How to Allocate Capital in a Firestorm of Uncertainty

Published on
April 2nd, 2020
80 minutes

How to Allocate Capital in a Firestorm of Uncertainty

The Interview ·
Featuring Dylan Grice and Raoul Pal

Published on: April 2nd, 2020 • Duration: 80 minutes

Dylan Grice, co-founder of Calderwood Capital, sits down with Raoul Pal, CEO and co-founder of Real Vision, to discuss the proper framework for successful investing in dark and uncertain times. While Grice believes that the coronavirus pandemic could trigger the "mother of all credit events," he is seeing bargains all across the asset universe, whether they're in well-known stocks, collateralized loan obligations (CLOs), catastrophe bonds, or uranium. Investors are thus subject to conflicting emotions: wanting to sell everything in order to avoid a market catastrophe, as well as wanting to buy high-quality assets that are trading at fire-sale prices. Grice describes how sophisticated investors, who have been researching specific securities for years and have enough cash to take risk now, can reconcile these conflicting inclinations by holding on to enough cash and, if one must put capital to work, sticking to the mantra, "buy what you know" – staying within what Warren Buffett calls one's "circle of competence."



  • TZ
    Tibor Z.
    5 April 2020 @ 20:06
    The only way to restart the economy is to go to a complete shutdown for at least 2,5-3 months. Each and every nation has to be isolated. Military on the streets to force people for quarantine. If you broke the rule you pay or forced service in the military fighting against the virus or can go to jail. An online portal where you have to report your travel. Let's say you go to the pharmacy or to the doctor. IF they catch you outside without a logged period you will get fined etc...After 3 months lets say the EU can open up it's borders within the member states. We need a border control that the world has never seen before because if only one illegally smuggled person gets through who is infected within 3 months the quarantine starts all over again! No external flights and only the most essential imports/export. Cargo coming into the EU need a 3 week storing (virus survives up to 17 days) and disinfect everything afterwards. Infrastructure has to rapidly evolve to this and recreate alternative supply chains. This have to go on as long as vaccination is ready, manufactured , distributed and injected into billions of people around the globe. Or an antibody, alternative medication discovered for this what makes it a harmless infection. I am wondering how long it takes for the so called world leaders to figure this out. These are my personal opinion about this issue. You can agree or disagree but I think without measurements like this we are going to in and out of quarantine for up till 18 months which makes no sense. The economy and the people will suffer longer by not doing the above mentioned.
    • CT
      Chris T.
      8 April 2020 @ 08:18
      Doubt that! You can’t claim that without any facts (which are not there yet). It’s not only about victims of virus but of shit down.
    • EL
      Eurico L.
      15 May 2020 @ 23:37
      Are you serious?
  • MS
    Michael S.
    12 April 2020 @ 03:12
    Grice's twitter headline: "People with a different worldview are not necessarily assholes. People who think that people with a different worldview are assholes are." Uhhhh, not necessarily. But I do remember my 20s!
  • CZ
    Cyprian Z.
    7 April 2020 @ 02:35
    "The difference between a fully hedged index, and just a naked index is 90 basis points" Can someone at RV pls confirm what exact DB indices Dylan used to confirm this? Struggling to find it. Thanks a lot
    • Am
      Alex m.
      11 April 2020 @ 13:55
      Yes! I would be interested to hear more in this too?
  • JW
    James W.
    2 April 2020 @ 22:46
    Very insightful but Raoul please ditch the blasphemy
    • SM
      Sergio M.
      3 April 2020 @ 01:10
    • BM
      Beth M.
      3 April 2020 @ 02:35
      Raoul, do kiss your mother with that mouth??
    • PW
      Pete W.
      3 April 2020 @ 22:17
      Grownups swear. DWI.
    • RP
      Raoul P. | Founder
      4 April 2020 @ 19:39
      Real Vision is different because we act naturally. We are real people, not talking heads. We don't put on a show. I happen to use swearing frequently as it conveys emphasis, humour, joy, anger, etc. It is very powerful for communication. And yes, I swear talking to my mother, as she also swears too (but a lot less than me!).
    • AD
      Andy D.
      7 April 2020 @ 20:30
      How quaint !?
  • PH
    Pompeu H.
    7 April 2020 @ 00:36
    Interesting and had a lot of fun watching it. Many thanks
  • AT
    Andrea T.
    3 April 2020 @ 17:03
    Please stop this war comparison. Hitler killed 6M Jews. Stalin 100M people. And those are just two dictators. Covid has killed so far 57000 people worldwide. 98.8% of Italian victims had pre-existing condition. Governments are so incompetent they cannot even agree on how to count deaths and infections. I wouldn't be surprised if there were millions of asymptomatic cases, which would mean the virus is not that lethal and that quarantines are meaningless. Early to come to a conclusion, but to me the cure is much, much worse than the problem. And I cannot help but thinking that governments know that, and that they *want* the cure to lead to a disaster.
    • MD
      Marc-Phillipe D.
      3 April 2020 @ 22:07
      I couldn't agree more!
    • ns
      niall s.
      6 April 2020 @ 22:25
      I also agree and suspect that when summer comes to the northern hemisphere there will be more people dying of sunstroke than coronavirus . Nature is self regulating ,politicians trying to out do each other is not , the fact that Modi has locked down India with less than 5000 cases and 136 dead is the proof positive of this. There are I'm told about 1 billion people in India many of them poor , why should such a number be locked down and deprived of a chance to earn a living to save a tiny proportion of their number .? It beggars belief.
  • Am
    Alex m.
    6 April 2020 @ 06:31
    Does anyone have any information on the etf that includes the put “insurance” at 98 basis points? I have not been able to find this...
  • NS
    Niki S.
    5 April 2020 @ 14:07
    Really didn’t add much
  • PB
    Paul B.
    5 April 2020 @ 07:40
    I agree with the Russian Bank....Don't agree with Uranium..."Thorium Salt Water Breeder Reactors" are the future. There is a very good reason why Uranium is cheap. It becomes a byproduct of a Thorium Reactor. The other reason is the Real Climate change has everything to do with magnetism. Good luck taming that Beast, it has a cycle and we are in it.
  • AP
    Ash P.
    4 April 2020 @ 23:14
    I love 'The Intersection'...I have to work at it not to fast forward.
  • SW
    Suzanne W.
    4 April 2020 @ 21:00
    Interesting conversation. Thank you!
  • TW
    Tom W.
    4 April 2020 @ 17:02
    Excellent interview!! Several ideas to explore, and a book to read. Thank you, RealVision!
  • PC
    Petros C.
    2 April 2020 @ 19:43
    Raoul has been talking about HYG in several of his videos over the last month. Would it be possible to publish an interview dedicated to HYG and related issues (credit risk, Fed response)? Thanks!
    • GB
      Gold B.
      4 April 2020 @ 10:44
  • AA
    Alberto A.
    4 April 2020 @ 02:51
    Fantastic! this is what RV is all thinkers with lots of humor :)
  • DP
    Dan P.
    4 April 2020 @ 00:36
    Raoul, Great interview and well timed.
  • ar
    andrew r.
    3 April 2020 @ 22:39
    Raoul, when things were melting down a few weeks ago, you warned to get out of $GLD because too many people own it, and it doesn't work in a crisis (though, of course, you think on the other side gold will be a great asset). Do you think that is still the case -- that is, it seems not much has changed, and one can't find a gold bear anywhere? Thank you!
  • JW
    J W.
    2 April 2020 @ 21:27
    Damn, that was a great interview ! Will go and have a contrarian Scotch (from India, just to annoy the Scots :-), think about it some more and re-listen later. Would love to have been part of this interview myself ! :-) Excellent. Thanks.
    • DS
      David S.
      3 April 2020 @ 07:00
      I will try an Indian whiskey. What kind of barrel do they age in? Normally I am a beer/wine guy, but I would like to try your contrarian whiskey. You will not annoy the Scots too much drinking an Indian whiskey. You will annoy them if you call it Scotch. Cheers. DLS
    • JW
      J W.
      3 April 2020 @ 09:11
      I currently have Rampur Select and Amrut Fusion.
    • DS
      David S.
      3 April 2020 @ 22:04
      Thanks. DLS
  • BB
    Byte B.
    2 April 2020 @ 17:31
    So I've only heard bad news around the covid-19. But even the experts admit they can't understand it completely,--we can't do good science without good data, and no one has good data! (Source from one of the experts: ) Therefore, one must discuss the negative and positive outcomes and try to be prepared for both. In addition to questions proposed in this interview, I'd like to propose others: --The virus might stop reaking havoc within weeks, not months, what then? --What if the "mental scaring" is overwhelmed by a feeling of winning a war against an invisible enemy or a feeling of togetherness, a connection to others who you've weathered a storm with? After crisis communities and nations come together, not apart!--See 9/11, Hurricane Katrina, etc. --What if the Fed and Fiscal stimulus ends up being too much, not too little? I ask these questions not in any form of malice, but in effort to get us all mentally prepared for continuation of a bull market. Right now everyone is rightfully stuck in panic mode. But as disciplined investors and traders, we must prepare our mental models of the world to fit both bullish and bearish outcomes, as no one is perfect at predicting the future. Please don't get trapped in panic, I've done that a thousand times. It's not pleasant, and it certainly isn't profitable. <3
    • MA
      Michael A.
      2 April 2020 @ 18:00
      Very well said. However, I think the mental scarring thing is something that is not to be underestimated. It's going to have a severe impact on the hospitality industry and will massively affect countries such as Spain and Greece at least for the next 18-24 months imo - lost jobs and piling further pressure on their debt numbers. That in itself may cause a domino effect with regards to their position in the Euro/European Union. One to watch for imo. That being said, I think takeaways will outperform dining in. Cyber Security (Kape Technologies is a fantastic company listed here in the UK) will outperform as i believe there will be a massive shift towards working remotely, even after this crisis. Business Continuing planning will probably get a revamp. Infrastructure too should get a massive boost as countries seek to de-risk supply chains and move production back to within borders. Mexico may be a bigger winner here as a beneficiary of America doing this. Lots of opportunities out there and i would seriously encourage people to take a step back from the noise and seek these out. Tech will be the big winner in this as it was in 2008. Good luck to all!
    • jr
      john r.
      3 April 2020 @ 05:31
      agree with your sentiment on this, economies work because of great ideas and collective trust. That didn't evaporate, the united front of the entire world fighting this enemy is going to create something awesome. " this is a misfortune, but to bear this worthily is a good fortune" M Aurleius
    • BB
      Byte B.
      3 April 2020 @ 15:30
      Thank you for your replies Michael A. and john r. Cyber Security does cost a whole lot less than office space!
  • PJ
    Peter J.
    3 April 2020 @ 14:14
    Great interview loved it. My Brexit percentages were the same numbers but reversed.
  • IP
    IDA P.
    3 April 2020 @ 13:07
  • KE
    Kathryn E.
    3 April 2020 @ 11:06
    Awesome interview. Thanks RV
  • bs
    bob s.
    2 April 2020 @ 20:43
    Time for more uranium. uuuu? ura? cameco? all of them? Can a cheap stock defy this likely market gravity? thx!
    • JV
      Jan V.
      3 April 2020 @ 07:50
      URA ETF rebalanced last year (away from miners). Now a very bad proxy for the uranium sector. URNM ETF is better sector ETF. It gives exposure to producers, developpers and some juniors. Might be a good vehicle if you won't dive into company specifics.
    • JW
      J W.
      3 April 2020 @ 09:58
      I bought a small amount of UUUU, UEC and URE in September last year (and have been under water since :-) but since I sized it small I can easily wait it out. One positive development is allegedly :-) this :
  • js
    john s.
    3 April 2020 @ 05:20
    I'll have whatever he's having.....
  • HH
    Henri H.
    3 April 2020 @ 05:16
    Absolutely brilliant!!
  • BP
    Brian P.
    3 April 2020 @ 04:36
    "If you created a portfolio that works, it would make you want to puke." hahaha! This is so great.
  • BP
    Brian P.
    3 April 2020 @ 04:12
    Do the hard work to attain what is hard. eh? Totally true.
  • JA
    John A.
    3 April 2020 @ 04:04
    Did this guy really just suggest to invest in CLOs at the beginning of a credit crisis? I feel like I am the only person in the world who thinks that the entire credit market works as an investment only if you can sell back to the Fed before it defaults in your face.
  • LP
    Lynn P.
    3 April 2020 @ 03:41
    Didn’t John Hussman essentially hedge his fund by buying put options? If that strategy didn’t cost much why did his fund fall so far for so long?
  • GS
    George S.
    3 April 2020 @ 00:27
    Wow...incredible stuff.
  • LA
    Laith A.
    3 April 2020 @ 00:15
    Amazing interview, absolutely brilliant.
  • SS
    S S.
    2 April 2020 @ 22:09
    Dylan should be a comedian in his next profession. He is hilarious. Great interview.
  • ca
    carlo a.
    2 April 2020 @ 20:38
    this interview did not convinced me
  • JS
    Jim S.
    2 April 2020 @ 20:36
    You really didnt know what was in HYG? Wow, now I feel like I'm actually doing my homework! Centene was one of the biggest holdings, but I dont know how LQD downgrades to junk would affect HYG... any ideas on that?
  • AS
    Aki S.
    2 April 2020 @ 07:04
    Filmed on?
    • DP
      Duane P.
      2 April 2020 @ 16:19
      Yeah, this is very frustrating. I find myself playing detective throughout these interviews by the data and numbers they quote.
    • SP
      Stephane P.
      2 April 2020 @ 16:58
      People were asking if you could publish you video faster... RV respond to ALL theses comments, you Deleted the filmed date ? I dont understand, im not the only one, why aren't you putting back the filmed dates ? AH yes i remember, you dont want to deal with comments about publishing faster...
    • FG
      Flavio G.
      2 April 2020 @ 18:00
      I think I saw Dylan's oven clock marking 31/03
    • DS
      David S.
      2 April 2020 @ 20:01
      Flavio G.- You get the Sherlock Holmes award. DLS
  • DS
    David S.
    2 April 2020 @ 19:48
    Excellent presentation. It has been a long time since Mr. Grice’s first short interview in 2014 with Mr. Williams. This seven-minute interview has always been one of my favorites. His discussion of capital vis-à-vis money/credit is excellent. He improved his prop desk story now by understanding the others could not forecast accurately either - two Socratic moments. Since then he has become an active trader by realizing no one knows, but one can make informed trades. I especially loved the story about how the people he hired have informed him. In addition, he realized that he had something to offer as well. The best of luck to Mr. Grice. Enjoy Switzerland. A favorite place for both stunning beauty and wonderful people. DLS
  • CT
    Chris T.
    2 April 2020 @ 09:15
    given the Scottish accent... makes me think Hugh Hendry would be a very interesting guest to get on given his macro and china views
    • TM
      The-First-James M.
      2 April 2020 @ 19:30
      Grant will be interviewing him tomorrow:
  • TM
    The-First-James M.
    2 April 2020 @ 19:26
    Wow. I reckon Dylan would be an awesome bloke to share a pint with! Amazing insight and some laugh out loud moments. :) From one leave voter to another, I know exactly what he means, re. Remainer vitriol and the feelimg of needing to just keep your head down in certain company.
  • nR
    niall R.
    2 April 2020 @ 19:16
    Fantastic, years in the making and looking forward to the next one already. Recommend googling "cred and credulity" for those new to his work.
  • PB
    Patrick B.
    2 April 2020 @ 18:36
    Could someone please provide the link to the Singapore PM’s comments that Raoul mentions? Thanks
    • GS
      George S.
      2 April 2020 @ 19:00
      Here it is: It's a VERY important speech.
  • SB
    Stephen B.
    2 April 2020 @ 18:12
    Interesting, i was also a 55-45% supporter of Brexit in 2016 and went through a similar experience. Shifted to 100%, with subsequent events with much less push back.
  • BM
    Brook M.
    2 April 2020 @ 18:03
    Hang on. I had to pause this and go get a Guinness. Thankful for the caption option.
  • SM
    S M.
    2 April 2020 @ 17:55
    • SM
      S M.
      2 April 2020 @ 18:01
      Raoul, his explanation is something easy to understand, yet when he comments, it makes complete sense. Please chase up further interviews with Dylan. Excellent questions and comments on your part.
  • NB
    Nidhi B.
    2 April 2020 @ 17:44
    Love it!
  • RY
    Roy Y.
    2 April 2020 @ 17:28
    Fantastically engaging .... Thank you .
  • PU
    Peter U.
    2 April 2020 @ 17:27
    What is the film date please?!
  • bb
    brian b.
    2 April 2020 @ 07:53
    have heard same thing in past re uranium, 2x went into URA and CCJ and got stopped out both times. but at least Dylan says he thinks its real long term play so maybe no stops this time i go in....a 5 or 10x would be nice, even if it takes years
    • AM
      Alonso M.
      2 April 2020 @ 17:18
      Listening to the last couple of conference calls for CCJ, it seems the CEO's tone is rather positive...amidst a relatively negative tone from the sell side questions. It was exactly the opposite a couple of years ago. The CEO of this company tends to tell it like it is and has not historically been prone to hype or hope. I am long, so I am biased.
  • JH
    Jesse H.
    2 April 2020 @ 17:12
    Superb stuff from Dylan and lovely guy. Thoroughly enjoyed this one. He really made me think differently and more deeply than before.
    • JH
      Jesse H.
      2 April 2020 @ 17:14
      He is also an exceptionally intelligent guy. Learned a lot from this one. Thanks again.
  • OC
    O C.
    2 April 2020 @ 17:12
    Fantastic interview.
  • AM
    Alonso M.
    2 April 2020 @ 17:06
    Excellent content and delivery.
  • ea
    edwin a.
    2 April 2020 @ 17:01
    Superficial, but these things matter: Raoul should do something (anything!) to improve his lighting situation a bit. ;)
  • SP
    Stephane P.
    2 April 2020 @ 16:55
    People were asking if you could publish you video faster... RV respond to ALL theses comments, you Deleted the filmed date ? I dont understand, im not the only one, why aren't you putting back the filmed dates ? AH yes i remember, you dont want to deal with comments about publishing faster...
  • TJ
    Terry J.
    2 April 2020 @ 16:04
    Dylan is a genius who explains politely what with hindsight we all as investors realise we should have recognised using common sense, but sadly unlike him most of us allow emotion to cloud those decisions. Based on performance data, it would appear only a small percentage of professional managers observe the disciplines Dylan espouses, which is probably why sadly so many retail investors have gone from the frying pan into the fire and opted for passive strategies. Fantastically insightful and educational. Thank you RV.
  • DG
    Dave G.
    2 April 2020 @ 16:01
    Thank you for the speed up button. 1.5x on this one.
  • AM
    Alexander M.
    2 April 2020 @ 15:35
    It just gets better and better. Thanks.
  • DR
    Derrick R.
    2 April 2020 @ 14:21
    Interview Nassim Nicholas Taleb next?? ;-)
    • vf
      victor f.
      2 April 2020 @ 15:08
      that would be great !
  • AA
    Andrew A.
    2 April 2020 @ 14:45
    Brilliant interview, and Dylan comes accross as a likable and humble guy as well.
  • MB
    Mark B.
    2 April 2020 @ 13:50
    Interesting.... Struck by the fact that Dylan's assessments related to value seem tide to a matrix that he acknowledges is broken, but he is still utilising past reference points.... Junk bonds were a case in point for me... Reference to max historic default rates has no baring in this circumstance so his prospective returns of 4% look err... optimistic... but to be fair, he did say he would only nibble...! What is so helpful though is to be provoked into thinking harder.... and thats what his perspectives made me do .... so hence the Thanks!
  • NG
    Neil G.
    2 April 2020 @ 12:40
    Not sure if I missed it or if there's another comment, but can you post when this interviews were conducted for perspective in the fast moving times?
  • DB
    Daniel B.
    2 April 2020 @ 12:15
    What an absolute pleasure this guy is! Thoroughly enjoyed this
  • MT
    Max T.
    2 April 2020 @ 12:06
    Great conversation . Dylan is a great guest and understanding his thought process through the current world is eye opening. Interesting his views are more positive than other people on Real Vision at the moment. Well explained with his position behind his motivations and views on the market, where he will find opportunity and the fact it comes down to doing the work.
  • JF
    John F.
    2 April 2020 @ 10:11
    Missing the closed captions.
    • MR
      Milton R. | Founder
      2 April 2020 @ 10:52
      Yes, we usually add them within 24 to 48 hours.
  • MB
    Mimi B.
    2 April 2020 @ 10:12
    Could you please add a caption for the video. Thank you
    • MR
      Milton R. | Founder
      2 April 2020 @ 10:52
      Yes, we usually add them within 24 to 48 hours.
  • BY
    Bowie Y.
    2 April 2020 @ 08:36
    Raoul, Lets have a round of pool someday?
    • RP
      Raoul P. | Founder
      2 April 2020 @ 10:44
      To be honest, Im pretty shit at pool...
  • FG
    Flavio G.
    2 April 2020 @ 10:35
    I've followed Dylan since his times at Société Générale. Total contrarian. Really enjoyed his diverging POV, a tad too dogmatic then IMO. I see him today as a more pragmatic individual and today, I appreciate even more his ideas. Great interview guys. Thanks!
  • GG
    Gichora G.
    2 April 2020 @ 09:52
    I have thoroughly enjoyed this! Sober, clear and hilarious.
  • MM
    Michael M.
    2 April 2020 @ 09:22
  • MC
    Michael C.
    2 April 2020 @ 09:04
    Dylan...very candid and thoughtful responses to good questions. Great perspective from a professional strategist in a large EU family office who has to be invested in markets (and doesn't need to sell me anything). My b/s warning system didn't activate once! Thanks gents.
  • YA
    Yaz A.
    2 April 2020 @ 08:59
    Very dynamic interview Love it. Taleb is also one of my favorite, The incerto books are great. #skininthegame