Interview with financial advisor Nick Bartolo recorded live at PestWorld 2023 in Honolulu, Hawaii (filmed October 18, 2023), part of Potomac TV's week-long live coverage of the event. The discussion is aimed at pest control business owners and centers on topics relevant to the pest control industry, suggested by the video's hashtags to include mergers and acquisitions, business valuation, and small-business ownership. # Channel Presentation Observations: "Financial Advisor Nick Bartolo, Live from PestWorld 2023" ## Explicit Self-Description Evidence - **Host describes guest's specialization trajectory**: The host states, "you're really beginning to specialize in this industry," signaling that the channel tracks professionals developing pest-control-industry-focused practices. - **Guest's own stated positioning**: Nick Bartolo says he approaches the industry "with a very humble approach to learn about the industry that way I can design my services to add as much value as possible in a specific fashion to the industry and to the pest control owners." - **Guest references his framework**: He describes "my framework this core4 framework" for client asset allocation, presenting himself as a structured wealth advisor. ## Observable Presentation Patterns ### Intended Audience - **Pest control and home-services business owners** are the clear target audience. The conversation repeatedly frames advice around "pest control owners," e.g., "that midcareer pest control owner that might have 3 four million of Revenue," and discussions of owners selling businesses for "$25 million" windfalls. - **Entrepreneurial owners across business lifecycle stages**: The host highlights "the entrepreneurial journey of a lot of these Pest Control owners... whether they started the business from scratch whether it was passed down from their parents." ### Claimed / Demonstrated Scope - **Wealth management and tax strategy for industry owners**: Topics include Roth IRAs ("a million dollar of taxfree gains"), employing family members, donating appreciated securities, direct indexing, and tax loss harvesting. - **Macroeconomic commentary**: Substantial discussion of interest rate "renormalization," 1940s-style financial repression, TIPS, gold, commodities, and high-yield credit. - **M&A / liquidity events**: The host states, "when I think about folks in this industry it's people that are experiencing liquidity in bents because that's of course where I live," indicating the host's own positioning in pest control M&A or transactions. ### Demonstrated Format - **On-location interviews at industry events**: The video is conducted live from PestWorld 2023, with the host noting "I've never seen a wealth manager at [PestWorld] before." - **Long-form expert Q&A**: The host asks definitional questions ("what is direct indexing," "what's tax loss harvesting"), suggesting educational content aimed at owners without financial expertise. - **Guest network integration**: The host references "former Buzz guests" being "very generous with their time," implying a recurring guest ecosystem and a channel name or series possibly involving "Buzz." ## Distinguishing Claims from Demonstration - **Creator claim**: The channel demonstrably covers industry-relevant financial education; the host explicitly situates himself in liquidity events ("that's of course where I live"). - **Demonstrated**: The channel attracts and interviews adjacent-service professionals (wealth management) seeking to serve the pest control niche — evidence of the channel's role as an industry hub. - No evidence in this material about channel-wide posting frequency, subscriber base, or formal channel description. # Delivery Observation: Financial Advisor Nick Bartolo, Live from PestWorld 2023 ## Overall Delivery Context This is a **conversational, two-person interview** format rather than a monologue. The transcript captures Nick Bartolo (financial advisor) in dialogue with an interviewer (host of a pest control–focused podcast). Delivery observations below apply primarily to Bartolo, with the host's side noted where relevant. --- ## Tone - **Hedged, probabilistic framing** is the dominant tonal feature. Bartolo consistently qualifies claims: > "in my opinion anyway" > "it appears to me that it's probably something that's going to happen very slowly and then all at once" > "I certainly think we're going to have higher structural inflation" - **Self-deprecating and candid**, especially about being an outsider at the event: > "I feel a bit out of place but happy to be here" - **Blunt interjections of humor** into technical finance talk: > "Coke hookers that kind of stuff" *(responding to a question about uses of cash flow)* > "I can see the headlines already saying that like global conflict and War caused the recession... Hamas caused the price of your lettuce to go up" --- ## Vocabulary - **Technical finance vocabulary** used repeatedly and without much simplification: *TIPS, box spreads, direct indexing, tax loss harvesting, yield curve control, equity risk premium, capital structure, stagflationary*. - **Macroeconomic framing language**: "renormalization of interest rates," "financial repression," "recency bias," "probability distribution." - Relatable framing vocabulary when addressing lay listeners: "keep this person Rich," "the cake was most likely already baked," "the bond Market's revenge against the FED." ## Recurring Phrases - **"You know"** — extremely high frequency filler, appearing dozens of times throughout (observable across nearly every extended answer). - **"So look"** — used as a pivot into substantive answers: > "so look I have my framework this core4 framework" > "so look tips I would argue in the short term are even safer" - **"And so"** — frequent connective chaining between ideas. - **"Right?"** and **"okay"** — used as comprehension checks mid-explanation: > "right like those things add up" > "we want to make sure is that okay we're going to figure out how to keep this person Rich okay" - **"Client partners"** — a distinctive recurring term for his clients (appears at least four times: "my own client partners," "the client partner of mine," "on behalf of my client partners"). --- ## Teaching Habits - **Hypothetical worked examples with concrete numbers.** A consistent pattern: > "$6.5 million house... Zillow thought this house could rent for $6,000... you're up to over 40,000 a month" > "if you do that over 20 25 years and earn a 7% return all of a sudden you have a million dollar of taxfree gains" > "you have a $200,000 embedded gain on your Berkshire haway position" - **Simplified numeric teaching cases** when explaining mechanisms: > "if you were to buy the S&P 500 Index Fund today at 100... it goes down to 90... you capture that $10 per share loss" *(explicitly prefaced: "let's just say to make up numbers")* - **Historical analogy as a teaching device**: the 1940s financial repression parallel is developed at length (deficits, debt-to-GDP, episodic inflation, yield curve control 1946). - **Counter-perspective acknowledgment**: he pre-empts objections — "why would an investor consider putting money in tips rather than buying on the short end" is answered directly; he also notes "I could be wrong" after laying out scenario analysis. ## Communication Patterns - **Long, chained answers** with multiple embedded clauses, often stacking several ideas before yielding the floor (e.g., the tax-strategies answer covering Roth IRAs, family employment, and appreciated-securities donation in one turn). - **Back-and-forth affirmation** with the interviewer — frequent overlapping agreement ("yeah," "big time Big Time," "exactly right"), indicating a peer-to-peer register between two financially literate speakers. - **Spoken-language disfluency preserved**: false starts and self-corrections appear, e.g., "is is it stocks you know stocks or companies with P or sorry pricing power." - **Sequential structure within answers**: he often lays out a taxonomy first, then itemizes ("there's those when you think about sort of that mid-career person but then there's other things where..."). --- ## Stable Patterns vs. Isolated Moments - **Stable (repeated across the transcript)**: "you know" filler, "so look" pivots, concrete dollar-figure examples, hedged qualifiers ("in my opinion," "I think"), the term "client partners," probabilistic framing of macro views. - **Isolated moments**: the blunt humor ("Coke hookers," "lettuce" headline joke) occurs only twice and stands out against the otherwise measured register; the admission "I'm not a good person to talk to about that because I'm more of an active manager" is a one-off self-limiting statement. - **Uncertainty note**: this transcript contains no timestamps aligned to sections and appears lightly garbled in places (e.g., "sorld," "centricon" for Sentricon, "whe whether"), so exactness of some quoted phrasing reflects transcript quality rather than speaker delivery; claims about pacing, gesture, or vocal tone cannot be made from text alone. # Position Record: Financial Advisor Nick Bartolo, Live from PestWorld 2023 ## Participants - **Nick Bartolo** — wealth manager (LA-based) attending PestWorld; identified in video title/metadata. - **Host/Interviewer** — pest control industry podcast host (based in Puerto Rico; specializes in pest control M&A/liquidity events). Identified via transcript context only. --- ## 1. Pest Control Industry Observations (Bartolo) - **Takeaway from PestWorld:** impressed by the **entrepreneurial journeys** of pest control owners — businesses built from scratch or passed down through families. - Learned what the **Sentricoon system** is after hearing about termite trapping on the host's podcast. - Surprised by owners' strong desire to **minimize taxes**: > "no one should pay more tax than they have to." ## 2. Tax Strategies (Bartolo) - **Limited options** for pure tax avoidance: renouncing citizenship or moving to e.g. **Puerto Rico**; otherwise "everything's on the margin." - **Mid-career owners (~$3–4M revenue):** - Tax deferral via Roth IRAs (self, spouse, children) — over 20–25 years at 7% could yield ~$1M in **tax-free gains**. - Employing family members for genuine business tasks (ads, clerical work, cleaning) could save "up to $110,000" in a year — *stated as illustrative, "all of a sudden" accumulation*. - **Charitably inclined owners:** donating **appreciated securities** to properly structured charities avoids capital gains tax while deducting the full amount; e.g., $200K embedded Berkshire gain could avoid ~$30–60K in taxes. ## 3. Interest Rates & Inflation ### Bartolo: - Clients are waiting for rates to fall before acting (buying buildings, houses, financing expansions) — he's concerned by this. - Rates have **renormalized**; the past 14 years of suppressed rates (distorted by the Fed) are **the abnormality**. Current rates are average or low vs. 50–70 year history. - Rates could fall in recession, but he does **not** expect a 1.5% 10-year or 2.5% 30-year mortgage again absent **yield curve control**. - Predicts **higher structural inflation** than the past 15–20 years. - **1940s financial repression is a better analogy than the 1970s**: high fiscal deficits (now embedded, not temporary), high debt-to-GDP, episodic cyclical inflation; 1946 yield curve control precedent. ### Host (agreement): - Agrees: "it's a currency issue not a sovereign debt issue" — Bartolo: "big time." - Host sees the renormalization **not yet reflected** in asset/transaction prices; many financial professionals have only worked in the low-rate era. Expects adjustment "very slowly and then all at once," with **commercial real estate** as a potential chain-reaction point. - Host notes sophisticated managers (e.g., BlackRock earnings commentary) are shifting toward credit/fixed income; the general public is still in "meme stock" mode. ## 4. Portfolio Positioning ### Bartolo — client framework: - **"Core4" framework**: exposure to all economic environments (rate of change in growth and inflation vs. expectations). - Stagflation assets: **commodities, gold, real assets, TIPS**. TIPS real yields ~2.5% across the curve are "historically high." - **TIPS vs. T-bills** (host question): TIPS arguably safer short-term — same liquidity plus inflation-spike protection. - US stocks remain clients' **largest holding** — hedging against being wrong; value indices have commodity-producer exposure. - Qualification: **"tactically I'm less positive on US equities right now"** given valuation and deteriorating environment. - **Public high yield**: credit quality "as good as it's ever been," ~9% absolute yield; better held in tax-deferred accounts; ~9% locked over a full cycle if credit analysis is good. Has not done private credit. ### Host — own portfolio: - Heavy in short-term sovereigns, significant gold, long oil/oil equities (XOP-type), **short Tesla**, short rate-sensitive assets. - Uses **box spreads on the S&P** — in Puerto Rico (no capital gains tax) they yield roughly a 6-month T-bill return but as a capital asset. - Describes himself as an active allocator, "not a trader per se." ### Foreign exposure (Bartolo): - Foreign stocks in neutral jurisdictions (e.g., **India**, which buys Russian crude but stays neutral) could do well in global conflict scenarios. - Concerned most people own 60/40 or heavy US stocks without a valuation discount and lack inflation-hedging assets. ## 5. Housing Micro-Example (Bartolo) - Rent-vs-buy analysis on a **$6.5M California house**: Zillow rent estimate ~$6K/month (host notes: "$6,000? Okay"); property tax alone ~$8K/month; total carrying cost >$40K/month. - Conclusion: the new rate reality is **not yet reflected** in housing prices/rents. Explicit qualification: **"I'm not calling for a housing bust."** ## 6. Geopolitics & Recession Scapegoating - Both speakers view the Middle East conflict as **not short-lived** and **inflationary** (cold or hot war historically inflationary). - Host predicts Fed pushes short rates down in 2024 while the long end stays elevated — "the bond market's revenge against the Fed." - Both anticipate **scapegoating** of global conflict for recession/inflation ("Hamas caused the price of your lettuce to go up") when "the cake was most likely already baked" given Fed aggression and fiscal stimulus dynamics. ## 7. Client Service Model (Bartolo) - Rejects the "activity justifies value" quarterly-meeting model; prefers **open communication** plus annual reviews. - Involvement scales with client complexity (trusts, estate, transactions, referrals to attorneys/CPAs). ## 8. Liquidity Event / Windfall Planning (Bartolo) - First step: understand the client's lifestyle and cash-flow needs. (Host jokingly: "Coke, hookers, that kind of stuff" — Bartolo: "everyone's different.") - Priority for a $25M windfall: **keep the person rich** — start in short-term T-bills at ~5.5%, deploy capital opportunistically and systematically. - Tax-efficient deployment tactics: - **Direct indexing**: owning index components directly, algorithmically harvesting losses while tracking the index; claimed 1–2%/yr after-tax outperformance over long periods — noted as especially important for new capital. - **Tax-loss harvesting**: sell a depressed position (e.g., index fund 100→90), repurchase a similar fund from a different provider, retain the loss to offset future gains. - Host follow-up confirmed: it resets basis without permanent avoidance for equities. - **Muni bond example**: sell a ~$2M muni portfolio down ~15% (~$300K loss), rebuy individual bonds at par (no future capital gain), making the loss effectively **permanent** — Bartolo argues this is more advantageous than equity loss harvesting. ## 9. Why Pest Control? (Bartolo) - Resonates with the people/attitude (raised in Las Vegas; father ran a route-based video-poker business after teaching; friends in landscaping/pest control). - Deliberately humble approach to learning the industry to tailor services. - Stated frankly: **"I'm a capitalist and in this to make a profit"** — pest control owners generate strong cash flow margins and sell businesses, so he believes he can add value on all dimensions. --- ## Unresolved Tensions / Qualifications Preserved - Bartolo's dual stance: **US stocks are clients' largest holding** while being **tactically less positive on US equities** — explicitly framed as probability-based hedging against being wrong. - Housing analysis framed as a micro example, **not** a housing-bust call. - Tax-loss harvesting on equities defers rather than eliminates tax (lower basis) — acknowledged by both speakers. - Host self-identifies as an active manager and disclaims being a representative example ("I'm not a good person to talk to about that"). # Speaker Attribution & Provenance Record **Video:** Financial Advisor Nick Bartolo, Live from PestWorld 2023 **Video ID:** `01a168c8-a785-7345-9eac-73fecd164448` ## Speakers & Roles - **Nick Bartolo — Guest** - Identified in title as a **financial advisor / wealth manager**. - Based in **Los Angeles** (mentions LA); discussed moving to/jurisdiction of **Puerto Rico** (states he lives there: "Puerto Rico we don't have capital gains"). - Discusses his **"Core 4" framework**, his client practices, and active management of his own portfolio. - **Unidentified male interviewer — Creator / Host** - Conducts the interview live at **PestWorld 2023** (location referenced as Hawaii). - Refers to "your podcast" and "former Buzz guests," implying he hosts **The Buzz** podcast (inferred from transcript language; explicit name not stated). - States he runs a **business brokerage / liquidity events** practice ("that's of course where I live" re: owners experiencing liquidity events). - Shares own portfolio positions (short-term sovereigns, gold, oil/XOP positions, short Tesla, short rate-sensitive assets). - **Third parties mentioned (non-speaking):** "the Mex" / "Franco" (a financial-industry worker in his mid-30s, per host); unnamed pest control owners and former podcast guests referenced at the event. ## Event / Setting Provenance - Recorded **live at PestWorld 2023**, apparently in **Hawaii**; both speakers traveled there (guest from LA, host from the East Coast). ## Sources & Claims Cited by Speakers - **Guest cites:** - Edward Chancellor's book (on interest rates as the cost of money / price of time). - Zillow rental data for a California rent-vs-buy analysis ($6.5M house example). - Berkshire Hathaway as example position for appreciated-securities charitable donation. - BlackRock earnings reports (asset-allocation shifts toward credit). - Historical rate/yield-curve comparisons (10-year, 30-year bond, 30-year mortgage; 1940s yield curve control). - **Third-party claims noted:** neither speaker independently verifies cited data; historical and market claims are the speakers' own opinions (e.g., "renormalization" of rates, 1940s financial repression analogy). ## Promotional / Positioning Segments (Flagged) - **Guest self-promotion / business positioning:** - Guest describes specializing in the **pest control industry** and designing services for pest control owners ("I can help them on all those Dimensions"). - Explains his advisory services: tax deferral strategies, Roth IRAs, charitable donation of appreciated securities, direct indexing, tax-loss harvesting, Core 4 framework, client communication policy. - Host endorses: "sounds like you can definitely help them get good reservations at restaurants in Las Vegas as well as LA." - **Host positioning:** references his own brokerage work with pest control liquidity events and "deals are more fun" remark — mild self-referential promotion. ## Availability & Limitations - No curated metadata supplied; speaker identities beyond the guest are **inferred from transcript context only**. - No timestamps present in transcript. - **Comment availability: not stated** in source material. - Host's show name ("The Buzz") is inferred from "former Buzz guests" phrase — explicit confirmation absent. I've never seen a wealth manager at sorld before and here you are I am I feel a bit out of place but happy to be here yeah everybody's been actually really welcoming to me and giving me a lot of time so I'm grateful so this is far from you you're in La so you came to Hawaii it's a lot closer than b well actually is it closer than b no it's about the same right about the same the same yeah the east coast to Hawaii is about the same so what have you learned here well despite hearing on your podcast uh about termite trapping I finally found out what a centricon system is okay so I saw that on the floor okay um but you know I think one thing that I've I've taken away in talking to people or one impression that has been left on me is just the entrepreneurial journey of a lot of these Pest Control owners and that would entail whether they started the business from scratch whether it was passed down from their parents working hand inand with them but really hearing those cool stories about building something growing it the challenges encapsulating that which has been really interesting and also I think I'm continually impressed and somewhat surprised sometimes with folks's lack of desire to pay tax which I'm with them on that because no one should pay more tax than they have to so it's been interesting to kind of push on that topic with some of the PCO it's always a huge question these guys always want to talk about how do I mitigate my taxes but unfortunately there's not a tremendous amount I mean you could renounce your citizenship yeah you could move to a jurisdiction like Puerto Rico for example but outside of that there's not a lot of things you can do or are there you know there's everything's on the margin right so I do think when it comes to that sort of midcareer pest control owner that might have 3 four million of Revenue potentially relatively young there's a lot of tax deferral strategies that you can execute now in order to create taxfree gains so it might not feel like tax savings if you're contributing to a Roth IRA for you and your wife and potentially your kids but if you do that over 20 25 years and earn a 7% return all of a sudden you have a million dollar of taxfree gains just thinking about you and your wife okay also you know we've talked a bit about it before but attributing genuine business tasks to your family members whether that's your wife or your children through maybe putting them in the advertisements or having them do General clerical tasks clean the office take out the trash right like those things add up and all of a sudden you've saved $110,000 on your taxes in a year which I think everybody would be open-minded to do even though a bigger Pest Control owner that might not seem that material so there's those when you think about sort of that mid-career uh person but then there's other things where you know you have a lot of owners that are charitably inclined whether that's through their church or other means and they might not understand that if you have an Investment Portfolio that has large embedded capital gains within it if the charity is set up properly you can actually donate the appre Securities so you avoid that capital gain tax yet you get to deduct the full amount um against your income in that year so that's one that's very straightforward and simple that can save you tens of thousands of dollars you have a $200,000 embedded gain on your Berkshire haway position and you want to donate that instead of paying you know 30,000 or $60,000 on taxes or whatnot so you know little things like that I think can add up what other things are you hearing from folks here I think inflation's a big topic and I think that interest rates are also a big topic so and these two things as you know go hand inand you know I do I get a little concerned though because not only Pest Control owners but my own client partners are talking about interest rates and how they're waiting to take a certain action once interest rates come down whether that's bu a building for their business whether it's by a house personally whe whether it's you know Finance their business in a new operations or a new branch location for instance so my view is that I think we've actually experienced a renormalization of interest rates and that the past 14 years are actually the abnormality correct in that they've been very distorted by the fed and suppressed by the fed and if you you know take a chart of the 30-year Bond the 10-year bond mortgage rates the 30-year mortgage rate you'll actually find that where we are now relative to past 50 60 70 years on the low side yeah it could be on the low side yeah average at best right and so I don't think that's well understood and I think it's one of those things when you've been in this suppressed interest R environment for such a long period of time it takes a while to adjust yeah okay and that's not to say that interest rates won't come down or couldn't come down in a recession as nominal GDP comes down but you know not going to see in my opinion anyway 1 and a half% 10year bond um and a 2 and a half% 30-year mortgage like we did during Co yeah I mean look the only way in my mind that we see that in the future or the near future at least is if the government really finds itself in such a desperate position that they need to buy up and down the duration of government securities right that's the only way they start engaging in overt yield curve control and then we have a lot of other issues right now we have a we have a currency issue not a sovereign debt issue big time Big Time it's a it's a perfect point and another topic that I've been thinking about and talking to folks about and you've mentioned in the past is the 1940s style Financial repression okay and I actually think it's a better analogy than the 70s and thinking about the current environment probably yeah and especially now as new Wars have broken out since I know the last time and I have spoken what's gone on in the Middle East so you know we have high fiscal deficits which was similar in the 1940s due to World War II although those were were at least temporary now the fiscal def deficits are really embedded in the system and then we have high debt to GDP same thing that happened in the 1940s and you had episodic cyclical inflation in the 1940s as well which arguably we're going to have that and I certainly think we're going to have higher structural inflation versus what we've seen over the past you know 15 20 years or whatnot in this disinflationary environment and so again in the 1940s what happened what you said yeah yield curve control 1946 the government gunned it and burned it up yeah yeah so in 19 and then in the 40s you had the short end of the interest rate curve at 38 of a percent in the 10e they fixed it too yep right and so if that were to happen my question I always ask people is okay how are what do you own that will do well in that environment right and so is is it stocks you know stocks or companies with P or sorry pricing power they could do well in that environment as the discounting mechanism is lower but we know the dollar is going to go down and so assets priced in dollars real assets priced in dollars like golden Commodities those are going to do well right um and I just sadly don't think many people own those assets you could also say that um foreign stocks in jurisdictions or countries that stay out of any potential glob global conflict could do well India is an example potentially of that is they've you know yes they're buying Russian crude but they're staying relatively neutral in some ways in the global battle lines that unfortunately seem to be um being drawn at the current juncture so you know with with most folks owning 6040 or you know heavy us stock portfolio with not necessarily A commensurate valuation discount in that portfolio it leaves me a bit concerned that portfolios are prepared for this type of environment and so what are you doing now for your own clients MH from a capital allocation perspective amongst a variety of different assets M so look I have my framework this core4 framework where I want to ensure that my clients have some exposure to all of the economic environments as defined by the rate of change in economic growth and the rate of change in inflation versus expectations okay and so within that framework you have a stagflationary environment where economic growth is likely to be weaker but inflation is likely to be higher and this environment that we're discussing whether the analogy is the 40s whether it's the 70s the assets that perform well in that environment are the ones that are inflating which would be commodi ities in Gold real assets and also treasury inflation protected securities or tips bonds as issued by the US government and right now what's you have a pretty intriguing um situation in tips in that the real yield across the curve is about 2 and a half% which is actually historically high so you're getting a 2 and a half% real return so if inflation ends up being four you're getting 6 and A2 if it's if it's five you're getting 7 and A2 which you know you know you do have that protection from something that's that's much higher than that why would an investor consider putting money in tips rather than buying on the short end of the curve in bills yeah so look tips I would argue in the short term are even safer than just short treasury bills right they both have the optionality in order to sell and deploy that but yet if you did have some sort of spike in inflation you're getting that with tips and also embedded in tips are the inflation expectations that exist in the nominal yield in a short-term treasury like a three-month T Bill where you as you know you can get 5.5 5.6% so but that's you know again that's only one piece of what the full asset allocation would be my clients do own US stocks right it's their largest individual holding because I can talk about these potential outcomes in the world and what assets would do well but again it's just a probability distribution of what could happen and could be wrong and so if for some reason we did enter more of a Goldilocks environment US stocks are going to do well okay and there are still a lot of excellent businesses in the S&P 500 for instance or in the value indices as they have more exposure to commodity producers that you know could do well in these other environments so that's how I'm thinking about it um but again tactically I'm less positive you know on us equities right now just given the valuation and the deteriorating environment yeah there's definitely a gap there yeah what are you thinking you know I guess for my own portfolio as you already know we've talked about this I'm extremely heavy in short-term Sovereign very short end of the curve um I've built up a significant gold position you know and I've dabbled in things like in you know in recent months I've built long oil and oil an oil Industries like xop type positions MH um I still remain short Tesla MH um and then I'm I'm I've got short positions on and a variety of different rats okay basically rate sensitive type mhm um but you know I'm not a good person to talk to about that because I'm more of an active manager yeah I'm very I'm active on a day-to-day basis I'm not a Trader per se but I'm very active in allocating Capital amongst different asset classes MH yeah interesting you know the other area where I've been um making incremental Investments is just in fixed income in general and not just short-term paper and not just government paper and not just tips but actually more credit oriented invest private credit type stuff I haven't done private credit um I've done a bit of public high yield just because the credit quality in public high yield is as good as it's ever been and relative to private credit it's far better okay so while the spreads between government bonds and high yield bonds isn't necessarily High relative to historical standards the absolute return is or the absolute yield is quite good at around 9% which if you think or if you know that equities have done about 10 since the beginning of time or for the past 100 years then if you can get nine in high yield bonds public bonds with greater credit quality and in a more advantaged position in the capital structure then I think that warrants some Capital particularly if you have tax deferred accounts yep because they're not as you know stocks are more tax advantaged because they can grow without paying you know that recurring income each year so if you can Own Credit in an IRA a 401k Etc then you know you're sort of in some ways as long as the credit analysis is good of the manager you're selecting in some ways you're locking in something close to 9% over a full cycle which I think most people would take y you know for me a lot of capital goes into box spreads on the S&P just because Puerto Rico we don't have capital gains so beautiful instead of being in a t bill I can get roughly the same return as like a six-month T bill by running a box spread and it's a it's a capital asset as opposed to interest rate another another smart reason to be in Puerto Rico there's a great a lot of great reasons to be there yeah so let me ask you how of you know when you when you deal with your clients how well actually let me rephrase this question how often does a client actually speak with his wealth manager you you know based on some of the folks that I've talked to this week at pestworld you know once a year if they reach out to them and bother them about it right so you know every client is different typically you know I think there's some man there's some wealth managers out there wealth advisers out there that want to meet quarterly and put that on the calendar and they want to justify their value by doing it quarterly okay so that philosophy that activity justifies value I don't necessarily ascribe to that okay okay I have a sort of open communication policy where if something's going on material or if there's some sort of um emotion that is coming up for that particular client about the markets or the environment please reach out to me that's how I handle it but always have annual meetings to just have a full review of performance the environment and how we're positioned for that and so but you know depending on the client partner of mine will also depend on how involved I am with just their overall Financial life okay so if it's a higher net worth client who has complicated trust in EST state is going through a transaction if they need help um with a referral for an attorney a CPA those types of things you know it ends up having a more complex Financial life we just end up speaking more right and some client Partners they might have those resources already at the at their disposal when they come to me but often times they don't and so I try to be helpful on on that Dimension you know when I'm thinking about this renormalization of interest rates is as you know interest rates are the cost of money and the price of time essentially right like Edward Chancellor's book um and so when you think about this renormalization I always wonder have asset markets whether that's public equities whether it's real estate commercial houses and transactions so private Equity transactions Pest Control transactions have these asset markets or transaction markets reflected the new renormalization of interest rates okay and if you look at the equity risk premium of equities if the you know the multiple on the S&P 500's 1920 times give or take you know we're looking at a five five it's roughly yielding I just had this discussion last f with the Mexican on it last night the you the exactly right the S&P is effectively trading that 20 times which implies a 5% yield and far more risky than being in government paper right exactly and so and then you have to think as that goes down the chain for transactions like has that reality if folks think it's actually structural which I don't think they do but is that filtering into private Equity transactions and what they're paying for T control companies right or other Home services companies no you you that's your area no and I I I I think I think this has not worked its way through the system yet and I think that there are so for as to your point the last 15 years has been a distortion MH but we've got a massive proportion of folks that work in the financial industry that have only worked in the last 15 years yeah and I think about the mechs I think about Franco he's you know in his mid-30s he's not worked in an environment other than this and the only environment he's worked in is seeing asset prices go like this and yields go like this yeah and so um I I think that this is probably something it's it appears to me that it's probably something that's going to happen very slowly and then all at once MH and I you know there's certainly going to be areas in a greater economy when you look at things like commercial realist estate and when the pressure really starts hitting that stuff will chain react throughout the economy and so again I think we're on the front end of this still and I don't think you know I I think we're starting to see if you read the earnings reports from Black Rock for example we're starting to see sophisticated asset managers looking around saying well why do I need to have so much in these crazy Structured Products and equities when I can be in traditional credit and fixed income and take a whole heck of a lot less risk and get the same return and so I think we're starting to see more sophisticated players making those allocation decisions we're certainly not seeing the general the general investing public is still living in the mem stock area era and doubling down on Tesla so but but I think that'll change here in the very near term and then of course like obviously the recent conflict in the United States or it actually is in the United States basically with Biden run around but the recent conflict in in the Middle East I think is going to be extremely complicated because my gut reaction um I don't view this as something that's going to be particularly shortlived neither do I I I this I think we are seeing now in live I think we're seeing the global chessboard pieces moving around at a very rapid clip and so I I I think that this um yeah I I I I think that this is ultimately going to further be more further inflationary situation due to this absolutely either a cold or hot war is inflationary and historically has been inflationary and so you know this recency bias if you will that people are suffering from I mean and I don't blame them because we're talking about a 14- year period that's a long period it's you know people's entire careers if you as you point out um you know I did a recent analysis on um the housing market and thinking about rent versus buy and I didn't do it on the broad housing market because you know we all know housing is local anyway or typically is local with the exception of the global financial crisis when lending got out of control but one thing that I looked at 10 you know 10 15 years ago before the financial crisis and one thing I looked at recently was just a simple rent versus Buy analys in a high priced area in California and I I looked at in this house it wasn't it wasn't for me it was for you know a potential client and they asked what do you think of the housing market and I said well let's do a little rent versus buy analysis and the houseing question was a $6.5 million house okay and Zillow you know this reputable Source online but you know they have good data Zillow thought this house could rent for $6,000 okay $665 million house I calculated the property tax and that was already 8,000 a month W okay so then you have 8,000 left for your mortgage um principal payment and interest and once you calculated those you're up to over 40,000 a month and so when I do a type of analysis like that clearly the new interest rate reality is not being reflected in that housing price or that rent or that rent or a combination of it and so I just think it's one sort of micro example of how this renormalization you know has impact or could impact asset prices going forward right it's not I'm not calling for a housing Bust or anything like that but it's just you know these are the decisions that people are making on the ground that ultimately impact asset prices yeah and like you said earlier in the conversation folks are waiting for interest rates to go down this is what I hear this all the time I'm just going to wait for interest rates to go down well you might be waiting a long time you might yeah yeah and the short end might go down in uh recession with the FED lowering rates and the long end might not go down or it certainly is not going to go down in my opinion as much as it has in the past yeah I tend to agree with that I mean that will be the bond curve you know the bond Market's revenge against the FED on the long end of the curve is what it'll be and it'll likely we'll find oursel in a position in 2024 where the FED will start to push the short end of the curve down and yeah well we'll see how this goes yeah and unfortunately they'll have the opportunity potential opportunity to use global conflict there's a reason to do it right always there's always a good scapegoat out there there is no I can see the headlines already saying that like global conflict and War caused the recession Hamas caused the price of your lettuce to go up this is definitely going to be a New York Times headlines at some point when the cake was was most likely already baked right given how aggressive the the FED has been and just you know the lack of the or and the fact that fiscal stimulus it's some some point is going to run out unless they perpetually increase deficits which they have done up to this point so Nick you've done a lot of research on the pest control industry I know that you've talked to a lot of former Buzz guests met with a ton of people out here this week I guess you're heading out here tomorrow I am yeah and so you're really beginning to specialize in this industry and I guess what is it about pest control that's kind of brought you into the into the mold yeah you know I think that the first thing is that I the people and the attitude of the people really resonates with me just based on how I was raised the you were you were raised at Redneck I was well I mean Las Vegas in the 1970s right you're Las Vegas guy that's right that's that's that's fairly similar um my dad actually after being a high school teacher operated a route-based business it wasn't pest control but you know it was a Vegas route based business that owned video poker machines and put them in locations but um so and then you know as we talked about before I do have friends that operate landscaping and Pest Control businesses back home in Las Vegas so the people have really resonated with me and to your point the former Buzz guests have been very generous with their time you know I've tried to come into it with a very humble approach to learn about the industry that way I can design my services to add as much value as possible in a specific fashion to the industry and to the pest control owners and then I mean clearly like I'm a capitalist and in this to make a profit and it definitely helps that you know folks in this industry do quite well generate nice cash flow margins and you know end up selling their businesses and so I think I can help them on all those Dimensions so you know hopefully I'll be you know adding value well in advance or well in excess of anything you know that my business is able to Garner sounds like you can definitely help them get good reservations at restaurants in Las Vegas as well as La potentially yeah I could potentially I can potentially do that or find somebody that can so Nick when I think about folks in this industry it's people that are experiencing liquidity in bents because that's of course where I live and so when you work with somebody let's say I'm a client of yours got a pest control business and I'm selling it next year and I'm going to make 25 million bucks I I might have nothing now maybe you've got a million dollars of my money in an account that you're managing and next I'm going to call you up and say here 25 million mhm what sort of discussions might you and I be having in a situation like that you know the first the first discussion is to really understand your life and what your uses of the cash flow are going to be from those Investments and from there Coke hookers that kind of stuff everyone's different right you know everybody has their their cash their cash uses if you will um and so you know we want to make sure that that we can create returns in order to um ensure that those those needs get met okay um but really it's like understanding that lifestyle so we can then Dei design an investment program to ensure that the cash flow is going you're saying like how much I'm going to have 25 million bucks how much do I spend right now per year or how much do I project My Lifestyle will run me yeah for that's that's a that's an initial step in the analysis just to ensure that we can execute some cash flow planning and forecast that out to make sure that the investment program is going to be in alignment with the cash that you're actually going to need to live okay but to take even a step back from there in that situation when you have a pest control owner that's worked 20 30 years to build up this Pest Control business and this cash flow stream and then they get this windfall the first thing we want to make sure is that okay we're going to figure out how to keep this person Rich okay and the first way to do that is to start slowly and and put the money in short-term T bills generate that 5 a half% return and then opportunistically and systematically deploy the capital over time okay and when we think about deploying that cash into stocks there's multiple ways that you can do that again it's not going to be the whole portfolio but there are very tax efficient ways around tax loss harvesting or direct indexing let's talk about order to do that yeah so what is direct indexing yeah direct indexing has really been a uh an innovation that's been enabled by technology and usually when those things are mentioned in financial uh areas it's like a red flag yeah and Ron all a sudden right yeah oh we have this great uh Financial engineering technology but direct indexing has been enabled by no cost trading commissions and also just you know fractionalization of security trading that sort of thing so what it is is essentially instead of owning the ETF which is an index fund you un you own the underlying components of the ETF so the individual stocks and then based on the movements of those prices the computer algorithm can buy and sell the ones or really sell the ones that are going down temporarily and then replace it with other components of the index all the while tracking the index within a fairly close band and it creates a much more tax efficient vehicle to where on an after tax basis direct indexing has shown you know over long periods of time to outperform regular index investing by 1 to 2% per year okay and that's particularly important when you have new capital that's being invested okay so that's a pretty substantial ad Advantage it doesn't sound like a lot on the surface but you know it is and that compounds over time so that's that's one tactic we use to be more tax efficient on on new capital what's tax lost harvesting tax loss harvesting good question that's a good question so tax loss harvesting is essentially if you were to have if you were to buy the S&P 500 Index Fund today at 100 let's just say to make up numbers it goes down to 90 and then you could sell that security that ETF at 90 and you capture that $10 per share loss okay that loss well back up so then would redeploy that $90 into another S&P Index Fund that's issued by a different provider let's say you own black rocks first and now you're going to buy uh vanguards so then now you have that embedded $10 loss that you can use to offset future gains okay so it makes your portfolio more tax efficient and Def defers potential gains out into the future okay so what you're saying is instead of if it goes from 100 to 990 and you don't sell it and then it goes back up to 100 you're saying you haven't reset your basis therefore there's no you're not able to roll that credit forward so to speak is that what you're saying that's right yeah yeah and so ultimately if it's a if it's an equity based security you're going to pay that tax if you end up selling it because as you point out your basis is now lower but there has been a really interesting opportunity in fixed income over the past couple years given the last two years last year in particular was the year worst year for fixed income really in the last 100 years and so if you actually owned a portfolio of let's say Muni bonds where that portfolio you had a $2 million portfolio let's say and mun bonds are down around 15% or so over that period so that's a $300,000 loss okay you can sell that entire portfolio buy a new portfolio of mun bonds but you're buying individual bonds at par so so you're never going to have a future Capital gra gain on that portfolio yet you can recognize that $300,000 loss today which is permanent for the future to offset gains MH so bonds it's more advantageous even than stocks to execute tax loss harvesting interesting which is you know it's an esoteric topic but you know every every percent every 2% you know I'll take it on behalf of my client partners I'm glad it's guys like you looking at this because I would have no patience for that deals are more fun 100% way more fun yeah well Nick I I appreciate you coming out to pestor and visiting all of us yeah it's been uh great to spend some time with you and uh look forward to spending more time with you in the industry yeah absolutely I appreciate you having me on and it's been great to spend time with everybody sounds good all right Che brother yeah you