00:00 the voters in the state of Washington have their say that the voters will turn the tax down as they have 11 previous times. My hope, too, is that if we're successful with regards to getting the income tax rescinded, that we can force them to put the capital gains tax on the ballot and restore the state of Washington to the same state of sanity that existed in 2020 when I moved here.
00:29 Particularly people who have achieved a lot like Elon Musk. If you were to substitute the word billionaire today for the word Jew in the 1920s, the actions and the rhetoric are starkly starkly similar. I would suggest that Antifa, as an example, is probably the modern personification of the brown shirts.
00:58 Well, that's a difficult decision. When my wife and I moved to Washington state, they had no capital gains tax and no income tax, and our understanding of Washington law was that to change that required recourse to the Washington voters. The legislature changed their mind. It's the direction that scares me.
01:20 It's the fact that Washington state vilifies people who have accomplished things. It's also very true in the state of Washington that despite radically higher taxation, the deficit goes up. In other words, the money that they steal does nothing that I can see to benefit people who live in the state of Washington.
01:41 The consequence of that is that I am considering for the remainder of my working years, which is likely the remainder of my life, to relocate to the state of Florida. I will be joining people who are leaving Massachusetts, leaving New York, leaving New Jersey, leaving Illinois, leaving California, and leaving Washington.
02:02 My hope is that if I'm forced to go there, that the constituency will be a constituency that's more common with my values. I do, as you suggest, love the Northwest. I won't be spending the wet season here. And as you know, the wet season here is fairly long. And I suspect that I'll split my time that I am in the Northwest more evenly between Vancouver, BC, and Northwest, Washington.
02:39 My hope is that if this tax gets on the ballot, and the voters in the state of Washington have their say, that the voters will turn the tax down, as they have 11 previous times. My hope, too, is that if we're successful with regards to getting the income tax rescinded, that we can force them to put the capital gains tax on the ballot, and restore the state of Washington to the same state of sanity that existed in 2020, when I moved here.
03:15 >> America's states are increasingly competing for residents, businesses, and investment capital. States with lower taxes and business-friendly policies continue attracting professionals and retirees from regions with heavier tax burdens. This migration trend has become a major economic story over the past decade.
03:33 Supporters of low-tax policies argue that reducing financial pressure encourages entrepreneurship and job creation. Critics counter that lower taxes can limit public investment. Regardless of perspective, population movements offer valuable real-world data. As people vote with their feet, states become economic laboratories, providing insights into how different policy choices influence growth, employment, housing demand, and investment activity.
03:56 >> I think the consequences of this activity are going to become more apparent. There will be differences in outcomes between states that treat people fairly and states that don't. I was at a dinner party not too long ago in Anacortes, Washington, a small town in northwestern Washington, a goodbye party for a family that was moving to Coeur d'Alene, Idaho.
04:22 >> It turned out of approximately 30 people in the party, four families were considering departing Washington. That wasn't including me. If you think about that high a proportion of achievers leaving a community as small as Anacortes, my suspicion, Nick, and I'm pretty good at suspicion if it's covering financial subjects, is that the state of Washington will record a net tax loss as a consequence of raising taxes.
05:02 I saw another list of 25 billionaires in the state of Washington, six of whom are thus far departed. This does not have a happy ending. The narrative around stealing money from people who have it is not an unattractive narrative. But the outcome is fairly obvious. I don't think the outcome will be apparent in the next couple years.
05:32 But I'm in my own way delighted that New York City elected a socialist mayor because I don't live there. I'm delighted, too, that Seattle elected an overtly socialist mayor because I think that those cities over five years, will be wonderful laboratories for the relative success or failure of socialism.
05:55 You and I were talking before we went on the air about promotional copy around selling newsletters. The progressives are much better copywriters >> For sure. >> than the libertarians because they appeal to people's emotions. The problem with arguments like mine is that they're arithmetic. They require people to think, and people would prefer to feel.
06:18 If you dial back almost 100 years now to the extraordinary success of the brown shirts spreading national socialism, also known as Nazism. Those were all emotional appeals. They were all suggesting to people, "Your problems are the consequence of the actions of a minority that we can oppress."
06:44 It might sound radical, but the rhetoric that you see concerning people who have achieved particularly people who have achieved a lot like Elon Musk. If you were to substitute the word billionaire today for the word Jew in the 1920s, the actions and the rhetoric are starkly starkly similar. I would suggest that Antifa, as an example, is probably the modern personification of the brown shirts.
07:21 >> Successful investing often depends less on predicting markets and more on having a disciplined system. Many experienced investors divide their assets into distinct categories based on purpose and risk. A foundation of liquidity provides flexibility during uncertain times. Core holdings represent long-term investments designed to survive market cycles.
07:40 Growth positions target businesses with strong expansion potential, while speculative investments focus on opportunities with higher risk and potentially greater rewards. Separating investments into clearly defined groups helps investors avoid emotional decisions during periods of market volatility. It also creates a framework for managing risk while pursuing long-term financial goals.
08:01 >> Sure, there's actually four buckets for me. The first bucket is savings or liquidity. The bottom, if you will, of the financial planning pyramid. Sure. And that bucket consists of really two components. Gold because I save in gold. And then liquidity, short-term liquidity, mostly US dollar denominated liquidity.
08:27 I understand perfectly that I lose purchasing power on my liquidity. But I maintain a lot of liquidity because I've lived through five or six liquidity-driven panics in equity markets, like 2008. So, the fact that my liquidity bucket might yield me 4% in a currency where I believe that my purchasing power is declining by 8% means that that liquidity ex-gold is costing me about 400 basis points a year, which I consider to be an options premium.
09:04 So that during a panic, I have liquidity and can act on it while others don't and can't. Then there are my core holdings. And these are companies that I'm prepared to hold sort of through hell or high water because although I've experienced 20 or 30% periodic declines in them, they've done so well over the course of my life and look like they'll do so well for longer periods of time that I basically acquire them in increasing amounts in that market and hold them and they've done really truly astonishingly well
09:46 for me over time. Then I have what might depending on who you are be called a growth portfolio or an investment portfolio. These are companies where there is some operating risk but I believe in the fundamentals of what they're producing and I believe in their business. And I have sort of five or six year growth plans for them.
10:13 Sometimes I'm mistaken and I have to sell. Sometimes I'm mistaken in a different way and they perform better than I had hoped and I buy more. And then of course there's the speculative bucket. >> Mhm. >> The speculative bucket comes in two pieces, active and passive. Passive is the part where I believe in the long-term future of the company but I've sold enough stock that I no longer have any cost in it.
10:40 Let's say I bought $100,000 worth of XYZ and XYZ performed well in terms of whatever exploration they were undergoing and the stock tripled and I was able to sell enough stock to recoup my capital and pay the capital gains tax but I still like the management team and I still like the prospect of the next unanswered question.
11:04 I call that a library card. I keep it around, paid for. I follow it but I don't follow it slavishly. My active positions are ones that feel sort of like that but where I haven't recouped my capital. Where I still have capital at risk and capital at play. So broadly speaking I have four buckets.
11:30 One of the bucket the speculative bucket is subdivided into active and passive. >> Holding cash is often criticized during periods of inflation because purchasing power gradually declines. However, experienced investors frequently view liquidity differently. Cash can function as a strategic reserve that provides the ability to act when opportunities appear.
11:51 During market crashes or financial panics, investors with available capital are often able to purchase quality assets at heavily discounted prices. In this sense, maintaining liquidity can be viewed as paying an insurance premium for future opportunities. While cash may underperform during bull markets, its value often becomes most apparent when fear dominates markets and investment bargains emerge.
12:14 >> They have to before I establish a speculative position or concurrent with it I have a memo template. In other words, I write myself a memo on every position which I revisit at least quarterly. And what's important for me in exploration is that the management team identify and articulate a series of actions which can answer unanswered questions.
12:45 >> Okay. >> Increasing the certainty with regards to a deposit, increasing the size of the deposit, increasing the grade of the deposit. They need to tell me what action they can take that will increase the value as opposed to necessarily the price of the company the most. And I follow that.
13:07 By the way, Nick, about 80% of the time when I ask the management team to answer what is the most important unanswered question, they say to me, "Well, I never thought of it like that." Which is to say they failed to plan because they didn't plan. Those are good companies. I throw them away.
13:23 I don't have to waste any more time on them. And no money. But then it really becomes a process of monitoring their progress with regards to answering unanswered questions. What's the probability of a yes, what's the probability of a no, and if they get a yes, what question does that presuppose? And that's the way I approach these things all the time.
13:49 >> Speculative investments require a different mindset than traditional long-term holdings. Rather than relying solely on market sentiment, disciplined investors focus on measurable milestones. Before committing capital, they establish clear expectations about what developments could increase a company's value.
14:06 These milestones may include new discoveries, improved operational results, or major business achievements. Progress is reviewed regularly, and investment decisions are adjusted as new information becomes available. Importantly, successful speculation is not about predicting every outcome correctly. Instead, it involves managing probabilities, limiting losses, and allocating additional capital only when evidence supports a stronger investment thesis.
14:31 >> I always take money off the table if my target correct price for an unanswered question is reached before the question's answered. Let's say I bought a stock for a dollar and because I thought that the first round of drilling was going to validate the geological model that they put in place as a consequence of trenching.
14:55 And I thought that the stock would go to $3. Sometimes in a good market, like the market that existed at the end of last year, the stock will get from a dollar to $3 in anticipation of the question. >> Wow. >> And in that circumstance, I will always sell enough stock to get my capital off the table. There are other circumstances where the drilling doesn't merely validate the surface data, but rather it compounds it.
15:24 An example would be the most recent drill hole by Arras Minerals, A R R A S, not a buy recommendation, by the way. A spectacular drill hole that I bought based on surface results and a geophysical anomaly. In a circumstance like that, the results before they drilled — well, I was thinking based on the trenching and on the geophysical result that they had a reasonable chance of slamming into a decent porphyry.
16:04 That the third dimension would have some copper mineralization would give me encouragement. As opposed to that, I got something like 300 m of 1.25 to 1.5% copper and with bornite throughout the hole. And I ended up buying a lot more. Not taking money off the table, but rather buying a lot more.
16:33 I had dinner not too long ago with a mutual acquaintance of ours, Peter Brown, the original founder of Canaccord in Vancouver. And Peter was recounting for me the history of Aurelian, where the company was absolutely down to fumes. Absolutely down to fumes. They had a wonderful idea, which they drilled.
16:55 And I think pre-drilling, the stock was at 50 cents on speculation about the drilling, the stock went up to 80 cents. Then they hit this mind-boggling hole. Mind-boggling hole. And the stock jumped immediately to $4. And as Peter said, at $4, the stock was a lot cheaper than it had been at 50 cents.
17:21 >> Because they started to answer the question? >> Because you had data. You had this goofy, goofy, goofy drill hole that validated what had been in my mind at least a very, very, very stretchy idea about geology. And I've tried to be good about that in my life.
17:46 If I get an answer that is in line with the answer I predicted and I get a move in the market that's in line with what I thought would occur it is likely depending on how they articulate what the next unanswered question is and allow me to form a target on that, it's very likely that I will sell enough stock that I can get to or at least approach that point of no concern.
18:16 If the data is worse than I had anticipated I'll probably sell all. If the data is better than I had anticipated, I'll likely buy some. >> Does the >> By the way, I don't ever believe I'm going to get every decision right. Mistakes are an important part of the process because they're inevitable.
18:39 >> One of the most difficult challenges in investing is deciding when to take profits. Experienced investors often avoid emotional decisions by following predefined rules. If a stock reaches a target price before key milestones are achieved, partial profit taking may reduce risk. If results exceed expectations, increasing a position can sometimes be justified.
18:59 Conversely, disappointing outcomes may require a complete exit. The goal is not perfection, but disciplined adaptation. Markets constantly evolve and new information changes investment opportunities. Investors who remain flexible, objective, and data-driven are often better positioned to navigate uncertainty and achieve long-term success.