Welcome back to the show, my fellow extraordinary Americans; for today’s guest, we have Frederick Weiss. Frederick is a business owner, investor, managing director, markets trader, and advisor. He’s the chairman of Cetus Fund 1A fund, which utilizes AI-based technology to help execute equity and fixed-income ETF arbitrage trading strategies, previously only available to large asset managers, large proprietary traders, and hedge funds. 

He’s also the managing director of Frederick Weiss and Associates, a boutique legal services company specializing in legal support, mainly with court reporting and legal videography to the worldwide litigation community. They also engage in discovery proceedings in the European and Asian arenas. Frederick is also an investor who seeks to invest in or acquire SMEs in Western Europe, the UK, North America, and Southeast Asia. He’s particularly interested in profitable companies where the owner wants to exit that have revenues over 2 million.

Frederick’s impeccable wisdom. Experience and knowledge in finance, business marketing, and market trading make him extraordinary, and I’m honored to have him on the show. 

Frederick, are you there?

Hi, cosmos.

Hey, Frederick; thank you so much for taking the time to do this podcast with me. I’m. I am honored to have you on the show.

I’m flattered by your introduction. Thank you.

So, Frederick, can you tell me and the audience more about yourself, your background, and how you got started in business and finance?

I was born in the Deep South in the United States, and my parents moved my family out to California. I was educated in California and started a business at a young age, in my early 20s. And, of course, I was happy to make my first million by 22 and promptly lost it at 23. So, I learned early on that making money is only one thing. Keeping money is another thing. 

While living in California, I went into several other ventures—one with a Southern California mortgage banker. At the finance department, we put together a whole loan package through Drexel Burnham Bear Stearns. At the time, I was offered a job to come out to New York to work for Bear Stearns in their department, one of the premier investment banking houses, along with Drexel. 

So that dates me. 

Instead, I chose to acquire a public – we now call them specs – with a partner from New York. And we did what’s called A roll-up, which was acquiring. Assets and companies, we executed about 15,000,000 transactions and had another 100 million under a letter of intent. 

We had some oil refineries in our portfolio. Unfortunately, we encountered some legal difficulties with the owner and the previous owner of our SPAC. So, I learned another lesson at that point. Always make sure your legs are in place. 

After five years of litigation, we gave back all the assets we had acquired to our investors, and we said, OK, we’re not going to do this anymore. I then decided to come to Europe because I heard people live out here for a long time. And they took one to four months a year of vacation. And being from California, I would have if I took two or two weeks a year. I was lucky. 

So I’ve been in Europe since Y2K, about the turn of the century. I unwound a deal I was in to buy a medical services company in San Rafael, CA, just to be able to move out here and have a clean start in terms of not having to fly back and forth to California for business. 

I decided to enter a business out here, my sleepy little business I learned when I was 18, which was court reporting. And if you know all of… If you’re better in any cases in court, you know what a court reporter is. And so, until COVID broke out, I was happily taking two to four months a year of holidays, mainly in Greece because I’m a Greek citizen and just having a wonderful time out here in Europe, with America being my distant memory. Then COVID hit, and suddenly, I had no business; no one was flying anywhere. 

And I was scratching my head, saying, what I do with my life now? And I remember that—old hat I used to have a job in California called merchant banking. We called it merchant banking back then, which was the acquisition of assets and companies. And I decided to put on that hat and affiliate with a group of experts. 

I had several deals under a letter of intent, but they were all outside. Of the country in. The UK, or in the US? Yes, and I didn’t find anything that made my heart say, do what you love, and the money will follow. Do what you don’t love. And then you have to figure out how to manage what you don’t love. I didn’t want to fly around the world managing different entities because I now have a young family and wanted to stay home with my wife and child. 

So, I turned down those opportunities and decided to align myself with a special partner. I’ve been a part-time trader in different markets for 30 years. I was looking for someone with something unique, something high-tech that incorporated or could incorporate AI and machine learning to handle the changing volatile environments of our lives. COVID was a tremendous Black Swan event for many different industries. 

I mean, and if you just look at the hotel industry, the airline industry, the cruise industry, and so many different industries that COVID and this kind of thing decimated, let sort of open the door to, well, you know what? Maybe this isn’t the only time this can happen. Maybe it can happen again. So if it happens again, we want to. Be prepared for it. I met several business owners with the opposite experience, such as those who dealt with online sales, like Amazon. Amazon flourished incredibly during the COVID times, and all the online retailers who carved out their niche selling worldwide were doing fabulously through the COVID times and still are. 

Another group of Industries that did well was the money management industry. Because inflation started to take off more, I won’t get into anything political except that since 2020, everyone knows, and everyone I don’t need to report, everyone already knows that we have experienced unprecedented inflation from the last decades; what a dollar was in 2019 is not what a dollar is anymore, a euro, a yen, or any other currency.

So, my initial goal was to democratize something that would not just keep up with inflation but beat inflation. So that people could do what you know Bezos and the other people of the world in the right industries are doing, which is beating inflation. And last September, I found a gentleman in Charlotte, NC. He has been in an industry for 25 years that trades investment-grade and municipal bonds. He’s opened high-frequency trading firms as a consultant for companies such as Tutor. And he has started his stock exchanges. He’s got a lot of deep experience in the bond industry, mainly the bond industry and equities. 

So, we decided to form a joint venture together because he had been knocking his head against the wall, marketing his wonderful investment-grade bond strategy, which is completely automated and returns incredible yields. He traded it manually, just plunking away on a keyboard in 2017 and 2018 for one year. He had a 30% ROI in that one year, completely trading it manually. 

So, he stood out. And then COVID hit shortly after that because he proved that was his proof of concept. He proved his concept there. This works, and it works, actually, in any market. 

So, during COVID, he took two years and learned how to code and code. He knew everything about trading, portfolio management, risk management, and the most effective utilization of capital at any one point. And so many other factors go into a successful strategy, and he put it all together, tested it, back tested it, kept testing and testing it, and got us to the point where it ran optimally; since 2021, he’s been doing back testing on it, and the back tests are 70% to 80% per year; he started marketing this to large banks such as Wells Fargo, Bank of America, and different large banks in the United States; talking to the head of their trading department, they said look what I have. This is wonderful. You guys can make so much more money than you’re making now because if you go on the Black Rocks website, I share any large bond house, and you look at their yields. Most of them are negative, -3 percent -20 %. The portfolios are all underwater. 

And the reason for this is when they get it and trade a bond, they buy and hold it. Well, everything’s been eroded in terms of credit. So, most of the bonds bought a few years ago are underwater. So, if you invested $100,000, you’ve got $80,000 now or $85,000. Some have returned, but both are underwater, meaning they are below them—the investment amount.

Paul has made it all in its year, and they came up with this fabulous program, which is now showcased on our two apps, which can be downloaded from Apple, the App Store, or the Google Play Store. If we have two programs, one is for investment grade bonds, the other is for stock trading, and they’re both based on ETF arbitrage and trade similarly. 

We met with investors yesterday from the UK and around Europe. Paul started up the demonstration system just in the stock trading, and we saw the system take several positions in the marketplace just yesterday. By the end of day trading, just one day’s trading showed an alpha or a return on one day of 2.24 %. If we annualize that, that’s over 580%, and our stock trading program for October netted after fees of 41.76%.

So, we have a vehicle to not only fight inflation but to beat inflation and to build wealth by allowing funds to compound, not taking out profits but allowing our funds to compound and build those funds, just like the big hedge funds. If you studied any big hedge funds, they take an investor’s money; they trade it, they, you know, they make incredible returns 60 percent, 80%, sometimes over 100% per year. And after a few years, they stopped taking money, and in another couple of years, they gave back all their investor’s money, shut their doors, and traded for themselves. We are looking to democratize this as much as we can at this point. Since we’re new, we haven’t gone through, you know, any kind of United States Securities and Exchange Commission approval of a public fund to take small investors’ funds. 

So, the only thing we’re doing with anyone. In the US, it is a managed account.

So, Frederick, one of the things that you consider is beating inflation, and that’s one of the reasons I love having the show. You better than anyone else understand how inflation works right, especially regarding our savings account. 

Many people say they try to save money for, let’s say, retirement and everything. They have a savings account, putting, let’s say, $1000 a month or whatever. But inflation is eating away at the Savings, and many people are unaware of that. 

They don’t realize that the dollar’s purchasing power or any currency ultimately matters, right? How much can you buy if you have a $20 note and go to the grocery store? How much stuff can you buy with that? Because, when let’s say a lot Of people are trying to retire, they’re going to realize that their monies that like they have to go back to work still now because they’re all their savings got, you know, especially after COVID hit and then they printed about $3 trillion or so give or take into the economy.

Yes, I remember when I was a kid, gasoline was $0.25 a gallon. And my mother, I would go with my mother to the grocery store, and she would have two carts full of groceries, and we would get out the door for about, and this was like two weeks of groceries for about $30. Things have changed since I was a child, and things have changed in the last ten years as well. 

Retired people have been hurt badly simply because they’re on a fixed income. You don’t have the opportunity to go out and. You know, go from a $50,000, I think the average wage right now in the States for a full-time person is what I’m not quite familiar with the average Wage. But since the minimum wage is at $15.00 an hour right now, the average professional wage.

Was it? It’s $15 in some states, but it was 7.50 – 7.25 for the longest time. But I still have to check whether they raised it to 15.

Suppose a person has owned a house. Let’s say in the last ten years. They feel pretty good right now regarding their equity because housing as an asset class has benefited the common person tremendously. Suppose you’re just wanting to save your money. And buy a house. Now, that’s a very difficult thing to do. 

Not only because houses are so expensive but also because interest rates have increased. We are saying that they have no choice but to raise the interest rates to try to stem. That’s the only real tool for central bankers to tame inflation. They don’t think about balancing the budgets, and you know, like we have a checking account, we can’t spend more than what’s in our checking account. 

So we budget ourselves. The governments don’t do that. They say, you know what did Barack Obama say? “Deficits don’t matter. Because I can print, we can print all we want. We can print into oblivion”, which is what they’ve done. So, as you rightly pointed out, the dollar’s purchasing power has been eroded tremendously, and it’s affected mainly the retired segment of people and the young person just starting out living with mom and dad wanting to move out and get their place. It isn’t easy.

Of the things that I wanted to mention over here. Right. 

Since you talked about how you were offered Bear Stearns, it reminded me of the 2008 2007 recession. But the beginnings of that.

We’re talking about baby boomers retiring versus the new generation, like the baby boomer generation in the 1950s and 1960s. They were still on the gold standard. Right, till 1971, August 15th, the 35 an ounce is like one gold or gold oz equals $35, right? 

They had to peg it to a gold oz and have a certain amount of gold. So what most people don’t realize is that after 1971 August 15, Richard Nixon took us off the gold standard, and our currency became a Fiat currency, meaning they could print as much as they wanted to fund whatever they want, whether it’s the welfare program or it’s wars or whatever. 

However, there was massive inflation in the 1970s and 2008 when the recession began. They solved it by printing a lot of money, like the solution is always printing a lot of money, lowering interest. Rates. But that just creates a bubble in everything, and it will eventually pop, and many people are unaware of that. 

So, I don’t know what they are. What are your thoughts on how that is?

I like to look at people who have studied history and learn from them. For instance, Ray Dalio. He’s retired now. Course, he headed the largest hedge fund in the world, and he’s studied several different empires of the past. The closest example in time to what we see happening right now with this slow-moving crash of the worldwide economies, Fiat currencies, is the Weimar Republic. You probably bring back some memories of where the inflation was or, you know, maybe even more recently that you know, Places like Zimbabwe where every day, it was inflating as much as it’s inflating one, you know, by one year here. People eventually were carrying home their day’s wages in wheelbarrows. This happened in the Weimar Republic, and this was unique to the Weimar Republic because the people in France right next to the Weimar Republic who were on the French franc had a completely different economic structure when the Weimar Republic crashed; these people were completely broke, the French.

Right.

Many French bought up German properties and businesses and became very wealthy in the ensuing years. And what Ray Dalio is saying right now is, are we headed for a Weimar moment? Well, you know, it’s a very slow-moving Titanic ship. Still, we all know that the dollar’s value is eroding and continuing to erode under the current administration and Federal Reserve policies.

And we will have a correction: This is a very large correction at some point. When’s it going to happen? Well, you know, I won’t take my crystal ball. If your listeners want to find that out, they can. They can draw their conclusions by listening to, you know, the many opinions that are out there. 

But when it does happen, those who are holding cash. Or gold or diamonds, or, you know, precious metals will be in a very good position to purchase things for much less than they’re currently going for. Sometimes, pennies on the dollar. So that’s what Ray recommends right now. It’s time to start holding cash.

Yeah. I mean, here, that’s something I was doing a lot of research on, and you bring up a very good point regarding the why. I’m a Republic for people who don’t know why I am. 

The Weimar Republic was the period in Germany between the First World War and the 2nd and the time that Hitler was in power. And the reason why Hitler, a human power, was because Of mass inflation, and then there was followed by a Depression. 

It was like people were starving on the streets, and they came up with the solution. But in the process, fascism came to Germany. And what most people don’t realize is that it is that economy matters and everything like people have to earn a living and all of that. 

But yes, you’re right about gold, silver, and even cryptocurrencies, as they help to protect your purchasing power. I wanted to ask you, Frederick, how should people save to protect themselves from inflation. Should they be investing in precious metals or learning strategies regarding the markets and the stock markets?

Well, let me back up just a little bit before. The biggest enemy to the common person right now is debt because we’re paying off our debts at 18% – 19% interest, where we don’t. We’re not in a position to save money. 

So, I think for the person, it’s important to have a dual strategy. If you’re in debt, you can avail yourselves of the concepts of the richest man in Babylon. You can seek financial advice to budget your money to start saving money on your frivolous purchases. Stop making frivolous purchases and start paying your debts off and saving as much money as you can each month. Start to live by the principle when I bring home money: the first part of the money I bring home is for me to keep, and the rest goes to paying my mortgage or my rent, my debts, my insurance, and food, and the necessary things of life. But the. The first piece of my money is for me to keep, and if you’re, you know, if your listeners are interested in learning more about these ancient principles, you can pick up the richest book of Babylon from Jeff Bezos, his firm, or go to a bookstore and learn about it.

So, what are the basics of the Richest Man in Babylon for those who don’t know, other than investing in yourself first?

Well, personal economics matters. If we have $100 in our checkbook, that’s how much we have. We can’t print more Money. And if we think about, well, I have to borrow money to live, then we have a problem. 

We must learn to live more reasonably, which is difficult in an inflating environment. But the person that budgets. And starts to live, let’s say, on cash and. Keeps a record. Of everything they spend, you know, how much do you do? You smoke; how much do you spend on cigarettes? You know, do you go out to eat? How much do you spend on going out to eat? Do I have to go out to eat, and maybe I can pack a sandwich when I go to work? Little things add up at the end of the month, and we can carve away at least 10%, which you take home for your savings. Is there not to touch but to accumulate? 

And so by getting our own financial house in order, we all need to do this individually because we’re not central banks; we need to keep our House in order. Then, we put ourselves in a position. As a saver to feel better about ourselves and as our self-esteem about our financial situation improves, we can start lifting our heads and educating ourselves about what we’re good at.

And looking for … we can call it—a side gig. There are many sidekicks out there having multiple sources of income. We have our job, but can we develop a side gig that can eventually replace our job or double our earnings and increase our savings to build a stockpile of money?

We can seek an investment, one that the principal will be safe and two that will give us a reasonable yield greater than that of inflation, whether it be. You know, buying a deed of trust. And just purchasing these deeds of trust, if you understand real estate, you can buy discounted deeds of trust and make much better than inflation yields. 

That’s one area that doesn’t require as much capital as, let’s say, getting into trading investment-grade bonds, but it’s about studying and doing things, as Warren Buffett says, things you can understand. 

And you know, Warren Buffett spends all day just reading through the financial reports of companies, not only the companies in his portfolio, but he’s been doing this for the last. I don’t know how many years. How old Warren Buffett is, but probably the last 60 years, he’s been doing the same thing. Well, people say I want to be like Warren Buffett. Well, to be like Warren Buffett. You.

It’s pretty. Need decades and decades and decades. Because, I mean Warren Buffett, he’s an icon of investing in his particular way, but he makes a lot of very good points, and the most important thing is, what is it you love to do? What is it you understand and do your research? We all have the greatest library that the world has ever seen. 

Right now, at our fingertips, do we spend it on Facebook? All of the different social media waste our time, or we can use that to research what other people are doing. YouTube is an incredible resource. You can take three months of spare time and learn anything on YouTube to the point where you can decide. Yes, I would like to look into getting into this. Maybe it’s a side gig. 

So it’s about of and can become a daily process with me. When I wake up at 5:00, I light my candle, set it on the table, and meditate. Well, a lot of people aren’t into that. But I like that because it makes me calm. And I think, where am I? How do I feel? What kind of ideas do I have today? The greatest idea machine. Ever made is the human brain, and if we allow ourselves time every day just to sit with our human brain and Let it flow with ideas and write them down. 

You know, I will come up with ten ideas every day. It doesn’t matter if they’re stupid. Doesn’t matter. Don’t make any judgment at all. Ten ideas. How can I get a second gig? And just write those ideas down. Several authors have written books on it. That and, of course, here I keep talking about books. Becoming a reader of how other people have become successful is very important.

Like, what books would you recommend?

Oh, boy, now we’re going off the top of our head here. There’s a fellow … a guy in New York with big hair, and I’ve got. Ohh. I have my Kindle. Right. I have my Kindle right here and will look at the books I have in my library that I can recommend. Yes, what a great idea. Cosmos. 

Of the two current books I’m reading, one is called How to Build Personal Momentum. Anything the other one is called Deep Work; something that social media and all of our Internet contact are doing away with is the ability to concentrate deeply on any one subject because our attention span has become minimized to the point of. What’s the average attention span now, 12?

Maybe even less.

Let’s see monetizing apps. Uh, OK, let’s see. No. Yes. James Altucher. Are you? Perhaps you’re acknowledging him as an author? He wrote a book on the Power of No. If you research James Altucher ALTUCHER, he wrote several very well-written books on the idea making, and many very wealthy people subscribe to this is, you know, how did you make your wealth? 

Well, I first started living on what I was making. And save you money. You know, basic thrift. You know, the Old Horatio Alger. Stories of, you know, the person who had two jobs and started saving money. And they guarded that, and then they saw things that were opportunities, and they went into it. This is the way America was built. 

This is the way that America can come back. Unfortunately, our government is giving us the wrong example of spending, and it’s making everybody’s lives go upside down while trying to keep up with how much it costs to live. Those are my basic thoughts.

So, Frederick, I wanted to add that if you look in the 1950s and 1940s America and, you know, up to a certain part of the 1960s, you could have a father working at a manufacturing job, and you had a mother was. A housewife, and you had two. Three children and you could. Live on one person’s income. 

So, the wages remained relatively the same, as if they did not match up to inflation. Once, we went up the gold standard. Patient was higher than that, and we call it, I don’t know if you call it stagflation, where you have stagnant wages or wages that don’t catch up with inflation, and then you have inflation that keeps going. 

And so now you had two people that had to earn an income, you know, to maintain the same lifestyle. And then you have to take on a lot of consumer debt. 

And you take credit card bills, and then it’s one thing up to the other, and that’s what I think reduced the overall life. That’s how we got into our position, like cause. They eventually just printed so much money. They just circulated. In the economy, then, that’s something that I realized cause before. When you had sound money, you could just live with one person. ‘S income, but now. It would be best if you had the father and the.

Mother, both work.

You inspired them to take on debt. On top of that, to maintain the same lifestyle. Because it’s easier to spend 1st and then pay later, right? Like it’s kind of like it’s really kind of like it’s. Almost like a. Ruse. Like where? Oh, it’s easy: just take this 0% interest for 12 months, but later, you realize the credit card bills are racking up. That’s the idea that came to my mind. That’s the thought that came to my mind.

You bring back memories. Yeah. You bring back memories, Cosmos. I grew up in that kind of family when we were living in Florida. When I was a young boy, my father worked for a Swiss company called. And he made an income. My mother stayed home and cared for my sister, and that was how it was. But as you say, living costs were stable, and things were affordable for one-income earners. 

We decided we were going to move out to California back in the 60s. First, my father got a new job with an insurance company. And his wages weren’t as high as they were; California was a little more expensive. My mother had to get a job, so my parents worked at that point for a couple of years, and my father’s wages went up. My mother could still stop, but that was before we went off the gold standard. 

By the time we went off the gold standard and, you know, we got into the 70s, I was graduating and getting my education, and I didn’t realize the significance of the events that had happened the prior ten years. As you say, Richard is just taking us off the gold standard. That was a very quiet announcement, but it had long-lasting implications for the—health of the middle class. 

Yes, we’re in a situation now where it’s an upside-down world from the standpoint of costs versus income for many people. So, it does require personal growth because the old standards of thinking about money have been replaced.

I just feel bad for the people retiring, and then they go into their savings account, and they’re like, oh. I must go back to work now. The banks just print it because many blame it on this or that, or immigrants this and that. Still, they don’t realize that their banks are inflating the money away, and the root cause is, some would say, Keynesian economics deficit spending or lack of sound money principles. 

But yeah, many people need to know that they’re losing them. Because of the loss of purchasing power, strong America hopes to educate the people about lifestyle. So, I’m glad that you understand this because this is important for people to know.

Yes, you bring back the memory of my all-time favorite book, which is a book written by the famous Ludvig. Knees called human action. It’s larger than the Bible, but he does a Ph.D. deep dive into everything we’ve been discussing and the natural cause and effect of what we’ve been seeing with the economy. He also talked about the Weimar Republic. Many prior empires before that, as Ray Dalio has done a study. 

So, I advise someone looking to improve their lives to increase their skill set. You know now the skill set of coding. You can get these six-figure jobs once you become skilled in coding in a particular way. You can work at home. You can make your six figures. You can work for companies, and there’s more need for coders than people who can code. Now, some people can’t code, and many people can’t. I haven’t learned how to code. I’m going to have to do a deep dive in. I mean, I know the law, but learning how to code is a is a is a gift. That is a skill. That that, you know, a certain segment of people will be able to learn an example.

I learned coding in college. I was never a fan of it, but I always knew it made good money. But you’re right for it. If people need to, and I know it’s hard, they must learn new skill sets and constantly change. 

And even and even and even like, crazier than this is, in the short term, it’s going to get worse because of automation. Well, like many people are saying, and I think you might know something. About this, like cause you’re into AIB’s technology. 

So, there are thoughts about automation taking many jobs, but I? Don’t know What your understanding of that is?

Oh, it’s happening as we speak. Automation. Over the next decade, many current jobs will be like the old horse and buggy where there simply won’t be the need for them for mean—the new AI-based portal such as ChatGPT. 

I am in love with ChatGPT. It saves me so many hours every week, mainly for writing. If I’m writing copy. I’m writing a book, and it’s helping me to outline the chapters in the book, which will be 21st century. ETF arbitrage. I was just using it for our daily lives to better ourselves. The technologies that we have right now can greatly enhance and improve our efficiency.

Yeah, I mean. I like automation and AI like they’re, they will. They will be the future, and people have to go into this new world like it’s just been a drastic change from the era of the 1950s and 1960s July, the 21st century.

Mm-hmm. Yes. And you know the human mind is an incredible AI in its ability to reason, make logical choices, and make choices based on judgment. They say that, you know, Elon Musk talks about, you know, the dangers of AI and it is taking over. And perhaps he’s right to, you know, in many respects. But I think we’re decades away from much of that, but the human brain directs AI’s incredible data-collecting ability. The fast machines can now operate at the nanosecond level, processing almost a trillion calculations a second. This is something that. You know, at least you know, in the industry that I’m in, I will completely do away with manual traders over the next ten years.

So, Frederick, there’s a question I wanted to ask you for, you know, like, so that the listeners kind of say, can you tell me the listeners a little bit more about arbitrage and how valuable it is in like business and like market trading and all of that and like?

Well, arbitrage, I mean the farmer arbitrages if he’s growing his soybeans. And he wants to lock in a certain price. He will go to the futures market because he knows he has a crop coming due in the harvest season, and he wants to make sure he wants to lock in a certain price that he knows he can get. 

So, he’s got a physical harvest, which he will hedge and arbitrage with the futures. A contract which will be at or about the same size as what his harvest will be, and this in this way. He can protect. Getting a certain profit for his harvest, and this has been. The Japanese perfected this a hundred years ago with the rice market arbitrage. What we’re doing is we trade what we call delta neutral.

So, we’ll buy something warm, Buffett says. You want to buy something. When there’s blood in the streets. Do you want to sell it when there’s Euphoria in the clouds? This principle applies to real estate. I remember picking up real estate like Monopoly chips back in the 80s for pennies of what they’re going for now. I was buying 11 houses a week, and people were just about giving them away. If you sat and could collect your rent, make mortgage payments.

Thank you.

Just hold on to the asset. You know, now there are many wealthy people out there who just that one thing with two or three houses did, you know, with what we’re doing with bonds and stocks. Whenever we buy something, you know, blood in the streets, whenever we buy something that our algorithm says is dirt cheap, we’ll buy it. And immediately, we’ll sell the index. 

So, when we buy the stock or the bond, and we sell the index with the equal amount just like the farmer, what we’ve created is a spread, and what we’re all looking for the spread to do is just to come together for the underpriced value purchase to come closer in the spread to the index itself, and then we close. We close out our average stock trade time, which is five days, and we’ll turn it over. We’ll turn over investors’ capital 500 times in a year. 

Now imagine 500 times turning over my capital in a year with a 70%-win rate and making this last month 41%. You know we did 2.24% yesterday in one day doing a demonstration for investors. Every single position we take is an arbitrage position, meaning a spread trade is now on the opposite end. Of the curve. Something which you can do with stocks and bonds. You can borrow a bond or stock and sell it short, so it’s wildly overpriced. Compared to its peers, we sell short, and then at the same time, we buy the same notional value of either, let’s say the Russell 2000 is the stock index we trade on, or we trade on the LQD I shares, which have 2500 investment-grade stocks, the best companies in the world. Right on the LQD, it’s run by Black Rock, and we trade only triple B-plus-rated companies. 

So we will sell short. That security and, at the same time, we buy the same notion of the value of the index, which is basically what we call buying the spread now that confuses it because you’re selling the secured. You’re buying the ETF, and we’re waiting again for the spread to come closer and back to its relative value. Our maximum holding time with a bond position is ten days, and then we close it out with bonds. We’ll turn a portfolio over about 250 times a year.

Eric, that’s pretty disruptive overall in your industry. You think about it, you know.

It’s so disruptive. Nobody in the industry is interested in getting it. Why? Because they’re doing everything manually. You know, Grandma has always cut the ham edges off on both sides of the ham. Therefore, we do it because that’s what she did. In other words, custom with. Banks and financial institutions. Who is making money? They make money from their management. If they don’t want to change what they’re doing well, they’ll have to lay off—a lot of them. People, you know, giving people pink slips is hard. It’s hard to lay off people, and there was a recent conference in Barcelona. All the big names, multi-trillion-dollar bond funds, Black Rock, and the other different bond funds agreed together. AI is a long way away from trading bonds. The manual trader still rules the roost, and I read that article. This was just in Barcelona last month. They all agree. And I clapped. I said, oh, that’s great. That’s wonderful. I love it.

So you clapped because now that’s. It’s an opportunity for you guys to disrupt, right?

But isn’t that the way life works? Somebody else is somebody else’s stable way of doing things, which has grown old because of technological advances and the advantages that COVID-19 has given us.

The Rose.

Which was time. And we used the time wisely. We now have something as disruptive. And each of your listeners can come up with something disruptive in their own life that can individually carve out a second source of income. And you know the minimum amount we can take in our managed accounts is 110,000 to get enough margin with our prime. Broker to be able to make these kinds of returns.

Is there any project you’re working on right now that you want the audience to have a straight glimpse of in addition to this?

Suppose you take a global view of what’s going on. In the economy now, of course, the political influences on economies are overpowering, and we are one year away from the general election; typically, one year away from a general election, everything is rosy with the stock market. That’s well; we saw what happened this last week. We had the greatest bull in the last few years in the S&P; just the last four days were, I believe, the largest one-week increase in the S&P for several years, several years anyway. Between now and the elections, when the new president will be announced, whoever that will be, the present economy is under the control of the administration and their colleagues over at the Federal Reserve. 

So, they’re going to do everything in their power. To keep the stock market moving so everything looks rosy for the consumer, it doesn’t look so rosy because he doesn’t have a $1,000,000 or $20 million portfolio performing well like the major hedge funds do as we do. But once the election’s over in 2025, there are several. Great minds are saying, including Ray Dalio, who’s saying cash is a good thing to hold now. Why? There will be opportunities coming soon, which, from an investment standpoint, will be affected by a great correction, whether real estate, stocks, or any asset class. That will be, we say, once in a generation. 

We don’t say once in a lifetime anymore because life seems to move so much quicker because of the information age. We now live. In and that will be great. You will. Wealth creation and opportunity go from normal consumer-type investments such as real estate and small stock portfolios to acquiring companies. 

A record number of baby boomers have built successful businesses that will need to sell their businesses and retire simply because they have to get old; they will, unfortunately, have to sell their businesses for a bit less, especially if they haven’t done proper financial planning and have had to take—debt recently, which is much more costly than it was three years ago when everything was. I was running at. When you’re running a 0% Fed funds rate, money flows, and it’s cheap, and everybody gets used to it. Those days are over for a while.

Yeah, I couldn’t agree more. It’s like what a 5.5% federal interest rate is like eventually.

We think that’s high. Well, it’s not high. I mean, when Paul Volcker came in back in the 80s. The Fed funds rate was what you’ve studied in his recent history. Very good. I think it went up to 18% or 15%. I don’t remember what the Fed funds rate is. They’re the numbers there, but it was three times as high now. People think oh, interest rates are so high right now. They’re not historically.

Like from the previous decade, right, like 2010, it’s where they put it at. Like, after, between 2008 and the end of 2022. For about 10 to 14 years, their interest rates were low, like .25% point 5%, zero percent, and people like the Gen. Z generation grew up with interest rates. 

So money was just coming in; these things are just being inflated away over time. And yeah, nobody saw it. Have they not been used to a 5.5%? Is it from your perspective? Yeah. But like for the Gen. Z like. They’re like, wow, 5.5%. So, a correction is in order, you know. That this can only. Leading to a downturn in the economy. A period of.

Well, 5 percent 5.5% is, from a historical perspective, a very fair interest rate, if not low.

That’s the ultimate irony, isn’t it? People are talking about this being high. But yeah, you’re right.

In the last 1,520 years, we have had extraordinarily low-interest rates, between less than 1%, and people have just gotten used to it for an extended period. 

But, Frederick, how can the audience connect with you and get to know you more about you and your work?

They’re welcome if they are interested in learning about our trading strategies; you can go to our site, quantumverse-api.com, learn a little about Paul myself, and read our investor decks. 

We have videos that we’ve been posting there fairly regularly since recently. We can learn about ETF arbitrage when we come out with our book. We’ll be happy to offer it to your listeners at a discount, and I would suggest it to listeners starting at the base level, saying I’m in debt. 

I’m not making enough money and need to get out of debt, fight inflation, and build wealth. Then, the different resources that I’ve mentioned. It would be helpful as a beginning.

That is awesome, ferric Ferrick. I’m so grateful you took the time to do this podcast because of your wisdom and knowledge, and, like finance and markets, I can go hours asking you questions, and I would still not run Out of questions to ask you like there’s so much that mine. But, like, this is like a 45. It is a one-hour podcast, so I must stop Now, but it was an honor.

Is that how long we’ve been going? Oh, and I didn’t prepare for this. It is all spontaneous Cosmos.

No, I know, I know, I know.

But like, yeah.

You’re so knowledgeable about all these things, and what you’re saying? Is right, you know, and so yeah, it’s. It’s an honor to have you. And I will be. I’ll be grateful to have. You are on the show at a later time.

I’m happy that I’ve been able to spend this time with you. It’s a Saturday afternoon.

Yeah. Thank you so much, and I want. To conclude this show. By letting my fellow extraordinary Americans know that. Look, there’s an extra ring within every one of us, and we must awaken it and unleash it until next time. Bye for now.