We Study Billionaires - The Investor’s Podcast Network - BTC006: Bitcoin & the Macro Backdrop - w/ Brent Johnson from Santiago Capital (Bitcoin Podcast)

Episode Date: December 30, 2020

IN THIS EPISODE, YOU'LL LEARN: How Brent views the macro landscape Brents opinions on different "pools" of money in the greater economy Why scare assets are going to continue to dominate the investing landscape How to think about position size Brent's risks for Bitcoin How much Bitcoin should be in your portfolio BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Brent Johnson's twitter Brent's investment firm Santiago Capital Management Browse through all our episodes (complete with transcripts) here. SPONSORS Support our free podcast by supporting our sponsors: Bluehost Fintool PrizePicks Vanta Onramp SimpleMining Fundrise TurboTax Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey, everyone. Welcome to our Wednesday release of the Investors podcast where we are talking about Bitcoin. On today's show, we have a big name from the traditional finance space, and that's Mr. Brent Johnson from Santiago Capital. What started out as a little spat between Brent and myself on Twitter quickly evolved into a phone call and then a decision that we should probably be recording this and turning it into a podcast.

So this was a really fun conversation because Brent is a guy. that likes Bitcoin a lot, but he also has a lot of concerns and points that he just likes to raise when having the conversation about it. One of the things that we really pride ourselves in here at TIP is offering all sorts of points of view on a particular topic so that anybody who's listening to it can make whatever decision they want after hearing the conversation. And on today's show, Brent provides a lot of food for thought on markets in general, expectations for going forward into 2021, and then the bull and bear cases for Bitcoin. So without further delay, here's my chat with Brent Johnson.

You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. All right. So here I am with the one and only Brent Johnson. Man, it's amazing how we came to this, Brent. It is. I can't tell you how many phone calls or meetings or initial communications with people I've had over the last year so where it started off with. So I saw you on Twitter or I heard you, you know, I saw an exchange on a podcast. It's very social media related when people first reach out to me in one form or another. So whether that's a good thing or a bad thing, I'll leave that to other people to determine, but it is what it is.

I love it how fast, though, when we talked on the phone after the back and forth, I'll call it that on Twitter. And we talked on the phone and like literally in the first minute, we hit it off and we're like, all right, well, let's record something. Let's do this. You know, I don't know, you know, this may sound sexist, but that's kind of how, you know, little boys, I mean, they'd argue they'd get in a fight, they'd hit each other, and then they're fine. It doesn't get drug out that long.

And then they're playing together. Right, right. So let's do this. Talk to us about your framework because I want people to kind of really talk about the big chunks of the things that they feel or that they view as being valid or what, What's making the economy function the way that you see it today? And then we'll just take it from there. Perhaps some people have heard this before, but just let me give you a quick overview

of what it is actually due because I think in many cases, people hear me speak and they think I only do one thing or they have a very limited view of what I do. Essentially, I manage money for high net worth individuals. And I have a very concentrated group of very wealthy clients and we customize a wealth management plan for them. And when I say a wealth management plan, you know, we work. with their trust and estate lawyers and their CPAs. And, you know, we come up with an investment plan and then we help them implement it. And no two people are the same. So nobody has the exact same

portfolio. But that said, because I'm kind of the architect of the overall plan and the quarterback of it, so to speak, you know, there's going to be similar themes across all of them. And my framework for everybody, even though their individual investment plan may get implemented differently and they may have different allocations based on their certain circumstances, the framework of which that I, you know, help them develop that plan is going to carry over across clients. And so the reality is, I am not trying to make my clients rich. Most of my clients are already very wealthy. They got wealthy either through a very concentrated position at a company that they were working at or a business that they started and then it went public or they sold it or whatever

it is, right? They had a very concentrated position. And then I've helped them. diversify out of that concentrated position, and now we're kind of creating an overall diversified plan. I mean, the greatest way to get rich is to have a concentrated portfolio, and the greatest way to get poor is to have a concentrated portfolio. That's in my opinion. I like that. And so it works both ways. And so most of my clients, like I said, they're not trying to become a billionaire. They've done very well. They've got a very nice lifestyle. They want to pass it on to their heirs or their foundation or whatever is. And so we're trying to protect it, right? And so that's where diversification comes in. So I don't think anybody should put it all into one thing.

I want to ask you a question about that real fast, because I would think volatility would be something that would be very high on the list as you're sitting down with one of these clients and you're saying, all right, so talk to me about your risk tolerance. You know, if your portfolio moved by 20% in a year, what would that make you do? Or there's some of the things that you really kind of focus in on it from the start? Absolutely. I mean, at the end of the day, my job is not to capture 100% of the upside of every move of the S&P 500. I think many people have wrongly started using the S&P 500 as their benchmark. There's no reason the S&P 500 has to be benchmark. It might be appropriate, but it very well might not be appropriate. So what we try to do is to come up with

an appropriate benchmark for them. What are they trying to accomplish? And how do we get that, right? And for some people, it means taking a lot higher a level of risk. Some people, like I have one client who is a very successful tech executive. He was a former Air Force pilot. And, you know, he's 65 years old, all he wants to do is, you know, live off his earnings and go fly his airplanes. He just wants to make a, you know, very conservatively to make five or six percent a year. So his portfolio looks much differently than somebody else who is younger, wants to take more risk and, you know, wants to get 15 percent a year or whatever it is. The point is, I think it makes sense to come up with a plan for yourself and who cares what everybody else is doing. I guess if you're just managing a mutual fund and your goal is to outperform the other mutual funds, your mandate may be a little different.

than my mandate. So with that said, and I think that is so important for people to understand is every single person is looking at their circumstances, their age, I mean, alone is a huge factor of it, right? All of those things are, it's custom. So a person listening to this, if they take one thing away, it's going to be completely different than somebody else. Talk to us about the big story. Like, if you had to explain, if you had to sit down with a new client and say, well, this

is how I see the world and the environment that we're operating in right now from a macro landscape, Give us that one over the world pitch or description of how you would describe it to them. First thing I would tell them that in the next four years may be the most difficult years from an investment standpoint in the last hundred years. And I truly believe that. I'm not trying to be dramatic. I'm not trying to scare anybody. I really think we're kind of at this critical point in history.

I think the big theme that I would point out is the debt. It's all about the debt. And debt, whether you think it does or not, debt has consequences. And, you know, central banks around the world are doing their best to push those consequences down the road so they don't have to deal with it. And regardless of whether they can continue to push it down or not, we're at a minimum, we're going to continue to bump up against it. And then maybe they can kick it again. But there's at a minimum, there's going to be events along the road that are going to be very volatile and very scary because of all the debt in the world. And I am of the

opinion that they can't solve it. They can try. But ultimately, we will have the kind of come to Jesus moment, right? And we've had several of those over the last 15 or 20 years, and they've been able to successfully kick it. I think we're getting to the point where it's going to have to be dealt with. I might be wrong on that, right? I might be wrong. But my point is, again, because I'm trying to keep people wealthy, I'm always looking for the pitfalls. And I'm always looking for what could go wrong. I don't just have the luxury to say, let's go buy Tesla. Let's put it all on Bitcoin. Well, when you said you don't see them being able to solve it, what would be your driving point of view for why?

The main reason is because all of the solutions to kick it down the road actually make the overall problem bigger. Let's take March as an example, just because it's the most recent and probably the freshest in everybody's mind. What the central banks did is they came in and they provided, lack of a better word, liquidity to the market. Because what happened was the debts were not getting paid. the dollar was not circulating. Asset prices started going down. It created this kind of like

vicious cycle to the downside. They needed to do something to stop the downside, provide liquidity to the market and get it back up without going into too much detail based on the design of the monetary system. It has to grow. The monetary system is designed to get bigger. It cannot survive contraction. If it contracts, it actually collapses. Or if it continues to contract, it will collapse. It's an exponential system. And an exponential system is either go straight up or they crash. And so that's what we have. When we hit those and when the debt gets too big and the debts don't get serviced,

you get a contraction. And the central banks, by design, have to come in and provide new capital to the system in order to get it growing again. And this has numerous effects across all kinds of markets, whether it's talking about growth rates or inflation rates or alternative currencies, it literally affects so many different things. To me, it all goes back to the design of the monetary system, the fact that it's a debt-based monetary system, which means for it to grow, the debts have to grow, but eventually the debts create, it gets so big, they create a deflationary force.

So you have this situation where the system has to grow, which is inflationary, but the system has grown so big it has to deflate at the same time. It eventually gets big enough to where it becomes in conflict with itself. And I think that will eventually have implications for all kinds of markets. And do you think that we're at a parabolic point where this isn't linear? It was probably never linear, but it's becoming very evident now that it's not linear. And we're actually starting to go parabolic in the growth of M2 and all the promises that are built on top of that.

Do you agree? Well, there's no, I do agree with that. And I think there is some misconception when you see these graphs of M2 and M1 going up. I'm not minimizing them. This is a problem. And this will have severe consequences. But it doesn't necessarily indicate what a lot of people think about. Even though M2 is spiked, the world is not just a wash in tons of liquidity.

People still need dollars and aren't getting them, right? It doesn't mean they can't get them. I'm just saying that just because that N2 has taken off, a lot of it's still trapped into the banking system. And we can spend five hours just on that topic alone. So we probably don't have time to go into too much detail. But a lot of the money that the central banks have pumped in, based again, on the way they've done it, it gets trapped in the banking system. It doesn't get into the real economy, or at least the full extent of it does not get into the real economy the way many people thinks it does.

I think the common perception is that the banks are printing money. They get to the banks, the banks go out and buy stocks and the stock market goes up. That's sort of true, but in a really detailed sense, it's not true. And the fact that it's not getting to the moms and the pops of the world, meaning Wall Street's benefiting, but Main Street is not. And so then that creates all kinds of problems, right? That creates problems for small businesses. And it eventually leads to problems of inequality. Yeah. And it's a system that benefits the wealthy at the expense of the masses, and it benefits the

few at the expense of the many. That can go on for a long time, but it eventually has consequences. We've seen central bankers come out and say that they don't buy into what you're just saying. I definitely agree with you. But we've seen central bankers that came out and are saying that's not the case, that it's not adding to inequality and destruction of the middle class, are they just straight up lying? Or do they believe it? You know, it's funny that you ask that because I always ask people kind of in the know,

I said, you know, there's that family saying, you know, are our leaders smart people who are putting us on or idiots really mean it? You know, and I've kind of come to the conclusion that central bankers as a whole, like at the staff level, you know, for the most part, I think they, I think they really mean it. But I think at the really high levels, I think they know. or at least they know that they're there to perpetuate the policies. I think that they do know that it does lead to inequality.

And I'm very critical of central bankers and I'm very critical of the Fed. I think central banks in general are probably the smallest group that have done the most damage to the biggest number of people, if that's the right way to say it. And not just the Fed, but around the world. Now, there's a lot of people who disagree with me and they say they're actually good people and they're trying to do their best. That may be true as well. But my point is that I believe that it leads to these inequalities and these inefficiencies and fairness.

And so I'm very critical of central banks. But the flip side of it is I'm not one of these people who just kind of howl the moon about the central banks. I mean, it is what it is. And if you lose money because the central banks did something that you didn't think that they should do or because you don't agree with QE, in other words, if you've been trying to short the stock market for 10 years and every time it goes up, you say, it's only because the central bankers. Well, at some point, you have to start factoring these evil central bankers into your formula, right? And so to think that the central bank, that they're ever going to do anything other than bail out the system is silly because that's literally their job. They're the lender of last resort.

So to think that they're not going to step in when a crisis hits and just let everything fall, it's not going to happen. They are going to step in. That's why they were created. Do you think that in 2021, we're going to see printing that exceeds the printing we saw. in 2020. Oh, yeah. Highly, highly likely. Nothing is impossible, but it would very much surprise me if it did not exceed it,

and perhaps drastically so. I say that, not just the Fed. Like, the whole world is doing that. Yeah. That's the other thing I always like to point out is it's fine to take shots at the Fed, and I think that they deserve it. But it's not like we have the idiots at the Fed, and then there's these geniuses at the ECB, right?

Or these, you know, masterful, you know, financial guys over at the B.O.J. They're all the same. So let me ask you this then. March, huge liquidity event, as you were describing, massive amounts of impairment on trusts between two parties all over the globe and then they had to step in with real printing to put all those units back into the system. If you think that we're going to have printing and debasement like we saw in 2021, but maybe even bigger, does that mean that we're going to have another liquidity shock like we had in March? that would generate the need for something like that because I agree with you 100%. I do think that it's going to be higher in 21. I'm just looking at it like, well, you need some type of event for that to happen. Do you see that?

I do. And I don't know what's going to trigger it. I mean, everything is just so ebullent. Is that the right word? I mean, sentiment is high on everything. Markets are euphoric. And listen, sentiment and narratives are extremely powerful. And right now, the narrative is that the world is going to print its way out of it.

We have global reflation. The central banks have reduced the amount of risk. They have your back. And so get into risk assets and here we go. And that can last a while. And I'm not denying that that is incredibly a powerful force and that it can't go on. I just don't think it can go on forever. And I don't have perfect timing.

It pretty good at the beginning of this year and I've done not so well in the second half of this year trying to time that. But I do believe that we're going to have more of these liquidity of incentives. And I think these liquidity events are going to lead to solvency events because Fed and central banks around the world, they can provide liquidity, but they can't make a business profitable. They can't make a good business, a good business, right? And what I find kind of interesting, this actually, it's kind of affected my overall thesis this year is that the central banks, to this point, they can provide liquidity, but they can't make businesses better. And I expected to have a year like this, even without COVID. Like, we were set up for this long before I knew anything about a virus. And even when I did know about the virus, I didn't know initially the impact it was going to have, right?

What I knew is that all the pieces were in place for a crisis. I didn't know what would be the catalyst to kick it off. I just knew all the pieces were there. And whether it would be some kind of, you know, a company missing earnings or whether one country would default on its debt or whether another currency peg would break, something would happen. and then it would cause this chain reaction. Well, it turns out it was a virus. And when it initially hit, you know, I thought, oh, my God, this is the catalyst. This is not only going to be really bad, but it's going to accelerate my whole thesis.

It's going to make it happen even faster than I thought. And that initially was correct. And I knew that the Fed and Central Banks around the world and monetary authorities would put policies in place to provide emergency liquidity and send checks to people and, you know, these CARES Act that didn't surprise us at all. what we didn't factor in and what we missed. And in hindsight, this was something that we should have done a better job of picking up on, was their ability to defer dollar demand, right? And what I mean by that is they put policies in place and said, you don't have to pay your rent for the next six months.

And in the meantime, the landlords can't kick you out. Think of all that money that's been deferred. Those payments still exist. They haven't been forgiven. They've just been deferred. But that's dollar demand that was kicked down the road at the same time that they're providing supply. We initially thought that the demand was so high that it would overwhelm the new supply that they're kicking in. And had they not been able to defer the demand, we think that would have been the case.

But they also did the same thing with mortgages, right? You don't have to pay your mortgage this. We'll just tack the next three or four months on to the end of the mortgage or whatever it is. Or once COVID's behind us, then you owe those payments. Same thing with kind of trade finance. If you ordered a bunch of inventory from China, but the planes weren't flying and the ships weren't floating. And so you weren't receiving that inventory. well, then you didn't have to pay for that inventory right away.

You know, you could pay for it three months later or six months later once the economy opens up. And so they've been able to provide a bunch of supply while kicking demand down the road. And I guess the point I would make is they can't kick the demand forever. And when the demand comes back, perhaps that's what causes the solvency and the liquidity that Lynn leads to these solvency issues. I mean, I'll tell you, I saw this chart and I think that Goondlock sent it out. Somebody told me that to it. And I didn't see it initially posted, but somebody sent it to me, and it showed households

around the country that are either in arrears on rent or behind on their mortgages. And it's like every state that's like 20, 30 percent of the population are either behind on their rent or their mortgage. San Francisco is a big restaurant town, and we actually have several friends who own restaurants and bars. And they're all just getting decimated. You know, so there's all these businesses that they've been able to survive on either savings or the emergency loans or the program that the government.

gave, but I don't know that those businesses are ever going to be solving. Again, maybe they will, but they might not. And so I think that there's all these issues that are still out there. And I don't know exactly what the catalyst will be. I just know that the table is still set for another crisis. That's kind of a long rambling answer to your question, but that's kind of how I see it. No, and I think these are all really interesting points. And I think when we look forward, the triple P was such a huge event and how they issued it because, I mean, it was literally willy-nilly like, hey, here's a giant pot of money. Everyone stick their hands in and grab as much as you can and go. And you might not have to pay it back. So just get as much as you can kind of

event. And I kind of suspect that the next one, and I fully expected to be a next one, is going to be an equal-sized pot of money, maybe even bigger. And I just can't imagine the zombification that that's going to have on just businesses all across the whole country and really kind of globally. Well, and not only that, but think of even if, let's say they get the vaccine to everybody in the next 60 days or not, to everybody. And everybody takes it and there's no more code. Even that's the case. I just don't think that the world is going to go back to work the same way we did a year ago. Businesses have the ones that have been able to, you know, in restaurants, you kind of have to go to the restaurant in order for the restaurant to be successful.

But someone like me or a lawyer or banking or some of those jobs like that, you don't really have to go to the office at. day, right? Or in a sales job, you don't really have to get on the plane and fly to Houston to meet that pharmaceutical company to say, you can just do a Zoom and then you can ship them to stuff, right? And so I don't think that companies are going to need the same amount of office space that they have. But think about how big the office and the real estate markets are, and those are all financed by debt. I just don't see how commercial back to securities don't have real trouble. And the problem is once you start based on the design of the monetary system, when you start to get a credit event, it has this effect where it kind of ruffles through

the whole world and the whole economy. And so I just think there's too many events out there to think that this is all going to go smoothly. Yeah, I was listening to a clip of Sam Zell probably in the August time frame. He was looking at the commercial real estate and just like, this is a disaster and no, I don't think it's time to step into this and start buying it. I think people need to stay the heck away. I'm surprised we haven't seen more bank. bankruptcies in that space. Are you aware of the government basically providing some type of relief for that middle tier? I don't think they have, yeah, but I think on some of that the banks have just extended the loans, you know, said to the people that owe the loan, you know, next quarter or next six months or we'll defer them out another year. But like I said, I mean, and that can go on for a little while, but eventually the banks have to get paid too or else the banks stop then because they owe money to people, right?

And so, again, this all works for a while, but it's interesting that in a way that if the economy opens back up and all the demand for the currency increases again, in a way that causes problems, too, right? Because then you actually have to pay your bills. And so I just kind of feel like we're in this corner. It's kind of like with interest rate. Interest rates are so low. There's no way that we can let them rise again, right? But the flip side is if interest rates won't rise, then banks don't do well and pension funds don't do well. And then they'll go bankrupt. Right. So you're kind of damned if you do and damned if you don't. And that's why I say, you know, they've done a masterful job of kicking this can down the road,

but I just don't think they can kick it for much longer without consequences coming up. And you go back 20 years, but if you just go back 10 or 12 years in the great financial crisis, a lot of the problems around the world got bailed out by the central banks. So it's the central banks that have the assets on their books now. And to solve those, then you start messing with currencies. The currencies become the outlets, right? And so I think we're going to have a currency crisis. And, again, whether it kicks off in 2021 or 2022,

I don't know, but I just know that we're set up for a massive currency crisis. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year.

bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty,

immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron. Passes are available at Osloof Freedom Forum.com, with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move.

With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the Netsuite AI connector, you can use the AI of your choice to connect directly to your real business data.

This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, Netsuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, Dismifying AI at Netsweet.com slash study. The guide is free to you at Nessuite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats.

Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from brands just getting to the company. getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with

helpful AI tools that write product descriptions, and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing, sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. So based on all that, I suspect you have a lot of the same narratives that I hold as dear as anybody else that talks on all these podcasts, which is the narrative is scarcity wins. If you can own something that's truly scarce, it's going to do really well in this environment just because of the expectation for how many more units central bankers

are going to be adding into the system. So is there anything beyond that that you can see from an investment standpoint or just talk to us a little bit about your opinions on that and maybe even beyond that? Well, the first thing I would say, And I've been saying this for got over a decade now, almost 15 years now, is that everybody should own gold, right? I mean, I think that should, I mean, it's just, to me, it's a no-brainer that you have to own some gold. And it doesn't mean you need to rush out now and sell everything you own, go put 30 or 40, 50% of your portfolio in gold. But you need to have some, right? And I think, you know, having some kind of assets kind of outside the banking system, so to speak,

or that aren't subject to the whims of the monetary authorities is a good thing. Now, but part of the issue is that, you know, a lot of the way that people own gold is either through an ETF or a mutual fund or they trade futures. And that's sort of that that's kind of exposure to the gold price, but it's not really gold itself, right? But, you know, gold is a thing that's, it's scarce and it's always been in demand for 5,000 years. And so I think over the years ahead, as governments around the world, increase the supply of their fiat currencies, that gold will rise. You know, we kind of talked about Bitcoin a little bit on the phone the other day. I think everybody should own Bitcoin. I think, you know, for some people, maybe, you know, a higher allocation is appropriate.

And I think for other people, you know, higher allocation isn't appropriate. But I think if you can afford to own some, you should have some. Bitcoin is the potentially biggest asymmetric trade in history. Lisa, it already has been. And it could be even from here, right? And there's, and even as much as I like gold, I don't think gold has the same asymmetry as Bitcoin does. Now, what you won't like me to hear me say is I think Bitcoin could follow a lot too, right? I'm not convinced that it's going to be the greatest asset in history, but I know that it has the

potential to be. And so I think you got to own it. But, you know, I think that there's some things that could go wrong with it. So I wouldn't sell somebody to sell everything you own and go out and put all your money into Bitcoin either. I think it has a place in a diversified portfolio, but not an all or nothing thing for me. The whole Bitcoin versus gold debate, I think it's kind of silly. I think you can own both. There's no reason you have to choose between the two. If you do, I understand it, but you don't have to. Talk to us about some of the risks that you see with it. I think the biggest one is that it's unproven.

Now, I know you'll say, well, it's been around for 12 years. We've had two or three crises. You know, it's gone from pennies to $23,000. It's proven itself. Well, fair enough. It's proven itself over the last couple decades. But it's been very volatile along the way. It's been open to massive swings.

If you bought three years ago at $18,000, when was it? Was it two years ago? It was anyway, whatever. Yeah, 2017. If you did all your analysis in 2017 and you thought this is the greatest asset in history, it is going to a million dollars and you put 50% of your portfolio in there. Well, today, you look pretty smart, but six months ago you didn't, right? Because you were down 75% from where you started six months ago, right?

It's 18,000 to 6,000 or whatever that number is, right? And it wasn't 6,000 in March. It was 4,000 in March. And so if you had liquidity from other places and you knew you were holding for the long term, it didn't matter. But if you needed that liquidity for something, that's a 60, 70 percent, that's a big drawdown, right? So my point is, is it's not without risk. The second thing I would say is, and you know these figures much better than I do.

I kind of go like this with Bitcoin. I get really into it, and then I kind of leave it for two or three months, and then I get really into it. And Bitcoin's kind of one of those things, or the crypto world is kind of one of those things. I feel like if you're not on top of it every day or every week, so much happens that, you know, you miss it. And so some of my stuff might be dated and you know the figure's better than I do. But a couple of the other risks that I would say is that isn't it something like 2% of the holders own 80% of the coins or something like that? The whales dominate the market, right? So typically the whales are pretty smart people, right?

And so, and I'm not saying this has happened. I'm just saying this could happen. If the whales pump it up, this is the greatest asset in the world. And then all the small retail guys come in and buy it at the margins and push it to 30 or 40,000. And then one night a whale says, you know what, I'm out. I'm 80 years old. I'm rich. I don't need any more.

And he sells. He can sell a lot of coins really quickly. Now, again, I'm not saying that will necessarily happen, but it can. And maybe you argue that it's not a thinly traded market. But if you have a big whale selling in a thinly traded market, prices can move really quickly. And you've seen that several times in Bitcoin. But the flip side is a whale comes in and you go from 4,000 to 23,000 and six months, right? So it cuts both ways.

The other thing I would say is that, again, I don't know the numbers, but I know over 50% of the miners are located in China. And so I'm not going to say that that's necessarily a bad thing. But if the CCP just rolls up to all the mining operations and says, these belong to us now, those people don't really have to say, no, they don't have the bill to say, no, they don't. If they want them, they're going to take them. Now, and then you'll say, well, then they'll all just migrate to the miners that are outside China or a little fork or something. And that's possible, but I'm just saying that is a risk. That could cause some disruption in the short term. The other thing, and you'll know this better than I will, you know, the whole tether thing is

I understand it, tether is a big part of the growth of Bitcoin. And it's my understanding, you can correct me if I'm wrong on this, but it's my understanding that tether is really more of a way to send dollars around the world than it is to send Bitcoin around the world. In other words, it's dollars backed by Bitcoin instead of Bitcoin back by dollars. I might have it wrong, but that's my perception. And I know it was like two or three years ago, they kept saying, you know, it's 100% backed. But they would never, never, never, an auto was never done.

It was never approved. And then it finally said, well, you know, it's more like 70 or 80% backed. Okay. Well, that's actually still pretty bit, no problem. But, well, what's it backed by? Well, it's backed by assets. Well, are those assets dollars or what kind of assets are they backed by? Okay, well, they've never actually said that.

And then this year, I think they said the value of tether has increased a lot, then when you look at the banks, the tether uses, there's been no dollar flows into those banks. So if all that tether's backed by the dollars, well, where are those dollars at? Because they're not in the banks that they say that they use. So again, it doesn't necessarily mean there's a problem. It's just a red flag for me. And then the big one, the really big one, and I already know where this is going to go. And that's why I laugh. But the idea that the governments around the world are just going to sit by and let a private currency be the currency of the realm, and they're just going to be slaves to this Bitcoin, and that's going to become the national currencies for a number of governments,

I think is absolutely ludicrous. Now, it doesn't mean that Bitcoin's not going to go to a million dollars, but I don't see governments adopting Bitcoin. I think they'll have their own digital coins. And if Bitcoin ever seriously threatens the livelihood or the ability of the government to fund themselves with their own fiat currencies, I think governments will take steps to limit the use of Bitcoin. And then I know people will say, well, they can't shut it down because they'd have to shut down the old internet. I get it. Totally get it. That's why I still think you should own Bitcoin. But you throw a few people in jail and activities will, you know, behaviors will change. What I think is interesting is one of the reasons that people are so, I guess, into Bitcoin,

if that's the right way to say it, is they see it as a way to take on, the evil system, right? There's this evil system that has lasted. It's centuries and it's the few take advantage of the many. The money's always in the hands of the powerful and it's never in hands of the people. You know, these guys will do anything in their power to maintain their power. But then on the other hand, they're not going to do anything when this private currency comes along and threatens their existence. I don't quite get that. I don't quite get how someone can think, you know, the evil empire has lasted for all these years because they're the, the most ruthless people in the world. But then those most ruthless people in the world are

also just going to sit by while this private currency comes along and threatens its existence. To me, at least there would be a battle along the way. Anyway, those are just some of my thoughts. Yeah, I love this. So on the last one with the government ban, what are your thoughts on entrenchment? Because I think if you talk to any hardcore bitcoiners, they're going to look at that argument and they're going to say, you're getting like insane entrenchment right now. Billionaire after billionaire is buying into this, who then have the ability to lobby and influence policymakers, elected officials, and you're not just seeing it in the U.S., you're seeing it globally. How would you respond to that?

I'd say that's absolutely correct. It's a very good point, and it's one of the reasons you should own Bitcoin. Right? That is very, very true. And the more powerful people that own it, the less likely it is to get banned, because it's those powerful people that fund the politicians that would try to ban it in the first place, right? So I completely get it. I'm just saying that Bitcoin could become worth a million dollars, but it doesn't necessarily mean it's going to replace the U.S. dollar. It's not necessarily

going to replace the euro. It's not necessarily going to replace the yen. So I think the people who say, you have to own Bitcoin because it's going to become the world currency and governments around the world are going to fall. Instead of, you know, people being slaves to the governments, the governments are going to be the slaves of Bitcoin. I think it's the personification of silly. But if, let's just say the U.S. stands up, you know, their own U.S. token and they have their own protocol, right? They're still managing that centrally. It's not like it's going to be a decentralized token. So if we still buy into the narrative, which I'm sure you agree with, which is they have

to continue to base the currency based on the policies that this massive deflationary price. So it doesn't really matter if they call it a U.S. dollar token or they keep doing what they're already doing, they're going to have to debase whatever that thing is. And it's going to be debased against gold. It's going to be debased against Bitcoin because I buy into Bitcoin being fully decentralized at this point. I think you have an interesting talking point. And I think a lot of people in the community share your fear with the Chinese mining. And you brought up the point that full node operators can fork. If there's a bad actor, are there somebody who's trying to go back and reverse one of those blocks, right, that have a 51%?

attack, the full node operators can go and fork the protocol. But I agree with you. I think in the short term, it's going to have an impact on price and it's going to create volatility, which I think is your biggest concern for a person owning this. Your opinion is they might not be able to handle the volatility associated with it. Yeah. And the other thing I'd say is, I don't have a problem with Bitcoin. Actually, I'm a fan of it. I would love to see Bitcoin continue to rise and become more popular and not get attacked by the government. I think one thing people get a little bit messed. And I think this is a mistake a lot of people make. And I've made it many times in my life. And I think I've gotten better at it is the difference between what you'd like to see happen and what's

actually going to happen. Right. I would love it if we had private currencies competing with the Fiat government currencies and we were allowed to choose. But there's legal tender laws for a reason, right? I don't have the time to go through them all. But look around the world and look how many times a country, kind of this rogue nation, started talking about using something other than the dollar. And think about how it ended up for those people and those leaders. You know, they're gone. Do you think there's a certain market cap? I don't know what the Bitcoin market cap is right now. Maybe. Like if we get to a trillion or we get the five trillion, does that argument really kind of go away? And it's like, all right, now governments are going to have to adapt because there's

no way they can really kind of stop this force at this point. Well, I would say the governments already have to adapt. But they're all talking about digital currencies, right? I think, you know, this thing kind of sprang up and there was kind of this cute little of anomaly. And then it kept growing and growing. And then I think it's gotten to a point where, I mean, my mom knows about Bitcoin at this point, right? It's not like a secret thing anymore. And it's kind of, you know, entered the Zik Geist a little bit. And I think the governments of the world realized they had to wake up. And I think they're kind of scrambling to try to catch up. And government currencies are not going to be decentralized. They're going to be centralized, right? And so I think they will be fine

with Bitcoin existing and they'll try to regulate it to a certain extent as long as it doesn't threaten their coins themselves, right? But I guess my point is the idea that they will just sit back and allow Bitcoin to become the currency of the world and not push back, I think is wrong. Now, that doesn't mean that Bitcoin won't win. It just means that they're not just going to sit back and allow it to happen. So one of the arguments that, well, I make this argument a lot, the reason that we've gotten to the entrenchment level that we're at right now, which I think is extremely high, way higher than anyone would have suspected, if we warped ourselves back 15 years ago and we said,

hey, there's going to be this decentralized protocol that becomes money. And all the central banks and all the governments of the world are going to allow it to happen, right? You, me, everybody else pretty much on the planet would look at you and said, That's impossible. They're never going to allow something like that. People who study the protocol and how the protocol functions believe that the four-year halving event was by design and by design in order to create deep entrenchment.

And so what it does is through its scarcity, it basically ratchets up into these various scarcity levels, but they stay put for four years. So you get these exuberant bids that happen because there's this suffocation of supply on the open market. It goes up. There's a total overreaction. It has this big giant correction. Regulators are getting ready to really start taking action like, hey, we got to start regulating this. Then the whole thing falls apart and they forget about it for three more years. And then the protocol does go through another four-year halving cycle and it basically does quantitative tightening. And it ratchets it up. So in May, we had another one of these events.

And there are a lot of analysts, a lot of people that are looking at, well, what does the scarcity level now take us to with this new having event. Well, it takes us over 100,000. And we're seeing the price run post-having event. And it almost seems like this whole thing was designed to perform in this way that allowed entrenchment at the deepest level into our existing financial world. Do you buy into that? I do buy it. Bitcoin is one of the most ingenious inventions in the history of the world. I mean, I think it's incredible. I find it endlessly fascinating. And I think, again, I think everybody should own it. I think the Bitcoin has this first mover advantage.

I'm kind of one of these Bitcoin maximalists, even though the Bitcoin maximus has tried me absolutely crazy. Right? That said, there's such an incredible advantage to be in the first mover. But that said, there's also the first mover disadvantage. And that if, and I'm not saying that they will, but if private digital currencies ever start to threaten government-issued securities the government's not going to go after the little tiny one.

They're going to go after the big boy to try to cut him off at the knees, to scare the whole world that don't threaten our existence. And again, I just think the people that think that this isn't going to happen, that Bitcoin will just be allowed to take over. Now, Bitcoin may take over, but it won't happen with the government just saying, okay. Without a fight. They will fight it.

They will fight it to the bitter end. And they will score some points along the way. That's my point. What do you think about the game theory of other countries? So, you know, if this was an individual country that was dealing with this threat, I buy into what you're saying all day long. But when we look at, and you and I are looking at this from a U.S. lens, right? And we're looking at it from a lens where there's been U.S. dollar dominance for decades, and it's benefited us tremendously from a military standpoint, from all sorts of standpoints where dollar dominance has given the United States

It's a massive advantage. When you look at all the other countries in the world, they see that through the exact opposite lens. It's been a detriment to them that dollar dom. So when you have this new token that's decentralized and it affords them a huge opportunity to take back some of that advantage that they've been a victim of for literally decades, even if I'm using the U.S. as an example, but you could really kind of use any country as the example.

If they want to step in and perform heavy regulation, I think you're going to have others that are going to look at it from a game theory standpoint and say, well, we're going to do the exact opposite. We're going to actually promote the use of this heavily. You look at Switzerland. I know they have an entire valley out there that they call Crypto Valley in Switzerland, and it's heavily promoted. I've been there. I've seen it beautiful, one of those beautiful places in the world. Tell us about it. It's basically from Zurich down to the border with Switzerland. It goes along Lake Lucerne and the Zug and, you know, there's these. half a dozen vaults up in the Alps that are former Army bunkers that do this cold storage.

You know, and they've passed laws and, you know, encouraged businesses to do this. So I agree with everything you're saying. I guess my point is, because I think they see the advantage of it, right? They want productive economies. They want growth of the economy. But I don't think that they want their currencies replaced. I mean, that's a big thing. I mean, you've got to remember that the currency of a government is one of its biggest tools.

Yeah, flexibility. I mean, think about this. Okay, so let's pretend for a second that we'll just use Switzerland because that's what we were talking about. Let's pretend that Switzerland was more of a rogue nation rather than just a neutral nation. And they decided, okay, we're going to, as the rest of the world kind of tries to clamp down on Bitcoin, we're going to embrace it. And we're going to make Bitcoin the national currency of Switzerland. Okay. So now you're operating a business in Zug Switzerland, and the currency's Bitcoin.

and it's priced at $25,000. And now you need to go build a new plant, right? So you go down to the Union Bank of Switzerland and you borrow $2 million of Bitcoin because you want to go buy some trucks and materials to buy that plant. And then a year later, Bitcoin's priced at $75,000. Well, now your debt, you took out three times as much debt as you thought you did, right? I mean, remember that cross-of-gold speech that was given by the politician back in the early 1900s because, you know, they didn't have the flexibility of the currency.

Well, how do you grow your country and your economy if your currency is going up two or three times a year and nobody wants to borrow? I mean, there's that side of it too, right? You need to, in order to have a productive economy, you do need to have at least somewhat of a steady currency. My concern is this, Brent, when I look at, so I buy into the whole Ray Dalio big credit cycle that basically started with Bretton Woods and the interest rates peaked in the early 80s and now we're here at zero percent interest rates, right? That big giant cycle. And I look at how much

that inflationary monetary policy has incentivized capital investment. And you look at how much technology growth we've had through that period of time relative to any other period throughout history, because it was this global collective incentive structure that was supplied through that monetary policy. And when I look at, and I just look at how nature works, if you have 12 hours of daylight, now you've got to have 12 hours of darkness. And you look at pretty much everything throughout nature has this cyclic piece to it. And so when I look at the fact that we've been going through that since 1944 up until now and we're 80 years into that big giant credit cycle that created all this innovation and all this growth, I then have to wonder to myself,

is this Bitcoin thing supplying such a hard peg that it's bringing the nighttime to this massive credit cycle that's going to slow everything down. Just because you and I like the fact that we've been able to have so much progress and growth through our entire lifetimes doesn't necessarily mean that that growth rate or that incentive to continue to produce and grow is going to continue to be there for the second half of our lives because maybe something like this steps in. Do you think that that's a little hardcore? Listen, I mean, these are extremely big concepts that we're thinking about, right?

and it's like the cycles of history. And I don't think you're off base. I don't know whether that's going to play out or not. I certainly think barring some new technological discovery, I think maybe the growth rates, you know, the next 50 years maybe are not quite as high as they were over the last 50 years. Maybe if we got rid of all this debt, whether it's by default or inflation or whatever,

but if we can get past all this debt that's, you know, taking all our productive capacity away, then maybe we could get to these higher growth rates again. Again, I'm just not sure. There's a difference between having a great store of value, which I think Bitcoin has the potential to be a great store value. I'm not sure it's as good a currency as it is a good store value, I guess, right now. It doesn't mean it couldn't become a good currency. But again, I don't want to borrow a currency that's going to go up three times in a year, right?

And I have to pay back three times as much as I borrowed, unless I took that money that I borrowed and invested something that went up more than three times a year, right? Let's take a quick break and hear from today's sponsors. No, it's not your imagination, risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you

secure and keeps your deals moving. of chasing spreadsheets and screenshots, Vanta gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at vanta.com slash billionaires. That's vanta.com slash billionaires. Ever wanted to explore the world of online trading but haven't dared try? The futures market is more active now than ever before, and plus 500 futures is the perfect

place to start. Plus 500 gives you access to a wide range of instruments, the S&B 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for. See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets.

Visit plus 500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than $600 million invested in a 7.97% distribution rate.

With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise income fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement.

All right. Back to the show. The way some of the lending works now is if you go and you want to borrow $100,000, well, you've got to have $200,000 in Bitcoin in order to take out the $100,000. And so then if the value of Bitcoin's going up, if you have other money in Bitcoin, it's going up in value and it's getting easier for you to pay back that loan. That's true. It's an interesting dynamic. I want to say something before I forget.

Again, if I had to be something in the crypto world, it would probably have Bitcoin maximalist because I just think the advantage of it are so much higher. than any of the other coins. It's the Bitcoin maximalists who also just think that Bitcoin's magic and it's going to take over the world and it's going to solve all the world's problems. I think that that's wrong, but I will say this. I mean, Bitcoin is a revolution, right? I mean, it's the money for the people trying to take on the most powerful groups in the world and it's trying to overthrow them. And that big group is going to do everything it can to keep from getting overthrown. But you know what? Sometimes, not very often, but sometimes the revolutionaries

win, right? And if you go back and you look at revolutionaries throughout history, they're typically not the most rational people in the world, right? They're the people who think that their cause is worth dying for. And to be a revolutionary, you kind of have to be out there and you kind of have to be a little bit crazy. So even though the Bitcoin maximalists drive me nuts, I kind of understand it. Because if you're going to start a revolution and you're going to win, you need the true believers who are willing to die on the floor. floor for the cause. And there's people out there that are selling everything they own and taking out loans in order to go buy more Bitcoin at $23,000 because they're the true believers. Who knows,

we'll have to see how it works out. One of the things that gets lost in where this could potentially go and unravel is really around the fixed income market. So today we've got, let's just ballpark it and say we've got $100 trillion of fixed income in the world. Most of it yielding literally nothing. call it $18 trillion is negative yielding. And so I'm just going to lay out a scenario. My opinion and the opinion of a lot of other people, due to this scarcity shock that just happened in the protocol back here in May of 2020, is that the price of Bitcoin should be around $100,000 by the fall of 2021. That's the numbers in the math that a lot of people are suggesting.

If true, I'm curious how people in the fixed income community could possibly keep, keep holding on to those positions as they watch something that is quote-unquote becoming the new store of value. I mean, we're already seeing narratives. I saw one on CNBC probably two weeks ago, and the headline was, I think it was like the dollar's death or something like that. And it was a picture of a Bitcoin with a crown on top of it. This is like on CNBC, right? And they're having these conversations. And I'm thinking, how are people possibly not going to say, you know what, let me just pull a sliver of 1% out of this $100 trillion market of fixed income and start sliding it into Bitcoin. And I think that the potential for it to totally unravel due to what has been caused

by the central bankers that you were describing perfectly at the beginning of the show starts to play into some of this. And I'm just curious if you would agree with it. I don't disagree with it, but I don't agree with it for a few reasons as well. So what do I mean by that? So I I think this $100 trillion that you're talking about, those markets, the people that make the decisions overseeing those markets, they can't go buy Bitcoin. Yeah. It's just not in their mandate, right? Now, the individuals who perhaps believe in Bitcoin may be currently lobbying their investment committee or their board of directors or whoever it is to allow them to take the 1% and put it into something like Bitcoin. But a lot of these, the big holders of these, you know, the $100 trillion of fixed income,

these are big pension funds and big endowments and big mutual funds. And, you know, a mutual fund that is tasked with, you know, managing AAA rated bonds, their mandate is to go buy AAA rated bonds. That guy may have his own money invested in Bitcoin, but he can't take his mutual funds money and go buy Bitcoin. And if and when that mutual contract. fund company ever does let somebody go buy Bitcoin, they're probably going to set up their own Bitcoin mutual fund or something to go do it. I guess my point is your argument, you could also

make that same argument. The gold's been going up over the last couple years now, not at the same rate as Bitcoin. I get it. But, you know, that same fixed income managers is they, why am I own, why do I have to buy negative building bonds when I could go buy gold? That would perform better than these negative building bonds. But they go to their investment committee and the investment committee He says, you know, we have had most a 1% allocation to gold and we would just go buy a gold mutual fund. We're not going to, in our AAA rated bond portfolio, we're not going to go buy gold, right? So my point is I'm not saying that those endowments and those pension funds, they may, at a group level, decide that we want to have a small allocation to Bitcoin. But these investments, it takes years sometimes to get a change in the investment policy statement or their mandates to allow them to go.

into the new asset class. And it's becoming easier, right? And when you have people like Druck and Miller and Paul Tudor Jones and, you know, these kind of legendary investors stepping up and buying Bitcoin, that obviously helps. You know, you got a guy like Michael Saylor, who's a little bit more of a, you know, he'll, I mean, that guy's kind of crazy, right? But, you know, he's gotten his board to sign off on coding, what did they put 10% of their money? I want to talk about that because this relates to fixed income what he's doing right now. So he just went out and he, he, He issued a press release that he was going to try to raise $400 million with a note, a five-year note that had a convertibility clause to it.

And what was so fascinating, so I talked to him on Monday, and it was oversubscribed. It was oversubscribed to $650 million, $150 million higher than what he was going after. And you know what I think is going on is you have people in 50 million dollars, $150 million higher than what he was going after. have people in fixed income that have the mandate that you're talking about. And they're Bitcoiners or they believe in Bitcoin and they're saying, holy crap, this is my chance to basically participate in this upside and do it in a way that I'm still meeting my mandate. I think that's absolutely right. I mean, listen, whether or not you agree that Bitcoin is going higher and whether or not you agree with Michael Saylor of the attributes of Bitcoin, it's a fairly genius move on his

part. Oh, yeah. Genius. if he's right about Bitcoin, which I obviously think he is. But yeah. Well, I guess my point is it was a way for him to go raise capital. And, you know, I have to a confession to make, I'm not sure that I know the answer to this. Was it that he would put 100% of the proceeds into Bitcoin or just a portion of it? Yeah. Okay.

Okay. Okay. And what was the interest rate on it again? Is 75 basis points. Yeah. Yeah. So that's essentially what it was, right? He basically, he sold a call option on Bitcoin to people who couldn't buy Bitcoin.

Exactly. That's the best summary explanation of what he did. Yeah. And then so I was really curious, well, let's see how the market handles this, right? Is he the 75 basis points payable in dollars or in Bitcoin? Do you know? Oh, no, it's dollars. Oh, yeah.

It's definitely dollars. Okay. Okay. Yeah. Yeah. It's a genius move. Whether it works out, I don't know, but it's very clever. I love how you just described that because that's what this is.

And my, so when I'm seeing this move, I'm looking at it and I'm saying, are we just seeing a preview of what Apple and other large cap companies that have a really pretty balance sheet, is he providing a template that's going to be copied in 12 months from now? Well, I would say it's unlikely he's the only one to do it, right? Somebody does something that's successful on Wall Street. Everybody starts to copy it, right?

I mean, that's just kind of how it's historic. been somebody figured out credit default swaps and the next thing, you know, we've got so damn many credit default swaps because of a global financial crisis, right? So whether or not this will turn out to be that same type of a thing, you know, I don't know, but I would not be shocked at all to see more people do this. Again, I think there's demand for Bitcoin. And I think that there's individuals at these institutions who would love to put one percent of their institutional capital into it. And my guess is that as Bitcoin stays high in price, you know, some of these mandates will get through. And then when we have a pullback in Bitcoin, and listen, maybe Bitcoin

goes to 50,000 and then pulls back to 30,000, I don't know. But whenever we have the next pullback, these things will kind of get shelved a little bit or they won't be quite as popular as they were. And then, again, I think that Bitcoin's going to go ultimately going to go a lot higher. But I don't think it's without risk. I think it's, I think that the risks are much bigger than the Bitcoin community thinks are. But that doesn't mean it's not going to be successful. there's risks in every industry. This is an absolute truth in investing. You can always come up with a reason not to do the trade.

There's always 100 reasons not to do the trade. But if you can find a couple of reasons to do it, sometimes you just got to do it. And I kind of feel like Bitcoin is one of those things. I own some Bitcoin. I don't know as much as you probably want me to or other people think that I should. But I own a little bit just because I see, I'll tell you, if you want to call me bitter about Bitcoin, I will absolutely admit that I'm bitter on Bitcoin because I've been following it since 2010.

Somebody sent me the white paper in town, January of 2010. They sent it to me because I was a big fan of gold. And they said, hey, this is pretty similar to gold. We think you might be interested in this. And I remember reading the white paper. I remember sitting back in my chair. You know, I live in Silicon Valley or near Silicon Valley. And I have a lot of people that work in tech.

But tech kind of goes over my head. You know, I'll talk with them about the things that they're doing and my eyes just weighs over because I just don't really get it. But I remember reading this white paper. And I remember sitting back in my chair and thinking, if the technology works, the way this paper says the technology works. In a million years, it'll never be legal because it is the most powerful thing possible, right? And Bitcoin was 25 cents at the time. And I remember thinking I should just put $5,000 in it and forget about it.

Well, you know, it's the one time in my life where I was somewhat practical. It just had a son a couple years before, you know, starting to pay for him to go to private school. and, you know, I had changed jobs and, you know, there's all these reasons. And, you know, again, I was I should just done in the trade. And I didn't because I thought about it and I was like, well, no, I won't. I ended up buying it later when it was, you know, $1,000 or $800 or whatever it was. But, yeah, I mean, you know, you can imagine what $5,000 at $0.25 or $0.30 would be worth, even if you sold it off a long ago, because you would never would have held it all, right?

So it's not like I'd have $3 billion and, you know, you know, Bitcoin, but, you know, $20,000 or $30 million wouldn't be bad, right? Right. It's pretty amazing. There are a few people in the community that have held from very insane prices of a dollar or a quarter. And yeah, I mean, it's, I can't imagine if it keeps to go, if it keeps going where it's, you know, many suspect it could go. I mean, they're going to be trillionaires as far as buying power goes. Again, I find the whole space fascinating. It's kind of the intersection of economics, politics, finance and the Wild Wild West, right? I mean, what's not polite about it? This is fascinating to me. But again, you know, the Wild Wild West, I mean, you can get shot in the street in the Wild Wild West, right?

It wasn't to say, it might have been a very cool environment and a very kind of wide open and opportunities were amazing, but, I mean, somebody might ride up on a horse and shoot you. So it doesn't mean that it wasn't some pitfalls along the way. Last question, because believe it or not, Brent, we've already gone an hour. I can see why everyone wanted us to talk. We haven't even gotten in a fight yet. Last question.

Tell us something about yourself that you've never shared or that people might be surprised to hear. It's just something really unique. Yeah, that's a good question. I don't know if anybody's ever asked me that before. I don't know if people have heard this before or not. The one thing that people might not know is the reason my company is called Santiago Capital is I hiked the Camino de Santiago, which is an old. ancient pilgrimage route across Spain. And I was between jobs in 1999 and I was looking for something to, I wanted something kind of adventurous and kind of spiritual and kind of, you know,

off the beaten path. And so I decided I was going to walk across Spain. And that's where the name comes from. Oh, that's awesome. And you know what? Before we had this conversation, I actually thought that to myself. I said, why is it called Santiago Capital? Because I don't see that anywhere kind of in his, you know, the bio, and I'm reading everything. I don't see it anywhere in there. So that's cool. Okay. Awesome. All right. I lied. There's one more question. Book recommendation or a person that really influenced you that people can research and study up on that really had a big impact on your investing style. I think the one book that's probably influenced my overall view the most is the fourth turning. And people have heard me say that before. I think the fourth turning is just a

genius work of, I know, history and analysis. And, you know, it applies to the past and it applies to the future. So if I had to give one book recommendation, that would be it. You know, my two favorite books of all time are the alchemists and the old man in the sea. And those are books about, one of them is about going on a big adventure and the other one's about kind of the ultimate struggle. I kind of think that's what life's about. You know, you can live kind of a boring life or you can take some big swings and go on a big adventure. And, you know, you may go through this struggle to do it, but ultimately it makes life pretty interesting. Brent, I really appreciate you agreeing to come on, especially after, you know, us wrestling

for each other in front of the playground. People take Twitter so serious. I really appreciated you being willing to just talk to me on the phone. I knew right away, I was like, all right, this is going to be a great conversation. And just coming in here and sharing some of your concerns. And I think that this is super important for people that are entering the Bitcoin. Spacer, even if you're taking a 1% position in Bitcoin, to hear counter arguments, to hear people say what their concerns are, whether they're valid, they're super valid, unvalid,

whatever. It doesn't necessarily matter. It's in the eye of the beholder of the person listening to this to decide and to do future research. And you brought a whole bunch of that today, and I really appreciate it. And I appreciate your time and coming on the show. Cool, man. I appreciate you having me and happy to come back anytime and hope you and your family. Have a great Christmas. Hey, you two and yes, we do need to do it again. Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by the Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.