The Pomp Podcast - Chris Gure, Investment Consultant: How Wealth Advisors are Explaining Crypto

Episode Date: December 6, 2019

Chris Gure manages the finances of various wealthy families and advises on their investment portfolios. In this conversation, Chris and Anthony Pompliano discuss portfolio construction, the macro economy, the psychology of money and investments, and how Bitcoin is currently perceived by his type of client. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

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So go check them out at BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp. And that brings us to the last advertiser of the episode, eToro. These guys have absolutely crushed it over the years. Their founder, Yoni, was one of the original Bitcoin OGs and has been ahead of almost every trend in crypto. He built eToro to help people buy, sell, and trade cryptocurrencies, but he added a few twists, social trading, copy trading, and virtual trading accounts.

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and you can get started by going to eToro.com. Again, that is eToro.com where the entire team is ready to get you started in just a few clicks. And don't forget, go subscribe to the Off The Chain daily newsletter. You can go to offthechain.substack.com. I write a letter of news, analysis, and opinion every morning that goes out to more than 40,000 investors. See you there. What's up, everyone? This is Anthony Pompliano.

Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Chris Gore manages the finances of various wealthy families and advises on their investment portfolios. He has also been incredibly helpful to me in retirement planning and was the individual who originally introduced me to Mark Yusko and Morgan Creek. So I wanted him to come on the podcast and share his insights. In this conversation, we discuss portfolio construction, the macro economy, the psychology of money and investments, and how Bitcoin is currently

perceived by his type of client. I really enjoyed this conversation, and I hope you do as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I'm sitting here with Chris. We got a whole bunch of stuff to cover. This is going to be a really special episode, I think, because we're going to get

the perspective of a financial advisor, both in the traditional world, but also how clients currently are thinking about Bitcoin and cryptocurrencies. So thanks so much for coming to do this. No problem. Thanks for having me. No pressure, bro. No pressure. All right, let's get into your background. We've known each other for a long time, but go ahead and tell everyone kind of what you did before the financial advising work. Yeah, I graduated college and realized no one's going to trust a 20-something-year-old kid with all their money. So I figured I need to go leverage the big brand names that were out there, see if I couldn't use them to get my foot in the door, speak with wealthy clients, talk about their financial planning. Went to a $5 trillion asset manager, used their brand name to open a bunch of doors.

was working on retirement plans and financial investment portfolios for companies like Oracle, Time Warner Cable, big Fortune 500 companies like IBM. It was fun while it lasted, but had to move on. So what do you exactly do when you're doing retirement planning for big organizations like that? I get that people need the help, but what exactly does that work entail? Yeah, everyone really thinks that they're going to try to identify this number out in the distance where it's if I can get to two, three million dollars, I can retire. But just like you and I were talking about a minute ago, if you think about it backwards, there's this really interesting story about Tiger Woods when he will go into the golf course, he'll actually start at the 18th

hole and walk backwards. So we can try to help clients identify everything that they're going to need in retirement, you know, how much money they're going to spend doing the income planning first. We can walk that back to a realistic number on, hey, you can save X, Y, Z, or you can get your investment portfolio to this number, you shouldn't have any worry about being able to retire successfully. Yeah. And so what is the average number, would you say, most clients? You do a lot of work in North Carolina, so it's not a New York, San Francisco, but what's the average number people are looking to save? Is it, hey, I need to get to a million bucks? Is it $10 million? Where are they trying to get to? We work with a really interesting subset of clients. We work

that 40 households manage right around $100 million as an office. But for the average person, they need to have $1.2 million in retirement. That's going to spit off $50,000 a year of top line income. Couple that with Social Security, which we can, of course, get into, see if that's going to work out long term. I do is the short answer. But couple that with any pension, Social Security, it should be all right. Got it. And so as you're sitting down with these folks, Maybe let's go through kind of somebody walks in the door as a new client. You basically say, all right, let's start at the end with the income planning on the retirement side. And then as you walk backwards, what are the things that you're trying to identify?

And then how much of that is more tactical things versus more of like a mentality around either saving or investing? Yeah, we want to really do all of that tactical planning, all of this. you know let's geek out on these financial plans let's run the numbers to see if we can't break the financial plan down behind the scenes we don't want to do that with clients we think our interaction with clients is 90 behavioral focused we want to understand your relationship with risk you know there's two ways to think about it clients will call us or coming off the street and the first thing they want to talk about is you know what's this hot stock tip what are they talking about on the radio that's going to give me, you know, double my investment portfolio in

six weeks. Generally, that's because they've done a poor job planning. They didn't save enough money. Now they feel like they need to take a lot of risk to get to their number to be able to retire. The flip side of that is we have some wealthy clients who don't want to take any risk. They feel like they achieved their number, their goal for retirement, and now they want to lock it under their mattress and, you know, hope that the interest will pay for their retirement. Yeah. But basically it's the difference between somebody who wants to get rich quick and somebody who's comfortable getting rich slow and disciplined. Right. And it's one way to think about risk is can I afford to take it? Can I afford to take this much risk? And so like,

explain that more. So we were talking earlier, a lot of people, their mentality growing up, you think about our parents, our grandparents, who they were waiting in line for gas and bread They weren't able to get the things that they needed to go to work and live their lives. They have a really different relationship with money, where it's more of a scarcity mindset. Oftentimes, people were able to get jobs when they were younger. They have all these advantages from their parents saving all this money. They were able to take a little more risk. So now the relationship with money is, hey, I have enough money in my bank account to pay all my bills for the next year.

My main focus might be to keep saving, but what are you giving up? What opportunities are you missing out on by just having this money sit in your wallets and your checking account? Yeah, this is one thing that we talked about a bunch where if you think about it from a business perspective, right, if I have a profitable business and let's say that my business is generating a million dollars in cash flow each year and I just simply keep taking that million dollars and just putting it to the side, saving it in a bank account, one, obviously inflation's eating away at it, but two is that's a strategy of saving. But if you took that same million dollars of cash flow and you had some way to reinvest those profits and you could turn that million dollars into $2 million, $3 million, $4 million, it would pay, quite literally, to continue to reinvest your profits into your business. But in order to do that and have the confidence to do that, you really got to have a pretty good handle on your business and understand the machine that you're building in terms of your return on invested capital.

You're exactly right. And that's really what we see our role as. If you owned a successful business, you're going to have a CFO that you trust who's the CFO for your business. We're the CFO for your household. And just trying to bring that down to something that people might understand and that we've been talking to clients a lot recently about is interest rates are extremely low. Let's talk about your mortgage for a minute. If you want to go buy a million-dollar house, you're going to put, just as an example, $200,000 down.

and the bank is going to lend you $800,000 at 3.5%, 4% right now. I mean, it's unheard of, the level of interest rate. If you leave that money in your savings account, you're making $2,000. Now, if you're comfortable investing that money and not putting 100% down on your home, what's the delta that you can make? If you're borrowing money just the same way you put it before at 3.5% from the bank and your investments are kicking off an 8% return, you're making you know five and a half percent four and a half percent on every dollar that you

didn't put down to the bank you know you just got to leverage someone else's money yeah and so how does the mentality uh and kind of risk profile change with let's say age first right so if i'm a young 25 year old who's just starting their career i probably don't have as much wealth or assets and i'm assuming the risk profile is much much higher versus somebody who's in their mid to late 50s who's got quite a bit of wealth and is nearing the end of their career. Is that accurate or do you find the opposite? Yeah, it is exactly true what you're saying. And it's not always for good reason. We grew up in this Instagram culture where people see all this wealth and all this wealth is flaunted. Everyone drives a nice car,

but what you don't realize is that they're leasing it. Thinking about some of our wealthiest clients, they drive cars that they bought 11 years ago and never made a car payment in their entire life. But also, they're taking a plane that they own whenever they're going on vacation with their families. They're not posting that online. No one's seeing that. Versus the 25-year-old client who's driving the Maserati to his humongous house who everyone knows about. Yeah. Well, it's also a lot of that stuff is fake, right?

It's rented cars. It's rented homes. It's all this stuff to really just like flex on people. Whereas I think that the difference is you ever seen these memes online that are like the goal is to be rich, not to look rich. Right. Which I think is exactly what you're talking about there. And so let's get a little bit into, you know, from an individual's perspective, how do you guys think about portfolio construction and really talking about traditional assets outside of crypto? Like what is that conversation like with the various types of clients you guys have?

So when we're putting together any investment recommendations, we have the ability to go out and look at every investment vehicle under the sun. And we want to screen it through our own process to identify now, is this, we'll just use public equities for an example, is this stock set to outperform for the next 12 to 18 months? One thing that we do that's slightly different is we outsource a lot of that value investing style that people used to love has not fared well last decade or so. With this Warren Buffett type of investing, we use a couple of different research providers to do the book value and identify which stocks are set to grow over the next year. And we want to overlay that with technical analysis to see, hey, is this going to be backed by some tailwinds? Is there momentum that's on our side for this asset to rise and to rise quickly? What's the weirdest investment you guys have ever evaluated? The strangest story we had was, I think it was 2017, we invested in Weight Watchers.

And it was over the last 20 years that Fortress has been around, the largest single stock holding in any portfolio. And what happened? The reason it became the largest single holding is because it more than quadrupled in value before we sold it. And we certainly did not time it at the very top. I mean, it would have been, you know, eight bagger, I think, at one point. And we got out between four and six. But it made for a great year. Everyone had Weight Watchers memberships paid for for the rest of their life, I think.

What is the, when we look at these investments, what do you guys do around alternative investing? Right. So not stocks and bonds, kind of your traditional assets, but the whole private, private equity, venture capital, even some people put real estate in there, etc. Like, how do you guys deal with that? So I hate that I'm going to tee you up perfectly. This is exactly what you want to hear, but it is the truth. And you guys worded a little differently. I do want to call you out about that. We're looking at alts as an asset class, which I don't think they should be described as that.

But regardless, we want non-correlated market assets. So if we are going to buy the S&P 500, which we're not doing as a general rule of thumb, we want to be able to balance that out with something that's uncorrelated. So our goal with all of our clients who generally have made all of their wealth or made a significant amount of wealth already is to keep them rich forever. We're not going to make them rich overnight by any means. But if we can avoid this permanent impairment of capital by bringing the volatility of their portfolios down, by keeping them invested for the long run, by lowering their market risk, we're doing our job. How does Bitcoin play into that?

Really, the compliance nightmare question of the century is how do you answer clients' questions when they are online, listening to you, listening to CNBC talk about this day in, day out? and they're looking at it more often than not, unfortunately, as a, hey, I saw this thing go from $100 a few years ago to $15,000. And if I put in X amount, I'd have, you know, 50X that amount now. And have you recently, so we're recording this in the end of 2019, the asset was as high as $20,000 at the end of 2017, drew 85% down around $3,000 and is now sitting, call it somewhere in the low $7,000s. Do you see interest kind of follow price? So in 2017, price goes up a lot.

A bunch of people come in asking about it. Price goes down a lot in 2018 and everyone kind of goes away. As price recovers in 2019, people come back and start asking again? Or was it a pretty persistent kind of interest level throughout all those price movements? No way. People are short-term biased. They're generally pessimistic. And really, one of the huge investment risks that's our job to help people avoid is people

get anchored in their own history bias. So they heard about Bitcoin for the first time, what was it, two years ago now when it was at the absolute peak. They bought it at Thanksgiving, Christmas when their nieces and nephews were telling them that someone was screaming about it on Twitter. They threw in $5,000 or $10,000, something they thought they could afford to lose, sold it at the absolute bottom, and now they're kicking themselves ever since. That's when people get the most upset. Everyone wants to buy low, sell high. Really, it makes for a great coaster or a saying on a mug or a t-shirt,

but in practice, it's a lot more difficult. And so those people today, where do you think their interest lies? Are they, hey, I bought the top and I sold it somewhere on the way down. I lost money. I don't ever want to talk about that thing again. Are they interested in it from a pure speculation standpoint? Do they maybe have done more work and now they look at it as a technology and an alternative form of currency? Where do they kind of fall on that spectrum in general? People hate being wrong and that makes for the worst investment strategy ever. So they want to be pessimistic. They want to see this thing go to zero. Because think about it, in their head, they bought at $20,000. Let's say they sold at $8,000. So they lost a little more than half

their investment. But hey, if it goes to zero, it's still not the most wrong out there. Yeah. So basically, I'm the smartest of the dumb people. Right. And that's unfortunately how people generally invest. Yeah. And so you guys, and again, we should caveat like 100 times throughout this. This is not financial advice. This is just pure Chris's opinion, my opinion, and kind of a conversation around philosophy, but not investment advice. How do you think about Bitcoin as a non-correlated asset or asymmetric asset? Or is it more of, yeah, maybe that stuff's true, but it's just a speculative thing for right now. And so it's okay for people that want to get some exposure, but keep it really small and capped. I think people that are a lot smarter than us

understand history and are able to identify over long periods of time that there have been these, you know, technological revolutions. And those have all been the keys to creating huge outside wealth, you know, things that are going to last through generations. And if this is the next one, I certainly don't want to be on the sideline. If this is going to be what are people calling it internet 2.0 that this is going to power you know the future of 5g or whatever everything is based off of how could you not participate it so admittedly and full disclosure i do own some of it it's not enough that's going to you know make a huge difference in my portfolio in the near term but hey if you and these other loud guys on twitter are right

i'll be cheering all the way um how's the macro economy playing to this like what do you think's going on there this is probably what really plays to client conversations so our average client let's say is 45 years old they are a doctor executive have a two million dollar portfolio with us own a successful business that'll be a huge asset you know as part of their financial plan in the future and their biggest concerns are generally around geopolitical events now people really oversell to themselves the importance of these geopolitical events in the near term, or I should really say in the long term. Whoever lives in the White House this year generally is not going to have the effect you think on your retirement plan 40 years from now

when you retire or when you're thinking you could potentially run out of money. On the flip side, when you see these countries like Venezuela who have hyperinflation, who are completely corrupt. You see them going into the banks and just taking the money out. This is something to actually be concerned about. And I'm not saying that will ever happen in the United States, but we do want to have international exposure to stocks and client portfolios. And this geopolitical risk does exist. There's no way to hedge it out completely. There is a really compelling argument to make with a currency that isn't backed by a country. And so as you think about that macro economy, you talked earlier about interest rates being low.

Obviously, there's a we can call it non QE or just QE happening. Do we see this stock market rally continue forever? Like what? Where are we in these cycles? And are you guys more of the thought that we're closer to the end in the beginning? Or do you think that it doesn't really matter what happens, you guys try to be prepared throughout any sort of macro environment? Yeah, we want to build out, just like I'm sure everyone does, this all-weather portfolio that's going to help people feel comfortable. And the reality is no one knows when the rally is going to end. And to guess what the S&P 500 is going to be next year and when it's going to peak is a fool's errand.

we need to identify what level of risk you're comfortable taking well in advance of that so that the next correction the next recession whatever it ends up being and whenever it ends up happening is only you know a blip on the radar you know generally these things the bull market lasts seven to ten years that's two three years of you know contraction market cycles exist there's no denying it the key is to identify your risk tolerance beforehand it's extremely difficult mentally to go through that exercise we talk too much about what's going to happen and not enough about how we are going to react to it that's where people make mistakes we see people that were invested up and through the financial crisis in 2008-2009 they got out

of the market they saw just enough to where they felt comfortable they never got back in and again they feel like geniuses, but when you go back, you see that you miss an incredible, unheard of rally. And they are the ones that are cheering for the next crash. Our clients that are younger, that 25 to 35, even older than that, they have really nothing to worry about. They have such a long time horizon in front of them. And again, people talk about the quote unquote retirement age being in your early 60s. You still need to have money indefinitely. You don't need to stop making money as soon as you retire? Well, and I think that what we're seeing across just personal finance in general is this like assault by technologists where they're trying to build

technology to automate away a lot of financial advisors' roles, banks' roles, other kind of financial service organizations, et cetera. How do you guys see, probably especially with the younger generation of clients the role for those fintech platforms versus what people would consider more traditional advice and kind of help that you guys can provide? Yeah, we're very bullish on how technology can help us service clients. We want clients to be able to feel comfortable by logging in, seeing where their investments are all the time. Generally, our clients didn't grow up using the computers every day the way we did remembering these logins these passwords the different data that's important for you know privacy protection is going to create a lot of friction for them

and when they can't log in all of a sudden their worst fear has been met and the money's gone reality if you click forgot password you'll be logged in in 15 minutes yeah um i i always wonder if there's clients who literally just have cash positions because they're so scared of what what's going on in all the products you're absolutely right and we love cash viewed as an asset class it is an investment um i remember a story mark told about what was like a nine-figure client had all this money in one bank that i couldn't even pick out on a map you know these are insured up to 250 000 that's not really helpful when you have 100 million dollars yeah um bitcoin new global currency or are you uh you not there yet certainly not there yet no why not

there are we were in new york all last week together i think we walked by two places that accepted bitcoin we walked past every place that except my american express card i'll give the american express points the nod on global currency at the moment before bitcoin that's fair in the united states true right i saw i'll take your word for it i saw um a stat from a coin metrics nick carter and those guys um that last year 2018 bitcoins adjusted on-chain transaction volume so this is not exchange traded volume and this is adjusted for things like mixers or exchanges etc right so it's doing its best job to figure out what is actual economic activity that's on chain um was 750 plus billion dollars in 2018 and so if you compare that to

venmo paypal or apple pay bitcoin's on-chain transaction volume dwarfs those three and these are people that are spending it on goods and services you're saying that's how they're so that's part of the challenge is what exactly are they spending it on right we don't know but are they sending it you know me sending you money am i send spending it somewhere to actually buy a good or a service um could i be moving it between two of my own accounts it's really hard to tell what the purpose is but just the fact that 750 billion dollars of transaction volume on chain in some adjusted manner, you know, $750 billion, pretty big number. You know, it's really interesting. I got an email last week. What was that huge exchange that closed down? So this is back to

your point about, you know, there's so many of these robo advisors that are going to disrupt the industry of, you know, financial services. And I don't see it that way at all. No one wants to call 1-800 number ever again. When you need someone, you want to call someone that's going to pick up the phone what's it like when you're trying to call coinbase to make sure that your transaction no phone number but that's concerning but what you're basically getting at is this idea that as automation becomes more prolific and machines and algorithms start to get rid of the more mundane aspects of jobs and the less creative aspects of jobs it actually makes advice and the creative components more valuable, right? So it's a thing where the machines are really good at

doing kind of work that is repetitive, or somewhat mundane. And they're really good at like computations, etc. But in terms of the actual creativity, human ingenuity, right? And the advice component, machines are still pretty bad at that compared to the best humans. And so I think that that makes that advice much more valuable over time. And it goes back to the, you know, who do you trust? And people are so concerned with keeping their identities safe and well-deserved concern over, you know, don't want to put your social security number in there. But I guess I've kind of have maybe a pessimistic view on this. I think if someone wants my information bad enough, they're probably going to get it no matter what I do if I don't save my passwords. So opt me into

automating everything. You know, I want every bill pay. I don't want to think about any of that. Yeah. I mean, look, if you go on the black market, I can definitely buy your stuff. You can have it for free. Right. If anyone made 10 bucks, it's yours. For sure. And so what about like custody and other aspects of Bitcoin? So not just the asset itself, but like, let's say a client walks in and says, Hey, I want Bitcoin in my portfolio. How do you guys think about the options to get exposure for that client? And what are some of

Maybe the risks or obstacles there that probably still exist today, but definitely existed two years ago. Yeah, we can't wait to see some of these big custodians like Fidelity add this onto the RIA chassis so we can have the option for exposure to it. There was a really, you know, for a moment, and this was over a year ago, we had clients calling in asking for that, what was that? GBTC. Yeah, that Bitcoin trust. When you look at it, it's trading, or it was trading at, what, 30%, 40% premium? So it's, hey, you're real worried about the fees, and now you're paying a 30% premium on this asset?

Okay, well, like, where exactly do you think it's going? How are you, you know, everything else you're talking about, you sound like a value investor, but now you're paying a 30% premium, really going against the grain on your investment policy here. Yeah, and so is it custody is the big obstacle when somebody decides they want it, or are there other things? Custody and compliance are generally the big obstacles with all of this. And this is why I don't think the adoption is where everyone would like it to be yet.

You're asking people who have grown up in a completely different age to adopt a new technology that I don't understand completely yet. I don't know if you understand it completely yet, but they don't understand it at an elementary level. And now you want lawmakers to make it comfortable for a trillion-dollar asset change from the generation before us to us to say, hey, we want to put – what are you trying to do, 1%? That's still a lot of dollars, and there's a lot of risk to congressmen and senators everywhere. Maybe, but if you look, I think, at the fiat system, there's more money laundering that goes on in the fiat system. There's way more risk, I think, in a fractional reserve system, as you see with things like the global financial crisis, et cetera, versus a bearer asset that is not participating in fractional reserve. What do they say about those pioneers? What?

They get slaughtered. I want to bet on the people with all the money. So as much as disrupting the central bankers may be what's needed to adopt and grow and advance as a society around finances, I don't know if I want to bet against the guy who's controlling interest rates. Yeah. Well, here's the one of the things that I've been spending a lot of time on is so the creation of double entry accounting happened in the early medieval times of the Middle East is where most people think it happened, probably somewhere in like 70 to 100 AD.

And then eventually made its way to Europe and was popularized by two separate folks. One was a merchant who started using it, I think it's around like 1300 AD. And then eventually one of the Medici family members started using it, the Medici Bank. And that's really kind of where it became super popular. And now obviously the entire global financial system is built on double entry accounting. But that one single invention created a massive inflection point in human history. And so if you think about there was single entry accounting, then we got double entry accounting, massive inflection point. I'd argue that triple entry accounting, which is what a blockchain or Bitcoin as an application provides, could be an even larger inflection point in human history,

simply because that triple entry accounting system is now going to permeate the globe because it's being built on the back of the internet. Yeah, you can innovate and you can, you know, we certainly believe that innovation is happening more rapidly than ever. This is a hyperbolic innovation that you're describing. If you're not on the front end of that, you're going to miss out. Yeah. What's the biggest mistakes you see, especially younger clients make?

So let's call it sub-40 years old. What are the big mistakes they make? So I'm going to talk out of both sides of my mouth a little bit here because it applies to different people. Generally, the issue for the masses is people are not saving any money. They're not putting any money away for a rainy day, and eventually they're going to need it, and they're not going to have it. I think it's, what is it, less than half of people could come up with like a $400 bill.

Yeah, it's less than, or more than, I think it's just 50% of Americans can't come up with $400 for an emergency bill. Yeah, it's terrifying. And when you look at it from, you asked about younger people, but let me jump to the older people right now. $1.2 million to retire is a pipe dream to most people. I think the average 401k balance is under $40,000. And people are going to spend that in a year or two. Yeah. So what do those people do?

Just keep working? Sad, sad reality. There's only a few levers that you can pull. Which are? Keep working, save more money, make more money, change your investment strategies. It's, again, essentially a lever to make more money or use less. And it's a pretty morbid thought process. And is it a thing where the earlier you start, it's just compounding and time are on your side? And so, yeah, having better strategies, et cetera, helps.

But it's just a thing of starting early gives you a massive advantage. Oh, my goodness. Humans are not that smart. And this is the easiest example on how to figure that out. Underappreciating the power of compounding is the biggest mistake that anyone can make. And the easiest way to put it, read this Bill Gates quote a while back. You can ask anyone, like 2 times 2 is 4, 10 times 10 is 100. But ask them what 17 times 21 is.

That's the limit of our mind's computing power. I don't know anyone that can do that without grabbing. My first thought would be to grab my calculator too. But that's when you're talking about this power of compounding. And when you can apply that to your money, you crack the code. It becomes rather simple. And the idea that people don't make enough money to save is fundamentally incorrect. We were talking to hundreds of people a week, most of them making less money than our average clients now.

They still had successful retirements, but you can't overspend. You can't live beyond your means. It's not rocket science. It's just not what people want to hear. Yeah, it's basically, look, whatever you make, you've got to spend less, right? You've got to be disciplined in kind of executing an intelligent plan, and then you need to leverage compounding in time. Right, yeah.

Like if I can figure it out, anybody can figure it out. It's based on percentages. So there's been huge, massive studies done, and you need to be saving 10% to 15% of your income per year. And this is if you're starting at like 25. so that's that's the trick where does that get you so so let's say that you make uh forty thousand dollars a year basically if you could say four grand a year that puts you on track and you do that year in year out since you were younger where does that put you yeah you'll be at eight

hundred thousand to a million dollars assuming you have a realistic long-term annualized rate of return which is easier said than done there's going to be some drawdowns you're going to need to stay invested. There's going to be big dollar amounts later on in life, but that's going to be able to kick off the annualized salary that you're used to receiving in retirement. Because things do slow down. Generally, people spend about 80% of their current spending in retirement. I think things naturally go down. You're spending, you're not traveling to work, you're not buying new clothes for work every few months. There's just less wear and tear on everything. Hey man, you gotta have a fly outfit go play bingo if everyone switches to black t-shirts that that'll save them some money

listen i it's uh it's like a uniform man what uh what about taxes and we were talking earlier about a whole bunch of different tax strategies and stuff like how important is it to uh take into account taxes and you hear rich people all the time doing all kinds of crazy things to uh either from a perception standpoint or in reality um lower their tax burden or tax payments is that One, actually helpful to those rich people. And then two, kind of everyday people. You know, is it helpful to folks like us who want to, you know, they read about this stuff, but they don't actually know, like, should I be worried about taxes?

Or is it just, you know, kind of the MTV version of the world? If you want to see someone lose their mind or if you want to fill a room with people, tell them that you're going to save the money on taxes. It's the best, you know, financial marketing of all time. This is how you avoid taxes. let me go on the record you can't just avoid it without breaking the law they're there for a reason and when you go back and think about it it they're they're not all that bad and historically and the reason i'm saying this is when you look at the last you know 40 50 60 years historically

we're at an extremely low tax rate environment so what exactly where do you want the balance to be you know no one wants potholes in the road everyone wants to go to good schools but no one wants to pay any taxes. It's like, hey, let's just level set a little bit. What does everyone think is fair? It's probably roughly what you're paying. So what do you think about like the wealth tax? Want to know who has the best URL? Crypto.com. That's right. Crypto.com. They're a crypto platform with one goal, motherfucking mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out. Tell him Pomp sent you.

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updating your coin mine consumer mining made easy that's right go to coinmine.com tell them pompset you and thank me later. One more word from our sponsor BlockFi. Their new interest account allows you to securely deposit your Bitcoin or Ether at BlockFi and receive 6% annual interest paid monthly in cryptocurrency. This rate actually compounds so you receive a 6.2% APY which is very attractive given the alternatives. So you can actually take your Bitcoin, you can deposit it with BlockFi and get paid an interest rate of 6% in return. Go check out blockfi.com slash pomp again, blockfi.com slash pomp to sign up and start earning interest on your crypto today. I think I didn't know I was going to ask him about the wealth tax. I think it's really interesting

that, and this is just in the last week, who was it? Bezos gave away a ton of money and people He gave away like $95 million. And that didn't go viral. What did go viral was the guy who responded and said, just pay your taxes. Which, hey, you know, these loopholes do exist on these corporate taxes. And you can see that Amazon, and they're certainly not the first ones to do it. Their effective corporate tax rate was 0% last year. And that does seem crazy to me.

But you're creating this environment that incentivizes them to move their money to foreign countries with extremely low tax rates and keep the money over there and not bring it back. So it's more complicated than people think. So I would argue that by introducing things like the wealth tax, what you're essentially doing is you're transferring capital from the best capital allocators in the world, which tend to be successful business owners, large wealthy families or individuals. And the reason why they're the best capital allocators is that's how they built those big businesses or wealth, et cetera. And you're transferring that from the best capital allocators to notoriously the worst, which is governments. Yeah, I can agree with that. It would be crazy if the way you incentivized our government was by sticking to a budget, and they had to stick to the budget to keep their job, to keep their benefits. How quickly would things change? I think that it would be incredible for there to be some sort of process where the government officials have to present their capital allocation strategy every one or two years to a council of the most successful business owners in America. I love it.

Well, who was it? It was like the Roman Empire where you didn't run for office. They forced you to do it. That's how I think it should happen. If you're running to be for office or for president, I'm not going to lie. That job doesn't seem fun at all. People are just mad at you no matter what you decide. Half of the country is going to think you're the worst person of all time.

Who would run for that job? That is insane to me. We should start putting names in a hat and just forcing someone to be elected. Who would you force? I don't know. I kind of root for chaos in situations like this. So let's send you up there for like six months. No, no, no.

We don't need me doing any of that stuff. That would be a nightmare for me and for everybody else. I got three picks for you, but you go first. You pick a person. I'll name a person that you would force to be president because you think that they would do a good job specifically with a bent towards the economy. So one thing we should talk about next is, and this is to your point about we should be able to see how these politicians spend their money. I want to see how someone invests and spends their money before I'm willing to throw them up there. And I want full transparency. None of this took me five years to release my tax records.

I need to see them right now on the spot without you doing anything to them. And then we'll send you up there to run the nation's economy. I would pick Bezos as one. I would pick Elon Musk as two, and I'll tell you why in a second. And the third person I would pick off the top of my head. Some shady accounting going on over there. My third pick would be somebody who has the intersection of economics, math, and invest, something like a Jim Simons, right?

Who basically just understands how to use data and math to drive economic return. Now, I'll tell you who the answer is. Who? Who's running Rentech right now. So for people who don't know, this is a massive hedge fund. You can't get in with less than $100 million. Even if you have more than that, I still don't think they'll let you in.

They cap the amount of money that they will work with every year, And they're averaging what net of fees, which their fees are ridiculous, 40 and 4, I think is what they're – 4 and 40 is what they're paying. And they're averaging 40% annualized returns after fees. Yeah, Jim Simons' renaissance. Yeah, we'll fix Social Security real quick. The reason why I would pick Elon for one of it is I believe that the way to get out of America's debt is innovation. and to return back to entrepreneurship and innovation and embrace taking these wild bets like the Industrial Revolution, the space race, et cetera.

And it's not so much that he or somebody like him would figure it out, but if you look at somebody like, I think it's the president or COO of SpaceX is this woman. I think her name is Carolyn Shotwell. uh like she would be a great person you just want her to see if she can find aliens no no no we already know the aliens exist uh but no but but if you think about right like really large budgets super super innovative and if successful drive such an economic boom for a country that you get out of this hole we're just holding on we're trying to plug the holes like, you know, the ship's sinking, we're under debt, let's raise the debt ceiling, that type of

stuff. And instead what it does is it goes back into a super offensive mindset where being a good capital allocator, driving innovation, and ultimately trying to spur economic growth through what is similar to a private business. If you take that approach, pretty much every politician would fail that test you know i love that answer i just think that the team over at rentek can do that more effectively than than elon and and company maybe um all right what is the uh one biggest surprise that you've had a client walk in and tell you the biggest surprise i ever have when talking to new clients is that i want like what like what's the craziest story a client said it walked in and said hey i gotta tell you and then told you x and

you were like wait run that back what did you just say like what's the craziest thing a client's ever told you don't don't tell me somebody admitted to murdering anybody but it was the craziest thing clients told you i had a prospective client uh let's let's decide exactly which stories we can share here before we throw them on air it's interesting clients call us um very early on in a lot of pivotal life decisions um when you think about the most taboo conversations you can have we're recording this a few days before thanksgiving the things you don't want to talk about in front of your grandparents are you know health concerns relationship marital concerns and finances are generally up there with things that people don't want to share publicly,

we work with families at the intersection of all three of those things. So we know the dynamics of their families a lot of the times. We know a lot of health concerns that we can't talk about or that we want to help avoid, offset, or address in some different way. And then obviously we are managing their entire financial lives more often than not. And to have those three things intersect, it's, hey, Chris, I don't know what you're doing today. I need you to get on a plane and come meet me and my lawyer, come to this doctor with me. Things are about to change, and you need to be at the epicenter of it.

Before I finish, I always ask rapid-fire questions. This wasn't rapid-fire? What do you think is the most important company in crypto right now? I don't know if you're going to like this answer. I think Coinbase when you are looking at trying to adopt something the user experience I think is well undervalued those guys do a great job of making it really easy to to use what regulation would you change or improve if you could in the crypto space anywhere just in finance in general we need to absolutely eliminate this

accredited investor limits. If something's a good investment, people should be able to do it. Trust that people will educate themselves when it comes to their money. They have everything to gain. And what would you say is your most controversial

thought in finance? Wait, do you say finance or finance? I say finance. Finance, like a normal person. Okay. For all those out there that say, what is it, finance? Like, what are you guys doing? I think that the craziest thing people are doing, and this is specific to my industry, is no one's asking how we manage our own assets. Explain that.

When you go to hire a financial advisor, if the first question you're not asking is, how do you manage your own finances, what are you doing? How would you start the conversation any way else? so are you saying that people should only go with folks who they agree with how that person's personally managing their own capital well would you go to the gym and hire a trainer if he was out of shape would you go to your dentist people are all messed up people do that all the time you shouldn't that'd be a crazy thing to do yeah that's fair uh what's the most important book you ever read that's a great question i read a lot of books i go back and read more often than not just because it's one of those things where if you read a book different times during your life

you're going to get a lot more out of it i don't know if i can just settle on just one just one i read books every day throw one out the alchemist that was a pretty wild book i've uh So my mom actually had copies of that sitting around our house growing up and all throughout college. She would reread it every single year, which is kind of crazy. But it's something that I picked up, and I think it served me pretty well. Aliens. Let's get to the real part of this podcast. Real or not? Of course they're real.

Why? What's that saying where it's like there are more stars in the sky than grains of sand on every beach? Really? yeah so just like go back to your math if you know you're talking about single entry double entry now you know scale it up to triple if i'm a big math guy i like to think i am but my i can't fathom how expansive the universe is so just to say we're the only one seems so naive have we contacted them or have they contacted us like do you think there's been contact i think they'd be here if they thought we were interesting you didn't answer my question i i'm sure we're

being monitored like some sort of science experiment we're probably a petri dish to someone else you think so absolutely and maybe it's not us so you know trying to get over my skis with math you when you think of the speed of light it's like the fastest way humans are able to think about this if you're hundreds of light years away and you look back you're looking back in time now so what are you seeing you're not seeing us here right now you're seeing like dinosaurs man listen i saw a crazy uh meme on the internet said uh if you think about hair follicles they uh uh disintegrate when they go into the ground so how do we know that dinosaurs didn't have like long hair well don't we do like just have like mullets

well it was like mammoths that that was the uh i'm gonna try to find the uh the photo again and i'll link to it in the uh in the show notes i don't know if that's what i want my thumbnail to be hairy dinosaurs mullets no it was like a dinosaur with a mullet it was like how do we know they didn't have weird haircuts all right man now listen we we uh we talk about aliens a lot but i might have to uh start asking people about dinosaurs too the best question you've ever asked in this podcast is if aliens exist do they have pets legitimate question that's the best question you've ever asked do you think so of course why well think about all throughout history or i mean and again so like a piece of a grain of sand infinitely expansive people have

always had pets yeah that's true what if the dinosaurs were the aliens pets all right you could ask me one question to uh to wrap this up what uh what do you got for me when's the wedding oh man everyone's talking about the wedding now um miss polina if you're listening uh i think that she has uh selected a date um but uh when uh when the date is official i will let everyone know and uh maybe we'll uh you know not have everyone come to the wedding but maybe we'll throw a little little party afterwards in uh in new york somewhere and uh i'm i'm uh petitioning to have everyone uh and anyone who wants to come to show up uh plina is uh open to the idea but we have some more negotiating to go so this is for for all your twitter followers i know they're

wondering this because you're you've been buying these bitcoins forever you're never gonna sell hold it forever i've never said any of that i don't give much advice in in reality at what price Would you take some off the table? And think about it like this. If it could go to $100,000 per Bitcoin or whatever your price target that you've addressed publicly is, at what point do you take some risk off the table? Honestly, my grandkids will have the Bitcoin that I own. All right.

It's a beautiful way to look at risk. Here we go. Risk tolerance off the charts. But it's not risk. I actually think that it is mathematically more risky to hold dollars than it is Bitcoin if you look out over a 200-year time frame. Well, I'm not saying hold dollars. I didn't say that. No, I'm just saying.

But any asset in the traditional financial system is dollar denominated. And the reason why I say that is there's two things that Bitcoin has. One is the separation of state and money. And the second is it's a new currency. And so if you look at it mathematically, what is the average life cycle or lifetime of a currency? We're getting pretty deep into the lifetime of the U.S. dollar. And then, so just mathematically, it's unlikely that it'll last for another 200 years, let's say. Bitcoin has a higher probability of lasting for 200 years than something like a dollar.

And the second thing is I believe that 200 years from now, we will look back and people will say, wait, there used to be money that was controlled and governed and created by the state. That's weird. I think that the separation of state and money is a foregone conclusion at this point because of things like triple entry accounting, the transparency of a blockchain, etc. And so while that seems radical today, 200 years from now, it's going to be no brainer. 200 years from now, they're going to take this audio, they're going to have put it through six different new technologies, and they're going to be like, who's this crazy guy who was 200 years ago talking about the separation of state and money? So on the record, you'll never

diversify your investment portfolio. I had a friend one time who told me the best way to diversify is to make more money. And if you think about that, right, it's taking a very long-term, low-time preference, passive approach to any investment. That's not just Bitcoin. I know a lot of people who would dollar cost average into the S&P, for example. And it's not like they have in their head, hey, at some point, I'm going to take money out of the S&P. It's this is where I'm going to store a portion of my wealth for the rest of my life. And I'm going to continue to dollar cost average into that position. And over time, that position will continue to grow. And so if you look at your investments or assets that way, it's less about like the short-term investing and where's

the price today, et cetera. And it's much more a decision around asset allocation. And then as you make money, you basically allocate based on that asset allocation. And if you have a really, really long time preference, as the study at Fidelity showed, the people who may have the best returning accounts are the people who died or forgot their password. And so time is your friend so the way you're getting out of this is saying you will for future dollars you won't allocate 110 of it into bitcoin you'll eventually allocate a portion of it into something else yeah i mean i everyone knows that i always joke right i've been very clear about the asset allocation uh that i've had um and nobody ever asks me about uh what do i do with the other

50 so percent or so uh and so the joke that i always um say is like it's not like i'm like levered up on uh you know like 6x levered hedge fund strategies or um i'm not like buying lottery tickets it's actually a lot of cash a little bit of real estate and like super safe more like barbell strategy type approach uh and so if you look at it as one part of my portfolio it would be considered very speculative and risky. The other part is super safe and non-risky. That blended risk profile that I'm taking is actually not that bad given my age and kind of my risk tolerance. There's a lot of people though who went the exact opposite direction. They put, you know, 80, 90% of their wealth into these speculative assets and they didn't have kind of an asset

allocation strategy they're they're super over rotated on on this stuff and so when the price drops 85 they lose material parts of their net worth right and so i think that um it's why i say it all the time on twitter etc is just um you know there's some very basic rules here around don't invest more money than you're willing to lose right you know or that you can that you can actually withstand losing um and things like that that are just tried and true in every investment in the world, they still apply here, even though this is new. We'll have to do that for the next one. We'll go through your asset allocation. I got some weird stuff in there. Oh, I'm aware. What's the weirdest thing you have in your portfolio? I don't think it's anything that's

weird. Bitcoin, people would say is weird. I own more bonds than a lot of allocators you know would allow me to, and it's still an extremely small percentage. I have a blueberry farm in there people think that's weird oh i know about the blueberry farm oh yeah uh the craziest thing i have is i have exposure to a company uh called nectome uh which provides uh i'm gonna paraphrase very broadly but they provide an oxygenated process that delivers cryogenic freezing like technology and what it does is it basically preserves the structure of your brain and so that they can, with almost 100% structural integrity, preserve your brain at the time of death. And they could do everything from research to eventually they would like to be able to take your brain

and because they preserve the synapse connections, et cetera, where knowledge and experience and information is stored, load that into a computer. You forwarded me that deal. I uh for anyone listening passed but tell them your most on-brand investment this is my favorite thing you've ever invested in which one come on you give them a shout out like every week your favorite restaurant oh mcdonald's what up yeah uh actually somebody while we're sitting here texted me and literally with a selfie and they're at mcdonald's and said thinking of you um and so uh it's the best restaurant in america period hands down no question

You know exactly what you're going to get. It always tastes the same. It's cheap. Service is fast. You can find them on every street corner. They have Wi-Fi now. And my favorite part, tell me a dirty McDonald's you've ever gone to. Pauline, if you're listening to this, tell me when you want to go to dinner.

It's on me. All right, man. Where can people find you on the internet? That's my name, Chris Gore, C-H-R-I-S-G-U-R-E. I think I have you in my Twitter and Instagram as my burner accounts, just because you told me not to do that. So I had to. All right.

Well, we'll do this again in the future. Thanks so much. Thank you. Hey, everyone. Pop here. If you like this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts,

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