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00:00WITH THE EQUIVALENT OF A SLOWDOWN IN THE GLOBAL ECONOMY FOR INSTANCE. >> THE ECONOMIC SIDE OF THE TABLE IS TOUGH. ONE OF THE REASONS IS IF YOU LOOK AT GLOBAL VALUATIONS, ALMOST ALL OF THE CHEAP COUNTRIES IN THE WORLD, THE GEOPOLITICAL NEWS IS GOING TO BE TERRIBLE. THE STOCK MARKET IS ALWAYS GOING TO BE DOWN 50 THROUGH 90%. THE ECONOMY IS BAD, THERE IS HIGH UNEMPLOYMENT. ON THE FLIPSIDE, COUNTRIES LIKE THE U.S., THE ECONOMY IS DOING GREAT. WE HAVE HAD A GREAT ECONOMY FOR SEVERAL YEARS. LOW INTEREST RATES, ALL OF THESE POSITIVES. THAT IS THE DISCONNECT. YOU USUALLY WANT TO BE SELLING WHAT IS EXPENSIVE AND BUYING THE CHEAP STUFF. THAT IS ONE OF THE REASONS IT IS SO HARD TO DO. YOU HAVE TO GET THE GREEN WITH THE GEOPOLITICAL NEWS FLOW. >> YOU LOOK AT THE RATIO TO GAUGE IF STOCKS ARE EXPENSIVE. RIGHT NOW IT IS AROUND 24. AT WHAT LEVEL DOESN'T MAKE IT A BUY FOR YOU? >> VALUATIONS OVER TIME GOING BACK TO THE LATE 19TH CENTURY. WHEN YOU HAVE A BENIGN INFLATION ENVIRONMENT, IT CAN BE CLOSER TO 21. ALL THAT MEANS IS YOU ARE GOING TO HAVE A LOWER FUTURES EXPECTED TO RETURN. I SAID THE U.S. IS EXPENSIVE, BUT IT DOESN'T MATTER UNTIL THE U.S. GOES INTO A DOWN TREND IN THE STOCK MARKET. THAT CHANGED COMING INTO 2016 YOU GO FROM AN EXPENSIVE MARKET THAT IS GOING UP ALL OF A SUDDEN TO AN EXPENSIVE MARKET GOING DOWN. WE ASK PUBLIC ETF'S THAT ARE TACTICAL AND THE TACTICAL ETF'S OR EITHER THE MAJORITY OF CASH AND BONDS OR 100% AGAINST THE STOCK MARKET. >> IF WE ARE GOING DOWN AND YOU WANT TO BE HEDGED, WHAT DOES THAT MEAN IN TERMS OF CAPITULATION? HOW FAR ALONG THE SELLING ARE WE? >> YOU NEVER KNOW. VALUATIONS HAVE BEEN LOW AS FIVE. THAT IS A LONG WAY DOWN. WHEN YOU HAVE AN EXPENSIVE MARKET YOU CAN EASILY HAVE A 20% BEAR MARKET. IN 2009 WE HIT A RATIO OF 13. IF YOU LOOK AT THE REST OF THE WORLD, THERE ARE MORE THAN ONE DOZEN COUNTRIES TRADING ALREADY. RUSSIA, BRAZIL, AND A LOT OF PLACES IN EUROPE THAT WE THINK YOU BUY A BASKET OF THOSE COUNTRIES. WE THINK DOUBLE-DIGIT RETURNS IN THE U.S.. >> YOU HAVE ALSO DEVELOPED A STRATEGY FOR CLONING HEDGE FUND STRATEGY. WE ALL LOVE LOOKING TO FILINGS. HOW DID YOU WORK ON THE STRATEGY AND HOW HAS IT ACTUALLY RETURNED? >> THIS IS OUR FIFTH BOOK. WE HAVE BEEN DOING THIS BY HAND ALL THE WAY BACK TO 2000. A LOT OF THE GREAT STOCK TICKERS , FOCUSING ON THEIR PICKS, YOU CAN ACTUALLY CLONE THEIR PORTFOLIOS FAIRLY EASILY. ONE OF THE BEAUTIES OF THIS IS YOU DON'T HAVE TO PAY THE 2% MANAGEMENT FEE THAT YOU HAVE TO PAY A LOT OF THESE HEADPHONES. IF YOU BUY TOP 10 STOCK PICKS, REBOUND IN THE CORNER, TAKE FIVE MINUTES, YOU REBOUND GOING BACK TO 2000 AND THERE IS A WHOLE HOST OF THESE MANAGERS. REALLY GREAT MANAGERS AND HISTORICALLY HAVE DONE A GREAT JOB. >> WHAT DID YOU LEARN ABOUT THE TIME HORIZON THAT INVESTORS NEED TO COMMIT FOR THESE CLONE STRATEGIES? >> ONE OF THE CHALLENGES IN INVESTING IN ANY STRATEGIES YOU HAVE TO INVEST THE ENTIRE MARKET CYCLE. THE REASON WE TALK ABOUT BUFFETT, THE REASON IT OUTPERFORMED THE YEAR, THIS WAS PUTTING THE TOP 2% IN THE ENTIRE COUNTRY. HE HAS UNDERPERFORMED HIS STOCK PICKS. HOW MANY PEOPLE COULD HAVE SAT THROUGH THAT? HOW MANY PEOPLE WOULD HAVE FIRED THAT MANAGER? IT IS IMPORTANT TO STICK TO A STRATEGY. >> THANK YOU SO MUCH. THAT IS A BOLD CALL. SINGLE-DIGIT PES. THE U.S. EAST COAST WILL BE HIT WITH A MASSIVE WINTER STORM THAT

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