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How to Handle Risk in Your Portfolio

Everyone has a different level of risk tolerance. Volatile markets, however, can make anyone questions their own decisions when it comes to the makeup of their portfolio. The reality is that long-term investors don’t make decisions based on what’s happening in the market now. They buy good companies and hold them for a long time. That does not mean avoiding risk. Instead, it’s about figuring out what level of risk you’re comfortable with and understanding that even good companies may have major dips (often for silly reasons).

March 15, 2021

Everyone has a different level of risk tolerance. Volatile markets, however, can make anyone questions their own decisions when it comes to the makeup of their portfolio. The reality is that long-term investors don’t make decisions based on what’s happening in the market now. They buy good companies and hold them for a long time. That does not mean avoiding risk. Instead, it’s about figuring out what level of risk you’re comfortable with and understanding that even good companies may have major dips (often for silly reasons).




Samantha Bailey  0:06

Welcome to 7investing now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.

Dan Kline  0:17

Good afternoon 7-investors and welcome to the Monday edition of 7investing Now my name of course is Daniel Brooks Kline. I’m being joined today by Maxx Chatsko Maxx. I’m in Davenport, Florida. I assume you were still in Pittsburgh.

Maxx Chatsko  0:30

Still in Pittsburgh? I did get to play disc golf last week. It’s warming up here in Pittsburgh, Dan.

Dan Kline  0:35

Don’t you dare call it Frisbee golf will be on on our hands. So we’re going to talk about risk in portfolio. We’re going to talk about some interesting Coronavirus News, we’re gonna play for questions on investing. We’re going to take your questions and comments. Before we do that. I’m going to share a couple of stories. First of all, Maxx I know I usually look red on these shows.

Today I am actually read we are on vacation. I’m at our vacation place, but we’re looking for an upgraded vacation place. So we’re staying at one of the resorts were considering. And I spent a little too long in the pool yesterday. And yes, Mom, I was wearing sunscreen. Number two, walked into a CVS yesterday with my wife and son saw they were doing vaccinations. And the woman at the table goes, do you need a vaccination? And I said do you just have extras. And they did. So my wife and son have now had their first shot, I would say to people, if you live someplace that have CVS is it does not hurt to walk in at 3:30 or four o’clock.

Once they open X amount of vials, they don’t have the ability to store them. So they might have more leftovers. Some places have lists, some don’t. It’s different. But I feel absolutely thrilled about that. But this is the real story. So Maxx Do you know what Culvers is? Is that a fast food chain you have in the Pennsylvania area?

Maxx Chatsko  1:49

No idea.

Dan Kline  1:50

So Culvers is a Wisconsin based change chain. It’s like kind of like a an upscale fast food burger slash ice cream. So this is gonna tell you everything that’s wrong with customer service. So we got Culvers yesterday, and I pull up their website to do curbside pickup, I put my order in, I pay for my order. And then it says, Wait till like 705, your order will come out. And about 710 I call the restaurant and I say Um, I don’t see any specific curbside pickup spaces. So I’m going to black Toyota, and I’m right near the drive thru. And they said, We don’t do curbside pickup at this location. And I said, but your app, just let me do it at this location and charged me. And they said,

Oh, yeah, that happens all the time. We’re not on the app. So I said, Well, can you bring me my order? If I tell you what it is? And they said yes, but you have to pay again. So now I have to decide whether I want to call culvers headquarters to get a refund of $12. Let me cut to the chase here. I’m not going to call culvers headquarters for a refund for $12.

But with that being said, Our top story today is how to handle risk in your portfolio. Maxx, I’m going to go to you first Well, it’s only you and I so I can only go to you. But I’m not going to start myself I guess you cover a risky space. How does that play out in your portfolio? Do you do just have a biotech late and risky portfolio?

Maxx Chatsko  3:10

Yeah, I guess it depends on your perspective on risk, right. Obviously, I think I’m doing things to mitigate the risk or constrain risk. But yeah, I guess by most standards, I mean, if I own a lot of early stage, drug developers, companies that are smaller than others might feel comfortable owning, you know, and these companies don’t have traditional fundamentals to interrogate right, they don’t have revenue or earnings or cash flows usually. So it changes it.

But you know, drug developers do have fundamentals, you can still look at things like how many assets are in their pipeline? What stages of development are they in? Right? Are they in phase two or later because those are a little bit more de risked? Sometimes they do have one or two drugs on the market, that agenda it’s generating recurring revenue, so it does kind of helped to de risk the development of the rest of their platform. But yes, most of the I have a pretty risky portfolio by most standards.

Dan Kline  4:02

And risk is of course personal. Now. We’d love your questions on portfolio building, probably wherever you’re watching this. If you type in a question, we will see it in our question field I say probably because it’s not 100% accurate, but we appreciate you watching we know it’s a beautiful day in most places. That being said, my portfolio I’m a little bit older than you in fact I’m 17 years older than you.

So my portfolio I view that I only want a certain percentage of risk I have about 5% of my portfolio and what I would call very risky stocks, which is entirely stocks you in Manisha have recommended. I have another 10-15% in 7 nvesting picks that we’ve labeled as risky or high risk. I don’t actually consider them quite as risky because some of them are, are already they have products in existence, they have revenue. The issue is really whether they will scale and if a company doesn’t scale it stock might languish, but it’s not likely to tank whereas in the biotech space, you absolutely are picking stocks that do have the technical possibility of flaming out entirely. But Max, you have an advanced degree in your space. Is that knowledge, kind of a hedge against risk? Because you understand what you’re looking at more so than if I’m just buying something? Because you told me do?

Maxx Chatsko  5:13

Yeah, I think so I mean, I still leave the possibility that I’m wrong, or, you know, I’m still humbled by, you know, how difficult some of it is sometimes. So I’m not I’m not trying to be too arrogant. But yeah, it does help to mitigate the risk, right? I mean, even Warren Buffett talks about staying in your circle of competence. So for me, that is, you know, biotechnology, and drug development. So, you know, I developed a framework, I actually just wrote about this for members only with respect to some of our picks.

But, you know, I look at, I have a bottom up approach to how I try to find, you know, drug developers, right. So what I do first is I look at a specific technology. And I dive in, I try to understand everything there is to know about this technology, what are the advantages? What are the disadvantages, which is important? You have to be very objective here, right? So I read like scientific literature, technical journals, things that are maybe not part of most people’s, you know, investing research, then I zoom out a little bit, I try to understand the technical term. So I try to understand the competitive landscape. So what companies are using this technology, and what companies are maybe, you know, not using this specific technology, but targeting similar diseases that you’re trying to treat?

Because sometimes, you know, as cool and novel as a new technology is, there’s something that’s maybe easier to use or easier to manufacture, or there’s less regulatory risk, that works just as fine. So you don’t have to, you know, there’s no, there’s no style points and investing, right, sometimes a boring, you know, old drug works just as well. And then I laser in on specific companies that look interesting. So this is where most people kind of start their research, I think, you know, but I look at like investor presentations, I’ll read through SEC filings and try to read them top to bottom, you learn a whole lot about companies when you do that. And then I start to tease out, you know, this company might actually be worth looking at further. So you know, where I end up with that framework is kind of where most people start.

Dan Kline  7:06

So when max says members only he of course, means 7investing members, you’re watching this show 7investing Now for free. But if you’re a member of our service, and we’d love to have you be a member of our service, that’s seven slash subscribe, you not only get our picks, and the big write ups of our picks, and the videos of us pitching each other, you also get some exclusive content each month, where we might give broader industry perspective, we have some free content, but we also have lots of content that just sort of gives you our investing philosophy. In a way, you’re not going to get it on the free platform.

But of course, we appreciate you watching and we would love your questions and comments, feel free to just say hello, Max, I know the answer for you here. But I’m going to ask this and then I’ll answer how do you balance your picks? Your personal picks with less risky stocks that maybe some of the rest of us have picked to to mitigate risk in your portfolio?

Maxx Chatsko  7:59

Yes. So I’ve actually I’ve invested in some of the riskier picks at seven investing that are interesting to me that are outside of biotech. So that’s not really balancing risk, I guess. But I have recently since I started some investing actually started to take more interest in building bigger positions in stable businesses, right. So I own a couple of electric utilities, for instance, you know, there’s a slow and steady gainers, they always beat the market, you know, they pay a dividend. So that pay pay pay off for me, you know, 10 years from now, I mean, I’m pretty young.

So a dividend now is worth a lot more later, right as a potential income stream. And even my March pick here at 7investing. I kind of see that as like a more moderate risk company. It’s not a drug developer. And I think it’s just gonna have slow and steady gains, it’s in an important market. So I even look at that to kind of counter some of the risks I’m taking with these early stage drug developers.

Dan Kline  8:52

And I sort of do the opposite. My natural instincts are pretty boring, and pretty solid. Like I pick companies that I know are going to do well in the long term, but that don’t tend to have a lot of downside risk. Now, everything has downside risk. You could look at great companies like say a Microsoft and recognize that they’ve had 50% dips, but they have the fundamentals where they’re very, very likely to recover. I buy not only either Maxx or Manisha picks, sometimes both. I’ve been very open to as we’re pitching stocks, hearing about something and just sort of gauging passion like you could tell when when Simon or Steve or someone just truly believes not just it’s not just their best pick that month, it’s something that’s like has their brain on fire because they’re excited about it. I might buy one of those companies unless it’s one that I’ve done the research and I don’t agree.

So my portfolio we’ve talked about this a lot. I think it’s something that anyone watching the show anyone who’s a seven investing member could think about, I have a portion of my portfolio, that’s Dan’s pics, those are the ones that I read about, I keep up to date on and then I have a portfolio of just companies I bought that sometimes I don’t even remember what the ticker stands for. Like, if I see a big move, I have to look it up. And I bought those because of somebody else’s conviction. And that’s where 7investing sort of becomes the driving force in keeping me updated. So in many ways, I behave just like a member.

Maxx Chatsko  10:15

Yeah. Which with what you said about, you know, how passionate some of the lead advisors are. I mean, that’s what you know, we published our deep dives, again, only for members, but you get to see us make the pitch to the team for the first time. And then we interrogate each other. Right? We have questions, we have concerns, we have this big open discussion, and members, seven investing members and Subscribers get to see that so it’s pretty cool behind the scenes look, but like you said, you know, Steve, he says, like, quiet humble, he lives in Montana with the bears and turkeys and things. But man, he gets like so into some of these, these companies. And he, he takes some risks that are pretty interesting. And, you know, a lot of those have worked out pretty well. So just seeing that, as you know, behind the scenes as an advisor, it’s pretty cool.

Dan Kline  10:51

We are super geeky about this. I think we could say to anyone who’s watching that, if you saw our slacks, it’s like 11pm on a Sunday night. And we’re not slacking about, like, you know, sports or, or who made the NCAA tournament, we did that sometimes, too. But like somebody sharing, like a research report, they found somewhere and immediately getting response like, this isn’t just our job. This is what we do. We see your questions and comment, we’re going to take it towards the end of this segment. Maxx, do you own anything, you’re probably sure is a bad idea.

Maxx Chatsko  11:26

No, I try to avoid those at all costs. You know, there’s some companies that I think are actually going to do very well and maybe even have a better shot at success. But maybe I just don’t trust their management team or so I just like it’s off limits that business can do well, the stock can explode. I’m just gonna sit on the sidelines there. So I tried to, to not do that. But I did this morning, just buy a pretty risky stock, probably the riskiest stock I’ve ever owned. I’ve been digging into genetic medicines, right. So now we have like gene therapy and RNAI and CRISPR, of course, and other gene editing modalities.

And I’ve been looking at what’s coming over the horizon, like, what are some next generation tools. And there’s some really interesting stuff out there, it’s still in the very early stages of development. So I kind of took a very speculative, very small, early position in a company that still has a lot to prove. So it could go to zero. But I’m just like you said, you know, put a little bit in there, and it forces you to kind of keep tabs on it a little bit more closely.

Dan Kline  12:24

Apologies to DJ Yannex, thank you for that comment, but we don’t know the company. So it is not one that we are going to comment on, we can’t know everything. So apologies there. That being said, I own in October, I bought a bunch of things when I started at seven investing, and I made some pretty small bets on Royal Caribbean and Carnival Cruise Lines, two companies I basically told you not to buy at that time, because at that time, I was pretty confident that bankruptcy was a possibility. On the other hand, those were both very vibrant businesses before the pandemic.

And I did see the long term upside. It’s absolutely dumb. It has nothing to do with fundamentals. Since I’ve purchased it RCL is up like 40%. And the original a little bit of Carnival I bought is up 110%. That just shows you that sometimes the market itself is stupid. Until we actually have successful cruise ships running in at least two thirds capacity at normal pricing from the US, you have no idea what a recovery is going to look like. So any purchase in that space was kind of dumb, but I do feel it’s okay. If there’s something you really like, and you want to own a little bit of it to like kind of be an owner. I think as long as it’s a very small bite, I used to think of it like the way my grandfather owned Boston Celtics stock when they were a zero value publicly traded company, that stock didn’t go up or down.

It wasn’t really an equity. It was like something you framed and put on the wall. That was kind of how I was viewing this particular these particular stocks. But clearly people believe they’re going to recover. Max, you’re not only younger than me, and I don’t think I’m giving anything away here but you’re not married. And you don’t have kids, at least you don’t have kids you’ve shown us. So does that affect your risk portfolio? You know, your risk in your portfolio? Do you feel like you can afford to lose a little bit more than maybe if you had some of those obligations?

Maxx Chatsko  14:18

Yeah, I mean, so look, I mean, it helps. When I’m investing in real estate, drug developers, those are riskier to begin with. But yeah, I’m young, I’m only 30 years old. I don’t have any wife, I don’t have a kid I don’t have mortgage. Right. So financially don’t have very much pressure. So that does help, you know, I could take a longer time horizon, make bets that are a little bit earlier. Like, I don’t mind investing in some companies, if my framework you know, if they make it through my investing framework, maybe they’re only valued at you know, $500 million, but I could wait five years and see how it turns out. You know, if those are worth billions of dollars after the execute, then I’m going to be doing pretty well right. So now it could go to zero as well. But I don’t again, have I don’t have as much, you know, I could take bigger Because of my age, and again, I have relatively limited responsibility. So

Dan Kline  15:05

I don’t actually think it changed how I invest at all. And I wasn’t when I was your age, a major investor. But that being said, I buy companies I like that I believe in that I feel happy. And I’m not sure at 30, I would have been like, oh, like, I love risking money. Like, I think a lot of that is just your personal tolerance, especially if you believe the company will recover long term. I know right?

Now I have the discipline to look at something and go, I don’t care if it’s up 20%, up 30%, whatever it is, or down 30%, or whatever it is, I’m buying it for a long term reason. So I actually think Sure, when you get closer to an event where you need the money for, you want to de leverage risk. So if if you’re getting close to retirement, you probably don’t want 30% of your portfolio in Cannabis Stocks. That’s probably a risky bad idea. But if you own pretty stable stocks, there’s probably no reason to start divesting, you know, until you’re really close to what you’re looking to do, and you’re trying to free up the cash. Max. One last question here on portfolio building. Do you hedge your portfolio with anything outside of stocks?

Maxx Chatsko  16:10

I do not. My Beanie Baby collection did not pan out Dan. So no, I am. I mean, no, I’m mostly just stocks and equities. I had I had a I had a cryptocurrency wallet back in the day. Long story my brother convinced me to to to buy something called cardano it’s one of these cryptocurrencies we were a few beers deep, right. So I bought some I forgot it. I don’t have the credentials, I can’t access the wallet. And now it’s up like, it’s up like 1,000%. Since then, and I can’t access it. It was only like 100 bucks at the time, but it’s gone. So maybe I should just stick to rypto EQ what they tell me and how to manage that. But right now, I do not have anything outside of stocks. Dan,

Dan Kline  16:52

That, to me is the single biggest fear of crypto. I’ve lost my keys and my wallet and all sorts of things that you shouldn’t lose. I cannot imagine that that I would want to own something that you really have to be careful about digitally. Maxx we the question about your coffee cup, is it half full or half empty? I’m gonna go with the logic that it’s not coffee. And now it’s about two thirds empty. Nobody says is your glass 1/3 full or two thirds empty?

Maxx Chatsko  17:19

Yeah, it’s, it’s 1/3 full right now. And it’s also decaf. So I just continue to disappoint everyone, Dan.

Dan Kline  17:26

Oh, it is actually coffee today, though.

Maxx Chatsko  17:29

It’s usually tea. But yeah, coffee today. It’s Monday, you know, I got to drink my decaf on Monday.

Dan Kline  17:33

I don’t hedge at all, with the exception of I mentioned at the top of the show, were in a vacation home, we own 100%. And I always considered that my hedge against disaster. If everything went to hell, I could work at Starbucks and still afford where I’m living now. So that to me gave me peace of mind. As we sell our main condo, we’re living in a rental, we’re going to buy a much nicer investment property that in theory we could retire to or settle into if we didn’t want to have the pressure to make as much money that’s as close as a hedge as I can. It’s kind of a hedge against what if dad screws up his life and can no longer make a good living or something magic is and you know, six robo advisors have replaced us here at seven investing with that.

Maxx Chatsko  18:20

Simon and his robot army. It’s coming for us, Dan.

Dan Kline  18:23

Hey, you know if you were told me when I started out as a journalist and I’ve I’ve collected a check as a journalist since I was 19. If you told me there’d be roboarticles on on CNBC and other but if you told me about CNBC, I guess I would. That wasn’t a thing. When I started.

Maxx Chatsko  18:39

I was any good, though. Like they didn’t MSN like kind of get rid of editors or something like that, you know, but

Dan Kline  18:44

So no, it’s a disaster. So there are earnings articles written by robots. And it looks like an earnings article written by a robot. It’s absolutely problematic. And if you go to MSN, like the lead sports story might be an obscure second tier British soccer team, or the lead news story might be like a Trump fat check from three months ago, because it’s still doing well like it.

Robots can’t do a lot of things like that’s what makes me worry about Robo drivers. If robots can’t pick good news stories, how on earth are they going to get cars around? But that being said, we’re gonna move into what we’re watching, we welcome your questions and comments.

This has been a strange show. But that being said, if you’d like to become a member of 7investing, you get our seven best stock picks per month. Those come out in the first of the month, which means April 1 is not only going to be April Fool’s Day, it’s also going to be picked day we promise we will not be doing anything overly funny on that day. If you’d like to become a subscriber, that is seven Slash subscribe is $49 a month or $399 a year.

If you subscribe, you get a personal referral code. Share that out on Twitter if your family and friends Sign up now. Do they get a deal? They also get you get one month free for every single person, get 100 people to sign up, you get 100 members, why do we do this? Because we’re not just building a business. We’re building an investment community, we’re building a group of people who want to learn who want to talk about this, we’ll be addressing that group of people Friday, where we do not only our new members call, which is people who are new to the service. And we’ll be doing our members only call where people who are members of the service can ask us questions about our picks. maybe ask if there’s things they want to adjust.

If there’s there’s anything regret, whatever it is still time to get in. If you sign up now, you can come to both of those calls on Friday and participate in our marathon. We start at 10 a.m. with the new subscribers call that an 11 we do the members call, we’re going to do that till 12:30. Then at 12:30 we’re immediately going to jump on a half hour late to a special edition of 7investing Now I see some questions piling in. We’re gonna get to those towards the end of the show. But before we do that, Maxx, what is your what were watching topic? I know what it is, but share it with the viewers here. Well, I tried to read some of these questions.

Maxx Chatsko  21:07

Share, Dan. So I saw a story that you know, Coronavirus cases in South Africa have plummeted. And this is kind of a mystery. In January cases were spiking a one in three tests that they had came back positive for Coronavirus. So that was a sign that they weren’t doing enough testing, that was a sign that it was probably much more prevalent in the general population. And we were detecting, and of course, we’ve all heard about the South African variants. It was, you know, evading some of these antibody drugs completely and certainly reducing the effectiveness of some of our vaccines that we’ve developed. So this was a very worrisome development globally. But since then, it just is kind of fizzled out. There’s there’s much lower cases in South Africa now detected then we have in the United States. Right now. There’s only about 5% of all tests in South Africa coming back positive. in Pittsburgh where I live, we still have over 30% of our test coming by applause. We’re just really depressed and we have the Steelers are terrible. And you know, the pirates, we don’t even know who they are anymore. penguins are doing okay, but we don’t have time to test for too busy sulking. So this is just like a really weird, strange thing that no one’s really sure why it’s happening in South Africa.

Dan Kline  22:15

So Maxx, let me ask a question. One of the risks with herd immunity is that there’s a certain percentage of the population that doesn’t want to take the vaccine that that number appears to survey higher than it is in reality, because there are some politics around getting the vaccine, which is a little bit ridiculous. So there are some people that say, oh, I’ll never take the vaccine. And they said that while they’re in line at CVS getting the vaccine, so but if more people have had it, then no, they’ve had it, does that mean that we won’t have viable hosts? And even if we only get to a lower percentage than where we think we get, there’s the possibility we’ll still hit herd immunity?

Maxx Chatsko  22:52

Yes. And that’s kind of what so epidemiologists don’t really know what’s going on in South Africa. But they kind of hypothesizing that, at least in specific populations. So the individuals who are going about and having the most contact within the economy, maybe they have reached herd immunity. So that is breaking chains of transmission. Now to your question, yes. I mean, in the summer, the CDC came out and said, hey, look, in certain regions, we’re only detecting about 10% of the cases we think are actually out there. So you could take the number of cases we’ve detected and multiply it by 10 is essentially what that meant. So the number of people who had it in the United States is way higher than the official, you know, detected cases in the Johns Hopkins database, or the New York Times database or whatever.

So yeah, it’s always gonna be a weird number. I think I’ve heard officials say, you know, what is herd immunity for this? We don’t really know, right? It’s a new virus, new strains. So maybe it’s 70%? Maybe it’s 80%? Maybe it’s 90%. But it’s it’s it’s a weird calculus, you have to get to right, because you’d have how many people have been vaccinated? How many people have actually had it? How many people had it? We don’t know, had it. So it’s this weird calculation. But I think what we’re seeing too recently, at least, you know, our cases, the United States are dropping, think we’re the lowest since it’s been since October now. So a lot of encouraging trends. So hopefully, that that holds up.

Dan Kline  24:14

Getting a lot of action in the comments. I’ll respond quickly to DJ antics, I think we’re the best deal in investing $49 a month or $399 a year is an amazing deal. You get seven top notch investors making their best stock picks. So I stand behind that all day long. We appreciate your questions and comments. We’ll get to them after this. What we’re watching segment Maxx, do you think this is just basically a warning that recovery is not going to be a straight line?

I actually started writing something about this last night where everyone is sort of bidding up certain travel stocks. But here’s the reality. Are you really going to book a full price Walt Disney vacation for four months from now until you really know what the world’s gonna look like? Are we booking discounted trip Are we gonna do some travel as we personally get vaccinated? I think that’s true. But I don’t think there’s gonna be like a magic day in June, where like, the president comes on and says, like, it’s all normal. Like, I think it’s gonna be, you know, sort of a ramp up here.

Maxx Chatsko  25:13

Yeah, like, I mean, you’ve said this before, I think that you said, people are acting like, we’re gonna wake up one day, it’s all gonna be normal. That’s probably not how it’s gonna work. Right? Well, that’s obviously not how it’s gonna work. But I think the takeaway here from this South African story is that, you know, we need to leave a lot more room for nuance and uncertainty. I mean, Europe’s had the opposite problem, they had this plateau, after like a steady peak and plummet, and now their cases are rising again.

Now, some of that might be because they’ve kind of botched their, their vaccine rollout. You know, that was kind of a mess. They kind of bet a little too heavily on AstraZeneca, which is not done so well with their vaccine. But um, you know, maybe the United States sees something different. I’m sure there’s differences in how society and the economy structure in South Africa. So we might not even have parallels here. United States and South Africa, but yeah, there’s, there’s so much uncertainty and how this is gonna play out. But I think overall, it seems more encouraging to me at least. But this could also, you know, be bad news for companies that are trying to be positioned themselves for a while this, this pandemic is going to be could be, you know, be going on for years are always going to need to make new vaccines for variants like do we? I don’t know, maybe we don’t.

Dan Kline  26:20

So Maxx, our friend max Lucas asked a question At first, he thanked us for talking about NF T’s. And that’s a topic we are going to talk about a lot going forward. We did that on Friday show. And I want to say Monday’s show as well, twice. Last week, we talked pretty significantly. You of course can find all the old episodes, either on our YouTube page, as audio versions on whatever podcast place you subscribe. And of course, at seven slash live stream. And on our website, we also put up full transcripts of the show, usually a few hours after today’s it’s actually not going to go up till tomorrow, because because I’m actually away and won’t be getting to it till late tonight.

But that being said, Max Lucas wants to know, how did that go in Sweden, as we know, famously in Sweden, they tried to herd immunity strategy with the idea that everyone was just going to get it and then it would go away. That’s a little bit different than a mix of vaccines plus, plus people, you know, having had it. I don’t think it went that well in Sweden, if you remember correctly, maximum.

Maxx Chatsko  27:22

Yeah, remember, it didn’t go so well. I think too, though, maybe people are a little too critical of that. And again, it shows like the nuance of it. You know, even in the United States, right? According to the CDC data, 92% of all deaths are in people that are 55 and older. So that’s not battle, but like 80, something percent of that story and people that are 65 and older.

So, you know, the risk is definitely weighted towards people who are older in age and may be less healthier overall. So it doesn’t mean we could be reckless and irresponsible when we’re young, like for younger populations and an act like there isn’t a global pandemic going on. But maybe there could have been more targeted ways to act in nursing homes, for instance, right, we saw a lot of criticisms of how New York handled that. So yeah, I mean, it’s a big messy thing. I don’t know, I don’t want to get too political. But it’s hard in the moment to to get things right. And it’s easy to be critical of decisions that were made on the fly. So,

Dan Kline  28:19

but Maxx is it fair to say I think politicians like to promise light. I think there was a lot of pushback when the President said, Oh, you’re going to be able to have small gatherings on Fourth of July, when here’s the reality. I have eight or nine relatives here in Florida who are fully vaccinated. The CDC says we can have small gatherings now we’re not going to wait till till the Fourth of July. But do you think we will because of vaccine availability be back to you know, let’s call it a normal plus? where like, maybe it’s mostly normal, but we’re still wearing masks? Maybe we’re not super comfortable going to a sold out, you know, basketball game, though. That’s gonna be happening in Texas soon enough. You know, do you think we’re really looking at a summer that kind of feels like summer?

Maxx Chatsko  29:04

Yeah, I think so. Like, I wonder if, you know, health officials have to be cautious now. But if everyone’s vaccinated by July, like Fourth of July, like most people, I mean, I think we’re going to be much different spot, we’re going to be in a much different mindset, you know, looking out in several months from Fourth of July is going to look different than looking out from now to Fourth of July. Right. So I think this is gonna be back to normal much more quickly than maybe we think, and again, like the United States gonna have we have we went from having like, maybe not enough vaccines, or is the rollout going quickly enough.

By the end of the summer, we’re gonna have too many vaccines, we’re going to be dishing those out globally. So again, this whole thing’s just moving so quickly. And there’s a lot of conversations that we’ll be having at the end of the summer that we’re not having now that are kind of tough to even think about but but yeah, I think you’re right, I think by Fourth of July, I think we’ll be back to a little bit more normal, much more normal, probably still be wearing masks, but yeah, we’re gonna be okay.

Dan Kline  29:59

We’re gonna move into Four Questions on Investing in a second but Maxx before we do that? So I’ve had the Pfizer vaccine, there are different types of vaccines out there after everyone gets vaccinated. Are there benefits to having more than one like the Johnson and Johnson vaccine is a totally different type of vaccine for the most vulnerable populations? Are there going to be reasons to double vaccinate people, and I’m asking you, someone who knows nothing about the science here.

Maxx Chatsko  30:24

I could see that being a possibility. So with the Johnson & Johnson vaccine, and kind of has like two modes of action. So your your body as triggers an immune response to the delivery vehicle that’s used to deliver the therapeutic payload. So that’s unique, that gives you one immune response. And then of course, the actual vaccine gets delivered. And that’s another immune response.

That’s someone who kind of care about, but that does help to boost its effectiveness. So I could see that happening, you might get the, you know, an mRNA based vaccine. And then later, maybe you get a Johnson Johnson vaccine that right now, I don’t see a need for that. But maybe if there’s new variants that are breeding in other parts of the world that have been a little less responsible, like Brazil, maybe that, you know, creates some long tail concerns, you know, maybe this fall or winter where we’re dealing with other surges that we can’t see now. Yeah, maybe maybe that’s something that happens. But I think all these vaccines really do provide pretty good protection, regardless, even if there’s new variants that are somewhat effective. So I think we’ll be mostly okay.

Dan Kline  31:24

You’re watching 7investing. Now, David Straus shares that he thinks your biggest hedge is good health and nutrition. There’s a point to that I, I often joke here that Maxx and Manisha have made me hopeful that as long as I can stay healthy for another, like four or five years, that there should be like scientific ways to solve whatever might go wrong with me. And there are days where I’m thinking about, like, you know, not going to the gym, or maybe eating that half pint of ice cream sitting in the freezer at 1130 at night, where I go, like, oh, maybe I shouldn’t do that. Because like, I really, I really want to be in good shape it out decent shape, at least until I’m a little bit older, when maybe there’ll be scientific super pills that can do all sorts of different things. Go ahead.

Maxx Chatsko  32:08

Yeah, I think about that all the time. I mean, you know, so there’s, there’s certain like genetic medicines again, and we can dose them once every six months. And they remain active in the body for months at a time. And it’s just like one molecule can change gene expression, right for and determine health outcomes. So I always think like, well, exercise does something similar. And you know, what your diet is, affects gene expression as well, right?

We don’t think about that way. But we’d rather pop a pill than like change your diet, when you’re eating every day, it doesn’t really make a whole lot of sense. And there’s a lot of interesting research going on about the benefits of exercise, as like an add on to, to cancer treatment. So those who can exercise obviously, it’s a little difficult when you’re going through chemo or something, but they tend to have better responses, more complete responses. So it’s not really something we think about we think about drugs first, but maybe in the future, we’ll have more of this, like diet based exercise based treatment, as well to augment, you know, these these drug approaches. So yeah, for sure.

Dan Kline  33:08

I do want to live long enough to experience the benefits of my portfolio. I am not one of those like, oh, like I want to leave a lot of money in the bank. No, no, I want to get there. And with my wife spend that money. That is the point of investing is, you know, to have a happy retirement Maxx we’re gonna play four questions on investing. But the first question you already kind of answered in the first segment. So I’ve done this with most of the team, the only person left are you and Simon who haven’t answered these questions. So very quickly, will reiterate on the first one. But you did cover this earlier? Have you ever invested in a company when your research Told you it was probably a bad idea?

Maxx Chatsko  33:45

Now, I’m pretty, pretty strict with how I go about that and stick to my framework.

Dan Kline  33:51

Question two, what’s your biggest investing regret? is there is there one that got away? Is there one that you sold too early, biggest investing regret?

Maxx Chatsko  34:00

Well, I think a lot of us have the same story. You know, in terms of maybe we, we don’t invest in something that we want to we think for some reason, it’s too expensive or, you know, not right now. And then it just keeps going up. And then later on, you’re looking like Oh, why didn’t I invest in that? I think as your you become more disciplined and you adopt that long term mindset, that seems to be like one of the most common regrets among long term investors is, you know, not buying a stock.

Dan Kline  34:30

Have you ever invested in a company whose ethics you question I’ve talked about this before that I the only stock I’ve sold in the past couple of years is WWE and when I bought it, I had some ethical concerns. I known people who worked there, and was a little concerned that they had a pretty bad reputation for how hard they work. People. I don’t like the fact that they’re performers are independent contractors and don’t get health insurance, yet they fully control what they’re allowed to do, including not allowing them to profit off social media even under their real rather than their performance. Name. So I was always a little ethically concerned about it. But I did own it for a while. Maxx. Have you ever bought a company you had ethical concerns about?

Maxx Chatsko  35:08

No, again, that’s kind of something in my framework. I mean, you know, I don’t know if I should name the specific company, but

Dan Kline  35:19

Let’s avoid a lawsuit, you could describe what the company does. I feel like

Maxx Chatsko  35:22

that’s all right. So yeah, I mean, there’s companies I again, I feel like they have a shot at success, but maybe they’ve struggled for a while. But this one company, it just, it’s it’s made terrible decisions for management, they’ve treated partners and collaborators terribly. They’ve kind of, you know, maybe been a little loose with their financial, you know, filings, if you will, they’ve been investigated by the SEC. So now they’re like turning around, and maybe they have a shot because they actually have, you know, a sustainable business. And that’s fine. But like, I just can’t bring myself to invest in it with the current management team. So

Dan Kline  35:58

I struggle a lot on Tesla. It’s a great company, but I don’t consider Ilan musk ethical. I also consider the news media, me being part of the news media, a little bit complicit, because when he does something crazy today, like give himself some ridiculous new title, he’s the

Maxx Chatsko  36:15

The techno king of of Tesla. Now, you

Dan Kline  36:19

week that was covered by the media as if it was a news story. He didn’t stop being the CEO, he just gave himself a silly name, because he knew you’d write about it. And to me, let’s stop doing that let you know, there’s way too much sunlight on every dumb move the guy does, or every silly tweet he puts out there. And so ethically, I’ve also heard pretty bad things about working there. I’m also not a fan of a company that just has like random 3000 people layoffs, like when they should need more people like I don’t like and I feel the same way about Microsoft, even though I am. It’s my biggest position.

But that being said, I don’t like people being used as pawns. Like if you’re a good company, and you’re growing, you should be able to have like an off month without cutting five or 6000 people like, yeah, that being said, we’re near the end here. Sam Bailey, let’s hit our finisher. This was a quick show. But we appreciate you watching. Which pandemic success are you most confident about in the long term 26.9% said zoom 58.1% said teladoc 7.7% said Domino’s and 7.3% said slack which is of course in the process of being acquired by Salesforce. So my concern about teladoc. Here, Maxx is there are a lot of telemedicine companies that aren’t teladoc. I know my healthcare provider offers very low cost telemedicine appointments, and it’s not through that platform. Is there anything teladoc is doing with its core product? That’s that’s unique to it. Like that’s actually the one that scares me the most out of any of these. Yeah, I’m

Maxx Chatsko  37:55

Yeah, I’m not sure I’m not really too familiar with Tella, Doc, but I think I have a question and I’m honest, it’s an honest question. But, you know, I wonder if all these these these ways we let tech come into healthcare, is it actually adding value or is it just creating additional costs?

Dan Kline  38:10

No, it’s, it’s adding value. It says, I live in the land of walk in clinics, Florida has a million places you can go to the doctor. But even if you go into a walk in clinic, you fill out the paperwork and they see you relatively quickly. You’re probably talking it’s going to take an hour they do that thing where like a nurse comes in and takes vitals and then for like no reason you sit there for 20 minutes like and that’s when it’s efficient. If it’s crowded, you can wait for hours. If you have a teledoc appointment I’ve talked about this example before I had an infection in my finger at least I thought I did. And I booked a tele doc appointment. They asked me to send them pictures of it I did and it wasn’t even a zoom it was a phone call like and they called me and they said yet you clearly have an infection.

Give us your your you know your drugstore info and will call in or fax in their mail in a prescriber? How do they send the prescription for like two hours later, I walked over to CVS and my prescription was there. That’s huge value if you you know, if my wife went to the doctor and came back with a positive strep test, and I had all the symptoms of stress of strep. Would it make sense for me to go sit in a waiting room and risk infecting other people?

Or would it make more sense to go to a teladoc appointment and say, hey, my wife had a positive strep test. I almost certainly have it. I’m allergic to penicillin. Can you give me so I think there’s incredible value there and I think mental health is also going to be a really big area of growth for telemedicine, I think that might even tie in with some of the connected fitness products. Or you might like use the screen on your Peloton to talk to a therapist. But do you disagree? Maxx, you’re younger than me. You’re probably not sitting in doctors offices that often.

Maxx Chatsko  39:47

No, I mean, I don’t know. Mental health. That’s interesting. Perhaps I think maybe there’s something you need though in person if you go to like a therapist, but I’m sure there’s applications for all these things. So yeah, I don’t I don’t know. It’s crazy. That 60% of people said teladoc, though, is that which? What would you get out of that,

Dan Kline  40:04

Um, I actually think Domino’s was a great business beforehand, it’s going to be a great business after the fact that look, all of these companies have used the pandemic to acquire customers. And that’s going to be good. I do think zoom is a very strong player, and everyone will throw up all the competitors. I think there’s a large percentage of people that don’t want Microsoft to be their sole provider, that don’t find teams to be as good as zoom. I think all of these are going to be pretty strong. I do worry that just like we talked about, you play disc golf, and I joked about not calling it frisbee golf, that people are gonna say I have a teladoc appointment, and they’re on some random platform, that’s not necessary. Now.

Could Teladoc do things to differentiate their platform further, they could there’s there’s records, there’s a, you know, tying it in better with prescriptions, there’s maybe tying it in with some sort of fitness tracker, where you could go to a virtual appointment, and maybe you’ve had blood work taken and they can take your blood pressure and who knows what else and you can have more of a traditional physical via telemedicine, if there’s a situation that warrants that. I think there is room to grow. But I do worry about how kind of generic that spaces.

Maxx Chatsko  41:14

Well, that’s interesting. I was gonna make a comment though, about like, zoom wheat. Now. It’s like the verb for video call. We just said we’re gonna have a zoom, right? It’s kind of like Google, I’m gonna Google it. Like the company’s name is now the the action. So that’s usually a sign of success.

Dan Kline  41:27

Yeah. And it’s not necessarily a zoom. That’s absolutely possible. You know, I record. I record a piece with a broadcast retirement network they have me on as a market expert, and we record it over Skype. And every time we do it, I log into zoom. And I’m like, Where’s the meeting? Invite? And then I realized, oh, wait a minute. It’s a Skype like and don’t record things over Skype, it does not go well. With that being said, we have reached the end of the program. We thank so many of you for joining us on this beautiful Monday. How do you get in touch with us?

That’s simple via email at And of course, you can reach us at on Twitter that is at the number 7 investing (@7investing). We appreciate so many of you reaching out to us. Hopefully more of you sign up slash subscribe direct sorry to throw a curveball at you there, Sam but that is slash subscribe. You can join there’s still time to get in $49 a month or $399 a year and you can be on our call on Friday. We’re Of course, going to be the new members call and then the existing members call all sorts of insight on our stock picks on that members call and remember the Friday edition of seven investing now we’ll go live at 1230 not 12 o’clock for Maxx Chatsko. I’m Dan Kline, we will see you on Wednesday.

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