy it. So that's what I've been doing and it's been fine so far. I don't know how long that will last for. But I would say that I do think the North Sea stocks are very attractive because they aren't going to drill in the North Sea. I mean, clearly, Burnham has recognized that this is an issue that is going to damage labor, particularly hard in Scotland, but elsewhere around the country, that the Milaband argument for not drilling is just a very poor argument. In fact, it's not an argument at all. And that the UK North Sea companies will probably gain tax advantages, will be allowed to drill more than just beyond Rosebank and Jackdaw. And those stocks could look very, very good. So you're looking at companies like Ithaca as an example, which are big companies or being attractive. So that's the area in which I've been focusing my attention in the oil and gas sector. And how have they traded in the last year? Well, they've traded well because the oil prices up, but also because-- And gas price for that matter. And also because there's an anticipation that there'll be a relaxation of these really punitive rules, which have discouraged-- it is absolutely true that we buy a lot of gas from Norway, which is right adjacent to our own fields, and that we're paying Norway to do stuff we could do ourselves. It's crazy, frankly. And at the start of the year, generally, when you joined us making big calls for the broader, either oil majors globally or some of the services names and gas names in the US, have you faded some of those positions? Definitely. Because the pricing has moved up, and they're not as attractive as they were. I mean, we were looking at oil and gas as being then, in January, as being something between 3 and 4% of the indices in the United States. It having been in the '70s and '80s above 20%. It's crazy, because energy is the important transformer of capital and labor and to output, basically. And there is no substitute for fossil fuels, for the foreseeable future. And they still represent a huge part of the world's energy consumption. But that percentage went up, and it went up to a level which I deemed to be sufficiently attractive to let it go, basically. That's really interesting. Let's touch on yields, which is obviously picked up in the last month, quite significantly, partly because of the war restarting. But I think it's broader than that. It was a factor, by the way, that Jamie Diamond warned about very clearly in our last episode and referred people back to that, if they haven't gone to it yet. Do you think the pickup in yields is this sort of range bound factor that we shouldn't get too worried about, or is there a probability or a risk that this is a real tipping point for global debt markets? That's a very good question. Basically, I don't see it being a tipping point yet. But I do see the escalation in debt in major economies around the world as being a future tipping point. Because at some point, the debt levels will be so high that the price of that debt will have to go up to compensate for the fundamental risks that the governments are going to try and inflate their way out of the debt. But at the moment, the signals from an economic point, if you're quite mixed, the US-- there's a good chance it's going to-- the Fed will raise interest rates a little bit this week. But there's a good chance it won't. It should raise interest rates, because I think the monetary policy in the United States has been a little bit on the loose side. But the employment is very mixed. You're seeing general employment being quite strong. But wage growth is weak. It's very weak, actually, at the moment. It's down below 3% in the United States. And that's not consistent with an inflationary boom. There's definitely not an inflationary boom going on in the United States. So I would say that we're in this range. And in fact, if I do occasionally trade bonds, I would just trade the range. We're probably towards the upper end of the range at the moment. So bonds are a buy. And I would only buy the long dated ones, because you don't get a sufficient leverage on the short dated ones. [MUSIC PLAYING] This episode is sponsored by the World Gold Council, the global experts on gold. They champion gold as a trusted strategic asset, provided market leading research to help investors understand gold's role, and modernize how gold is owned, traded, and used, developing industry standards, and market infrastructure. Learn more at goldhub.com. This podcast is sponsored by interactive brokers. Building wealth starts with the right broker. An interactive broker helps you reach your goals with powerful tools, global market access, low costs, and unmatched financial strength. That's why the best informed investors choose IBKR. Learn more at IBKR.com/masterinvestor. But this is interesting. You think that ultimately, bests and wash and Trump will keep a lid on the potential disaster scenario of US Treasury's falling out of bed? For the moment, because the source of sufficient foreign capital coming into the US to allow it to continue in the way it's been going. But you know, in the next Senate, I think you probably know this as well. Social security will become effectively bankrupt, it won't have enough money. So they'll have to print more money to pay for social security in the US. They have less discretion to cut expenditures in the US. And they have no desire as far as I can see to cut expenditures. And their fiscal deficit continues to be awful. In fact, it's much worse than Japan's as an example. Do you think that there are other countries that could drag yield tire or the US is the anchor? I mean, clearly UK yields have been a focal point. Japan, you mentioned France could be an interesting one with the presidential election next year. Or will the US kind of dance to its own tune? US is by far the most important. Japanese yields have to go out. The bank of Japan has not been taking the necessary measures to tighten. But the inflation in Japan is definitely something that they haven't experienced for a very long time. So they're probably not used to it. It's like runaway horse being confronted with a human being for the first time. They don't really know what to do. But they're going to have to tighten policy. And that will obviously affect my hopefully, my very bad call on the Japanese yen so far. But I think the US is the most important. And UK, I think things are OK here, actually. I don't think there is bad as people think. I mean, obviously it could be a lot better. France is interesting. But it has the sort of overarching banking of the European central bank. Whether that's good for forever is another matter. But their debt is much, much worse than the debt here. Yeah, they've got a big problem. I think it'd be interesting as we approach the election next year where the political instability affects their yields in a standalone way, clearly in the meantime, they're backed by Germany and the rest of the ECB. But we shall see. It's going to be a very interesting presidential race there. And let's talk about the end then. Yeah. Firstly, just remind our viewers why you have been very bullish on the end long term. Yeah. Well, it's partly because Japan is incredibly cheap. Now, that's an anecdotal point, but it is absolutely true. So I don't know if you know this, but the Japanese economy and the British economy are roughly speaking the same size in gross national output. And if you go to Japan, that should not be the case, because they have twice the population. And ostensibly, Japan is a pretty advanced economy. So there's something fundamentally wrong with the pricing in Japan. As indeed, there isn't China for that matter. Secondly, although Japan is indebted, its corporations are stuff full of cash. Its consumers have very large savings, as we all know, and are not indebted. And Japan basically sells its bonds to its domestic audience. So it's not dependent on foreign inflows. It has a large current account-- from time to time, it has a large current account surplus. Certainly, it's in a much better trade position than the United States is. But most importantly, Japan is by far the biggest international creditor. It owns more assets around the world than any other country. And at some point, I don't know when that is. And I've got that timing completely wrong. The Japanese, and those already signs that the Ministry of Finance, the Bank of Japan, are trying to encourage investors to bring back money into the country, the Japanese will, as they always do, stamp it back into their own assets. And what those assets are, I don't know. And that will improve the value of the yen. I don't know how much by it. But it's definitely been a bad call of mine. And it goes against the fundamental principle that I always tell people I have, which is that a foolish consistency is the hobgoblin of a small mind. And in other words, you have to change your mind. And I've been very adamant on this particular position. Maybe I'm wrong, but I have my cash reserves, a lot of them in Japanese yen. It's not being great, but it's not being a disaster. Because I'm not a currency speculative person. I'm not taking on billions of dollars, like George Soros or anything like that. But I do think that at some point, this court, of course, every call eventually will be right. But you've got to look at the long end of the Japanese bomb market. You can get something like 4% on that. They get to 5% of the yields in Japan. They're as attractive as US yields and fundamentally, it's a much better bet, basically. And listen, it's interesting that you have continually reassessed the position and you do stick with it. In the short term, clearly it's interesting that you think the Fed is going to hike potential. Maybe the risk of a Fed hike is higher than the market expects. Are those types of factors priced in and again, and do you think that would hit the end to the downside in the short term, or is it not really reacting to those yield differentials? I think the differentials now are not nearly as great as they were when you basically had 0 against 4%. The long end, 4% against 5%. And any hike by the Fed will be a quarter of a percent. It'll be to minimise. And I would say the market is expecting 40, 60 that there's a hike this week. And just elaborate for a little bit on-- we mentioned China there. Because there's sort of similar arguments towards the start of the year, towards the Chinese Yuan and the end. But the Yuan has responded. So why has there been a difference, do you think, there? It's because you can't trade in the Yuan, basically. It's simple as that. I mean, if you and I wanted to put our money into Chinese Yuan, it's almost impossible for us to do it. You can if you're a Hong Kong-based person, whether you want to count. But fundamentally, it's really hard to trade in it. And so that's the reason. Whereas the yen is extremely liquid, and there's subject to huge flows of capital, trade, and speculation, basically. And then just remind people the scale of your conviction. If we're at 160-ish-- Yeah. If your view plays out, what does it go to? Well, someone said that the Japanese yen tends to halve over a 10-year period and then double in a two-week period. So I would say that we're looking at-- and the yen has gone, by the way, from 80 to way above 200. And it's range in the last 25 years against the US dollar. And I would say that we could see 110 to 120 on the Japanese yen against the US dollar. And I recommend that if anyone wants to just check out how cheap Japan is, just go and look at hotel prices or prices of meals. And you can live in Japan in Tokyo for, I would say, at least, half the price-- less than half the price of London. Hi, guys. It's a wealth. I hope you're enjoying this episode. Just a quick reminder to please hit follow or subscribe on your podcast or video episode that you never miss an episode. And if you've got time, please do give us a five-star rating and leave us a comment. It really helps other people find the podcast too. Now, back to the episode. I'm for people more on this. I suggest they go back to our episode with Louis Gavre. From Gavkow, we talked about that as it relates to China as well and how cheap it is to stay in a four seasons in Beijing compared to London or New York and also in Tokyo. Jim, let's talk about Golden Silver. Because again, this is a call you got from your first appearance on the podcast over a year ago. You're a very bullish, over a long period of time. And obviously, they search into the start of the year and you temper it your enthusiasm then. Gold peaked at 5,200. Earlier this year, it settled around 4,100. Silver peaked at 110. Earlier this year, and it settled down around half that level of itch at around 60. What's your view for each of those two short term, long term, from here? Well, short term, I think they're still going to be under pressure. And it's very hard to cut through the noise on Golden Silver. Because there are so many balls on both of them, who are sort of demented balls. They've been balls for 50 years, basically. We never see any opportunity to sell and maybe get back in there. But what I would say is that over the long term, they're both going to do very well. They're going to preserve your capital, which is what they're designed to do. I'm not in gold and silver at the moment, except for the miners of-- Silver miners are very difficult. There's not any a few of them. But there are plenty of gold miners out there which are making very large profits, even with gold at 4,000 rather than 5,500. And they're all in sustaining costs of the production, generally speaking, around $2,000, even despite inflation and some of the inputs go up to make a mine cost. So they're generating huge amounts of cash and some of them forward hedge. So there are gold miners out there that highly recommend that people look at those generating huge amounts of money. And as long as gold doesn't go down to, say, 3,000 or 2,500, which I don't think it will. Because the central banks are still remain buyers of gold. Then I think they're extremely good buys. It's the same with oil and gas. Sometimes you buy the oil and gas. Sometimes you buy the stocks. At the moment, you buy the gold and silver stocks. Give us a few examples. Well, I've got I/O in Equinox, which is a company that's morphed, and it's a very big Canadian producer. It's one of the very largest producers. It's probably-- I mean, if I said it was selling at 3 times cash flow, I think that's pretty accurate. I/O which I've owned for a long time, something called Metals' Exploration, because we sold our condor gold into it. That looks very cheap, very leveraged to the price of gold. So those are two examples. But there's plenty of other ones out there that-- or just by the gold ETF. The gold miners ETF. Yeah, yeah, yeah. Rather than the underlying gold ETF. Let's talk about different geographies, Jim. And you mentioned that the US hasn't been the best performer this year geographically, which are the sort of countries or regions of the equities that you hold at the moment that you're most drawn to. Are you doing company specific or are there countries that you think stand out? Yeah, I'll get in a great question, because I think you should be pretty nimble on your feet at the moment in the current market. If you looked at the markets at the beginning of this year, and we'd have sat there and said, oh, this is what we're going to do for the whole of the year. Almost certainly, we've ended up losing money because of the massive churn. Like we're just talking about the Mag 7. Down drawdowns are 30% from June. It's incredible. And that's applied to markets almost everywhere. But if I had to choose markets now, I would say UK smaller companies are extremely attractive. There are plenty of investment trusts out there that sell at discounts that are suffer of these. But we're talking about there about P ratios of between 10 and 11, free cash for yields of about 9% dividend yields of four to 5%. And if you put those away, tuck them away, and you buy an investment trust, so it's a 10 to 15%. Discount that is well run with those in it, then I think you'll do very, very well. And the other country, which I mentioned earlier, there could be a stampede into Japanese assets because the Japanese will suddenly all decide they want to get their money back from overseas, particularly if these US markets still continue to decline, then the Tokyo market could, having been more a bond for the best part of 30 years, actually doubled from here again. And but it has been quite strong already. Yes, but it doesn't mean to say that you couldn't get this final blow off as well. And normally I don't like that sort of, the Japanese market still not very expensive. So if it was really, really expensive, and I thought there was going to be a blow off, I'd say that that's a game of past the past or best sit it out. Elsewhere, you know, China, you know, I think maybe it was Louis Gav saying that when when China walks in the room, profits walk out, that's coming to an end. The Chinese government actually realizes that these companies are over competing with each other to the point where there's no profits. And that's in the solar industry, the electric vehicle industry, you name it. And that's got to change. And so they are beginning to change that. And it could just be that Chinese stocks are very attractive at the moment. They're a fraction of the cost of comparable US stocks. This episode is brought to you by Elsec, the leading global financial markets infrastructure data and analytics provider. To learn more about how Elsec connects businesses, investors and markets worldwide, visit lsec.com. This episode is sponsored by BNY investments. BNY investments is part of BNY, a global financial services company supporting investors and institutions around the world. This sponsorship does not constitute investment advice. If we get more specific now to have some stocks that you've most conviction behind at the moment, give us two or three names. OK, so I was an early investor and I think you may even know the guy who founded it, Cosmo Fielding Melons, psychedelic company, it's called Beckley Citech and it would bought by a company called ATI, which is listed on the New York Stock Exchange. Eli Lilias come out and made a bid for that company. And it's still, you know, on paper it's quite a generous bid. And those of us who are founder investors are going to do very well out of it. But I think it's severely undivided to use the company potentially because psychedelics are going to be a huge industry. Cosmo and Cosmo's mother identified that they were the earliest people in the world to really get onto that. So I think we could see, first of all, you can buy the shares now. And you get a, what's called a CVR contingent value right, which is about another one and a half billion dollars potentially, which I think they'll, some of that at least will be paid out to shareholders. So you can buy them with reasonable safety and even if Eli Lilly buys it, then you'll make money on it. But and I like that sort of floor. But if someone else comes along and buys it, they're going to have to pay a lot more for it. And so I would say that's a great buy at the moment. And just explain to us for the uninitiated the case for psychedelics. Well, the psychedelics got a very bad rap because people like Timothy Leary and, you know, the counterculture in the 1960s was misusing the psychedelics and people were throwing themselves out of windows, the LSD trips and the ketamine and psilocybin, which is derived from mushrooms, et cetera. Today it's proven, and they're used, you know, clinical trials are proven it that you can reset brains much more effectively using psychedelics than antidepressants in people with PTSD, treatment, resistant depression, a whole range of mental maladies. And this could be a very, very big market indeed. But done on a medical supervision, it's not high and, you know, you're going into get a trip and, but it is having very, very profound and positive effects on people. Never done it myself. I know people who have and sort of swear by it, but I think if you don't have one of those mental conditions, then probably it's best not to try it. Yeah. No, but it's being approved as you say, whether it's in places that Holland, Switzerland, some places in Latin America and the US now as well. So the trend is shifting. And just as a reminder to have years, nothing should be considered financial advice. And Jim obviously has a position in that company. What about food supplies? Because this is an area you've been very passionate about for a long time. It's a long term theme, but interestingly with the Iran War and shortages of fertiliser, it's become a much more short term topic once again. Where are we in that in that cycle and the investment opportunities? Well, I'm interested in what are called novel proteins creating this clean food. And there are two types of those. There's one which is made using cellular agriculture, which takes a cell out of any living being basically amplifies it and produces let's say beef, pork, fish, meat, meat, not substitutes, but real meat but made in a lab. And the other one is what's called precision fermentation. And that's a sort of brewing process being around for a long time. So kimchi is made by using precision fermentation as an example. Soy sauce is the same being around for hundreds of not thousands of years. That process has become more adept. And so people can now produce dairy proteins that are exactly the same as cows, proteins, egg proteins and palm oil. And I'll give you a quick example of this. So we have a factory in Liverpool now which is producing oils without any palms or any plants being involved. It's a very big factory. It's nearly 12 acres in size. We've been producing this at the beginning of this year. We're doing batches of 100,000 litres at a time and we've been approved for cosmetic oil, but it will absolutely short be approved for palm oil, cocoa butter, olive oil, any valuable oils you can think of that damage the environment. And they're producing at a price which is equivalent or lower than the current production with no environmental damage, no thousands of miles, no deforestation, no orangutans hurt in the process. That company will own the whole of the palm oil market here in the UK in my opinion within three years. So it's here and now. I wrote a book called News Law six years ago that updates kind of come out quite soon. And you're right. It seems like a very long time, but actually News Law, Riff Off Moore's Law has happened really, really quickly. The price of this stuff has come down to the point where it's what I call griddle parity with the regularly produced foods. They're all much better for your health because they don't know environmental damage, no antibiotics, no hormones, no bad stuff in there. In the case of fish, there's no microplastics, there's no mercury poisoning. So I think whatever is produced will be sold and the production rates are going up dramatically. And as you rightly point out food insecurity is now rife across the GCC and the Middle East. It's rife here. We have to import 40% of our food. We should be producing a lot more in situ close to the consumer. And I think it's going to happen. It's just one of those industries that will suddenly take off. What will the implications be for the big palm oil, all of all, supplies of the world? How much is this going to be undercut? Well, palm oil is frankly speaking, I don't have any great regard for palm oil producers because it's one of the worst products on the planet. And it's used in absolutely everything. The palm oil market internationally is about $80 billion US dollars a year. So it's huge. But as far as olive oil is concerned, there's always a shortage because the Spanish which produce 90% of it are having droughts and greater quantity, wildfires and all this stuff. So I think it will be welcomed actually the production of olive oil. It will be an adjunct to the super high quality Spanish olive oils, the extra virgin oils that we're familiar with, but just aren't available. And the price of volatility will be gone, which is really important for consumers because the input costs of the things that make the olive oil and for instance the Liverpool facility are basically predictable. They don't go up and down with world markets. And actually one of the things I'm going to look into is the whole concept of futures in these key products because if they can be produced at scale with no price volatility, then the futures markets are going to be very interesting to deal in. Yeah, it's very interesting. What, take us inside your thought process with an investment like that, Jim, because you've obviously been in the investment for a long period of time. It's a long play and it's not obviously daily liquidity anyway. You couldn't trade in and trade out of it. But how do you weigh up the value and when is the time to exit or take profits in a business like that? Well, there's not any profits to be taken at the moment. But the Clean Food Group, which is the company that does the oils and we own approximately 40% of it, has got two great assets. One is that it bought this plant for a million pounds and probably the plant and the equipment in it is worth a hundred million pounds. So its capital cost is very low. And that stands against the fact that energy costs as we all know are very, very high in the UK. And there is an energy component to this. So one more than offsets the other. And the second is it's got a very long patent life, 19 year patent life on the production of these valuable oils. And as you know, I've got a biotech background. And so I really like to look at the defensive motor around these companies. And it's very, very, very strong owning these markets around the world, which I think they can do, will be incredibly lucrative. This company should go public in the next year or so. And I think it will achieve a very high valuation. And then we can decide are we going to take some money off the table or are we not? But in my own case, and I made this clear, everything that I make from the agricultural investments I've made, and they're quite substantial. All the profits and all the money that's been put in and so forth will go to animal welfare, which is a big passion of my other half, you know, well, and myself. I didn't know that. I didn't know that explicit. Yeah. That's amazing. And I guess this could be one of the biggest ones. So we shall see. Do you think it'll list here in the UK? Yes. Because we own it. Oh, we're the largest, sorry, we don't own it. We are the largest shareholders. And I wanted to list here in the United Kingdom. But they will have factories. I mean, basically the big markets in the United States, as we all know, I believe they'll have a factory there. They'll have a factory in the Middle East. I don't have factories everywhere in licensed agreements, maybe even in China. So this is going to be a super company to get behind. And I really like the management as well. So bring it back to the broader markets for us, Jim, in terms of how you're feeling about the rest of 2026. As you said, the US can keep going as it is for the time being. Do you think that will be reflected in the S&P 500 by the end of the year? Or do you think things have started to turn in a way that those heavy market cap stocks will drag everything down? Well, a gut feel is that we're on a downward trajectory at the moment. And you know, you just look at the way the markets are trading at the moment, they trade very heavy, I think, is that, you know, that's the way that I would describe it. And so, and then you look at the fact that there's been a That's what's right, what's the right way? Gamification of the US market, you know, they're all on their Robin Hoods and they're predictive markets and all this stuff and margin debt is at an all-time high. Whatever way you look at it, well there's percentage of outstanding shares and all that sort of stuff. And you did ask me earlier on in this conversation about whether SpaceX marks a turning point and I didn't want to say definitively, but my gut instinct that is yes and he's very, very clever for all sorts of reasons and one of the reasons he's so clever is he only released slightly less than 3% of his shares. He got away with it. I don't know how he did on SpaceX. And there is going to be a huge outflow of unlocked shares as soon as he produces his first quarterly results, which is very, very soon now. So I can't see any reason why SpaceX would go up from here. But at the same time, you look at the US investment banks that all came out with positive reports. It's the highest dispersion range in the history of stock markets in terms of views on the SpaceX. The lowest recommended price is 80. That's the target price and the highest is over 300 and the current price is 115 I think you were saying earlier. But they all wrote bullish reports because they all got the investment banking deals and the bullish reports are just ridiculous to read frankly. Yeah, some of them are pretty extraordinary aren't they? By the way, to your point about the investment bank earnings last week or two weeks ago, record quarterly profit for JP Morgan, but Jamie Diamond said it's as good as it gets. So he's sort of hinting quite clearly a similar theme to and he's as good as I mean, he's so good that if he says that, then you've got to listen to him. Yeah, I agree. And then it was great to have him on last week. So Jim, as we wrap up, I guess we asked this to you on your first appearance, but it was a year ago. So I'm interested if the answer has changed and and your view at the moment. But what is your overriding piece of investment advice? This July 2026 for all of us. Do you remember my advice the last time? But first time I gave my advice? I don't. I need to reply. I do remember. It was the foolish consistency as the hobgollon of a small mind, which I still think is good advice. But I was thinking about that this morning and I think we just repeat Muhammad Ali, it does like a butterfly and sting like a bee. If you think that you can lay down your portfolio for the next 20 years and you'll be fine, then I think you're making a big mistake because the rapid change in technology, the rapid change in almost everything in society means that you've got to be well read and which I know we are. But you know, you've got to have good sources of advice and if you feel hesitant about the markets, just don't go into them. Don't feel that you have to be involved at all times. And I think now is a time to be less involved rather than more involved. I do see areas that we can make money in. But you know, I'm a professional investor. Most people are not professional investors. If you have a sort of hesitancy because everyone's talking about stocks or everyone's involved in stocks and just wait it out, there'll be an opportunity to buy much cheaper. Jim, it's always a pleasure. Great to see you once again. Jim Melon, the chairman of the Burnberry Group Legendary Investor and of course dear, dear friend of the Master Investor podcast. Next week on the Master Investor podcast, we'll be joined by Luke Gromin, the founder of Forest from the trees looking forward to that conversation. So please do hit subscribe or follow on your podcast app if you haven't done so already to get that one. And for now, I thanks again to Jim Melon. This podcast is produced by parody productions and Master Investor Limited in association with bird line media. 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