The Economic Reset Nobody Is Ready For | Eli Mikel

Buy Eli's Book, TIME: A Map For The Crossing: https://www.amazon.com/TIME-Framework...

Buy Karlton's Book, The Art Of Legal Tax Avoidance: https://theartoflegaltaxavoidance.com...

Earning $500k or More? Book a FREE Tax Assessment Call with Karlton's team at Tax Alchemy: https://start.taxalchemy.com/consulta...

Most people think the economy is just going through another rough patch. Eli Mikel looked at the same data and reached a very different conclusion: the 300-year deal where you trade your labor and get capital in return is quietly breaking down, and AI is the thing breaking it. This episode is about what kind of moment we are actually living through, and what to do with your money before the window closes.

In this episode, Clockwise Capital founder and "Time: A Map for the Crossing" author Eli Mikel explains why he believes we are closer to a major economic reset than most people realize. He breaks down the six cycles his AI system Kronos uses to read the economy, the 2027 to 2029 "debt wall" that has to be resolved, and the four scenarios that could play out, ranging from a managed deleveraging to a 1929-style crash. He also lays out why the classic 60/40 portfolio is finished and what he calls the new 60/40, the Time Portfolio built for an era of inflation and volatility.

If your job feels less certain than it did a year ago, this is the framework for getting ahead of it. Eli makes the case that as we move from a labor economy to a capital economy, your portfolio becomes your income, and the people who cross safely are the ones who own capital before the reset, not after. Whether you are an investor, a business owner, or someone just trying to make sense of the headlines, this conversation gives you a map, a vehicle, and a starting point.

Chapters:

00:00 The reset is closer than you think
00:26 Who is Eli Mikel: Clockwise Capital and the book Time
01:24 From Schwab to first principles: how Eli got into finance
04:07 Beyond Modern Portfolio Theory: what kind of moment is this
05:16 The 3.8 billion year covenant between labor and capital
07:00 What is actually happening right now: layoffs, AI and Kronos
10:48 The six cycles that predict the reset
14:08 The Ponzi stage: America's debt spiral
16:09 How close is the reset? The 2027 to 2029 debt wall
18:41 Four scenarios: from a beautiful deleveraging to 1929
22:19 The 1929 tail risk and the end of dollar dominance
25:24 The most likely outcome and the AI bubble
29:25 How Kronos helps you position your portfolio
31:28 The Time Framework: the new 60/40
35:19 Private markets, alternatives and uncorrelated bets
38:11 The post-labor society: your portfolio as income
43:15 The book, Kronos and where to start
47:11 Close and where to find Eli

Transcript

SPEAKER_00 0:00

They expect, you know, 70% of white-collar jobs to be gone within the next 12 to 18 months. That type of scenario, we could be talking about equity uh downfalls of 70 to 80%.

SPEAKER_01 0:10

Was this the first time in history that something like this happened?

SPEAKER_00 0:13

Well, um, I don't want to scare the audience, but uh I would say that we are closer to that reset uh than further away.

SPEAKER_01 0:26

Welcome back to the Wealth Made Simple Show, everybody. I'm here with a very special guest, Eli McHel. I wanted to make sure that I opened up by giving this man a solid introduction because the conversation that we are about to go into today is going to be powerful and very relevant to the times that we are in. Eli McHel is the founder of Clockwise Capital and the author of Time, a Map for the Crossing, a macroeconomic framework focused on the structural transition driven by artificial intelligence. His work centers on the idea that the traditional model of exchanging labor for income is breaking down and that individuals must shift towards ownership and capital participation to remain economically irrelevant. Without further ado, welcome to Wealth Made Simple. Eli McKell, welcome to the show. Thanks so much for having me. It's exciting to have you on the show, man. And I'm really excited to talk a little bit about the AI stuff, but you and I have a little bit more of a background in finance. And I want to tell the listeners that are here, how did you get into finance? And we'll bridge over to AI in a second.

SPEAKER_00 1:26

Sure. Yeah, you know, I started off um in finance almost 20 years ago now, uh, 2007. Uh I really looked at the landscape and said, you know, I want to figure out, you know, how I can make change in in accordance to sort of what inspired me to get into finance, uh, which was that, you know, I grew up in a family where investing wasn't something that um, you know, we talked about a lot, where financial education was not big around our kitchen table. Um, and and the access to certain tools and certain conversations just were not there. And so what inspired me to get into it was to create that access for that next generation. And so um that has sort of been my guiding tool, my my guiding map, if you will, uh as I've sort of matured in my financial career. And yeah, uh AI now is a big part of that and sort of delivering that access.

SPEAKER_02 2:23

Yeah.

SPEAKER_00 2:23

Um, but you know, all along the way, um, it's sort of been that guiding principle of how can I provide uh more access and more financial education?

SPEAKER_01 2:31

Absolutely. When it comes to financial education, most people think, okay, reading a financial book or getting a financial advisor, which side of the table do you feel like you sit on? Were you getting yourself educated in the finance space on your own, or did you go down the path of wanting to become a financial advisor?

SPEAKER_00 2:46

Yeah, so you know, I kind of took a little bit of a different route. Um, I started off and I said, well, I want the traditional education, I want the traditional background in corporate finance. And so I started off uh at uh Charles Schwab, TD Ameritrade, uh TD Ameritrade now, Charles Schwab, uh, really worked my way up the corporate ladder, got to understand the industry. Um, and then I said, you know, I I want to figure out um, you know, really what's gonna take this industry and be able to sort of shape it to where the environment and where I think the environment's going.

SPEAKER_02 3:20

Yes.

SPEAKER_00 3:21

And so that led me to really have an understanding of um, I think a much broader uh depth of domains. Um, you know, I studied things like physics and biology. Um, I studied things like chemistry um and how things, different things come together. Um and I tried to take some of those components and some of the authors that I lay out um in my new book, Time, uh a map for the crossing, um, and sort of sequence those together, synthesize those together, uh, bring those into finance. And I think in many ways, by that synthesis, we were able to discover something new. Um, and that that that discovery of something new then led me to a realization, which um I'm sure we're gonna get into.

SPEAKER_01 4:06

Oh, yes, we are. I want to talk a little bit more about the theories that you kind of developed over time, working with Charles Schwab and then climbing the corporate ladder. Most people kind of get taught like a modern portfolio theory. How do some of the philosophies that you've learned differ from that?

SPEAKER_00 4:21

Yeah, well, um, you know, what I tried to do is take that diverse background and approach finance more so from a first principles perspective. Um, and I said, you know, well, what is actually driving investment returns? Um, you know, how should portfolios align uh with the current market that we're in? Um, and it really made me take a first principles view of, okay, well, what kind of market is this? Um, which the next sequence sort of led me to the question that I lay out in the book, uh, which is, what kind of moment is this? And to me, this is a pretty unique moment. And what um we sort of were able to discover through that process is that um this moment is unlike any other um that we've ever experienced, really, not just in finance, not just in economics, um, but really in the history of civilization. Um, you know, we lay out in the book that, you know, um matter starts solving problems about 3.8 billion years ago. And that matter is primarily carbon-based matter. And that matter goes along and it comes to uh a point where we get to sort of the industrial revolution, which started uh about 300 years ago. Um and within the industrial revolution, there was an implicit covenant uh between labor and capital. Um, you know, you trade your labor and you get in return capital. Um, we feel as though we're in one of those moments where that covenant is breaking down.

SPEAKER_02 5:53

Right.

SPEAKER_00 5:54

Um and that's explicitly tied to AI and the technology cycle that we're in. Um so we ask ourselves, well, um, where all where is all this going? Is this a is this a is this a positive? Is this a negative? Um and you get people that line up on both sides. You get people that say, um, this is something that is gonna be uh revolutionary, it's gonna be positive, it's gonna make us uh have you know not just universal basic income, but universal high income. Um, you know, that's kind of the Elon Musk camp.

SPEAKER_02 6:23

Yeah.

SPEAKER_00 6:23

Um and then you have people that say, well, um, you know, this is we we have to go through an economic reset and and we need to uh figure out what to do with all this debt that we have. Um and you know, AI might lead us to sort of the apocalypse. Um, I was reading about uh from a physicist, David Gross, who is saying that within the next 50 years, uh civilization could struggle uh from an existential standpoint.

SPEAKER_01 6:50

Wow.

SPEAKER_00 6:51

So you have the full spectrum of optimism and pessimism. And the question that I wondered is how does solve how does finance solve this? How what is our role? What role do we play in addressing this moment? Yes. And that's what we tried to lay out in uh time, uh, a map for the crossing, and that's what we tried to input within our AI uh that we've named Kronos.

SPEAKER_01 7:13

Okay. So, Eli, tell us what's happening right now. You know, we're looking at the markets, it it's it's looking a little bit bleak. It seems like things are just going up, then they're going back down. Trump makes a tweet, then things happen. There's things that are out of our control, it feels like, with the straight-up hor moves and just the things that are going around the world. And then there's so much uncertainty with employment right now. We're seeing um people getting let go of their jobs. I know uh Facebook announced that they might be letting go 14,000 employees. Oracle, I believe, already let go 30,000 employees, and we're hearing data centers, data centers, data centers. What is happening right now? How do you describe what's going on?

SPEAKER_00 7:51

Yeah. So um, you know, what what we've tried to do is lay out um within the the cycles that we discuss, and uh, and and cycles are sort of a big part of um our our underlying operating system with respect to our AI. Um, our AI basically looks at uh different various cycles, and for which we measure about six different cycles, um, and we we can get into what those cycles are. Um, but we look at those and everything that you just described, uh, you know, the war, um, what's going on with AI and and you know, the sort of job uh replacement uh forecasts that are currently out there. I was listening to the uh CEO of of uh Google AI, and he was saying that uh they expect um, you know, 70% of white-collar jobs to be gone within the next 12 to 18 months. So you look at all this and you and you ask yourself, you know, how do I make sense of all this? Well, the interesting thing is uh the cycles that we analyze would predict all of this. Um they they would show you that the things that are happening, not in their very specific form, but um the overarching uh things that are going on and and uh the wars that we're having, the the the you know what what uh Ray Dalio calls the external crisis.

SPEAKER_01 9:13

Yeah.

SPEAKER_00 9:14

Um, you know, the the the the area that we're in within the cycles would predict that this is exactly what's supposed to happen uh from a geopolitical perspective. Um within the technology cycle, uh we follow a woman named Carlota Perez. Um and she talks about uh the different phases that the technology cycle is gonna go through. So everything that we're seeing in terms of job displacement, that would follow Carlota Perez's uh technology cycles.

SPEAKER_02 9:41

Yes.

SPEAKER_00 9:42

And so um, you know, these things are not happening randomly. Um, they're very ordered, um, almost in a almost alarmingly ordered. Um and we we talk about, you know, what's some of the underlying driving forces that create that order.

SPEAKER_02 9:58

Yeah.

SPEAKER_00 9:58

Uh again, laid out in our book, uh Time, uh a map for the crossing. Um, but though those things that we're seeing right now and we're all experiencing viscerally, um, those are things that are pretty uh apt and and and appropriate for where we are within the cycle, albeit very uncomfortable for us as a society.

SPEAKER_01 10:18

Yeah.

SPEAKER_00 10:19

So the question is, uh, what do we do about it? How do we prepare ourselves for it? That's that's what we uh that's what we do at Clockwise Capital.

SPEAKER_01 10:26

That is the question. And I would say that a lot of people right now are operating with a little bit of fear, but it's you're sitting here calm right now, as if this was something you kind of already knew was was going to happen. So talk to us a little bit about how you've been taking data and building something that can allow for us to predict what's happening today.

SPEAKER_00 10:44

Yeah. So, you know, um let me lay out the cycles and and and then I think it'll help to kind of give um people context around uh kind of what they're experiencing right now. And what the cycles basically do is it gives us a way of measuring the um economic lifespan and life cycle uh of an economy. Um, and the light the lifespan and life cycle of an economy. And a lot of a lot of what we see is more or less a sort of scaled up representation of a human's life cycle. So if you think about that analogy, um, you know, a human goes from birth to puberty uh to adulthood to uh middle age and there's into to older age, and there's basically four cycles uh that every human goes through. You know, when you you you get to puberty, that's one, uh going through um from puberty to about 25 years old uh is two, 25 to middle age is three, and then late cycle is four. Um well economies go through those exact same cycles. And so um the the uh researchers and economists that we follow that create these cycles, um, you have one, um, Nicholas Kondrachev, which uh is an economist that comes out of uh Russia in the 1920s. And he talks about complex adaptive systems and capitalism and an economy being one of them. So he talks about the birth of the cycle. Um the second would be uh Ray Dalio, who talks a lot about uh the mechanics and sort of what we think of as the physics of the cycle and the different phases that he lays out there. Um we then get to um, you know, why do these cycles take place? Why do they keep recurring and happening over and over throughout generations? Um, Strauss Howe uh lays that out in his book, Generations. And they talk about um the real reason behind why these cycles keep taking place over and over again, uh, is because society largely has sort of this um entropy moment where it goes from early on as we lay out sort of the four phases, um, in the beginning, uh as we after we go through sort of a uh an economic reset, um, people are a lot more cohesive. Um, they preserve institutions, they value institutions. Well, over time, uh there's more of a inclination to be more individualistic and more expressive.

SPEAKER_02 13:20

Yeah.

SPEAKER_00 13:20

And so that's what we're seeing now. We're at the later stages of that cycle. And as a result, uh people are a lot less inclined to preserve um and think about the institutions that got us here. And so you sort of see that in in in uh on in cycle number four. Um and so you you get then to a point where you ask, well, what sort of breaks the cycle? What's behind the reset? For that, we look at uh a gentleman named Hyman Minsky. And Hyman Minsky talks a lot about uh the different phases of how we get to a breakage within the cycle, for which the last stage would be uh the sort of Ponzi stage with respect to uh debt and the debt cycles and the debt that we've accumulated. Well, right. Why do you call it the Ponzi stage? Uh they call it the Ponzi ski Ponzi stage because what's happening is that they're we are having to borrow money uh just to pay for our debt. And so um it's a Ponzi because you are literally taking money uh uh uh that you made in terms of taxable income, and you're using that money to pay interest and expenses. Well, that can only last, but for so long. Right. So that leads to a debt cycle, debt spiral for which uh at some point that breaks. And we lay that out in the book for which there is a specific window of time that you would expect that in.

SPEAKER_02 14:43

Yeah.

SPEAKER_00 14:43

Um, so that that's what breaks the cycle. Last two, I'll run through real quick. Carlota Perez, I mentioned her before. She talks about the rebirth. After we've reset the cycle, we get to a new stage. And technology ends up being the sort of birthing mechanism of a new cycle. And she lays out how that how those will play out. Uh, and lastly, we see the sixth within uh a gentleman named Richard Foster, and he talks about how companies um and how this how the different cycles and the speed of said cycles um end up compressed compressing the life cycle and lifespan of individual companies. Yes. And so if you look at that data, um 1959, the average uh lifespan of a company was 61 years in the SP. Uh now it's under 20. Wow. Right. So what so so you take all those together and uh Kronos, which is our AI, then analyzes huge amounts of data in order to uh put those into those different cycles. We sprinkle in some clockwise proprietary, and what we get is a map. Um, and that map allows us to say, okay, where are we within the broader economic cycle with respect to uh when we can anticipate a reset for which we lay out that window, uh, and then what the other side looks like in the destination that we're going to.

SPEAKER_01 16:08

Yeah. When it comes to this reset, I'm interested to figure out where you think we are and how close we are to a reset. And what would that look like for us?

SPEAKER_00 16:17

Uh, well, um, I don't want to scare the audience, but uh I would say that we are closer to that reset uh than further away. Um and I'll I'll sort of lay out the window and then I'm gonna back into uh why I believe we're closer to that. So the window of time, and this all has to do with debt. Um it has to do with the fact that we're at um when I wrote the book, interestingly enough, uh, which was only you know a few uh months ago, um we were at 125% debt to GDP. Uh now we're at 130%. Um so these numbers get big pretty quick. The compounding effect uh gets alarming. And so um, you know, we have to resolve that level of debt. And that that that debt that the US has is not just uh a US debt problem, it's a global debt problem.

SPEAKER_02 17:12

Right.

SPEAKER_00 17:12

Um and so how does that debt get resolved? Um, you know, we look at the interest rates and we've done, you know, the math on when those payments come due. Um, and there's a debt wall uh that has to be resolved. And that debt wall essentially says that uh about 60% of that debt that we have that's outstanding uh will come due in the next two years. Um and then there's a specific time window of 2027 to 2029 uh that that debt wall has to be resolved.

SPEAKER_02 17:44

Yeah.

SPEAKER_00 17:44

And we lay out the four stages for how that debt wall is is likely to be resolved. Um and so um Kronos can predict the window. Uh, Kronos can predict what needs to be done in order for that debt to be resolved. Uh Kronos cannot predict the exact specifics of uh when that actually unfolds.

SPEAKER_02 18:05

Right.

SPEAKER_00 18:05

Um, but within a but within a rough framework, you would fully expect for the types of things that we're experiencing now in the news, um, the types of things that we're going through uh more broadly speaking to occur that historically does occur associated with said debt.

SPEAKER_01 18:21

Yes. So when it comes to this debt, I mean, from somebody who is listening to this right now, it seems like the US always comes up with some type of a solution, right? Some type of way to kick the can down the road. How many times can we keep kicking the can down the road? Do we have the ability to refinance? Are we kind of stuck right now? What's the way out?

SPEAKER_00 18:41

Yeah, so we lay out there's four different scenarios. Um the can can be kicked down the road. Um, and that's, you know, that that that is baked within these scenarios. So I'll lay out the scenarios and then I'll tell you what likely happens in terms of the can being kicked down the road. So the four scenarios are um that they're um, you know, what what Ray Dalio has called a beautiful deleveraging, uh, which is that there is um uh a policy um structure that would allow for uh the debt uh and the interest rate on said debt to be lower than the overall inflation rate. And so if you can pull that off from a policy perspective, then you still get a deleveraging of the debt, um, but it's systematic. Yeah. And it's done in a way where um you're gonna lose some of your value within uh debt instruments, and and that includes cash. So you still get inflation, um, but you get a managed deleveraging of the debt through inflation.

SPEAKER_02 19:43

Right.

SPEAKER_00 19:44

Uh that's scenario number one. Scenario number two is what we believe is the most likely scenario, which is that uh you don't have the necessary policy will in order to manage that kind of beautiful deleveraging. And as a result, you essentially get a scenario where um the debt um becomes uh unmanageable um and the uh central bank has to buy back the debt, um, which means that they're going to pump a lot of money into the economy in order to do that, which means all roads lead to higher inflation.

SPEAKER_02 20:19

Right.

SPEAKER_00 20:20

Um, in that scenario, you likely get a similar situation to like 2022.

SPEAKER_02 20:26

Yeah.

SPEAKER_00 20:27

Um in 2022, we saw stocks fall 20, 25%. Um, but the interesting thing about it, what usually happens in uh as stocks fall is that bonds rise, right? We all know about stock that stock-bond relationship. Um, but in 2022, long bonds, bonds uh with a maturity that are greater than 20 years, actually fell. Right. Uh and they didn't just fall a little bit. They fall, they fell 40%. They felt double that of the that of stocks. Yes.

SPEAKER_01 20:59

So that's the first time in history that something like this happened?

SPEAKER_00 21:02

That is the first time in history that um for US history, yes, that that something like that happened. That that that's correct. Usually um what happens is that you get a situation where uh you have a 2008 type of scenario where in 2008 uh you get stocks crashing, bonds soared. Bonds soared. So um the SP 500 was down in 2008, uh, call it 40%. Uh, you get stocks that are up close to 20%, right? So your 60-40 portfolio, your stock bond traditional portfolio, uh buffers you against that volatility. Yes. Um and and that type of scenario would be uh a phase two, a scenario number two uh of a deleveraging. So a 2008 type of uh fall in the markets. Um in a in a in a situation where I'm sorry, in a 2008 style fall in the markets would be scenario number three. So you so you have number one would be a beautiful deleveraging where uh the the the debt gets resolved through uh financial lower interest rates refinancing. Yes. Number two would be 20 2022 type of situation. Number three would be 2008. But the big one that we have to be careful of, and and we give this a low probability, but um I think it's a risk that is worth uh talking about is a 20 as a 1929 uh type of situation. Um, in which case you get stocks falling 70 to 80 percent.

SPEAKER_01 22:38

Okay. Um 1929, stocks fell 70, 80 percent. What happened in 1929?

SPEAKER_00 22:44

Yeah, so in 1929, you get a interesting um dynamic and an interesting setup in the market. So um you have a lot of similar euphoria to what we're experiencing now. We went we went through the roaring twenty the roaring twenties, and you have uh people that um essentially said that technology is going to lead us out, that um, you know, you had productivity rates going through the roof. Uh, we were on the the precipice of uh the second industrial revolution, the first uh um that actually started here in the United States.

SPEAKER_02 23:20

Yeah.

SPEAKER_00 23:20

Um and and you essentially had people saying that uh the stock market can never go down. So what happens when people make that claim? They take out a lot of money and they borrow a lot. Yeah, right. Right now, if you look at uh overall private credit, you know, we've healed we've we've seen a lot of borrowing, a lot, you know, just Jamie Diamond was just talking about it's a lot, you know, he I think his statement is there when you know when there's cockroaches, uh, there's not just one, there's many.

SPEAKER_02 23:46

Yeah.

SPEAKER_00 23:47

Right. So we we have an issue with respect to um private debt. So a lot of the same setup um as we had in the 1920s leading up to 1929. Um, then what happens in 1929 is what happens in every cycle, which is we had a Minsky moment. And that's what I was referring to in terms of uh Hyman Minsky. Uh the debt got to a point where it just cannot be resolved any other way. Okay. Um and there was a deleveraging. The the issue there is that um we're now in a moment where if we go through a 1929, we live in a world where it's much more interconnected. We live in a world where um um you're talking about the speed of information uh is much, much faster. In 1929, people didn't find some people didn't find about out about the market crash until you know weeks or months later. Now it shows up in your phone instantly.

SPEAKER_02 24:43

Right.

SPEAKER_00 24:43

So the question becomes um, you know, how would we resolve that in 1929 um if 1929 were 2029? So um that that type of scenario in a deleveraging situation um is is a lower probability, but it's based on um really the uh US dollar being uh no longer the sort of hegemony um and the the world's reserve reserve currency that it has been in the past.

SPEAKER_01 25:14

Yes.

SPEAKER_00 25:14

And if we go through that type of scenario, um, we could be talking about equity uh downfalls of 70 to 80 percent.

SPEAKER_01 25:23

Yeah. But when it comes to the different scenarios that we just talked about, the one that you're leaning towards the most would be scenario number two, which is the money printers turning back on. And in that case, we might see markets crash, but then possibly even a slingshot back up. Is that possible? Would you say?

SPEAKER_00 25:40

Yeah, that that's possible. Um, the estimate that Kronos has run um is that uh if we go through a um 2008 um or or 2022 type of scenario, um, is that we would actually fall about 40%. Um so that that that is the estimate. Um, it's based on the um the math that Kronos does based on where valuations are. Yes. Um, and you know, getting in into sort of the more nuanced finance part, you know, valuations are sitting at all-time highs.

SPEAKER_02 26:18

Yes, they are.

SPEAKER_00 26:19

You know, we're we're priced for perfection um with respect to this AI boom, uh, which is exactly what Carlotta Perez's technology cycle would predict.

SPEAKER_02 26:29

Yeah.

SPEAKER_00 26:30

Um her four phases, you go through, you have an installation phase in which the technology becomes deployed, and then you go through a frenzy phase in which the bubble grows and expands. And there is uh exuberance and there is some irrationality. Um, and before you get to uh the other side, which is the the golden age, uh you go through the turning point. The turning point is a reset with respect to expectations around the technology cycle itself.

SPEAKER_01 26:59

100%. One of the things that I'm hearing from people that seem way smarter than me in investing is that we have this AI bubble and that the SP is entirely propped up by companies like NVIDIA. How do you view that when someone says a statement? And how should the average investor approach their portfolio?

SPEAKER_00 27:17

Uh, you know, I I think that um every investor should make sure that um two things. One is that um they're assessing where the market is from a overall broader, as you know, cycle perspective and how we view the market. But what it asking the question, what is the market environment that we're in? Um and taking, again, really a first principles view of that to say, um, is this market like the market that we've been in for the last 20, 30 to 40 years? Um, are the next 10 to 20 years likely to be like that? Um, we think the answer to that is no. Um, the second question they should ask themselves is what type of portfolio uh would make the most sense to align with that environment. Um and so, you know, we we at clockwise have um what we call our time portfolios, which are set up to uh maximally align with the environment. Um but in terms of individual securities, um, you know, it's one of those where uh it's extremely difficult right now to um to really assess is this the right price for this particular company?

SPEAKER_02 28:33

Right.

SPEAKER_00 28:34

Um, you know, when when we think about companies, we primarily think about uh multiples. Um so, you know, what what is the multiple? What is the um um, you know, what what what is this company trading at? What is the valuation appropriate uh for this company given the expected growth that it has? Um and so right now, again, um most of these companies are priced for perfection. Um and so the question becomes, um, you know, if you have some of these companies, I would make sure that two things. One is you take a long-term view uh because we could go through a significant reset. Um, if you're not comfortable with the expected volatility, um, I would try to figure out what that looks like in terms of what you can expect, um, for which I think asking Kronos would be a great first start.

SPEAKER_01 29:26

Absolutely. Talk to me a little bit about how Kronos helps an investor make decisions around their portfolio, or at least how they think about investing.

SPEAKER_00 29:35

Uh, yeah. So, you know, um what Kronos is going to do um, first and foremost, is going to assess uh where any individual is. And the the nice thing about what what Kronos was built and designed for was to help us internally manage portfolios. Um and we use Kronos the exact same way that we recommend the external public uses Kronos. Um we come in and we describe uh questions that we have as it relates to the environment that we're in. And we say, you know, for example, um, you know, we just went to war with Iran. What should we expect from the markets and what should we expect? Uh how should we expect our portfolio to hold up? Um and Kronos is going to give you an answer. And Kronos is going to break down uh the expectations as to um, you know, what the market's likely reaction is based on where the cycles are and what what one would predict uh with respect to um what's happening right now and how that maps on to what the expectation of what should happen. And so um Kronos is going to give you that, and then Kronos is going to say, based on where we are in the cycle, based on the expectation for the environment, um, here's the type of portfolio that historically uh has done well. And then you're gonna have to ask yourself, well, is that portfolio the right portfolio for me? And how should I make changes in my portfolio based on uh that expectation set if I share that same worldview? Yeah. So that, so, so that that's the same way that we use Kronos to sort of back test ourselves and strengthen our own uh portfolio disposition. Um, that's how we recommend the public uses it.

SPEAKER_01 31:28

Understood. When it comes to some of the things that you guys are doing to help uh people build wealth, you guys use frameworks, one of which I researched is called the time framework. Can you speak on that?

SPEAKER_00 31:36

Sure. Yeah, so um what this comes back to is um, you know, uh the ideas around what the 6040 is supposed to do. And I use that, you know, the 6040, 60% stocks, 40% bonds. Um, not to say that every portfolio is uh, you know, 60% stocks, 40% bonds, but as a proxy for uh what has done well historically and a benchmark and a starting point um for an environment that we think we're no longer a part of. And that environment was one where um you wanted to at times lean into stocks, lean into equities when uh growth expectations were high. Um, and you wanted to uh lean into fixed income when you expected volatility. Uh well, the interesting thing about it is that um, you know, with a 6040, the beauty is you don't need to make that many changes with respect to that dynamic because for the past 40 years, interest rates have been going down.

SPEAKER_02 32:43

Yeah.

SPEAKER_00 32:44

And as a result, bonds have held their place. So you didn't need to be that dynamic with your portfolio. You could set up a 6040. Um, and that's why that was the recommendation. And then set it and forget it. Set it and forget it, make tilts based on your overall risk tolerance, uh, based on your own personal situation. Are you getting close to retirement? Are you just starting off? Um, but we use the 6040 as the benchmark proxy and then make tilts around that.

SPEAKER_02 33:11

Yeah.

SPEAKER_00 33:11

Um, we think that era is over with. And that new 6040 um that needs to emerge is the time uh benchmark and the time portfolios as a result. And so what we talk about in that regard is um, you know, if the intent of the old 6040 was to buffer volatility, um, again, during times of pullback, uh leaning into growth, but also having a buffer with respect to bonds, um, if bonds and and stocks are now positively correlated and essentially are moving up and down together, bonds no longer serve that role as being that buffer.

SPEAKER_02 33:48

Yeah.

SPEAKER_00 33:49

And so the question becomes what is that new 6040? You know, what what is the new portfolio that is going to buffer volatility when we just laid out that we have absorbent risks ahead of us of anywhere from a 20 to 80% downturn in stocks? You know, what is that 6040 portfolio that people should um apply as their reference point in order to manage that volatility?

SPEAKER_02 34:16

Right.

SPEAKER_00 34:17

Well, what we've come up with is a um a portfolio that is designed for the current market environment that we're in. And that that portfolio and that new 6040 is the time portfolio. And that time portfolio is really based on two primary things. It's based on leaning into stocks, leaning into growth where it makes sense, like the old 60 uh 40% did.

SPEAKER_02 34:44

Yeah.

SPEAKER_00 34:44

Uh, but the 40% being much more dynamic, specifically around areas like commodities uh that can hedge out inflation, um, and explicit hedges, things that move um down and buffer you when the stock market is actually coming down. Yeah. And we think the new 6040 um is much more dynamic, um, but it's much more centered around hedging out uh overall inflation and overall um um dollar devaluation with respect to the debt cycle that we're in.

SPEAKER_01 35:18

Yeah, absolutely. One of the things that uh my friend Christian and I talk about all the time is having uncorrelated investments. And he and I are big advocates of the private market. So we want to hear your opinion on uh, you know, establishing uncorrelated investments for your audience and more importantly, how you view private markets. And is that a part of the new 6040 that you're referring to?

SPEAKER_00 35:39

Yeah. So um, you know, I think about things very simplistically. I think, you know, um there's only five things you can invest in uh around the world, right? In in total. There's literally only five investments that you have to choose from um stocks, bonds, cash, real estate, and commodities. Um, everything else is packed within there or some derivative of. And so when I ask myself, you know, what should that allocation be as we move towards this new environment where, you know, the technology cycle offers, you know, uh um, you know, abundance like we've never seen, um, but the economic cycle offers volatility like we've never seen. Um, I say to myself, well, bonds in many ways um are a real challenge to invest in. And so um I do think that that that opens up the space much more so um for alternatives and private.

SPEAKER_02 36:38

Yeah.

SPEAKER_00 36:38

Um and and and the right question I think is, you know, what's the right allocation within alternatives and private?

SPEAKER_02 36:45

Yeah.

SPEAKER_00 36:46

Um we're we we are our expertise in public markets. Um we're much more focused on our core competency, which is um, you know, designing portfolios around um, you know, investing in uh uh public, uh publicly traded ETFs, uh publicly traded diversification. Um, but we think that uh with every financial advisor that we work with, we're fully in support of making sure that they have a healthy portion that is allocated towards privates, towards, towards alternatives. Yes. Um and so, you know, to us, um, you know, that space is probably going to uh do well over the next few years. Um and and in particular, we within the portfolio even lean into um that within the ETF public space.

SPEAKER_02 37:36

Yeah.

SPEAKER_00 37:36

And so we don't, again, do this in in the private uh world. We we do this through publicly traded ETFs. Um, but we like that space with respect to innovation. Um and we typically have about 10 to 15 percent uh of that innovation exposure within the broader time portfolios. Um, however, um I would say that going more directly um and the ability for one to do their appropriate due diligence, um, there is a lot of opportunity in that space. Um, you have to be surgical, um, but but there's a lot of opportunity there.

SPEAKER_01 38:11

Yeah. When it comes to opportunities, it seems like many people feel opportunities are being taken from them with AI. And a lot of it can feel a little bit unpredictable. How do they come to terms with where their job is going? Should people be looking at starting an AI business or just having conversations with Chat GPT for now because they have time to worry about that later?

SPEAKER_00 38:33

Yeah. Um, well, listen, um, I think the the sort of public anxiety is palpable. Um, I think it's appropriate around uh what do we do um in terms of of um this you know imminent job replacement that we're all uh sort of um, even if we're not in perfect agreement on it as a collective, um we certainly all register it as a primary risk. Yes. Um and so the question is how do we prepare for it? Um we believe that we are headed towards a what we're describing as a post-labor society, um, in which um the primary drivers of labor uh will no longer be human. Um the primary drivers of GDP um will no longer be that of human beings in terms of um in in in its most explicit sense. It doesn't mean that humans won't have jobs.

SPEAKER_02 39:30

Yeah.

SPEAKER_00 39:30

Um it's just those jobs won't be centered around a capitalistic intent. Um it it won't be something where uh the only reason for a job is to earn a paycheck. Um so the question, I think, becomes where does you know, where do where does money come from? Where do the wages uh come from for people as this job uh displacement cycle takes place? We think that portfolios are gonna play a much, much bigger role.

SPEAKER_02 39:58

Yeah.

SPEAKER_00 39:58

Um, we think that portfolios have the opportunity um to be sort of a um universal basic income or UBI for a lot of people as we get again make that transition from you know labor to capital, where capital will be much more important in terms of supplying income relative to what human labor will be.

SPEAKER_01 40:22

Totally get that. So are you suggesting that a universal uh you called it employment income? Is that correct?

SPEAKER_00 40:29

Universal basic income, but universal employment income, uh, I think is is um one of those where um, you know, it result it relies on on people being um employed, for which I think that to a large degree, uh, traditional employment will not look the same.

SPEAKER_02 40:49

Right.

SPEAKER_00 40:49

Um, it'll be much more oriented towards projects, um, and and frankly, much more of a human-centric economy that again doesn't really rely on uh uh employment or or traditional labor. Yes. Um the question again, though, is where, you know, if we're in still in an economy where consumption is needed in order to uh facilitate said GDP, um, you know, how does that transition take place? Um, we think that portfolios again will play a much bigger role um and how that sort of universal basic income gets played out um as we go through the next five to ten years. Yes. Um however, um there is a growing need, we believe, that uh some form of public universal basic income will be needed. Um and and we're big How soon do you see this happening?

SPEAKER_01 41:44

Uh, you know, I I think that Do you feel like the money printers are gonna turn on first with the amount of rise in unemployment relative to what we're seeing right now happening with AI? Or do you feel like the universal basic income could possibly come way before we try to solve our debt problem?

SPEAKER_00 42:02

I think that people will have to solve their own universal basic income before the government steps in.

SPEAKER_01 42:07

Yes.

SPEAKER_00 42:08

Um, that's why I'm I'm a big advocate in more and more investors. You know, roughly about 50% of uh of the population doesn't invest. Um, we need to get more and more investors, more and more people that are participating on the capital side of the ledger. Um the challenge that we have right now is that um government doesn't have a conversation. They, they, they're they're they're completely anemic as it relates to being able to solve problems until the problem is right at their front door.

SPEAKER_02 42:38

Right.

SPEAKER_00 42:39

If you're an individual, you don't want to wait for that to happen. I think they'll eventually get there where some type of uh public universal basic income will arrive. Um, however, the wealth disparities that will happen in between that time will be massive. And so, in order to dampen that down, um, we think we have to create more and more investors. Uh, more and more investors uh have to be in a position where they feel confident in their portfolios over the longer term. Um, and more and more investors have to be ready for the crossing that we lay out in our book time.

SPEAKER_01 43:13

Yeah. Talk to us a little bit about the book time. We're excited to hear about it.

SPEAKER_00 43:16

Yeah. Um, well, you know, the the the book was basically a um it it the origin of it came from uh, you know, a understanding that we're going to have to talk about a really big conversation. And how do you have a conversation about uh a 3.8 billion year journey that started with carbon based life uh that now gets us to the current present form? And I wanted to have that conversation uh almost with myself before I was able to have it in public. Uh, and the book was basically a way to write that down so that I could uh hopefully talk about it in a coherent, coherent way. uh that that i think um helps to deliver the message to the people that ultimately need it yeah absolutely and when it comes to people getting support from you and your team would a good place to start would be the book or would you recommend that they try to go to chronos to ask questions in a different way than then they possibly could from a traditional chat GPT or a a manus for example yeah so um you know i i would say go to clockwise capital uh backslash chronos that's a good starting place um the reason why is because people are busy and not everybody has time to sit down and read a a full book in order to understand the moment that we're in um if you go to Kronos and you talk to them about okay what is this environment about um you know how should I think about the current anxiety that I have with respect to jobs how should I think about the current anxiety that I have when I turn on the news uh go to Kronos he'll he'll contextualize the moment for you in about 15 seconds. Um that is what I would say for 99% of people. If you want a more in-depth understanding of what's going on with Kronos, uh the sort of operating system that powers Kronos, the book time available on Amazon is a more in-depth version. Um what I tried to do is keep it under 100 pages. So I packed a lot in I tried to synthesize as much as I could and compress uh because again I know that people are busy and people are trying to be productive people in uh in an economy.

SPEAKER_01 45:31

Absolutely people are busy and they're trying to keep up with the times changing and more importantly they they need a place to start. A lot of people are rushing off to the internet to try to figure out what is the solution. Many are starting businesses or many are just investing in things and losing money. And what I'm seeing is fear starting to rise uncertainty starting to rise and people need a roadmap. I think a part of what you have done is giving people access to information that can help them synthesize what they're currently going through and come up with their own game plan on how they can take advantage of the markets and where they're at.

SPEAKER_00 46:04

That's well said. Yeah that's well said um yeah I on what we try to do um is threefold and and if you go to Kronos again within the vein of of saving people time uh and and being cognizant of people's time uh what we try to give them in 60 seconds is three things. First is that roadmap that you've laid out uh the second is sort of the vehicle and that's the time portfolios to have an understanding of what uh Kronos would recommend at a current moment in time. And then the third is a guide. And that guide is um you know an advisor that you can connect with uh with from in our marketplace where they can be attached to uh an investor to help them either set up a time portfolio um or take it a step further and do more complex planning.

SPEAKER_01 46:55

Yeah.

SPEAKER_00 46:55

And so we try to give all three of those the map, the vehicle and the guide in order to get to the destination of that post-labour society that we speak of.

SPEAKER_01 47:04

I love this. I'm a big framework person and I like the fact that you guys have it systematized. Where can people follow you at?

SPEAKER_00 47:10

Yeah you can follow us at Clockwise Capital um backslash Facebook Clockwise Capital bash backslash Instagram uh and also check out Clockwise Capital's uh YouTube channel Eli McKell everybody thank you so much for joining us Clockwise Capital be sure to click on the links below to learn more we're excited about your book if you don't mind sharing your book one more time with everybody we'd love to download it.

SPEAKER_01 47:32

Sure. It's called Time a Map for the crossing. You guys heard it here first. Thank you so much, Eli. Thanks so much.