The Pomp Podcast - #807 Long Term Investing

Episode Date: January 30, 2022

This episode is a little different than the usual podcast format. There is no guest. Instead, I will share a couple of thoughts I have around a specific topic. Today I discuss long term investment strategies. The same strategy that made legends like Warren Buffett incredibly successful. Controlling your emotions and viewing your investment with a long time horizon will help you navigate these market selloffs. ======================= BlockFi provides financial products for crypto investors. Products include high-yield interest accounts, USD loans, and no fee trading. To start earning today visit: http://www.blockfi.com/Pomp ======================= Choice is a new self-directed IRA product that I'm really excited about. If you are listening to this, you are likely part of the 7.1 million bitcoin owners who have retirement accounts with dollars in them, but not bitcoin. I was in that situation too. Now you can actually buy real Bitcoin in your retirement account. I'm talking about owning your private keys and using tax-advantaged dollars to do it too. Absolute game changer. https://www.retirewithchoice.com/pomp ======================= Circle is a global financial technology firm that enables businesses of all sizes to harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide. Circle is also a principal developer of USD Coin (USDC), the fastest growing, fully reserved and regulated dollar stablecoin in the world. The free Circle Account and suite of platform API services bridge the gap between traditional payments and crypto for trading, DeFi, and NFT marketplaces. Create seamless, user-friendly, mainstream customer experiences with crypto-native infrastructure under the hood with Circle. Learn more at circle.com.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Hey, everyone. Today's episode is my perspective on long-term investing, market volatility, and why everyone may benefit from simply taking a deep breath. Before we get into today's episode, though, I want to quickly talk about our sponsors. Today's episode is brought to you by Exodus, the world's leading desktop, mobile and hardware crypto wallet they offer beautiful user-friendly blockchain products that sync across all of your devices making it easier to send receive and exchange over 150 or more

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double your first deposit of up to a thousand dollars by using promo code pomp head to my bookie place your bets and get ready for the unmatched intensity of playoff football bet anything anytime anywhere with my bookie anthony pompliano runs pomp investments all views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of pomp investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Financial markets can be crazy at times. The complexity of an economy makes it nearly impossible to predict

what will happen in the short and long term. Humans are really bad at dealing with uncertainty, specifically when there's a dopamine-driven feedback loop of volatile price movements thrown in their face every few minutes. Let's use Bitcoin as an example. On at least six occasions last year, the digital asset fell in price more than 20%. There was a 50% drawdown in approximately 95 days, which was the fourth time in four years that Bitcoin had fallen by 50% or more. To say that Bitcoin's US dollar exchange price is volatile would be an understatement. There are a few financial assets that compare. This volatility in price is mirrored by wild swings in investor sentiment in the market. During January 2021, Bitcoin crossed $38,000 for the first time in

history. The fear and greed index registered at extreme greed. In January of 2022, Bitcoin crossed below $38,000 and the fear and greed index registered at extreme fear. This is a great example of wild swings in sentiment. The price of the asset is the exact same, but the difference of one year and the direction of the asset's movement led to very different beliefs about the future. This is top of mind right now because we are watching the complexity of financial markets play out related to Bitcoin. The Federal Reserve spent the last two years flooding the market with cheap capital, which pushed investors further out on the risk curve. Wall Street funds and institutional investors adopted Bitcoin as an inflation hedge asset. Public companies started

to put Bitcoin on their balance sheet. The price of Bitcoin pushed higher as inflation raged on. Now that the Federal Reserve is talking a tough game, including increasing interest rates and tapering quantitative easing, the price of Bitcoin and other risk assets have fallen significantly. The anticipation of more expensive capital and ultimately lower inflation growth year over year has investors scrambling to gain more exposure to value investments. Simultaneous to the Fed-related speculation, there's geopolitical game theory playing out involving Bitcoin. China has taken an abrasive stance towards Bitcoin miners and investors. This led to a massive migration out of China, which can be seen in on-chain metrics and the global hash rate measurements.

Elected officials in the United States continue to propose legislation that would create high friction for companies, investors, and miners. El Salvador has leapt onto the global stage by embracing Bitcoin in a major way. They are buying Bitcoin, building Bitcoin ATM networks, launching Bitcoin software products, creating a Bitcoin city, and raising capital through a Bitcoin-backed municipal bond. The various approaches of China, United States, and El Salvador have been playing out for months. A new entrant to the global game theory is Russia. Their central bank has taken a fairly adversarial position to the industry, including a proposed ban on crypto trading and mining.

It appears that Russian President Vladimir Putin disagrees with the central bank and has reportedly signaled his support for a proposal from the finance ministry that would allow crypto mining and trading, but in a heavily regulated manner. Price volatility. Sentiment swings to the extreme. Some countries embracing Bitcoin. Other countries attacking Bitcoin. The Fed saying one thing, but doing another. This is all leading to uncertainty in the market. No one knows what is going to happen. It is easy to be fearful. It is easy to get distracted. The world is moving fast. How can

you possibly keep up? Well, maybe you don't have to try. The beauty of taking a long-term approach to investing is that you can live a less stressful life. You are able to do the work to identify secular multi-decade trends and allocate capital accordingly. Barring some significant invalidation of the thesis, a long-term investor can then focus on dollar cost averaging into the investment over time. MicroStrategy's Michael Saylor was on Up Only TV yesterday, and he clearly articulated his Bitcoin strategy. Kobe, one of the hosts of the show, asked him, is your strategy, you just don't give a shit, you're just buying Bitcoin no matter what? To which Saylor answered, yeah. This may seem crazy to the ill-informed eye, but the conversation evolved to unpack this even further.

Michael Saylor explicitly explained that he would periodically buy the tops of Bitcoin price cycles along with buying bottoms. When you dollar cost average, it is impossible to know whether you are buying the top or the bottom. But if you have a long-term view, you don't care. You simply continue to convert your currency

into the asset of choice. Regardless of what is happening in the world, a long-term Bitcoin investor will continue to simply dollar cost average. Geopolitics, noise. Fed decisions, noise. Wall Street adoption, noise. Sentiment, noise. Price, noise. The key to generating outsized returns over decades is to ignore the noise. Focus is a superpower. You lead a less stressful life.

You don't get distracted. As Warren Buffett once said, our favorite holding period is forever. Many investors in modern markets could benefit from understanding this advantage. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on apple spotify or your favorite podcast player and if you're looking to try to transition to get a new job in the bitcoin or crypto industry we've got you covered head over to palmscryptocourse.com we've developed a curriculum with the top teams across the industry it's a three-week intensive training program with over 50 events packed into that three-week time period go to palmscryptocourse.com to learn more and i'll meet you guys for the next episode

Thank you.