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Brian Hirschmann: The Most Dangerous Time in Financial History a financial history of the world

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Tom welcomes Brian Hirschmann, Managing Partner of Hirschmann Partnership, also also considered by ValueWalk to be the “World’s Most Bearish Hedge Fund.” Brian discusses how all the bubbles have only grown in recent months, but their gold investments continue to perform very well.

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Brian discusses how the US has crossed the 130% GDP to Debt level and last year, and they reviewed past outcomes of countries at these debt levels. The conclusion from the study was that default would be all but inevitable. Warren Buffet said recently, “If governments could always borrow at negative interest rates, it would have been discovered 2000 years ago.” People today have too much faith in the government’s ability to borrow.

He explains how equities are overvalued when measured by CAPE metrics. Today we are at levels twice the norm, which means that a pullback of 60% would be required to return to normal. Bond markets are also likely to burst, which would likely mean a drop of 80%. We seem to have another housing bubble, along with the price to rent and price to income levels, all being back nearly at 2006 levels.

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China produced and used in one month more cement than the US utilizes in a year. If China bursts, it would almost certainly cripple global growth. The next crisis could easily be the worst crisis since the great depression. At this point, nearly anything could trigger such an event.

Brian remains a gold bull and believes any crisis should be a significant windfall for investors with mining equities. Since the market cap of gold equities is relatively small, he expects a lot of new capital could come flooding in looking for a new home. He discusses how they measure and compare the value of mining equities.

He argues that physical gold’s nominal returns are going to underperform most other investments. This is why funds like Berkshire Hathaway chose to invest in Barrick Gold rather than physical metal.

He explains how they adjust and rebalance their portfolio depending on expected future returns and why this is important for mining equities.

Lastly, he touches on two markets that he feels are in bubbles, bitcoin, and global housing markets.

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Time Stamp References:
0:00 – Intro
0:37 – Bonds & Collapse
8:33 – Yield Curve Control
11:49 – Gold Expectations
13:50 – Foreign Investment
14:32 – Silver Investing?
15:29 – Gold Value Investing
16:25 – Valuing Equities
18:10 – Physical Gold Investing
23:23 – Factoring Risk
27:47 – Portfolio Rebalancing
30:17 – Gold and Oil
32:34 – Bitcoin & Bubbles
37:23 – Global Real Estate
38:38 – CPI & Inflation
39:52 – Wrap Up

Talking Points From This Episode
– Debt, GDP, interest rates, and collapse.
– Measuring equity valuations.
– China’s bubbles and risk to global markets.
– Physical metal vs. Mining Equities

Guest Links:
Twitter:
Website:
Hirschmann Capital Letter (pdf):

Brian Hirschmann, CFA, is the Managing Partner at Hirschmann Partnership (HP) launched in 2014. Since its inception, HP has outperformed its benchmarks by a substantial margin despite being the “World’s Most Bearish Hedge Fund,” according to ValueWalk.

Previously he was an associate at Goldman Sachs Principal Strategies (GSPS), a multi-billion dollar hedge fund whose alumni include Robert Rubin, Tom Steyer, Daniel Och, and Eddie Lampert. After GSPS, Brian returned to Los Angeles to join Hotchkis and Wiley Capital Management and where he was an equity-owner and made over $1 billion in long-term investments.

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Brian graduated with distinction from Yale, where Professor Robert Shiller strongly influenced his investment philosophy. Robert is one of the few to predict both the dot-com and housing bubbles. Robert was also influenced by Professor David Swensen, Yale’s legendary endowment manager.

#HCapitalLLC #BrianHirschman #Debt #GDP #Inflation #Gold #Bonds #Silver #Bitcoin .

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23 comments

Diaspora Returnee 27/09/2021 - 11:02 PM

The insinuation that the Central Banks are technically not printing money and that "The Fed…is part of the US Government" is good comedy at best.

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Nathan Schwappach 27/09/2021 - 11:02 PM

The alt coins taking market share have more to do with speculative mania: it’s like claiming garbage dot com site IPOs took away from Googles market cap. Then when it comes to utility tokens it’s a different aspect entirely. Bitcoin won’t lose 90% of its market cap, rather it absorbs the failure coins caps.

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Douglas Sherbon 27/09/2021 - 11:02 PM

This is brilliant. Now I'm for sure not going to buy any bitcoin as it definitely sounds like it could just be obsoleted by superior cryptos at the rate they're coming along. Definitely agree with most of the points in this, but there are 2 sides to almost every coin, and those smaller gold mining companies aren't necessarily as much better as this makes them sound but I still like the concepts presented about what does make them better.

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ROBIN BROWN 27/09/2021 - 11:02 PM

Real money must have intrinsic value "As Good As Gold" As good as bit coin" I don't think so?! If a man offered me 1 Million in gold or bit coin what would you take ?

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Khafre Ahmose 27/09/2021 - 11:02 PM

Cash is trash to me. As soon as I get it, I convert it to gold or buy gold stocks.

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m l 27/09/2021 - 11:02 PM

hes saying that crypto will collapse because of competition? Did the tech sector collapse from competition? No, it just got bigger and bigger and a few strong ones stood out. The same will happen

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Greg Speth 27/09/2021 - 11:02 PM

May 1 2021 …silver squeeze, physical silver

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Grant S. 27/09/2021 - 11:02 PM

I support his thesis. I use a PM in Canada, and he has been doing this for numerous years. His five year numbers beat this guest"s returns by a large margin. In fact, the rebalancing question posed to Brian was based on the PM's interview Tom had. Also, U.S. vs. Canada based advice.

My entire portfolio: 80% gold and silver equities and bullion. 20% Blockchain/Crypto.

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issen van 27/09/2021 - 11:02 PM

In Sept.'s sell-off, BTC did not sell off, though…

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issen van 27/09/2021 - 11:02 PM

Why would there be inflation if QE is not money-printing?

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issen van 27/09/2021 - 11:02 PM

Which one of those 52 countries did not default?

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issen van 27/09/2021 - 11:02 PM

How is the FED a part of the US Government?

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donwooss 27/09/2021 - 11:02 PM

Bitcoin network is the most secure network bar none. WTF is this Brian Hirschmann talking about? 37:34 These guys talking about Bitcoin when they actually dont even know the network and the technology.

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Chenin Blanc 27/09/2021 - 11:02 PM

Hirschmann speaks with too much certainty………his logic is a bit too simplistic.

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Haust Portelance 27/09/2021 - 11:02 PM

The guest is going back 130 years to decide the stock market is a better return vs GOLD, which makes zero sense.
We were on a gold standard! On a GOLD standard inflation is zero, and deflation runs supreme. On a GS GOLD does not increase in value until the currency is finally devalued from over printing of currency. GOLD has yet to increase 6x minimum to account for the currency creation.
Everyone knows past performance is not indicative of future returns.

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MJ 27/09/2021 - 11:02 PM

Great interview

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Matt Ball 27/09/2021 - 11:02 PM

One of the best interviews. Pumped i got to hear from this Hedger, I personally am predicting a crack up boom but if im wrong, I think its China's fictitious economy that wrecks everything, gross derivative exposure from banks (excessive leverage) or Crypto if it continues to grow larger.

Its interesting that Brian noted algorithmic trading and that we have a negative return on bonds and a 2fold overvaluation in equities… Meaning somethings gotta give! Im only 9 mins in, but what do you guys and girls think? Where are you most confident putting your money?

Thanks

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Quaalude Charlie 27/09/2021 - 11:02 PM

an EMP or loss of electrical power, 2) a disruption of the internet, 3) a computer virus or cyber theft that we now think can’t happen, 4) a governmental ban on a certain cryptos in favor of required use of CBDCs, 5) a stock market-like crash in the crypto due to fears of 1 – 4

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Lao Mark 27/09/2021 - 11:02 PM

We are in an unprecedent EVERYTHING BUBBLE in History. The stock and other major will indeed face a bubble burst. We are at the limit of the limit of insanity. The world is upside down! Another 1600's Holland tulip crasyness

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Jim Stowell 27/09/2021 - 11:02 PM

great interview…don't agree with his inflation take. It is more than 2% in my neighborhood. However, his view on Bitcoin is quite original and I will take it to heart….There is an increase in crpto plays…which are a play on a bag dollars…"BIT COIN" a misnomer…..there is no coin; its a bag of dollars or other fiat currencies . A crash in Bitcoin would be such a surprise such as to crash other assets…Rising interest rates is the thing…I wonder how that will impact gold and silver. Overall, thought this man has his knowledgeable head screwed on right….

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Stephane Pasquier 27/09/2021 - 11:02 PM

You're misinformed. The FED is not part of the US Government. The shareholders of the FED are the big US Banks.

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humbllbug 27/09/2021 - 11:02 PM

Element47 and Element79 on reddit

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Lee Anderson 27/09/2021 - 11:02 PM

Interesting that he didnt mention Copper mining. A substantial amount of Silver comes as a byproduct of Copper Mining. He just mentioned Lead & Zinc mining.

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