Cody Willard on bailouts, Bernanke and business
I chatted with him on Monday morning about his life and career. There isn't enough space for the whole conversation but here's a quick summary of his life. The 36-year old attended the University of New Mexico on scholarship, and sold his car for $4,000 after graduating and moved to New York. He worked at Starbucks while he wrote to people he read about in The Wall Street Journal in search of a job on Wall Street, eventually landing a job at Oppenheimer as an analyst. He launched his own hedge fund in 2002, investing in technology stocks in the midst of the carnage. Along the way, he was involved in a handful of dead-end tech start-ups, lost his home on September 11th, wrote an unpublished novel, and started a Neil Young cover band that folded when the guitarist fell off a roof.
After reviewing his bio, we talked about a subject near and near to my own heart: the inanity of TARP and the stimulus package. Cody is an articulate spokesperson for the "stop the insanity!" movement, and his ability to penetrate through the hype and scare tactics made him an interesting interview.
You have serious beef with the Federal Reserve. Are you just another voice of the libertarian crowd?
I shy away from the "L-word" simply because I don't ever want to get grouped into any type of national platform. So no, I don't go toward the Libertarian ideal. I just want to be a free-thinking individual.
I mean look: The Federal Reserve's entire charter is to redistribute wealth in some manner or another -- whether it's cutting rates so banks have access to all kinds of cheap capital that normal people don't. The very premise of the Federal Reserve is insulting to me. The Federal Reserve has destroyed every incentive I have to save. They are forcing people to stop saving. That's their way of fixing the financial system?
You've referred to the bailouts as "fascism" on the part of Republicans and Democrats. Can you explain that a little bit?
You go back and actually look at the definition of fascism according to Mussolini himself. He defined it as basically the marriage of government and corporate powers. A year ago, 15 months ago, you and I would never have fathomed that our own government would actually own insurance companies, banks and car companies. Or government has crossed the line into merging government and corporate powers. I want to be accurate when I talk about something and I think the most accurate term is that, what Democrats and Republicans have done equally in the past 15 months is turn this country into one that has some real fascist realities to it.
Is there anything about TARP or the stimulus package that you do like?
No, absolutely not. It's just a massive redistribution of wealth to the most politically connected people and the ownership class at large. It's unfair, unethical and immoral on every level I can think of. I don't know how anyone can possibly look around at poor people around this country and say "You guys are better off because we bailed out and we stimulated." We're talking three, four times the entire budget of welfare for the poor has been spent on bailing out the banks. And Obama and Bush are equally responsible for doing that. They told us we had to. Wake up and smell the coffee. Do you not see that we have spent $200 million bailing out one single company's shareholders. They keep saying, "We don't want to be in business." Then don't! The SEC and the FDIC have already failed in every aspect of their jobs.
When you look at your story -- pulled up by your bootstraps, worked hard, etc. -- do you worry that our current economic policy path is leading us away from that?
Well, I don't see this as really being about welfare or bailing out the individual. Whether you're for or against welfare for the poor, there's some sort of social reason behind it, you can get. Whether you agree with that or not, you can understand it. But everyone who has any sense at all is just offended on the most fundamental level that we've sent trillions of dollars of welfare to shareholders.
How can we fix that?
Truly, I think the only thing we can do is stop it. The best case scenario is that these companies figure out how to profiteer from all this taxpayer largesse that they've tapped into. The very notion that they're profiteering from these welfare funds is the best case? What country am I in? The best case scenario is that bailout companies profit from taxpayer largesse and everyone's upset. The worst scenario is that we're in an economic recession. The best case scenario is that the incompetent managers who drove us into this ditch end up profiteering from this largesse?
The alternative is that we stop and let the market sort it out. We demand every dollar that we've sent to Bank of America back. They have to sell every side business they have to pay us back. GM has to s
Moving away from the macro stuff: How did you start a fund?
I just raised money. It was October of 2002 and the NASDAQ was down and I just thought it was a great time to start a technology fund. I started off with just a tiny bit of capital and over the next five years, I had a little bit more capital -- enough that I made a decent listing. And I started doing some media stuff and then that just took on a life of its own and I closed down my fund right before we started the show.
What's your best career tip for young people?
Persevere. It really does come to that. You're going to have setback after setback financially, career-wise, personal life-wise. But you have to persevere in order to succeed. If at any point in the first five years, I had given up -- when I probably should have -- I would have never ended up with my own fund or my own TV show.
What's the best investment for the next five years?
Betting on higher interest rates is I think the easiest, no-brain thing, probably for the next two to five years. If rates triple in the next two years, you might have to get out of it. The next time the market crashes -- I wouldn't chase them now -- Google and Apple are solid.
But I think you also have to invest in yourself. For 12 years, I've invested in myself: starting my hedge fund, raising money, marketing it, creating three different entities you have to create to start a hedge fund. I've invested in websites that helped create my media persona and I had to spend money investing in that.
What do you think of real estate?
Anywhere that is down more than 50 percent, I think you could start to look for bargains. Anywhere that is not yet down 50 percent -- for example 20 percent, for example New York City -- it's a ticking time bomb and I would get the hell out.