Some episodes are worth bringing back. This is one of them. Salem Abraham is a bit of a legend in the trend following and managed futures world. With 30+ years in the business, he’s got the experience, the war stories, and, thankfully, the willingness to tell them. We originally sat down with Salem a few years ago, and the conversation was too good to leave in the archives. In this re-release, we cover tiny Canadian, Texas; why you need noodles and red sauce if you’re competing to make the best spaghetti; the Turtle Traders; a tourist boat capsizing in front of the nude beach; just how low oil can go; hanging out with Boone Pickens; honeybees; sending the first computer-generated orders electronically to the CME; trend following, naturally; why an apple salad is not a fruit salad; bonds at zero; and pecan and apple orchards. You know, the usual.
Salem is the founder of Abraham Trading Company, a research-driven investment management firm that has managed alternative asset portfolios since 1988 for families, individuals, foundations, endowments, and institutions. Today, the firm runs the Fortress Fund for endowments and institutional investors.
So whether you caught this one the first time around or somehow missed it, we’re digging it back out of the archives. – SEND IT!
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From the Episode:
Check out the complete Transcript from this week’s podcast below:
RE-RELEASE: Texas Trend Following with Salem Abraham
Jeff Malec 00:09
Welcome to the Derivative by RCM Alternatives. Send it. Hello there! Welcome back. You found the Derivative, brought to you by RCM Alternatives, where we’ve been doing trend following about as far back as I can remember. It’s been quite a good year for trend. We’ve got energies, we’ve got gold, short bonds recently. So, want to learn more about it? Head on over to rcmalts.com/whitepaper. RCMAlts.com/whitepaper can check out our guide to trend following. Okay, on to this podcast, which keeps on the trend following topic. I was on a call with Salem Abraham a few weeks ago, trend legend, talking about his mutual fund product and thought back to what I thought was one of my favorite podcasts, like four or five years ago, where we had Salem on, so in a little Smartless inspired re-release, for those you may be new to this feed or can’t remember the talk with Salem, here’s Texas trend following with Salem Abraham. Send it. Welcome to the Derivative, and thanks for tuning in with us. Today’s special guest is someone who anyone familiar with the history of managed futures will know well. With many stories from being far removed from Wall Street and LaSalle Street to extensive work with nonprofits to creating his own fund, he’s got a lot to share. And we’re talking about Salem Abraham, of course, and his Abraham Trading Group, which has about as long a history and trend following and futures markets as you’ll find. His newest venture finds him focusing a little more on the total portfolio, not just the alt part, and weathering the storm for a total portfolio approach, which we’ll get into. So this is sure to be entertaining and educational. So welcome, Salem. We’re so glad to have you with us.
Salem Abraham 01:58
Hi Jeff, it’s great to be here on the Derivative. Thanks for having me.
Jeff Malec 02:02
No worries. And so I’ve known you for a bit, haven’t crossed paths at various conferences and whatnot. But let’s give listeners a little more color on you outside of the trading world. You’re down there in Canadian Texas, right? Where in the world of Texas is that?
Salem Abraham 02:16
So Canadian is a little town of 2,500 people, two stoplights. It’s up in the Panhandle, that top square in the northeast corner, about 100 miles northeast of Amarillo. It is a town that’s ranching. the The main industries are ranching, and then oil and gas. And so it’s. I had two great grandfathers settle here with a Lebanese merchant and an Irish rancher and the Lebanese boys kept marrying Irish girls for a couple generations. So really,
Jeff Malec 02:47
those seem like an odd mixing, right?
Salem Abraham 02:50
Oh no! Well, the Lebanese are real mean and tough, and the Irish have a good time. So it’s a nice mix.
Jeff Malec 02:55
And so you’re far north. You’re like further north than Oklahoma City, and
Salem Abraham 03:00
right? Yeah. No. We’re actually
Jeff Malec 03:01
far north as you can get in Texas.
Salem Abraham 03:03
Right. Yeah. No. You go. If you we go about 50 miles north, we’re out of Texas, and then about 30 miles east, we’re over into Oklahoma there too. So we’re we’re closer to five other state capitals than we are to Austin, including Lincoln, Nebraska. So way north. Really. And and so you spread out your roots there. You’ve got some farmland, you’ve got some ranch land, you got some orchards. So tell us a little bit about all that. No, yeah, what was so yeah, you know, out here in the country, they it’s everything’s cheaper, so they just give this stuff away. So we’re we’re ranch land, and then and then I’ve gotten over the last 10 years or so into orchards more. So I’ve got a an apple orchard here in Canada, and then a peach orchard over in Oklahoma, and a pecan orchard down in Central Texas. And so just mainly is a source of fixed income for me. That is so you know, and I have some other real estate investments that are just really fixed income type. I don’t like bonds as well, so but I like the fixed income component. And as a trader, you know, you kind of tend to you make money in lumpy ways, and it’s feast or famine. So to have that fixed income component’s good, but I’d rather have it in the form of kind of real commodities, not fiat money. So,
Jeff Malec 04:26
got it. And so I’m envisioning you like out there working the the ranch and the orchards.
Salem Abraham 04:31
Is
Jeff Malec 04:31
that the case or no? No,
Salem Abraham 04:32
not so much. I go out there when they let me. I I usually break things or or maybe hurt myself if I go out there too much. But no, but I do have you know I my kids they’ll keep honey bees and I help them with honey bees so we’ve got honey bees out here that’s kind of fun and then we and then to go steal some apples or peaches when you’re you know it’s a it’s a minute 45 seconds if I go straight to work halfway across town so I could swing out to the orchard. And make it a five-minute commute, and still some peaches or apples on the way to work. So that’s nice.
Jeff Malec 05:05
Got it. And you’ve separated. You don’t have the work compound as part of your house and everything. You got a separate office.
Salem Abraham 05:11
No, I’m in. I’m yeah. No, I’m in. So my house is in the middle of town, and then office is yes, halfway across town, seven blocks away, so
Jeff Malec 05:22
yes. And then it’s been hard to separate Canadian from you for a while, right? Like you’ve helped do renovations and buildings and a bunch of well,
Salem Abraham 05:31
no, we’ve got
Jeff Malec 05:32
our town.
Salem Abraham 05:33
Sure. Well, I’ve been real blessed, you know, financially, and I think, you know, when you look at a town and you look around. It’s especially a small town. You look around, and there’s really a group of you know a small group of people, maybe probably even 50 people that are gonna that really are able and willing to make a difference. And so you you know you end up people step up and do different things what they can. And you know that’s true of even running, you know, the local government things like that. And so, no, we try to help out where we can and do things. You know, invest in the community, and there’s sometimes a return on investment that can’t be measured in dollars. But, but yeah, the the best job I don’t get, Jeff. Though the best job in a small town, you know, isn’t mayor or anything like that. It’s you want to be fire chief. Fire chief, you get to you get to drive a truck and talk on the radio. Yeah,
Jeff Malec 06:26
every boy’s dream, right?
Salem Abraham 06:27
Yeah, no, and I’m not cool enough to be on the on the fire department. There’s yeah 32 people, and you you got to be in the club and really cool. And so no, that Scott Brewster, my friend, Scott gets to be fire chief, and so no, so I can start
Jeff Malec 06:41
in a town that small. It’s just all volunteer. I’m sure, right? Oh yeah, I know. So the bell rings and they leave what they’re doing and go grab.
Salem Abraham 06:48
You bet. You bet. No, that’s right. No, and with eight kids, you know. So my wife and I, we dated in high school here. Then I went off to Notre Dame, got a finance degree, came back, and we we’d been married now almost 32. Let’s see. Yeah, 32 years this year, and we have eight kids. So you know, there’s not as much to do in the country. So we had to make our own entertainment. And so we, so but I was on school board. So school board is bad. I was on school board for 12 years. I make everybody, you know, after 12 years, everyone’s mad twice. So it’s time to get off.
Jeff Malec 07:22
They’re they like you. They’re mad at you. They like you. They’re mad. Yeah,
Salem Abraham 07:24
no, that’s it. So with eight
Jeff Malec 07:26
kids, what’s the spread there in the ages?
Salem Abraham 07:29
So today there’s really there’s there’s 10 years, 10 months, oldest to youngest. So so there’s seven, almost 17 on Saturday. It’ll be 17 to almost 28. So this Saturday. So so we’ve got
Jeff Malec 07:46
four brothers and two sisters in my world, but they’re from many different fathers and mothers and mixtures. Few divorces and step moms and step dads. And yeah, no. Everybody
Salem Abraham 07:57
wonders if there’s a trick, and you’re like, no, no trick. It was the two of us. There was no surrogates, no twins, just no
Jeff Malec 08:04
Netflix. No,
Salem Abraham 08:05
no, nothing. No, no multiple wives, multiple husbands, no adoptions. It’s all yeah.
Jeff Malec 08:11
So what’s the secret on 32 years of marriage? How do you you got an algorithm for that or a yeah no
Salem Abraham 08:16
you I’ve it’s crazy coupons. So everybody gets probably I think it depends. Me, I need a few more extra crazy coupons in my wife. She’s less crazy than me. But if you can, if you can just say, look, you’re allowed to have, say, you know, for me, four crazy coupons. You could be really crazy and make no sense on four things, and I’m going to love you anyway. And so I think you just got to give them a pass on some things, and then it gets instead of trying to fix them, you just say, you know, you’re you’re fine, crazy and all.
Jeff Malec 08:45
I like that. And then do they give the coupon, then it gets ripped up, or they can be crazy on the same thing for, for their whole. Oh no, it’s
Salem Abraham 08:52
it’s pretty just one thing. You just say no, this thing. But we’re gonna work on you elsewhere. There’s some ways that yeah, you’d like to try to fix them on some other spots, but no, we. I think you just got to say, all right, we’ve all got our our crazy, and we’re gonna, and that’s okay. So
Jeff Malec 09:09
I love it. And then besides your work in the town, you’re doing some. You’ve been heavily involved in a few different charities as well.
Salem Abraham 09:16
Well, you know, I think being just, you know, in the land of the blind, the one-eyed man is king, and and so if you if you know something about investments, and there’s you know there’s foundations and endowments out here that need you know that need investment advice. So I get on a lot of investment committees and things like that, and so so yeah, so different foundations and endowments trying to help, and and really and truly, what you notice, you know, I know that you know there’s this a red state, blue state, and city and country and what you know, I I get to go to the city and I can put on my suit and I can take the subway in New York City and I know my way around the city well and I but I’ve seen you in
Jeff Malec 09:58
a suit yeah you can’t nice yeah.
Salem Abraham 09:59
And so, but you know, I I always think they talk about a frog in a well. So frog, you know, you you you just know your own little world, and I think that’s true of in today’s society with politics what they are. Where if you’re in the country, you know this country perspective, and if you’re in the city, you know the city perspective. I think you need to know the two, and it and everything makes a lot more sense why people think what they do, and and out in the country, really and truly, I mean, you look around and it’s like if if you know if you and I lived across the street from each other and there’s no one within miles of us, you’d say if we’ve got a problem, Jeff, you and I have to figure it out. And out in the country, that’s what you’ve got to do. People have to step up because if you’re you know if if if if not you know this this small group of people, then who? And it’s nobody. And so you you really you you step up and help. And so I’ve I’ve done that, and then and then that’s led to some other things where you know now I’m on the investment committee at St. Jude Children’s Research Hospital out of Memphis, and so I’ve been you know from that which is about a 5 billion endowment, down to you know a $500,000 endowment, and then and then I’ve done things with Boone Pickens and I. He’s a neighbor. He was a neighbor to us on a ranch, and then he bought our ranch back in ’08. And but he and I have been friends for about 30 years. He was a friend of my grandfather’s, and so, and he’s his his big ranch is right here near town. And so he and I started a foundation together back in ’08, and that was a lot of fun. Yeah,
Jeff Malec 11:28
best biography book name ever. The first billions the hardest.
Salem Abraham 11:32
Yeah, yeah, yeah. No, and I’m in the book too. Sorry, I haven’t read it. I know
Jeff Malec 11:37
the title, but I was in Colorado once at a bar, a restaurant, or something, talking with a guy, and he’s like, “What are you doing in town? He’s like, “Oh, I’m writing this book on boon picking.
Salem Abraham 11:46
Yeah, yeah.
Jeff Malec 11:47
So, and he passed not so long ago, right? Was a year in September.
Salem Abraham 11:51
Yeah, September. But he’s yeah. We had. I was real fortunate to get to spend time with him, and he was a good mentor, and we a good friend, and yeah. No, I was a pallbearer at his funeral, so we were, we were, that was nice to get that honor. And he, yeah, no, he was a good guy and a lot of fun. We had fun together. Yeah,
Jeff Malec 12:11
Oklahoma State Cowboy. That’s it. That’s it.
Salem Abraham 12:14
That’s it.
Jeff Malec 12:22
Oh, So how did how’d you go from Canadian Texas to becoming a hedge fund manager, for lack of a better word? I don’t know if you like that moniker or not, but
Salem Abraham 12:31
yeah, well, no, it’s it’s fine. That’s you know, I started I started trading futures in college, and so I was lucky to Jerry Parker. I’d met him through a family connection, and he
Jeff Malec 12:48
of Chesapeake family. Chesapeake,
Salem Abraham 12:50
yeah, right. And so I was. I’ve always been. There’s a lot of things I’m not good at, Jeff, but I am good at math and data and statistics, and so, so he had mentioned, and you know, was studying finance at Notre Dame, and he had mentioned to me while I was about halfway through college, he had talked about what he does with basically technical analysis and basically using data to predict where markets may go. He
Jeff Malec 13:16
was there at Notre Dame, or he was. He was
Salem Abraham 13:19
so I saw him in. I met him in Canadian, so his his first wife, she and I had mutual first cousins. So we were at we were at those mutual first cousins’ houses here at the house here in Canadian, and so I met him, the new husband to a cousin of a cousin, and so he
Jeff Malec 13:37
wow he
Salem Abraham 13:37
told me he told me about trading and what he did, and I thought, wow, that’s fascinating. And so he
Jeff Malec 13:41
was an original turtle, right?
Salem Abraham 13:43
And it was when he was a turtle. He was still working for Richard Dennis at the time. Oh wow! So he said, “Hey, well, you could come to Richmond, and and I could, you know, at least show you some of what I’m doing. He was just being nice to the new, you know. Here he comes and meets, you know, 30 people, his wife’s family, and so I know he was just being nice looking back, but at the time I thought, okay, great. Well, so then, then about three days later, I’m on the phone to him. Said, hey, when can I come to Richmond? So then he’s probably the only one
Jeff Malec 14:11
of the of the 30 that wanted to talk math instead of ranching. You know,
Salem Abraham 14:15
I asked him. I said, well, had anyone ever taken you up on that offer? Because he had made this offer, and it was, I guess just a an offer that no one says yes on, but I was excited to go hear about it. So he was nice to kind of show me some things and point me in the right direction. And then, so then I started trading during my last semester at college, and then right out of college, in I got out a semester early with honors out of Notre Dame with a finance degree. Started in January of ’88 managing money, but you know, but it was interesting. I started in August of 87 with a $50,000 account. I was taking 21 hours at Notre Dame, a big load of classes. I was hurrying to try to get back to my now wife, my then girlfriend. My grandfather was back here with a job, and he was a great guy to work with, and. But so the crash of ’87 was two months in, and so that was an interesting time. So you were training
Jeff Malec 15:06
from college during the crash of ’87. Yeah.
Salem Abraham 15:08
So you know it’s interesting. Like here we are now in the middle of the coronavirus crash, and it’s and you know we’ve had some crashes in between. So crashes tend to they’re they’re each one a little unique, but they all rhyme to some degree. So
Jeff Malec 15:24
there’s probably some kid at Notre Dame or elsewhere right now trading some account doing something we’re not even thinking about.
Salem Abraham 15:31
Yeah, no, that’s right. We’re yeah getting an education. I know that first crash in ’87 was an education for me. It was a so the euro dollar, the interest rate markets moved 37 standard deviation move, and and you know I’d taken statistics about a year before, and I thought you know they talk about one, two, and three standard deviations, and 99.7 is within three standard deviations. Well, it’s that point three that’s outside of three standard deviations. Really, is the most important part, and that’s the part they never talk about because that’s the part that breaks you or kills you is the the you know that that point 3% outside of three standard deviations.
Jeff Malec 16:09
And you think you understood that from that early point that the markets aren’t normally distributed and they have these outlier moves?
Salem Abraham 16:16
No, I no. But when they took half my account’s value, I had a $50,000 account. It sunk in a little bit. It went to 66,000 in two months, and then to 33,000 on october 20, 1987. That Tuesday was the day after the crash because the eurodollar futures. That’s when they moved up that 37 standard deviation move. So no, but and it takes a while for some of that to sink in. So you don’t realize it right away. But I did know it was a historic event. I was lucky to survive without, you know, without losing all my money, and and I tried. You try to set up a model. Were
Jeff Malec 16:50
you doing? It
Salem Abraham 16:51
was trend following. I was trading 21 markets and trend follow a trend following model. It
Jeff Malec 16:56
was a turtle version. Version kind of a turtle
Salem Abraham 16:58
version. Yeah, yeah.
Jeff Malec 17:01
And then said, “All right, I’m coming back to Canadian and going to do this for a living.
Salem Abraham 17:05
Right, right. You know, back
Jeff Malec 17:06
of a 50% drawdown.
Salem Abraham 17:08
Right. Yeah, my grandfather. He said, “Of all the ways to lose money, why in the heck do you have to pick the very fastest one? So he was a businessman. He’d been he had done deals all his life in oil and gas, and he had seen. You know, he was a he was an interesting deal maker guy that he was just great. So the
Jeff Malec 17:25
oil and gas to me always is a good corollary to trend following and to right because you’re digging a lot of holes that don’t pay off but doesn’t cost a lot and then boom when one hits you got this huge outlier outlier gain so it’s lumpy like classic trend following would be
Salem Abraham 17:41
absolutely yeah no it’s a it’s an interesting there’s a lot of parallels the risk management and diversification apply to oil and gas very much so
Jeff Malec 17:51
how to side topic how are all those people doing in the current it’s
Salem Abraham 17:58
really bad I mean right now it’s worse than 86. So 86 and 14 are both kind of parallel to me. But right now we’ve gone from bad to incredibly bad. You know, there’s literally there’s people with oil right now. In the last 48 hours, there have been I’ve been hearing stories of just shutting in wells. Just go turn off wells to say, look, we’re we’re not even selling the oil and the gas. Usually, that they at least produce what they’ve already drilled. They stop drilling new wells, but they at least produce what they’re doing. But I think I read
Jeff Malec 18:33
today we’re rallying today, and because of that, because they’re just shutting down production.
Salem Abraham 18:38
Yeah, yeah, and they. I mean, literally, I know people who are out that the guys that what they call pumpers, and they go they’re turning off wells. We’ve got a company on a you know, and I invest some too in oil and gas as well, and we’ve got a company that is saying we’re not sure we were even going to buy any oil from you. They canceled our contract two days ago, and so they just say you know and and you know you could and then you see $20 oil on the futures, but it’s out in the field that’s like $10 oil,
Jeff Malec 19:10
really.
Salem Abraham 19:11
So it’s not yeah you’ve got this big basis differential, and then
Jeff Malec 19:15
jet fuel. I’m reading they don’t even have enough places to put all the unused jet fuel,
Salem Abraham 19:20
right? So not enough
Jeff Malec 19:21
physical storage out there in the world.
Salem Abraham 19:23
Yeah, no, oil and gas is going to be really hurt. You know, there will be like if you had a restaurant, you could see in six months you go open the restaurant back up, everybody’s back to work. But oil and gas, you know, you’re really, you know, you’re it’s bad for six months, but it’s going to be bad for another six to 12 months because of all this excess supply that’s been stuck everywhere.
Jeff Malec 19:44
Right, and you’re not. No one’s putting the investment in right now either.
Salem Abraham 19:46
No, no. So the
Jeff Malec 19:48
and that’s on top of 18 months of terrible MLP and whole industry’s had a tough go of it.
Salem Abraham 19:54
Yeah, no, we’ve really gone from bad to not worse, bad to horrible. I mean, really, I’ve never seen it. My lifetime, this bad. I saw 86 was bad, 14 was bad, oh eight was bad and back. It was that V drop, but this is, I mean, this has gone to a point where it’s just catastrophic for the oil and gas business. But and a business really that’s used to booms and busts. So,
Jeff Malec 20:18
yeah. Well, Godspeed to those guys, oh yeah. So so then you’re there in what? So you started in your 88. Once you got back to Canadian, started managing money, and that was just small friends and family and whatnot.
Salem Abraham 20:31
Right, right. My two brothers and my grandfather and and me and yeah, my grandfather. He said he it was so he had his his provision was so I put in 45,000, and then two brothers put in 10 and 15, and so I had 30,000. My grandfather put in to round out the 100,000, and and I mean he would, I mean this is a guy who would go drill a half million dollar well and and come up zero. So 30,000 is kind of in 88, in 88. So chump change, chump change to him. So he was a real Wheeler dealer, and did, and so he said to me, he said, he said, okay, I put the 30,000, but if you get down to half, if we lose half our money, we stop this commodity trading nonsense, throw that quote machine out the window, and get back to real business. And so I said, okay, so that’s January ’88. Well, it was funny then. So January, well, February, March, April, May-it’s-it’s going down 81,000. I start May. Well, May-the first 10 days of May were bad, and and I’m down to just above 70,000. Well, then I remember about mid-May because I was hoping we’d stay above 70,000. Well, it dropped below 70, and I’d get this fax in, you know, those curled-up fax machines for my little thermal paper. Yeah, that
Jeff Malec 21:41
whatever that paper was.
Salem Abraham 21:42
Yeah, yeah, that’s right. And so he comes in my office, sticks his head in that morning. He said, “Where are we today? And I said, “$68,742. And he’s just a matter of time.
Jeff Malec 21:55
He wanted to get you into the oil business. Oh
Salem Abraham 21:57
yeah, he was like, “Let’s stop this junk, and this is a waste of time, and you’re, you know. And I remember I showed him a big, a big simulation. I said, “Look, Granddad, if I had done this, look how much money I’d have made over this year. And and he said to me, “He said, ‘Oh, Salem. He said, ‘You know, you think that you and that Notre Dame degree, you think you’re pretty smart, but those guys in Chicago, man, they’re gonna eat you for breakfast, spit you out for lunch. He said, ‘He said, “You know, he said, “What do we do with all this paper? I said, “Well, look at the look at all that. He said, “What do we do? This we send it to Chicago. They cut us a big check. And I said, “Well, no, not really. But and so, yeah. So he was to say he was a non-believer is a is a big understatement. But so the funny thing then is, middle of May ’88. You know, then if you remember the drought of ’88 kicked in, so I was 68,000 in the middle of May. By the end of May, I was back above 100. By the end of June, I was at like 170,000. Wow! And and ended the year after I was had a fee of zero and 20, so a 20% incentive fee. After that, a it was like at $240,000. So it made 140% year one. So
Jeff Malec 23:01
that that was a pretty good cost of living increase in Canadian Texas. Oh yeah, you bet. 88. Yeah.
Salem Abraham 23:08
No. So that was so that so then I traded till January of last year, January end of January 2019. I stopped trading and had a great time. And we we had you know as much as 600, a little over 600 million at one point when we shut down, we had a little over 200 million. But we, you know, the hedge fund space had gotten tougher, fees had gotten lower. You know, I think we’ve and expenses are higher. So what used to be a great business had gotten to be a good business, and
Jeff Malec 23:40
had nine years of,
Salem Abraham 23:41
oh yeah, tough,
Jeff Malec 23:43
very tough, the toughest on record, trend following right environment, and and we had
Salem Abraham 23:49
and then we had this new idea with the Fortress Fund, this new fund that we’re doing. We had started it a year earlier, back in the middle of eight of 2018, and we were excited about what it could do, and really it was an opportunity to kind of come from being-it’s like being a baseball player, going to be a manager a bit. So, the Fortress Fund is a little bit of a hybrid between we manage it and we trade a little in it, but we also have a lot of outside traders, third-party traders, hedge funds in there. So, it’s an interesting opportunity for us to, and for me personally, to kind of slow down a bit, but really, too, to interface with it’s really well suited for foundations and endowments, and it’s kind of it’s playing off of my role as an you know being on investment committees, and then in the nonprofit world, and you see a lot of small foundations, and by small, I would say really anything under 100 million, they just really tend to do a poor job of managing their money. Some some do a really good job, but some I’d say the majority have trouble either if they do a good job, then the fees are high, or they so and they and we just they don’t have
Jeff Malec 24:57
a lot of scale, they don’t have a lot of leverage, right? It’s all. Resources,
Salem Abraham 25:00
right, right, and so that makes it harder. And then, and they can attract good people on those investment committees, and so that’s yeah, that’s it.
Jeff Malec 25:10
We’ll come back to Fortress in a little bit. I want to go back to ’88 and your quote machine that your granddad wanted to throw out. What were you, what were you using? How were you generating your signals and all that way back then.
Salem Abraham 25:22
So I had a Tandy 1000, a used Tandy 1000 computer that was, you know, that orange screen and big mom. Was that
Jeff Malec 25:29
like a Texas Instruments? Was that its own brand? I think it’s
Salem Abraham 25:34
Tandy was its own brand. I think. Okay. Maybe was it part of Radio Shack? I don’t know. But I couldn’t afford a new one, so I bought a used one, and and I had charts. I had I’d I’d get a they’d send it every week, and I’d mark the charts every day. You know, update them, and then I would just generate signals from you know running the numbers, and I’d have I’d have my numbers every day, and so and you’d
Jeff Malec 26:00
actually run a basically a back test manually.
Salem Abraham 26:04
So I had, yeah, no, I had it was back then it was System Writer, so which now became TradeStation. Yep,
Jeff Malec 26:13
I remember.
Salem Abraham 26:13
And I had a I had another programming. It was called KeyWorks. Was a you could it would memorize your keystrokes, so you could essentially write a macro on top of System Writer, and it would. It took about 24 hours to do one simulation. Wow! And this is before you had a team or anything. So you’re doing all this,
Jeff Malec 26:33
yeah, yourself,
Salem Abraham 26:34
right? No, your
Jeff Malec 26:35
your story of bringing your granddad the the results, the back results reminds me. I was starting attain capital, and I spend all this time on a business plan and all these projections, and took it to my dad and be like, “Hey, we checked this out, and I was so proud of it. He just turned to me, goes, “Nobody loses money on a spreadsheet, son. Well, and it’s good advice, you know. It’s good advice, but so do I do it. He’s like, “Do whatever you want, but it’s not going to look like that. I’ll guarantee.
Salem Abraham 27:04
But but I think you know. With oh, it instructs me when I with eight kids when I want to kind of scoff at them and say, you know, kid, it’s not that easy, and you know, no one cares, no one loves you. Your your mom and I sort of love you, but that’s it. You know, you want to you want to give them that speech, but I remember I got that speech, but they were wrong because it did work.
Jeff Malec 27:27
Right.
Salem Abraham 27:27
And so now, about three out of four things he told me I was wrong on. He was right, but
Jeff Malec 27:32
but the one was a good.
Salem Abraham 27:34
That’s right. So I wonder when with my own kids. Well, maybe this is one of those one out of four. I better give them the benefit of the doubt. I don’t want to throw water on cold water on everything. So,
Jeff Malec 27:43
and then somewhere in there, you told me the story once you were one of the largest electronic traders, or you had a whole. You started to hire a team and have technology and the whole bit.
Salem Abraham 27:52
Well, so we had so in the late late ’90s. So hedge funds, you know, the stocks. If you look at ’95, ’96, ’97, ’98, ’99, those five years, I think the worst stock performance was like 22% to 38. You know, it averaged about 25% Stocks did for those five years, and I remember someone said to me, and at the time I was working for Commodities Corporation, which was a great group of people, and I was one of their traders. And they, well, someone said to me, “Why would I want the risk of futures if I can make 20% in stocks? And I heard that
Jeff Malec 28:27
the last three years. Yeah,
Salem Abraham 28:29
and I said, “Yeah, exactly the same that we’ve heard lately. And I said, “Well, no, I get it, but I just don’t think it’ll keep that up. Well, so we had a lot of money leave. We were having five years of tough performance. Stocks were doing great, so when the money left, what we did in ’98 is I got a membership on the Chicago Merkel Exchange, got a quote machine. There, what was then Globex, their Globex machine, and we started coding, and we got permission. We were we we are the first people had permission from the CME to automate order entries to have a computer-generated order. It took us we had to get board approval, and so we started doing arbitrage electronically with my personal money because so in like ’95 I had 130 million under management. In 1999 I had 3.7 million of which it was 90% family and friends and my money, and so, so then I had we I opened a broker dealer with my own money, and started doing this arbitrage, and you know just stuff where we were trading like an ETF, like the spiders SPY versus the S and P futures, or you know a lot of ETFs versus futures, and there were a lot of
Jeff Malec 29:41
groups in Chicago doing that on the trading floor,
Salem Abraham 29:44
right? And so it’s
Jeff Malec 29:45
doing it from Canadian Texas, a little different setup.
Salem Abraham 29:48
Well, and the thing that was interesting is kind of like you know the the game Slapjack, you know, except if you had you’re the 10 year old that shows up with a optical recognition and an on a. Computerized on our hand slaps it, and you start getting nine out of 10 jacks. So we were competing against people that were doing it on the phone, and we and we we did real well for a while. And so we did that from 90, really 99 through oh let’s see oh oh oh five we stopped we stopped in ’05, so for about six years,
Jeff Malec 30:22
the competition started to get there. Everybody got fast. Kind of the high frequency training was being born.
Salem Abraham 30:29
Yeah, yeah. True
Jeff Malec 30:30
today, what we think of in nanoseconds and right.
Salem Abraham 30:33
So when we were when we were doing it early, we would and we had a lot of fun. It was a great experience because you’re programming, you program all night, and then during the day, you’re you know you can see how it goes. But at night, it was quiet, so you could play around with their machine. Basically, it was quiet, so it was a it was a neat opportunity. We had a lot of fun. It was fun to program like that. It was fun to see really the floor operation, and and I think to me, I’ll say to you know this high frequency trading, it’s so much better than the floor. I mean, I I get the floor was good, but the I think just to be anonymous as an off as an off exchange trader, that anonymity is good to to be able to to feed orders in. It’s cheaper. Everything about now. What do you mean the
Jeff Malec 31:15
basically electronic trading, not right certainly high frequency, but high frequency,
Salem Abraham 31:19
but electronic versus the floor. I like. I just people kind of bad mouth it, and I said, “Well, I get it. There’s problems with everything, but it’s it’s better than the floor. Even though I have a lot of friends that were floor traders and did well, and I tell
Jeff Malec 31:32
people when I was a clerk, and I’d go down there at 620 in the morning in the bond futures, you know, as a 20-something-year-old hungover from the night before, and I’d have to reconcile trades with other clerks at six in the morning. I’m like, this is insane. We’re matching millions of dollars of trades, and people are just like, it was kind of go fish. Do you have a four lot you’re looking for in the bonds? Nope. Okay, I’ll try this guy. I mean, so inefficient.
Salem Abraham 31:58
Oh yeah, we so inside of
Jeff Malec 32:00
all that inefficiency, people were like walking away from trades and hiding trades. Well, those
Salem Abraham 32:04
guys with the light blue coats-they were the the isn’t that the ones that the reporters?
Salem Abraham 32:09
Yeah, they would end up well the out trades all the morning. You were fixed. It was like 4% of all trades were out trades. There was
Jeff Malec 32:17
yeah, and it was hugely
Salem Abraham 32:18
inefficient. Yeah, no, and it’s but but yeah, no. So we’ve I’ve and so I’ve had a fun. I mean, I’ve really as a math geek and a data geek, and to get to have a front row seat with the markets, it’s it’s a lot of fun. Just to,
Jeff Malec 32:33
and for you especially, not being a Wall Street guy or Ivy Leagues or right to even the playing field on electronic front is is nice for you, I would assume.
Salem Abraham 32:43
Yeah, no, we because there were days we were doing over 1% of the volume of the Chicago Merced Exchange from Canadian from a two-stop like town in the middle of nowhere, 100 miles from the nearest airport. I would have
Jeff Malec 32:54
loved to seen that meeting when someone at CME figured that out and like, wait, where’s this volume coming from? What the heck’s down there? Somebody get down there.
Salem Abraham 33:01
I could tell you 10 funny stories about people just saying what, like, how did you cancel and replace an order 800 times? And you go, yeah, that’s probably it’s like you did you cancel to replace every two seconds. It’s like yeah, yeah, that’s probably right.
Jeff Malec 33:15
And now they have rules of like your messaging rates and all that. Oh yeah,
Salem Abraham 33:19
no, we we were we were on the front end of a really interesting time, and you know, but to read like Flash Boys, the the book, you know, you see
Jeff Malec 33:27
Michael Lewis book,
Salem Abraham 33:28
yeah, it’s interesting because about half of that I knew, half of it I didn’t know, and there was probably a whole another half that he didn’t know, that you know, you there were interesting things that, but but you know progress things move and the world’s changing all the time and we gotta adapt.
Jeff Malec 33:52
As of the end of your trend following trading career and the beginning, like how much did the model change over those years? And
Salem Abraham 34:00
you know we just kept it was evolving. Always, we added more. You know, we added different time frames of trend following from shorter term to really long term, and then we even had some mean reversion things, and we had some things that were more pattern recognition. So we anything that we could our our toolbox was find any kind of price pattern that has a predictive value, and so we were able to find things that we were constrained just to trend. So we were able to do other things too. So it was, so I think just the kind of the repertoire of models expanded, and that did you ever
Jeff Malec 34:35
find yourself? I’ve been arguing for a while that the a lot of the trend followers have had to kind of add long bias, add a longer time frame in order to survive and stay afloat. Like, yeah, fight that battle internally of like, do I stay true to the the core philosophy of what am I trying to do, or do I try and stay in business?
Salem Abraham 34:53
No, absolutely. No, we had that. We had exactly that for I would say 10 years because what you saw really. Was the the biases to add beta because you could basically go in and add you know you say well I’m a trend follower and G Wiz stocks are going up so I’m going to get long and you’re like look this is just an excuse for beta so really you’re you’re adding beta to the market to to to the model but the the research I had one research guy that was always like yeah but it’s better, and you go yes, it’s better. But if we have a big market sell-off, we don’t want to be. We’ve got to be that diversification. We can’t be correlated.
Jeff Malec 35:28
It’s better if it’s the only thing on the planet,
Salem Abraham 35:31
right?
Jeff Malec 35:31
If they’re using you to be not that thing, then it’s not better,
Salem Abraham 35:35
right? And that’s where, see, in a way, the fortress is that where it’s like, no, we’ve got beta in the fortress. We got stocks, bonds, and alternatives. We do all three, but they know there’s beta, so they expect it. But with us as a trend follower, there’s always this pitch in alternatives where we need to be. You know, we’re going to be non-correlated, and the non-correlation pitch, which is true in most cases, but I think what’s happened is different groups have let beta kind of sneak in, and you’ve really got to be diligent in analyzing their returns to see. I know what they’re telling me, but is it true in that? Is there beta in here?
Jeff Malec 36:13
Well, it’s hard to believe, right? We just posted our asset class scoreboard yesterday for March. I think the SOC Gen CT index was up 17 basis points in March.
Salem Abraham 36:23
Wow! Yeah, and see that shows that they did their unbelievably
Jeff Malec 36:26
hard to believe. No, did their job, but you did in the old days you’d expect it to be up
Salem Abraham 36:31
10. Well, yeah,
Jeff Malec 36:32
with energy making that move, with bonds making those moves, you’d expect it to be a lot bigger upside than it was. And for the years, it’s flat to maybe down slightly.
Salem Abraham 36:42
Well, you get some guys that that have openly added beta, but others that haven’t. We but we didn’t see as much beta in our group of traders in Fortress. We didn’t see we we had one trader that really had some beta, but for the most part, we didn’t see it. So it was. I think if you pick the right traders, you just got to be careful now. And I think as the as the for the managed futures business, if I were to speak to everybody in the industry, I’d say, look, let’s stay true to what we do. Let’s make sure that we provide non-correlation. People have stocks. Don’t give them more stocks, but the but the flip side of that is yeah, but you know I’ve got to survive, and
Jeff Malec 37:26
it’s insanely hard proposition of right. Hey, you could manage $8 billion by putting stocks and futures together. Right, you could manage 200 million and be a small percent of someone’s overall portfolio. You know, people got to feed their families and make a living. They’re going to probably choose the former.
Salem Abraham 37:43
You bet. No, that’s right. That’s right.
Jeff Malec 37:52
So yeah, let’s dig into the fortress fund. Been dancing around a little bit here. So
Salem Abraham 37:57
well, we ought to talk. Can we talk about just kind of lessons before we go to Fortress. Can we talk about?
Jeff Malec 38:04
Yeah, let’s talk lessons.
Salem Abraham 38:06
You know, over the last three plus decades, the lessons that I’ve learned, and I think there’s things that your listeners and can can get some that you know I had to pay for some of these lessons, so I’m gonna I’m gonna try to give for free. Anytime you get free lessons, is better. So the one thing that I’ve thought of is always you got to be aware where the crowd is in the market. If you think of the crowd as 100 people, some people you know 100 pounds. Some the big traders are 500 pounders, and you’ve got to say where are they, and and if ever they’re all leaning one way, then sometimes you get in a situation where the market can’t get worse or can’t get better, and it can only go the other way. And those are times I think in the markets that you need to watch for. They don’t come along as often as we would like, but when they do, you got to be paying attention. So, so like for instance, I think the energy market, which which we talked about, are sort of that way now. They are they’re horrible. They can’t. I think you wait another week or two, and they can’t do anything but get better. Maybe you know once that gets priced into the market. Doesn’t it seem
Jeff Malec 39:13
like that’s a little counter to trend following, though? It is. Oh no! It totally. That’s one of the lessons. All right.
Salem Abraham 39:20
That’s but but trend following works. Oh yeah, no, you’re always with the trend. But and the and the thing about trend following that you’ve got to remember is it’ll go further than you’ve ever imagined. Right. Like crudel, you’ve got to imagine crudeal could go to $2 a barrel. I think crudele could go to $2. So so that’s where be open to extreme possibilities, but once you get to extreme, then then you end up you’ve got to understand. Okay, it may not go any further than this. Well, so I always imagine it like a boat, and if you could sit at the back of the boat, watch 100 people in the boat, and you say, “Is everyone?” Get on one side or the other, then you need to pay attention. Generally, they’re somewhere in the middle, 90 probably 99% of the time. But every now and then you see them lean one way or the other. I was listening to the radio, and they were talking. This has been 10 or 15 years ago, and they were talking about a tourist boat down at Austin at Lake Austin, and there were these tourists, and they were going around giving the tour of Lake Austin. Well, I guess part of the tour is they go by the nude beach at Lake Austin, which is a place called Hippie Hollow. When I was telling the story, I think you had heard it at a conference. Yeah, I
Jeff Malec 40:32
called out Sean Jordan in the middle of the conference and said, “Sean, what’s the name of that? Sean, what’s the name?
Salem Abraham 40:37
Yeah, I know. He would know, and he did know. He actually did know Hippie Hollow. He calls it so. Yeah. So so, tourist boat goes by Nude Beach. Nude Beach is on the right. Lake is on the left. Which side are the tourists on? Well, they’re on the. They’re all on the right. They’re looking at the nude beach. And now, unfortunately, nude beaches. We would imagine they would be full of supermodels, but generally they’re not full of supermodels. This is so much. No, not so much. It’s unattractive naked people that are fine being naked, and so you’ve got these tourists on the right side of the boat gawking at the unattractive naked people at the new beach, and then so they get so far on the right side that instead of you know I would think well it can only come back well there’s another option the boat capsizes so now you’ve got the boat capsizes now you’ve got the tourists in the water and who comes to their rescue to help them get ashore is the unattractive naked people. So that’s the
Jeff Malec 41:44
real life story of this. Doesn’t go any lower than 20. The boat cap size. It went to 10. That’s right. So so
Salem Abraham 41:50
yeah. So the lesson is, if you’re with the crowd, you got to be careful because at some point you may be, you you may find yourself being rescued by unattractive naked people, and so that’s a that’s a bad outcome. So so beware when you’re with the crowd, particularly if the crowd is going to an extreme. You might want to say no. Let’s all go to the let’s go to the left side of the boat while everybody else goes to the right side, and you’re you’re the one person not being rescued.
Jeff Malec 42:18
I love it. I love that story.
Salem Abraham 42:20
Yeah. So so there’s that, and then I think the other, you know, the one thing too is that idea where we talked about earlier the things beyond the three standard deviations. I think to survive a financial storm, you need to study financial storms. You say what happens in a financial storm, and how do I build a portfolio that can survive a financial storm? And so that’s where, really, you know, we know we hear about diversification, but but that’s where that diversification and really smart and thoughtful diversification needs to come in, because right, you know, we’re
Jeff Malec 43:00
talking just value stocks and growth stocks isn’t diversification.
Salem Abraham 43:05
No, no, and national
Jeff Malec 43:07
stocks and U.S. stocks isn’t diversification.
Salem Abraham 43:09
Right. No, you get you know you you can you know what I liken it to is someone that does a fruit salad and they say, hey Jeff, try my fruit salad here. It’s great. I’ve got Red Delicious apples. I’ve got Granny Smith apples. I’ve got Honeycrisp apples. I’ve got Fiji apples. You know all these, and you know you know your apples.
Salem Abraham 43:28
Yeah, and you just say, yeah, no, I’m an apple orchard guy, and so, so you say, look, hey, you you would say to me, Salem, this is just an apple salad. You know, you you might want to try a grape or a banana. So when we just do versions of equity. We’ve got an equity fruit
Jeff Malec 43:43
salad. Yeah,
Salem Abraham 43:44
that’s it. So it’s not diversification, and and study it in the recs. Say what happens to this portfolio in the financial recs. Challenge to, you know, when you know has been with fixed income in the last really since ’08 with fixed income getting the rates getting so low, and now we’re you know last week they were you know they’ve actually even dipped a little bit negative territory on the front end of the yield curve. Yeah. So you see that, and you say, well, what used to be say 6040 before ’08. Now is actually the benchmark is 7030 because people keep creeping more and more toward equities, and and you know equities
Jeff Malec 44:28
to the lower lower yield. Yeah, because the
Salem Abraham 44:30
because bonds are worse and worse, and you know equities are kind of like a you know you know say it’s like a dog that is is really nice 99% of the time, but but every now and then it goes crazy and bites you and craps on your carpet. You say, you know, I think I think you need to be an outside dog. Even bite you, but
Jeff Malec 44:50
like rip your face off, right?
Salem Abraham 44:51
Right, right. So that dog, you say, no, you need to sleep outside. I don’t want you in the bed with me. If you you know if that 1% of the time happens, so stocks you don’t want to get too close to stocks because every you know in my career about once every 10 years it it goes haywire and really hurts you this and so you got to think about that
Jeff Malec 45:13
12 year one was a little bit of an anomaly of taking a little while to go. The flip side of that is people would argue, right? Of, well, hey, you told me this, and I had I was buying puts for 12 years and lost 40% or something, right? So it can’t just be something that’s negatively correlated and bleeds to death. You got to have something that that survives. Right. I think that’s still the argument for bonds, but I would agree with you that bonds at 567, percent, yeah, no brainer. Have that in the portfolio. You’re getting paid for protection. Bonds at zero or negative, I don’t know if I want to get nothing for protection. Yeah, I’d rather have some absolute return potential in there.
Salem Abraham 45:54
Yeah, no, no. Bonds are the worst. You know, I’d rather own gold than bonds. If I’m gonna have to be in something really like that, I’d say, well, at least I get inflation. But better than that is that’s the alternative space. That’s why you love alternatives. It’s because, and again, as a math geek, I’m I’m saying well, you know, alternatives are if they’re non-correlated, and they have real return. Like I could make a decent rate of return with them, then they really bring something to the table that’s nice. And so I think in the time of you know when when bonds like you say were yielding five 6% a 6040 portfolio is a good portfolio, you know 7030. It’s funny no 130’s, no one has 30% bonds. You go looking at the largest college endowments, everybody they’re they’re they’re they’re five to 10% bonds, and sometimes they’re high yield bonds, so it’s like, well, this isn’t even this is zero bonds, which got
Jeff Malec 46:44
dumped on this in March. Yeah,
Salem Abraham 46:47
right. They’re equity like when they’re again, and then and then a lot of the hedge funds that they sometimes pick end up being, you know, equity like. You know, like you get long short hedge funds. You’re like, okay, let’s think of it. Long stocks,
Jeff Malec 47:01
yeah, is is
Salem Abraham 47:02
long equities, which is going to have a correlation. Even though they say, well, the beta is 0.5, and you go, well, the beta is 0.5 because it has half the vol. But it’s if it’s correlated at a one, it’s not going to help you. So it’s going to go down, and it goes down less. It’s just watered down stocks.
Jeff Malec 47:19
Yeah, I agree. So you had a nice story on your watered down whiskey before. Oh
Salem Abraham 47:24
yeah, no, well that’s it because you pay for you’re like well if you’re gonna pay for whiskey would you rather pay you know $5 for whiskey or $5 for watered down whiskey and that’s where yeah right people
Jeff Malec 47:35
have been like great I’m I’m cutting my fees I’m giving you this new low fee product but yeah all I did was water down the whiskey.
Salem Abraham 47:41
Yeah, no. So yeah, so you got to be you got to be worried about just you know in that case you’re paying hedge fund fees for watered down equities, and you’re like, well, you if you bought half equities and half treasuries, you’ve got half of all, and you got the correlation of one. You’ve duplicated that. You know, a lot of hedge funds that are long short, but you know you get some of the alternatives like global macro managed futures, some that are you know stat arb that are equity neutral, not not not a long bias. There are some things hedge funds that really have no correlation. They have a decent rate of return, and even better, I would
Jeff Malec 48:19
argue, right? Even better, they have negative correlation in a crash,
Salem Abraham 48:23
right? So they have
Jeff Malec 48:24
on average non-correlation, but negative correlation in a crash. Versus some of the other products you’re talking about have, on average, non-correlation but positive correlation in a crash.
Salem Abraham 48:33
Yeah, yeah. You know that’s that deal of if you want to have if you want to kind of hurricane-proof your portfolio, study the study the storms, and in the storms you hear people say, “Well, yeah, well, when that happens, the correlations all go to one. We say, “Okay, you need to pay attention to that. That’s important.
Jeff Malec 48:48
They they do often throw that out. Oh, well, that you shouldn’t look at that because everything went haywire. Yeah. Yeah.
Salem Abraham 48:52
Well, you say, “Well, look, I don’t want to. It’s a
Jeff Malec 48:54
compass had a magnet next to it. You can’t pay attention to those readings. Yeah, yeah,
Salem Abraham 48:57
yeah. Yeah, it’s kind of like a guy that tells you, “Hey, Jeff, I got these seatbelts. They’re really great, but you know, on the average day, they’re awesome. Now, in a wreck, they don’t work. But and you’re like, well, that one time I I need a seatbelt to work is in a wreck. If the seatbelt does not work, if my diversification model does not work in the wrecks, I need a different diversification model.
Jeff Malec 49:19
Agreed, agreed.
Salem Abraham 49:20
So that’s so study the wrecks. If you’ve got something that correlation goes to one in the wrecks, that’s not what you want. You want to create something that’s that you want to build your financial house with the storm in mind, and then it can survive the storm. And you’ve got to know, I can’t put my. It’s like back to the seatbelt analogy. I cannot do this in the split second while a crash is happening. If I’m in a car wreck, it’s not in the middle of a car wreck I put my seatbelt on. You’ve done that when you left the driveway, when everything was calm, in an environment where you could build your financial, you know. Your financial house that is that is hurricane proof. You built it before that, long before the hurricane came. So it’s this idea of thoughtfully building a portfolio before the storm, and how do what things can you include that are helpful? And when you when you do that research, you find that there’s stocks, and then bonds aren’t sadly are not a not as good of a of an asset anymore. And then, but that’s where alternatives can come in too. And alternatives, I think, are more important than ever now.
Jeff Malec 50:32
And we two comments on that. One, the storm, quote unquote, storm you’re talking about. I feel like people have a too narrow view of when and if that storm is coming, like you think of that on decades long or 100 years long. How do you view that of like what time frame you need to be protected for on this storm?
Salem Abraham 50:53
Well, it’s kind of like you know, it’s got to be. You figure your investment career, me as an investor, starting when I started trading when I was 20, I’ve got pretty good genes in my family if I take care of myself. And you know, so let’s say I trade till I’m 90. So I’d say over 70 years, you know, it’s kind of like dying. It only has to happen once for the game to be over.
Jeff Malec 51:17
Exactly,
Salem Abraham 51:18
and that’s where you know you say, okay, if I only have to go broke once to be broke forever, because you lose your stake. So you’ve got to. I think you’ve got to look at it, and then then you once you if you look at it in a you know a 70 year time frame, you say well it’s not if it’s when there will be a storm, and and in my experience there’s an extreme storm about every 10 years, and so you you just it’s it truly is like wearing your seatbelt. I mean, the odds of needing your seatbelt, you probably need it once or twice in your life. You’re glad you wore your seatbelt, and you want to make sure you know the same with building a portfolio. You say I need to build it, knowing that there will be a financial storm at some point, and I have to be always ready for it, just like I have my seatbelt on.
Jeff Malec 52:05
And then my other comment on this whole concept would be, you know, the person who’s like, “I love everything you’re saying. I get it. I didn’t used to get it, but now I’m scared. Is it too late for me?
Salem Abraham 52:19
Like, well, you know, that’s
Jeff Malec 52:20
that’s I’m hearing a lot of that lately. Of like, great, I get it. I should have had all this long volatility exposure, but I didn’t. So what do I do now?
Salem Abraham 52:28
Well, I you know it’s kind of like when in October 20, 1987, I lost half my account’s value, but what I did was I soaked up the lesson, and you know I think that first storm and even there was a storm came in January of 1991. I think it was the 17th. It was a Wednesday night, 6o’clock. The U.S. starts bombing Baghdad. Yep. And crude oil. The I lost. That was the biggest percentage loss day of my trading career as a hedge fund manager. Again, it sinks in because it was a losing time. But you, but those times. So when something bad happens, you can either say, “Well, I’m going to learn from it, or not. And to me,
Jeff Malec 53:12
what a crude rallied? You were short.
Salem Abraham 53:14
No. So everybody thought crude was going to go up, and it oh,
Jeff Malec 53:17
it sold the news. Yeah.
Salem Abraham 53:18
Yeah. It was. Yeah. Buy the rumor, sell the fact, and and and and I sat there. What I and I wrote it down when I was done. The markets didn’t behave like I thought they would. I thought gold would go up. I thought stocks would go down. I thought crude would go up. Everything went opposite of what I I did. And then as a trend, as a systematic trader, what I did was I let my system run. And there’s times that I would say this the systematic model is always looking and assessing risk in the rearview mirror. Yeah, and sometimes as a human, you have to say, okay, it’s it’s not assessing risk properly because there’s something getting ready to happen. Let’s say there’s an earnings report or something like that. Like if you had a Black Scholes option pricing model where you know implied volatility is different than than the historic vol because you say, well, there’s something getting ready to happen. Therefore, the market’s built in a higher vol. Well, so as a systems trader, I learned I needed to override the risk parameters and add more risk in the models so it would lower my position sizes. Yeah. So my
Jeff Malec 54:19
example to clients, I was there. Say there’s some huge asteroid coming to hit the Earth, and they send a probe out to check out if it’s on the exact trajectory. Vol is is what it is, looking backwards until they say, “Hey, Wednesday at 4 p.m. We’re gonna the probe’s gonna tell us if the asteroid’s gonna hit the Earth or not. Like there’s just a total phase shift.
Salem Abraham 54:40
It’s
Jeff Malec 54:40
binary. If it comes back yes, volatility goes 50x. If it’s no, it’s so yeah. I agree with you on there that you can’t always be looking in the rearview mirror.
Salem Abraham 54:49
No, and you need to adjust your positions knowing that hey, there’s going to be a big event because, like you say, it’s either all good news, all bad news, binary, and the market’s going to. So, but in the meantime, there’s no wall. Everyone’s on the edge of their seat, ready to move one way or the other. So, so my back to your point is, it’s never too late because there’s another train wreck. There’s another storm coming. It may be another 10 years from now, but it’s never too late to to do it. And sometimes they’re not evenly spaced. You know, you know when the when the crap hits a fan, it’s not evenly distributed, and it doesn’t come. It doesn’t come in nicely spaced intervals, and so we don’t know when the next storm’s coming. It could be in six months, or it could be in you know right. And who knows if
Jeff Malec 55:32
we’re even out of it yet, right? Oh yeah,
Salem Abraham 55:34
no. There’s plenty of storm left. This this you know the interesting thing as a data person, you know I panicked on panicked. I I I kind of rang alarm bells at Abraham Trading on January 26th. I said, “Look, this is a big deal. We need to watch it. And then over the next, because there was about I think 500 less than 500 deaths in China and about 20 2,000 cases. And I said, I wanted to see if if if what I would consider a top medical country had people die, so so it was about a week or two later someone died in Japan, and I said, no, this is serious. Yeah, that’s a
Jeff Malec 56:12
real deal.
Salem Abraham 56:13
Yeah, because they you know they can’t blame it on well the medical care in China, Hohen will the well, and
Jeff Malec 56:18
now we’re hearing that they’re really like 40,000 deaths in Wuhan, and they were underreporting.
Salem Abraham 56:24
Yeah, but
Jeff Malec 56:26
to me, this whole thing’s been interesting. You can quickly see the type of people that understand exponential movement and outlier events and all that. They were worried and they were preparing. And other people are like, “What are you talking about? There’s only 20 deaths.
Salem Abraham 56:40
Right. I
Jeff Malec 56:40
was like, yeah. If you double that every two days, right, it’s a big. You know,
Salem Abraham 56:44
you know, it’s that joke. Would you work for me for 30 days? I’ll pay a penny the first day, but I’ll double it every day. And by the end, you want
Jeff Malec 56:51
a million dollars now or a penny doubled every day for 30 days? Yeah,
Salem Abraham 56:55
and by the end, pennies
Jeff Malec 56:56
more.
Salem Abraham 56:57
Yeah, it’s like 450 million or something at the end.
Jeff Malec 57:00
Yeah, yeah, the last day.
Salem Abraham 57:00
So it’s crazy, but you know, because it’s a penny, two pennies, four pennies, eight pennies, 16 pennies, 32, and you’re like, “This is this stinks. You’re like, “Give it time.
Jeff Malec 57:09
Right. My kids have that of how many times do you have to fold a piece of paper to reach the moon? And it’s I think it’s 46 times.
Salem Abraham 57:16
Wow! But
Jeff Malec 57:16
that’s the right the 45th time. You’re halfway there.
Salem Abraham 57:19
You’re halfway there. The
Jeff Malec 57:20
big that 46 fold is a big one. We’ve tried it. We can only actually physically fold it. I think six times before it’s too unwieldy.
Salem Abraham 57:29
Yeah. Well, that’s fascinating. No. Well, that’s good. Well, the the exponential piece is the part that you. It’s kind of like compound interest. People underestimate it. So those lessons-that’s what led to the fortress. The fortress fund was an idea that, you know, we were where we were in the alternative space with a hedge fund, and we would say, you know, Jeff, we we do this one thing in the hedge fund space. We could be one piece of your 20-piece puzzle, and and then we would see them really mess up the other 19 pieces. They wouldn’t do a good job, and so so that might even
Jeff Malec 58:11
fire you because they screwed up the other 19, right, right,
Salem Abraham 58:14
right. And so what we did, that’s it. And so we so with the fortress fund, and it’s an outgrowth too of a Boone Pickens and I did a foundation together called the Pickens Abraham Foundation. We both had put in 2 million bucks to help kids in this these two counties of Hempill and Roberts County, Texas, where Canadian is and where his ranch was, and you know total population in the two counties is about 4500 people total, and you’ve got two school systems. And we wanted to help really kids and do college college scholarships, things like that. And so, so we did that. I
Jeff Malec 58:54
knew you were downplaying your charitable efforts earlier.
Salem Abraham 58:57
Okay. Well, so so congrats on that. Yeah. No. Well, it was fun. It was fun working with Boone, and we-he cares, you know, about obviously OSU, and and there’s a lot of kids in our area go over to Oklahoma to go to go to school too, and so we, so we, it was fun for me because I got to be king of my own investment committee. So I had my 2 million, I got to invest, and Boone invests his 2 million, and so we ended up then. So I got to try out what I wanted to do, if you know, if I could be king of my investment committee, because you know they say what a committee formed to build a horse, you get a camel, and you and anytime you’re on a committee, I always remind myself when they’re doing something that I think is stupid, I’m like, okay, I guess here’s one of these stupid humps, and then I just kind of keep my mouth shut and know that this is this is the inevitable.
Jeff Malec 59:49
And Steve Steve Jobs famously said, “We have no committees at Apple.
Salem Abraham 59:53
Yeah,
Jeff Malec 59:54
we run it like a startup. And he would say, “Like, no, that button’s stupid. Well, sir, everyone thinks he’s like, “No. Yeah, yeah.
Salem Abraham 1:00:00
Yeah. No. No. Well, there’s there’s some. Yeah. There’s good and bad with it. I’ll say I’ve seen the wisdom of a committee, but I’ve seen the bad of a committee. And the part that’s bad is a committee. They they don’t believe the math. They really want. They’re we’ve all been taught like 6040. Who came up with that? I mean,
Jeff Malec 1:00:16
yeah, it just became a thing, right? Yeah. Yeah.
Salem Abraham 1:00:19
7030 people pull these numbers out of their ear, and everybody says, “Well, you know, we’ve been all been taught. I’m like, “Well, have you ever done the math? Because the math will tell you a different outcome. And to me, what I always saw when I looked at the math is, I’m like, “Look, your stock portfolio, your stock piece is way too big. You’ve got way too much risk to stocks. You need to reduce that. You’re and you need to bring in alternatives, but the right alternatives. So there was this real clear way I had in mind, and and so I did that for 10 years with in the Pickens Abraham, and it did really well and had this proof of concept, and so then and at a much lower risk, and so then that’s where the team said we ought to have this as a product because there’s a lot of foundations and endowments that could do this, and so that’s where the Fortress Fund came. And we, you know, and then our fee was just 0.65 percent. So we have this low fee, and we say, look, and I’ve got, you know, I’ve got over 10 million of my money in it, either personally or my kids, or then now my foundation. And so I’m like, look, you basically you tell me I’m going to invest in stocks, bonds, alternatives. It’s the whole package, and if and really, you know what? It’s it’s like Ray Dalio’s all-weather fund. I thought that was a neat idea where what he did, and and so it’s and it’s it’s probably half the work for me. It’s a smaller team on my side, you know, it’s again back to the baseball analogy. I don’t have to get up for six a.m. workouts, and but I’ve got a great, you know. So, but we have between six and 12 hedge funds that we invest in third-party hedge funds, and so it’s a neat product.
Jeff Malec 1:01:53
And so the Abraham Classic model is not one of those funds.
Salem Abraham 1:01:58
No, it was for the first year of it from eight from 2018 to 2019. No, we don’t. We we just say no. We’re going to let third party people do it, and then and so it. I just think it’s a cleaner model, and I think too it it becomes a model that you know someone says, you know, Salem, you just handle it. You know, I was talking to a lady this morning who does a foundation in Lubbock, Texas, and you know they’re they’re worried about people in Lubbock now with the coronavirus and how do they you know they’ve got they they’re worried about the mission they have, and what it allows us to do is we can come in and say look let us be your investment committee all in one. Your foundation’s invested along our my own foundation and my own retirement money and some of my kids’ money and so you you save yeah and then and then just tell me and and and so it’s a fun product but you know it’s like what you all do at RCM where if someone comes to you and you say look we would like to understand alternatives can you help us and you know and y’all can look at their portfolio, and you can give them a piece of that portfolio because the hard part is, and I see this on investment committees. People don’t understand alternatives. They they don’t do the math. They don’t have the depth of knowledge that, like you know, like someone like y’all would have or others. There’s you know, there’s I think there’s probably a dozen really good alternative shops in the country that understand it well, and friends of ours, and people like RCM, and so and it’s like they
Jeff Malec 1:03:30
usually end up with a big name because of that lack of understanding. Of like, all right, if I don’t know the right one to pick, I might as well pick the one everyone else picked. Yeah, kind of. No one got fired by an IBM approach. Right.
Salem Abraham 1:03:42
No. Yeah. No. Absolutely. You see the big. Yeah. The big. The big marquee names. But the reality is, you know, when I I had this discussion with with a consultant not long ago. I said, look, they’re a big name, but I think the smartest people don’t work for the big names really-they go out on their own and do their own deal. So, and me in the business, I’ve just seen the smartest people go do their own deal because, that you know, the big the big name you pay to be at the big name shop. So they can’t. The best talent in the business goes and does their own thing. So,
Jeff Malec 1:04:17
yeah, I agree. I mean, yeah, yeah. And so then on Fortress, you guys also running the beta piece?
Salem Abraham 1:04:23
We yeah no, we do the stock. So we do beta, and we’ll do stocks and bonds. And there’s no, so we don’t do there’s no mutual funds, no underlying. We just pretty much index those. So we say, look, we’re gonna give you. You’re not
Jeff Malec 1:04:34
trying to add alpha. You just let’s get a pure beta.
Salem Abraham 1:04:37
Right. So we do beta
Jeff Malec 1:04:39
ETF or whatever. Right.
Salem Abraham 1:04:40
But no, but no, not even. But we don’t have ETFs. We build it like you know when we did the. So going back to say the the equity arbitrage stuff that we did. So we would build baskets, and so we were like, well, we know how to build that. So there’s no cost. So we don’t want the nine basis points of SPY. Even we just say,
Jeff Malec 1:04:58
I love it. There’s not too many. People are worried about nine basis points. Yeah, yeah, we know how to get around that.
Salem Abraham 1:05:04
Yeah, and the piece of just the third party. I don’t want to have my money in an ETF. I’d rather have the exposure directly. That then, you know, my grandfather taught me about CIF, and CIF is cash and fist. It’s like, look, you better be in your fist if it’s your cash, so I want to make sure I haven’t given my money. I want to have it close to my hand. So,
Jeff Malec 1:05:26
yeah, and we’ve seen in this crash some of the bond ETFs and getting dislocated from their nets and whatnot.
Salem Abraham 1:05:31
Right, right, right. And it’s in the storm that you have trouble, and that’s when you don’t have trouble.
Jeff Malec 1:05:37
And so this started just for your Pickens Abraham Foundation,
Salem Abraham 1:05:42
right?
Jeff Malec 1:05:43
We should have come up with something more clever for that. The Abraham or the Abra Pickens. I
Salem Abraham 1:05:52
have I have a lot of respect for for Boone, so he gets to go first. Pickens Abraham. The
Jeff Malec 1:05:58
and but then you said, hey, where other people are approaching you, and you say, “Well, we’ve got this program we’re running for this foundation. We can run the same thing for you.
Salem Abraham 1:06:05
Right, right. So, and then it’s since so the the way the foundation was set up is, if either one of us, if if Boone or I, the the first to pass away, then it gets split. So his part went to the T Boone Pickens. My part is in the Salem and Ruthie and Abraham Foundation, so for my wife and I, and so we, so then, and really, that’s then where, and the Salem and Ruthie and Abraham Foundation is invested in the Fortress Fund, and so it’s you know we don’t pay fees if the the foundation does not pay Abraham Trading fees because of conflicts of interest, but it so that’s where 100 of my foundation is. Is where about 90 of my kids’ money is, and then I’ve got a big chunk of my retirement in there as well. So it’s it’s a safe place to put money.
Jeff Malec 1:06:54
Your wonderful daughter Kate works for the Fortress Fund. She yeah no she’s hand trading and
Salem Abraham 1:07:00
yeah no so she’s the oldest of the eight. Kate is, and she is director of marketing and a smart girl. Yeah, and you know that the good thing, Jeff, about eight kids is, I tell people said, you know, diversification works in all ways, and with eight kids, you know, you’re bound to have a few winners out of eight, and there’s not as much pressure, you know, and then and and you know, like in your family, you’re one of the winners. See, but you go, but you know, there’s bound to be a few losers too.
Jeff Malec 1:07:24
Oh, we we got some,
Salem Abraham 1:07:26
and you go, okay, we love them, but you know, but you say, but but again, there’s no pressure. You say, you know, if you have one kid or two kids, you’re like, oh, they got to be winners, and you’re like, with eight, you’re like, no, I’ll just accept the average. Let’s just let the
Jeff Malec 1:07:39
chips see where they where they land,
Salem Abraham 1:07:41
I love all my kids, but yeah, no, Kate’s Kate’s one of the winners for sure. I’m not sure about some of the others; they’re
Jeff Malec 1:07:49
all. I get it. I’m in the same boat there.
Salem Abraham 1:07:51
Yeah, in a quarantine too. Now with the quarantine going on, we we’re not sure if we like them as well. I love my wife. So what’s
Jeff Malec 1:08:01
how old’s the youngest? Are there any still in high school? Or they’re all two,
Salem Abraham 1:08:05
two in high school. It’s a junior and a senior. The youngest turns 17 Saturday. So we’re yeah about 17 to we’re we’re in that 10 year 10 month that two month window where there’s from going to be 27 to to 17. So
Jeff Malec 1:08:20
my kids are young, eight and 11. So I’ve been saying, like, I feel bad if you were in high school right now during this lockdown and all this stuff, or even in college, like taking away some of your best years.
Salem Abraham 1:08:32
Yeah. So three of our kids are in college. They had to. They got sent home from college. We have a senior who she’s, you know, no junior senior prom, no grad, probably no graduation, no all the end of school stuff. So no, it’s kind of a bummer for them for sure. So
Jeff Malec 1:08:46
that yeah, this is going to shape that generation in ways we probably don’t even realize yet. But yeah, they’ll they’ll
Salem Abraham 1:08:51
they’ll all be toilet paper hoarders. I don’t get that, but we
Jeff Malec 1:08:56
do have a lot ourselves.
Salem Abraham 1:08:58
Yeah. All
Jeff Malec 1:09:05
right, we’re going to wrap things up here. Anything else you want to add on the fortress fund?
Salem Abraham 1:09:11
No, no. I just think it’s and
Jeff Malec 1:09:12
the portfolio approach.
Salem Abraham 1:09:14
No, I think it’s good. I just think, yeah, no, I think we covered it well.
Jeff Malec 1:09:18
I actually had a question. I just remembered. So, is part of the whole idea. There’s the rebalancing as well. So, right. Well,
Salem Abraham 1:09:25
so if stocks are doing really
Jeff Malec 1:09:27
well, I’m going to take chips off table, put it into the alts. Like in a period right now, the alts just paid out. I’m going to take that off. It’s going to allow me to buy into stocks at these lower levels.
Salem Abraham 1:09:36
Right. No. Yeah. No. We there’s um there’s some rebalancing. There’s some risk management too, you know. You know, in January and February, we were actually, you know, stock volatility went up. We there’s some rebalancing there. That doesn’t happen very often. That would be something rare. But typically, we’re about 45% allocated to stocks, 20% bonds, and 35% alternatives.
Jeff Malec 1:09:58
And so when you. Amend that per our bond discussion, or that’ll stay. No,
Salem Abraham 1:10:03
we always have some exposure to bonds. I don’t like it, but we’re going to have exposure to it.
Jeff Malec 1:10:08
It’s how the math works.
Salem Abraham 1:10:09
Yeah, no, well, you know, and if you’re competing, our competition is really we’re trying to beat the top 10 college endowments. And you know, if you’re in a if you’re in a you know a contest who can make the best spaghetti, you got to have noodles and red sauce, so we got to have stocks and bones. It’s Harvard’s Jeff. Yeah,
Jeff Malec 1:10:27
Harvard’s been coming under a lot of fire because they’re like laying off their cafeteria workers and stuff. It’s like, why do you have this $50 billion endowment if you’re not going to use it in a scenario like this?
Salem Abraham 1:10:36
No, exactly. What is it
Jeff Malec 1:10:38
for? Right. Well, it’s just to keep building bigger and bigger.
Salem Abraham 1:10:42
No, no, I think that’s right.
Jeff Malec 1:10:44
Great. Well, I’m going to switch over my background here for our favorite section.
Salem Abraham 1:10:49
Yeah.
Jeff Malec 1:10:50
Give me a second. There we go. Inside the Millennium Falcon.
Salem Abraham 1:10:56
Hey, look at there.
Jeff Malec 1:10:58
There you go. That’s
Salem Abraham 1:11:00
great, yeah.
Jeff Malec 1:11:01
So this has been a great episode. Thanks for joining us and sharing all your wisdom. We wrap up all our pods with a little bit rapid fire favorite section. So I’m going to ask you some of your favorite things.
Salem Abraham 1:11:13
Okay.
Jeff Malec 1:11:14
Favorite animal on the ranch out there.
Salem Abraham 1:11:18
Oh, you know. So honeybees wouldn’t count. That’s an insect because we like our honeybees. I think an insect’s
Jeff Malec 1:11:24
an animal. We could give you. Yeah,
Salem Abraham 1:11:25
I’d say chickens. So the chickens we just got, so we can get our eggs. Yeah,
Jeff Malec 1:11:30
yeah. My wife’s cousin. They’re in Seattle, and they have three chickens actually in their little backyard. So they say they get an egg a day.
Salem Abraham 1:11:38
Yeah. No, that’s it. You bet. You bet, yeah.
Jeff Malec 1:11:42
Do you listen to podcasts at all?
Salem Abraham 1:11:44
Sure, some. Yeah. What are
Jeff Malec 1:11:46
What are your favorite podcasts?
Salem Abraham 1:11:48
Oh man, the derivative. You know, love the one you live, right? Yeah.
Jeff Malec 1:11:52
Besides this one. Besides this
Salem Abraham 1:11:54
one, you know, I liked the one that the systematic investor, the with Jerry Parker and
Jeff Malec 1:12:01
yeah,
Salem Abraham 1:12:02
Moritz and Neal’s those guys that was fun. Yeah, this
Jeff Malec 1:12:07
favorite orchard crop. They call it a crop or a
Salem Abraham 1:12:12
a crop. Yeah, peaches. I like peaches. Now apples. I make more money from pecans though. Yeah, there’s
Jeff Malec 1:12:19
a a old fund, a fund guy here in Chicago. He quit, retired, moved out to California, and started a almond operation. And say makes 10 times more money than he ever did in the hedge fund business.
Salem Abraham 1:12:32
Well, it’s a it’s a it’s a good fixed income substitute, I would say, because you you make now. It’s a little lumpy, but it but it provides regular income and and it isn’t you know negative rates. It’s a you know I think you can make on an orchard if you’re willing to kind of put up with the extra work with it. You know you can make eight to 10% on your money and really not work that hard. So
Jeff Malec 1:12:54
really, and then so does that are there management companies or people run all that and you’re just the investment or you got to figure all that out? No, I’ve got I’ve got a guy
Salem Abraham 1:13:03
I’ve got I have managers that run it, and then there’s a one main orchard manager that he runs the orchard here, and then he manages the other two, helps helps manage them, kind of oversees
Jeff Malec 1:13:14
it. I I could do a whole podcast on orchards. I’m so curious, but I’ll just the last bit on orchards is: Have you seen a downturn at all with with what’s going on, or
Salem Abraham 1:13:24
no? People less
Jeff Malec 1:13:26
likely to get there, and an upturn. They want more, or is it such a long lead time? It doesn’t matter. No,
Salem Abraham 1:13:31
it’s kind of a little of both. You know, I think ultimately there’s going to be it’ll help, but we’ve got to pivot where we’ve got to do more kind of delivered to your door, you know. If I could say, Jeff, hey, in these trying times, we’re going to deliver a box of fresh peaches to your door.
Jeff Malec 1:13:48
Then you say from the orchard,
Salem Abraham 1:13:49
right from the orchard. And so I think that’s what that kind of thing with peaches and apples. Now pecans, pecans will be interesting. But I think people right now, you know, a pecan is a is a food that you can. It stores well, so you don’t have to refrigerate it, and it can sit there, you know, in the shell. And so I think that the things I have are going to work well. I think others, it’s a little harder. It depends on how well it stores, and so it’s it’ll it’ll be interesting. We don’t know yet.
Jeff Malec 1:14:18
Yeah, it’s odd to me. You’ve chosen crops without futures markets to hedge.
Salem Abraham 1:14:23
Yeah, no, no, it’s more fun. It’s in a way, you know, the volatility you get, you you you get I think rewarded for that being willing to take a a lumpy set of returns. And if you diversify, it’s kind of like alternatives. If you diversify on their non-correlated stocks or non-correlated crops, you know. In this case, you say it’ll work out. Yeah, pecans
Jeff Malec 1:14:45
and apples are pretty. I mean, I guess you could have both. Those could be a nice pie, but
Salem Abraham 1:14:49
yeah, I need I need a pineapple orchard, and then I can get in the fruit cake business. So I don’t know if that’s as lucrative.
Jeff Malec 1:15:00
Favorite investing book?
Salem Abraham 1:15:02
You know, I I really like Jack Swager’s Market Wizard and New Market Wizards. I like those. I like. Were
Jeff Malec 1:15:09
you were you in either though?
Salem Abraham 1:15:11
No, it would have been better if I was in there. Yeah, I was featured. No, but you were
Jeff Malec 1:15:16
Covell’s book, right?
Salem Abraham 1:15:17
Yeah, I know I was, and you know, I think with to read an interview, just you know, I think to really hear the words of a trader is important. Sometimes you see there’s something lost in translation, so I liked it where it’s that interview style. I think that was helpful to me. You know, I like two other books. I like which are just good financial advice. There’s one called The Richest Man in Babylon, and then there’s a book, Rich Dad Poor Dad, and they both are really talking about the importance of saving, and you know to save 10% of your you know that discipline to save, you know I think one of the you know the one of the biggest things about building wealth is saving, and
Jeff Malec 1:15:57
saving early especially
Salem Abraham 1:15:58
early right, and it talks about those in those two books. So I think for someone that says, “Hey, I want to have some money and have a good retirement, read “Ricious Man in Babylon” or “Rich Dad Poor Dad. Both of those are really good books too.
Jeff Malec 1:16:10
Got it. Favorite? What do you have down there in Canadian? Tex Mex or or barbecue or Mexican food?
Salem Abraham 1:16:17
Oh, all of it. Yeah, no, it’s all good. Yeah, you can. You just it depends on the day of the week, right? So, how many
Jeff Malec 1:16:23
restaurants are there there
Salem Abraham 1:16:25
in Canadian? So we have the Dairy Queen and Pizza Hut are the only two chains. Okay, the nearest Starbucks was 101 miles away. Then they put one in a grocery store 45 miles away. So we don’t have, but there is a good coffee shop. But then there’s the best restaurant in town is so we’re on the second and third floor of our building, and the first floor is the Cattle Exchange Steakhouse and Barbecue Place, and they have they were listed as one of the top barbecue places in Texas, and and you know it’s barbecue that’s just one floor below you, and steaks one floor below you is better than barbecue and steaks 500 miles away. So, so that’s got to be at the Cattle Exchange Steakhouse for both barbecue and steaks.
Jeff Malec 1:17:08
I love it. I can’t wait to go back out to a restaurant.
Salem Abraham 1:17:11
Yeah, yeah, absolutely.
Jeff Malec 1:17:13
And then we ask everyone lastly your favorite Star Wars character. As I’m sitting here in the Millennium Falcon.
Salem Abraham 1:17:19
Yeah. No, you bet, and it looks very cool too. That you know, you know, I I would have to say Luke Skywalker because just because you know Yoda, it would be great to be you know I I would I guess I’m trying to identify who Yoda is. Wait, he’s he’s like there. He’s arrived. Luke is he’s too
Jeff Malec 1:17:38
meta. Yeah,
Salem Abraham 1:17:38
yeah. Luke is still seeking
Jeff Malec 1:17:41
knowledge, and Yoda’s given knowledge. I don’t know. You’re probably pivoting more to Yoda these days. No,
Salem Abraham 1:17:46
well, I, I, I don’t giving
Jeff Malec 1:17:48
out knowledge.
Salem Abraham 1:17:48
Any trader, yeah, you never get to Yoda. The Yoda is the ideal, and Luke Skywalker is all of us on that journey to our best version of ourselves. So, I think whatever you’re doing, you hope you’re, you know, you always hope for that force to be with you and the the and good and all that. So I like that. I love
Jeff Malec 1:18:07
it. That’s our best answer yet out of anybody.
Salem Abraham 1:18:09
Oh man! Well, all
Jeff Malec 1:18:11
right. Well, thanks so much for joining us, Salem. This has been fun, and good luck with the Fortress Fund and all you’re doing to help everyone down there in Texas and St. Jude and everything.
Salem Abraham 1:18:21
Yeah, well, Jeff, thanks for having me. Thanks for having me, man. It’s great to be with you. Stay safe too, and we’ll all. I look forward to sitting down, maybe to some barbecue or steak sometime soon in person instead of just. We’ll do.
Jeff Malec 1:18:33
I got to make it down that way. My brother’s in Dallas. Maybe I’ll drive and stop. Yeah, yeah. Stop
Salem Abraham 1:18:38
in. Stop in. We’ll take good care of you. We’ll make sure you show up in Dallas heavier than you left Chicago.
Jeff Malec 1:18:45
Okay, that’s it for the pod. Thanks to Salem, belatedly five years later. Thanks to RCM for sponsoring. Thanks to Jeff Burger for producing. We should be back next week. I’m not sure the exact schedule, but tune in. We’ll let you know what’s going on. Peace.
This transcript was compiled automatically via Otter.AI and as such may include typos and errors the artificial intelligence did not pick up correctly.
