We Study Billionaires - The Investor’s Podcast Network - BTC063: Potential Economic Tightening & Bitcoin w/ Dr. Jeff Ross (Bitcoin Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, everyone. Welcome to this Wednesday's release of the podcast where we're talking about Bitcoin. On today's show, I have a brilliant economic thinker with Dr. Jeff Ross. As you'll quickly discover in this show, Jeff has profound insights into how macroeconomics work, and what that means as an investor trying to navigate this challenging low-yield landscape. Jeff describes the critical elements of a contracting economy and what it means for things like Bitcoin, healthcare, and equities, and much, much more.

Starting point is 00:00:30 So without further delay, here's my chat with the thoughtful Dr. Jeff Ross. You're listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pish. All right. So, hey, everyone, welcome to the show. I'm here with Dr. Jeff Ross. Jeff, thanks so much for making time. I'm really looking forward to this chat. Thanks for having me, Preston.

Starting point is 00:01:05 I'm really excited to be here. Hey, so I think the thing that's really obvious to anybody who's joining us and looking at your background. And I'm sure this is always the first question you get when you're talking to people is, what caused the transition? You were a medical doctor and now you run your own hedge fund. Backstory time. Yeah. So started in college. I loved investing and I wanted to be a doctor and I needed to make a decision. And so I decided to be a doctor, obviously. And once you go down that pathway, you're sort of stuck on that pathway, if you kind of know how that works. So I did my kind of pre-med coursework in college, got to med school, did four years in medical school,

Starting point is 00:01:42 and then I did six years in residency and fellowship. Finish that in 2008. So when I finished that, I was a board-certified diagnostic radiologist and a fellowship-trained interventional radiologist. The latter is basically image-guided, minimally invasive surgery. So when I got out, the job market was fantastic. I could move anywhere in the U.S. pretty much that we wanted. So my wife and I talked about it.

Starting point is 00:02:04 We thought Colorado. So we grew up in Minnesota, did our training in Milwaukee, and we always have loved the Rocky Mountains. And so first chance, we came out here. And so I've been out in Colorado Springs since 2008. Probably about a year into private practice medicine, I remembered that I loved investing. And so I started a blog at that time, teaching people how to invest on their own. Did that for like a year or two. And first I got picked up by a Motley Fool and started writing for them. And then I started doing stuff for seeking Alpha.

Starting point is 00:02:31 Had built up enough of an audience at that point of people who were like, hey, we really love your style. we think you seem like a good guy. Could you manage our money? I was like, oh, no, I'm just a doctor. I just do this kind of for fun on the side. But it put a little bug in my brain. I'm like, man, if I could do this for a living, that would be kind of fun. And medicine's pretty intense. I was on call every fourth night as an interventional radiologist doing my stuff there. So, but I started thinking about it. And then fast forward a little bit. 2013, I ended up founding Vailshare Capital Management and then started this hedge fund in 2014. So it's called Vailshire Partners. It's a long, short, health care and technology centered hedge fund.

Starting point is 00:03:07 Literally, no clients when I started, $120,000 of my own money. I just turned the shingle around in my window and said, open. And I waited. And for eight months, I had no clients. I just was like, all right, you know, let's do this. Literally everybody, even my attorneys, my super nice, this lawyer who was helping me out, he's like, Jeff, I just got to tell you, you have like less than 2% chance of succeeding. There's no way you're going to make it.

Starting point is 00:03:28 Like, you're just some random dude in Colorado and you're a doctor and you have no connections on Wall Street. you're never going to survive. And I'm like, thanks. I think I will, though. I'll figure it out. I have this quirky personality where I kind of like being told by people that I can't do something and just makes me want to try harder and kind of prove people wrong. Anyways, fast forward. I ended up getting my MBA in there in finance a couple years ago and kept growing Vailshire on the side as a side gig all the way up until actually September 2021, just finally retired from medicine because Vailshar had finally grown to be big enough. I now have over 100 clients and separately managed accounts. so the RIA side of my business and then I also run my hedge fund as well. So having a ton of fun.

Starting point is 00:04:06 Do you think you had an advantage by getting your MBA so late because you hadn't been schoolhouse trained in KAPM models and those types of things? Yes. In fact, and I hate saying this because I really liked my teachers and I feel like I had a good education. It was great. The finance courses, all they do is teach you these goofy academic models that literally, I just don't think they help. And I would talk to my teachers about that. I'm like, I'm just telling you, Like, I do this for a living. These models, they give you a false sense of security that you know what you're talking about. It just doesn't work that way.

Starting point is 00:04:37 Anyway, so, yeah. And ironically, I kind of started out as more of a value investor, but as the decade went on and, you know, the world of funny money, the Fed money printing, all that stuff, I firmly believe that if your denominator doesn't work in all of your equations, no matter how good your equations and how well-intention they are, you don't get accurate results. And so I just think that it kind of blew out, you know, growth blew out value. investing. And so I had to morph my hedge fund. I was getting these kind of cruddy results as a value-based health care fund. And then I switched over to more of a growth mentality. And then along

Starting point is 00:05:09 came Bitcoin, and we can talk about that as well. So I've really morphed in the last eight years as being a fund manager for sure. So there's been these rotations into value that have worked, but in very short periods of time over the last decade, and they almost all seem to be correlated to when the Fed is actually trying to tighten and restrict the number of units that are being put into the system. And so you could make the argument that we're going through one of those times right now, or at least we're kind of anticipating that they might do that. We had a little bit of that in the 2017 going into late 2018 period of time where they were actually tightening. And during this period of time, you actually saw value outperforming growth.

Starting point is 00:05:54 But this was, if you're looking at the total time horizon, this was such a small piece of the last since the 2008-2009 crisis that those situations of tightening were actually occurring. Do you see that as being the correlation that when value performs is when we're actually tightening monetary policy versus just accommodative insanity? Absolutely. In fact, because I think what the market is sniffing and value stocks are sniffing out is that we're actually for once, at least for a short time, we're getting serious about our monetary. We're trying to actually have a serious currency, but that only lasts, as we know, for months,

Starting point is 00:06:32 maybe a few quarters. This time, I think it only is going to last a few months before they turn right back. Like right now, they're talking about tightening. I don't think they last more than a couple quarters at the very most. And then they're right back to quantitative using again. And funny money goes on and risk on assets are going to blow up again. So I don't know that the Fed ever again can be serious about monetary policy. I just really don't. They've backed themselves in a corner. I really think we're in the final stages of this Keynesian economic experiment where, you know, credit rules, your ability to borrow cheap, credit, cheap, you know, have access to the credit markets. That rules everything. And then if you can put that

Starting point is 00:07:08 into high revenue growth, those are the companies that crush it. That's why we see all these tech stocks just crushing it, you know, year after year. And so I think we're just going to continue to see that probably right up until money actually dies and we have a true crisis and confidence in our currency. And then what's going to happen after that is probably going to be a disaster. But thankfully, we have Bitcoin. You said you had about 100 clients that you work with. I would imagine that either your personality and like what you're saying right now on a show like this is what's attracting your clients. So it's an easy conversation to have. But are there some that were with you before a lot of this started really kind of coming off the rails that you've had to educate? And what has that

Starting point is 00:07:49 process been like? How receptive have some of them been? Great question. So yeah, a lot of my original clients were with me because I was a good stock picker from the Motley Fool days, you know, or from Seeking Alpha and I picked out good healthcare stocks. And so I would sort of talk with them about a lot of funny money kind of things going on and kind of, you know, just sort of simplistically talking about things that the Fed is doing and the sort of the debasing of our currency and the effects that this has on value investments. And then along came Bitcoin. And, you know, I went down. the rabbit hole kind of early 2019. And starting about that same time, I started really teaching my clients about that too. They were very, not all of them, right? But so the majority, at least

Starting point is 00:08:30 initially, were very reserved. You know, it was, it's used by criminals. It's this crazy money. It's anti-government. And this is scary and should we really be investing in this stuff? So I spent a lot of time on my monthly letter is just like, hey, here's what I think about it. This actually isn't as scary as it sounds. It's actually good that it's decentralized and not controlled by a central bank. It's actually really secure. It's actually not only used by criminals. In fact, criminals hardly ever use it. And if they do, it's really stupid that they use it. So things like that. And so that that helped us to get off zero to kind of a half a percent position, then to a 1 percent. And then to kind of a 5 percent position. And then at that point,

Starting point is 00:09:05 I had actual hard data, right? So I had my clients who allowed me to put them in some Bitcoin and the ones who didn't. And I would just show them like, it's kind of, do you remember those old commercial's like, here's your brain and here, here's your brain on drugs and they'd crack an egg and show it frying in the frying pan. And it was just like that. I'm like, here's your portfolio. Here's the same portfolio, but with like 5% Bitcoin in it and look at the difference in returns. And it's not more volatile. It's just much better returns. And this is what Bitcoin offers over the long run. So after I did that. So now I'm to the point where my clients love and I actually have to kind of pull them back a little bit. Like, all right, hold on. You know, like we still want to

Starting point is 00:09:40 stay a little bit diversified in these portfolios for some who want to go all. in, I'm like, great, let me help you do that, let me show you how to do that, and I get them set up. But for the ones that I want kind of a diversified portfolio, we're much higher than the average investment advisor as far as our Bitcoin allocations. And I'm actually kind of proud of that because I think it's obviously the way to generate Alpha for the coming decade or more. And risk-adjusted alpha. Exactly. Yeah. Exactly. The sharp ratio. Which I think is really counterintuitive to people that would look at Bitcoin with 60, 70% annual volatility and you're like, yeah, risk adjusted, it's really helping improve my numbers. People

Starting point is 00:10:19 might not believe that. But until you stick it in there and you actually run the math, that's pretty insane. I want to backtrack to healthcare. This is something that I can say that Stig and I, for how long we've been doing this show, we really have not covered healthcare in any type of depth. So I'm excited to kind of have you on with your background and everything. When I'm looking across the board, just on like a couple of the really big names in healthcare, CVS, 58% in the last year, United Health Care Group, 37%, Anthem, 43% Siemens, 51%, HCA Health Care, 40%, McKesson, 50%. Like, these numbers are huge. What are your thoughts, why healthcare, what's really interesting when you look at pharmaceuticals in the last year, they have not performed like that. They've been pretty flat. So the delta between healthcare versus pharmaceuticals, how do you think about that just in a broad brush overview? Great question. First of all, I used to write about CVS as being a great value company way back in the day. It took a long time. Kind of getting back to what we were talking about, the value companies have been sort of left in the dustbin, but we recently have come into a period where value has generally outperformed.

Starting point is 00:11:32 So I think the pharmacy companies, well, it depends. You have to tease those out, right? because there's the COVID-related pharmacy companies that just crushed it, the Pfizer's and those kind of things. And then there's the other companies that kind of got left for dead. I used to be a big fan of the biotech sector, Gilead, Biogen, those kind of companies. They were the hot, hot companies up until about 2015, actually right when I kind of was getting started with my stuff. And then they entered this really painful bear market and just never really got going again. Biotech was super hot when I first started. It's still kind of left for dead, honestly. And so it kind of depends on what sector of healthcare we're talking about, but healthcare in general is a great, generally a great defensive

Starting point is 00:12:09 play. So when the macro scene is turning bearish, a lot of people turn to health care, kind of like they would for, you know, obviously like U.S. Treasuries and the U.S. dollar or things like that. CVS. I think is just a great example of a company that was just kind of languishing and nobody cared about it because it was a great value, but it didn't have a ton of growth. It's not going anywhere for a long time. So I think that's why a lot of people glommed on to that. The other companies you mentioned, I mean, insurers, those are the companies as a doctor we love to hate. They give doctors just tons of problems, but they're great if you own them from an equity perspective. They just do well. And whenever the markets are concerned at all, they kind of grind

Starting point is 00:12:46 through. They're like a Hershey stock or these other just real kind of safe haven low beta stocks that always perform even in kind of the tough markets. So that's why I think those have outperformed. Pharmaceuticals in general, I think are kind of old farm, traditional pharma. They're kind of in the doghouse. I think a lot of people have drifted towards alternative medicine kind of things and they sort of look at these guys as the bad guys. They don't have a lot of new products anymore that are really sort of life changing. You know, there's no new Lipitor from like 20 years ago that was the best selling drug of all time. You know, Gilead had this the hepatitis C drug that kept changing the names for it. Harvone, I think, was one of the most

Starting point is 00:13:24 recent ones. But anyways, it cured hep C. They actually cured the disease. And so their whole patient population to treat, to sell their drug to just kind of vanish because they cured all these people. So that's a great thing to have if you're the people, but it's not so great if you're the company because now you don't have anybody to sell this product to anymore. So it's sort of a wishy-washy overview, but I think that healthcare is really changing with technology. We're moving more into areas like genetic medicine and things like that. And I think that's where the future is, teledoc, those kind of companies, telemedicine, anything that combines healthcare and technology. Those are sort of the hot areas, and I think those are the

Starting point is 00:14:01 areas to kind of be looking for for this decade as well. You had mentioned when you were talking about your intro there, were you ever working on the machine? I think it's called the Da Vinci Machine by Intuitive Surgical. I didn't use that. That's for like urologists to do prostate surgeries and then other. So I did more, the companies that I would use would be more like Boston Scientific and Edwards life sciences and those kind of things. I put catheters in people, so like blood vessels. And if people like, somebody has cancer and they need a port put in for chemotherapy, I was the guy that did that and lots of other things. But I know about those companies, intuitive surgical is a fantastic company, that robotic surgery, minimally invasive surgery.

Starting point is 00:14:43 I'm a big fan of the medical device companies, anything that can make surgery easier, more tolerable, if you can get in and out in a day versus being, you know, hung up in a hospital for a week, those kind of companies. I'm a big fan about supporting those in general. On your site for your hedge fund, you talk about this quote unquote all-weather portfolio. As having talked with you previously, I understand your fixed income thesis and I suspect it's very similar to mine. And when a person hears all-weather, they almost automatically kind of equate that with Dalio and risk parity and things like that. I highly suspect that kind of stuff is not in your portfolio based on what I know you understand about the markets. So how do you

Starting point is 00:15:27 go about doing something that is all weather when, and I think I know the answer of where this is going to go, how do you do all weather when fixed income is a train wreck? And feel free to get into your opinions on fixed income. First of all, it's not a hands-off. You know, Dahlia is going for the, I don't ever touch this portfolio for 20 years. What are the categories that I can put in where one will even out the other one, you know, if there's a bear here and a bull here. So I don't do it like that. What I mean by all weather personally is I look across all asset classes and how they're going to perform at different stages of the business cycle. So depending on if we're accelerating economic growth or decelerating, if we're in an accelerating inflationary period or decelerating,

Starting point is 00:16:12 how those things play together in different asset classes perform differently. Are you saying that you quad four? Yeah, the hedge eye quad-fourish action. Yeah, so I like that data a lot because what I like about Keith and his data is they have real-time economic data. And I actually find that stuff pretty handy. And I want to put this on the record. I'm sorry to interrupt you.

Starting point is 00:16:37 I love having fun with that, but I agree with you. I think there is some value there, especially when you're looking at kind of how you want to be positioned for the big macro cycles that are playing. he was talking about using it with respect to Bitcoin. Yes, he took a ton of crap for his Bitcoin stuff. And his seller interview is that's still going down in history is one of the best interviews. I think that's the interviewer where Saylor said, all your models are broken. And then back out, you know, that's a meme now.

Starting point is 00:17:07 Anyway, so it's awesome. So I love all that stuff. But I do use that hedge eye for data. And I like their approach from a macro perspective. For me, that helps kind of ground me and where we are from a macro standpoint. And I keep bringing that up because different asset classes perform an expected fashion when you look back historically in different setups. And so like how we are right now.

Starting point is 00:17:29 So speaking of bonds ironically, so I'm all about you and your beliefs on bonds right now. I mean, they're literally just return-free risk, right? If you hold them for the long term, totally up with Greg Foss and his beliefs on that as well. But in the short term, they actually can provide alpha for you. So like in a setting like what we are right now when we have these deceler. inflationary conditions and decelerating economic conditions. I think we peaked in Q4 of 2021. I think we're on the decline right now. I think that the Fed is tightening at exactly the wrong time, and we can get into that kind of stuff too. When we're in these kind of settings where the Fed's

Starting point is 00:18:03 trying to put the brakes on, even though the economy is starting to look sick, long-dated U.S. Treasuries actually can perform pretty well. And you're seeing the 30-year since the start of the year has actually been bid. Yeah, right on. And so, and we're seeing the yield curve flattened. That's kind of expected just based on this kind of thing. So I'm totally not a fan of bonds for the long term, but I will put them in our portfolios, our all-weather portfolios, for a quarter maybe, or for two quarters or something like that if I think they're going to outperform, especially where, and I think risk-on assets are not the place to be. We'll kind of hide in the U.S. dollar. So we'll hide in cash. We'll raise a bunch of cash. We'll sit in long-dated U.S.

Starting point is 00:18:40 treasuries. I love going along the VIX. We talked about that last night as well. And so that's how I have my Vailshare clients positioned right now. We are as defensive right now in our portfolios, and it's January 27th right now. So we're as defensive right now as we were back in late February of 2020. That was the last time I was just defensive. And it paid off. And it's not me. It's just kind of looking, reading the macro tea leaves and seeing where we are. I didn't know that we were going to have that huge drawdown, but I had so many red flags at the time that I'm not willing to take the chance. I'm not willing to sit in equities right now and sit in these huge risk on assets. And so I think we're at that same kind of setting.

Starting point is 00:19:16 And for my long only clients, we're just kind of sitting in cash. For my hedge fund, I'm actively hedged against that to try to profit from the expected downside. 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. in every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is.

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Starting point is 00:23:51 define that? If a person was going to try to come up with how you're arriving there, what would you'd be looking at to define that? Everything to me is cyclical, right? So I look at everything as kind of this roller coaster sign wave, and a lot of these asset classes move based on kind of year over year comparison. So I look at the comps from usually a year ago, sometimes quarter over cover, it depends what we're talking about. To me, when I look at fourth quarter of 2021, all of these metrics were literally off

Starting point is 00:24:20 the charts. The economy just ripped it higher. Inflation was, you know, 7% little under that for the last. whole quarter, 6.6 or something like that, if you average out the quarter, those are just unsustainably high rates. And so to me, it has to start declining at that point. So that's what I mean when I think that we've peaked in the business cycle and we're kind of on our way down again. Look at the indicators coming in. They're still reporting indicators and people are still talking about high inflation and they're still talking about a strong economy because we're talking about

Starting point is 00:24:48 December numbers. That's still what's coming in. So the headlines are old news. And what's so interesting is I think the Fed continues to just look at old news and they keep talking about inflation is running hot, hotter than you expected. The economy is hot, you know, job growth is great, you know, and all that kind of stuff. Therefore, we're going to put on the brakes right now. And I keep saying they're doing it at exactly the wrong time. They should have been doing it last year when the economy was actually accelerating and things were looking good and inflation was accelerating. But I liken it too. They're basically driving a car and they're just looking in the rearview mirror the whole time. And so at some point, when they're driving forward looking in the

Starting point is 00:25:25 rear view mirror, they're going to crash and the market's going to crash and it's going to tell them that, oh, shoot, we made a mistake. We're tightening at the wrong time. And I think they're going to do another pivot similar to what they did back around Christmas of 2018. They're going to be forced to you. The market's going to tank. It's going to really get their attention. They're going to have to take the attention off of getting inflation under control and put it back on sustaining the markets. When we were talking last night, you had made a comment that I'll tell you, I just, I just wanted to put on a round of applause when you said this because I agree with you so much. But you said something to the fact of you watch technical factors, you watch value factors, and you find them important.

Starting point is 00:26:04 But in the grand scheme of things, you're really watching the macro landscape because it's so much more important in driving the direction of where pretty much everything is going to go. So if I misquoted that or you'd maybe say it a little bit differently, please, please correct me, but then really expand on what you're getting at with this for people so they understand what you mean by that. I'll do a little backstory to this. You know, I've been bearish on Twitter very publicly since early January, since I realized I had made a mistake by being too bullish on Bitcoin all the way through kind of the third week

Starting point is 00:26:40 of December and my fun on like, oh, shoot, like Bitcoin has sniffed out that there's trouble under the hood. I didn't believe it. I was waiting for this parabolic ramp up to kind of end the year. Didn't get it. My fund suffered in December. It was a bummer. So I flipped neutral. And then early January, I'm like, no, this is real. We're literally sliding into a really bad condition. So I flipped bearish at that point. So I liken it to, you know, I love on-chain analytics. I love technical analysis and all that kind of stuff. I use it a lot. I look at valuation metrics. But when the macro setup is clearly in one direction, that supersedes all of those things. So I don't ever look for bullish TA, bullish technical analysis in a bearish macro setup.

Starting point is 00:27:21 I don't care about bullish on-chain analytics if the macro backdrop is bearish. And vice versa. If it's bullish, if the macro is bullish, it's like a tsunami. You know, it's moving in this direction. You can have the coolest sandcastles, the biggest most powerful sandcastles. If you see a tsunami coming, it just absolutely overwhelms all that other stuff. It truly doesn't matter. So I say you either got to surf it or you got to get out of the way because it's just doing what it's doing.

Starting point is 00:27:45 And then one other analogy, because people keep getting mad at me again on Twitter, I feel like I'm a meteorologist, right? I grew up in Minnesota and it's say, say we're in January or in Minnesota, okay, it's a very cold place. I feel like the weather guy is saying, well, it's winter. So this whole next week, you should expect snow and really cold weather and there's going to be icy roads. And I feel like people are throwing stuff at me and they're mad. They're like, but I want warm weather. I want sunshine.

Starting point is 00:28:11 I'm like, well, it's winter. And so I would probably plan on it being cold and snowy. I would go long cold. I would go long snow and I would go long ice and I'd probably short hot weather and short, you know, getting a sun tan. And I feel like I'm just the messenger telling people this kind of stuff like, look, this is the macro backdrop. You can hate me for it, but this is what the weather is.

Starting point is 00:28:30 And so you can fight it if you want to and you can go out in your swimsuit in the, you know, negative 10 degree weather or you can kind of go along with it and go build a snowman and you know and so anyways that's how I feel about all this kind of stuff that the macro to me is so clear right now and I'm not hating on anybody and I don't want Bitcoin to go down I know that over the long run it goes up and to the right it's truly number go up technology and I really believe that it will but in those that huge secular bull market that we're going to see I think throughout most of our lifetimes we get these bearish cycles we can have you know business cycles where it's going up and down and up and down. And we're just in a down point. And that's a great time to be accumulating more

Starting point is 00:29:06 Bitcoin and risk assets in general. You want to be accumulating them when they're down big. And I think that's just kind of period we're in right now. You know what I notice is everybody's got a different time horizon. And on Twitter, you can only like the data throughput, right, is just so minuscule that you put a comment out there. And long term, like you just said, this thing's going up. At least that's both of our, you know, points of view. But maybe your opinion on the next month, next six months, whatever it is, right, might be bearish. But the person who's reading it is saying, oh, this guy, this guy's saying Bitcoin's going down forever or whatever, whatever timeframe they're assigning to it without even knowing the deeper context because you can't transmit that much data through the tweet, right? So, yeah, it's fun.

Starting point is 00:29:55 It's fun. It's good to have fun with it instead of let some people ruin your day. So, anyways, this is what it is. Oh, yeah, you see all different types. How are you thinking about the dollar? I had a conversation with Luke Roman just a little bit ago, and he was kind of thinking that we might see a shift in the dollar. But I'll tell you, since we've had that conversation, this thing has continued to rip higher just the last 48 hours. It does not seem to be letting up.

Starting point is 00:30:21 And if that's the case, I think it only magnifies everything that you're saying from a bearish sentiment going into this supposed hike that we're going to see in March. What drives that? For somebody who's hearing that, they know that is the dollar's getting stronger, it's putting a lot of pressure from a macro standpoint. What drives that to happen in the FX market? This took me a long time to figure out. And I think it's really actually pretty simple, if you think about it. When people start getting nervous and the panic starts to set in, what do they do? Think about what you do. When you panic and you're like, oh, shoot, I have these assets. I'm watching my net worth go down. I'm looking at my 401k. I'm looking at my IRA. It's going down, down, down. Panic starts to set in and you get that fight or flight response. And so what do you do? You hit the sell button. What does it mean when you hit the sell button? You're selling your stock and you're buying the US dollar. And so people all around the world, I mean in the US especially, that's where we're thinking about mostly, but people sell their stocks. They sell their bonds. They sell their commodities. They're selling real estate related things. And they're buying dollars. Most people don't

Starting point is 00:31:22 think of it. I'm buying dollars. They just think I'm selling this other asset. But you're buying that. That puts a lot of pressure on that. And so that causes that upward pressure in the dollar and that's what causes the performance to go well. It also can cause liquidity issues with the dollar as well. Obviously, if there's not enough, dollars kind of floating around the system. So that's why when we're in these sort of risk off environments like we are now, it's really smart, I think, to raise some cash because your cash alone, which normally is just this dying, melting ice cube, as everybody knows, over the long run, in the short run, it can provide a great safe haven. It can actually provide alpha relative to all of these other declining asset classes.

Starting point is 00:31:59 So that's kind of how I look at it. At some point, by the way, people keep asking, people who understand Bitcoin, I think kind of fundamentally get that someday down the road, Bitcoin will also be a risk off asset, that that will be the go-to safe haven asset like the dollar is, like long-dated U.S. Treasuries are, like gold historically has been. I think we're way too early in that. There's not enough people who truly understand Bitcoin yet. It hasn't reached a high enough level of adoption. but probably before this decade's over and hopefully by around 2025, 2025, 26 somewhere in there, people will start to think about it like, well, do I really want to, if I hit the sell button, do I really want U.S. dollars or would I rather hold the soundest money? Would I rather hold Bitcoin?

Starting point is 00:32:40 At some point, that will happen on a major scale. And I can't wait for that day. Honestly, I'm such a geek about this kind of stuff, but I just can't wait until the day where Bitcoin outperforms the dollar when we're in a risk-off setting. What market cap, if you had the guess? I think it's somewhere between 20 and 100 trillion. I don't know where that is. So maybe let's call it 60 trillion, div or take. I think by the time it gets that big, people are really going to be taken it seriously. They're going to see it as the world's major decentralized non-government currency. And so that's when they're really going to start thinking about. You know, I think it happens also first in these developing nations that are really struggling, you know, with these currency crises on kind of a regular basis. You know, the turkeys, the South America, Central American countries, that have just gone through just horrific, horrific losses of purchasing power that destroys families, destroys business. They already understand the value proposition of Bitcoin. They understand preservation of purchasing power. They understand that when an inept government is controlling your

Starting point is 00:33:38 money supply, that they're literally sucking your purchasing power, your proof of work away from you so that the government can survive at the expense of its people. I think it's practically criminal. It's definitely immoral. And Bitcoin fixes all of that, those kind of problems. So I'm very excited for that day. There's regulatory forward guidance and rumors that are getting published right now with the White House, evidently going to be coming out with something. It looks like it's going to be heavy towards defy and stable coin regulation. What have you heard? What do you think is going to pop out of this? And what does that mean for altcoins? What does it mean for Bitcoin? People are really clucking about it right now on Twitter, right? And it's making all the headlines.

Starting point is 00:34:24 None of this is a surprise. It shouldn't be a surprise to anybody. You've been watching Gary Gensler. I've been watching him closely and listened to his speeches. He, I think, has been exceedingly clear. Bitcoin is not a security. Couple other things like Bitcoin are also probably not securities. And I think of probably like the forks, you know, the Bitcoin cash and the BSV and maybe

Starting point is 00:34:43 the light coin and these other things that tried to compete with Bitcoin as a currency, but lost clearly. And then there's everything else. So 98% of everything else are securities. He's very clear. He's like, and if you are one of these, we know that you are, I would recommend that you come talk to us. He said that many times. Like, we don't like it that you are unregistered securities. We're the SEC. We have jurisdiction over you, even if you don't think we do. We're coming. So come talk to us or we're going to come after you. And I think that's what's happening now. So we're starting to see kind of the framework get laid out. I'm nervous for Altcoin people. A lot of my friends, you know, like they're into that kind of stuff. I'm I generally focus on Bitcoin, so I don't care much about it. To me, it's more of a distraction. But there's what a trillion dollars worth of people's money and that kind of stuff and lots of people really believe in it. And I think they have sort of this herd mentality, like there's a safety

Starting point is 00:35:35 in numbers. Oh, they're not really going to come after us. Oh, but we are decentralized. They can't really shut this project down and, you know, and we're just like Bitcoin and all that kind of stuff. I don't think so. I think they're in trouble. And I also think that the exchanges are in trouble because, you know, they've been sort of skirting the issue as well. But I think as far as Gensler is concerned, they're saying, hey, look, as long as you have a platform where these unregistered securities can trade, buy, sell, whatever, earn interest, do all that kind of stuff, you're complicit in this as well. And so we're going to come after you. And I just feel like people are so surprised by it, but he's, he's been clear as day on it, I think. And so that's those things. And then there's the stable coins, which are a totally different issue. I think it's so interesting that like Janet Yellen has been kind of focusing in on those and a lot of the other leadership, Elizabeth Warren has had. things to say as well. I don't want them meddling with this kind of stuff, honestly. I'm, more libertarian kind of bias. I would rather have less government for sure. But I think that those things are going to have their moment under the scrutiny spotlight as well. And I don't know what's

Starting point is 00:36:37 going to happen. I wouldn't be surprised. Some of the headlines are talking about are they going to get swallowed up by big banks? You know, is JP Morgan going to buy Circle or something like that and own USDC coin, those kind of things? I think it's very possible. My take on all of this, and they call it a security issue, this is a matter of national security. I really think it comes down to, you know, the U.S. government has had this absolute domination on the world's financial system for decades and decades and decades. Their greatest tool, their greatest policy weapon is basically economic sanctions, right? They can cut off monetary flows from this country, blah, blah, they know where the dollar is, they know where it's going, they know everything about it,

Starting point is 00:37:14 so they can control that, and that's a huge source of power for us. Crypto and even, you know, these stable coins, they don't have that same control over that and they hate that. And they want that control and they want. So they want to have their fingers in everything so that they can keep a control. They can keep terrorism and financing and all that kind of stuff under surveillance. That's where all of this comes in. Coming over to Bitcoin, I think they realize we can't do anything about Bitcoin. It's completely decentralized. It's totally secure. It has this proof of work thing that basically makes it an impregnable fortress. There's nothing to do about it. So let's just let that lie, and we're going to start going after all these other things. That's my take on it

Starting point is 00:37:53 from the high level. None of it surprises me. I do think stuff is coming. I don't know. The only thing I don't know is what that means. Are they going to shut down Cardano or Solana or Ethereum? I can't imagine that they would do that. So I don't know what they're going to do. I don't know what the penalty is. Are they going to find the founders? I just don't know. I'm equally as confused. And I think this is why I just continue to focus about on this show, just about Bitcoin, is because everything that I've seen from a regulatory standpoint and the way Stig and I and the other hosts of our network think about it is we just don't want to be talking about something that could pose just enormous risk into somebody's portfolio.

Starting point is 00:38:33 We're just looking at it from, hey, everything that we've seen from a regulatory guidance from Gensler and those that have preceded him is that this thing's going to be viewed as a digital asset. Everything else is going to be viewed as a digital asset security. And it appears like, I think their first play is going to be really kind of just going through the exchanges in order to limit what's happening. And then maybe the next step is to go after some of the protocols themselves. I know Ripple was, I mean, they've already started engaging with Ripple. And I wonder if they're trying to use them as a base case case law type situation where they're trying to get a ruling from that and then using that as a copy and paste for a lot of the other protocols that they see

Starting point is 00:39:16 being similar to them. Yeah, that's my take on it too. I think they're doing that. And so I'm really curious to see, you know, obviously don't own any ripple. So I'm very curious, though, to see what the verdict does on that. And then not just the verdict, but what's the penalty? You know, is it a slap in the wrist? Is it a sizable fine? Do they try to show? shut it down. I just, I don't know the answer to that. I don't know if they know the answer to that, too. They're probably kind of sitting in their, they're, you know, meetings like, what are we actually going to do about it? What's interesting is a lot of these, should we call them founders, these founders of these protocols, they're extremely wealthy individuals. And so the litigation and the

Starting point is 00:39:55 team of lawyers that they can afford versus the government lawyers, I think it's going to be an interesting thing to kind of watch out. I don't know that it's a slam dunk for the government just based on the caliber and the funding of litigation that they kind of have in their corner. So it's going to be, it's going to be very interesting to see kind of how it plays out. And I think the exchanges now are getting so large. What was it last week? We saw this German bank was purchased by, oh, I forget which exchange purchased them. Oh, yeah. You talked about that with Mark Moss. I saw that. Yeah. Yeah, whatever it was. But I mean, that's huge. I mean, that's not something that in my mind I would have ever thought would have been taking place is the exchanges are getting so big and they're so

Starting point is 00:40:39 powerful that they're actually stepping in and buying banks that are touching the Fed rails and they're onboarding in that direction. And it's just, it's moving fast. I was just going to say that the technology is moving so fast. I will be astonished if government can actually keep up with that, you know, in the SEC. So I just, I don't know. I don't know how this ends, but it will definitely be interesting. Yeah. And on the stable coin piece, I think they can come up with all these rules and regulations here in the short term and it might have some type of impact. But these discrete log contracts, which hasn't been really talked about too much, but it appears like there's a technological way to synthetically create stable coins all via the blockchain.

Starting point is 00:41:23 And if that's the case, like, there's no way to regulate that. There's no way to regulate it. So you'd have like this tokenization of stable coins that would be happening in a synthetic way all on Bitcoin. And there's just no way they could regulate it. That's where I think it would really kind of come off the rails. If that technology that appears to be there could start taking root, it don't matter what their policies are around the world because so much of this stuff would just really

Starting point is 00:41:50 kind of start moving at a pace that I don't think anybody could possibly. control. So we talked earlier about kind of your bearish sentiment due to the economic contraction that's taking place. This is a really hard question. How would you define that inverting itself where things would then become bullish? So think back. We both know what happened in March of 2020. We had this big giant liquidity event. But then the Fed steps in. They recapitalize everything. They drop all these units into the system, these monetary units into the system. And it comes I'm screaming back. So as you look at that scenario and you're thinking about, all right, let's say you're

Starting point is 00:42:29 right. Let's say we go through this big bearish contraction. What is that going to look like in order to reflate and go through the next bullish cycle? What would be the key variables that you'd be looking at to identify that for people, let's say that's six months from now or nine months from now, whatever might be. What are you looking at? to me it looks, it doesn't look as dramatic as it did back in March of 2020. So I don't think we get that dramatic V-shaped recovery that we had with COVID. That was like unprecedented. I don't

Starting point is 00:42:59 know that we'll ever see something like that again. We might. We probably will. But, you know, it's unlikely to happen again. I think what's more likely is that we trend down and we do this like stair step down where we drop, go sideways, drop, go sideways. And it just sort of crushes the souls of everybody. We may have some sort of big news triggers. event like a COVID or maybe Russia does invade the Ukraine or maybe something happens that triggers fear and panic in the markets. And we go from this kind of just debilitating decrease in all risk on assets and then it just plunks down. At some point, right around that point, I think that's where we bottom. That's where we get the Fed's attention for sure and they start considering

Starting point is 00:43:39 pivoting. At some point, business cycles just have to bottom. That's the beauty of all this stuff. So that's what I keep telling people too. We're in the winter right now, but at some point, spring comes. So at some point, we go from bad to less bad. I think that that probably happens in about the third quarter based on kind of historical numbers. And so when I say third quarter, I think that the markets look ahead, especially risk on assets, tend to look like one to two months in advance and they tend to do their stuff kind of in anticipation of improving economic conditions and changing, accelerating inflationary

Starting point is 00:44:10 conditions as well. We can talk about that a little bit. So we're a quick side tangent. I think inflation decelerates all this year. And by the end of the year, we're looking at kind of like three to five percent levels of of inflation, which are still high. They're still over the 2 percent. But I think economic conditions should start to improve before that third quarter, probably

Starting point is 00:44:29 fourth quarter as well of 2020. So that's why I look at this. I'm kind of, I think we're going to dump in the first half of 2022 and then accelerate out of it. I don't think that we have that V shape. I think what we see is kind of really kind of bad to less bad economic conditions. Bitcoin was the first major asset class alongside of. of small-cap US stocks to peak on November 10th. And then they've been grinding down. I think

Starting point is 00:44:52 they've been doing that because they sniffed out trouble under the hood, under the economic hood. And then it took the larger asset classes, the larger stocks and things like that, the S&P 500, Dow and all that stuff. It took them to basically the new year to start coming down. So they're behind Bitcoin. And Bitcoin is more of the leading indicator. Bitcoin's probably going to be the first to bottom or one of the first. So I call it the canary in the coal mine. And then I think it starts kind of grinding higher. And then maybe a week later, two weeks later, a month later, I don't know, equity's bottom. And they start to grind higher from there as well.

Starting point is 00:45:24 So nobody will believe it too. That will be the point where shift is going to come out declaring victory. Bitcoin's going to zero. It's dead. It's stupid. You guys are crazy. Buy gold. And that's going to be the time to buy Bitcoin.

Starting point is 00:45:34 And that's going to be the time to buy back into risk on assets and the NASDAQ, little tech companies that have gotten crushed. So that's kind of how I'm looking at playing this. 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

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Starting point is 00:48:50 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. So what if the, so I'm with you on the inflation. I think the 7% print that we recently saw, I mean, I could see it kind of going flat and kind of staying there for a little bit. But if they are, in fact, tightening and they're allowing these yields that continue to sell off, it's going to have to start pulling those inflationary prints down. But the only thing that, based on previous cycles, that's what seems to be how these things play out. In the back of my mind, I'm looking at supply

Starting point is 00:49:34 chains and I'm looking at the total dysfunction of employment all over the country. And I'm thinking, maybe these 7% numbers just hang around, right? Like, maybe they don't go down to these three or four percent, which I agree. If I was going to say my base case, I would say exactly the way you're seeing. And I think that's my base case. But my God, the employment situation is just so dysfunctional right now that I don't know that we're going to get back to a functioning society that's fully gainfully employed to get those numbers to be like that. I agree with you on the employment. That's a huge issue.

Starting point is 00:50:11 And I think that's going to take actually years to play out. I think there's this whole generation of people that are like, I'm not going to, you know, go work that crappy service job for minimum wage or whatever. The difference is, I think, the supply from what I'm hearing from CEOs of companies is, obviously the supply chain issues are massive right now. They still are, but they're all talking about like they are kind of improving. At least that's what I'm reading. They're slowly improving. They're working through the log jams. They're working through these kind of issues. So I do think that improves. I think that with commodity prices also coming down, that that helps with that kind of stuff too.

Starting point is 00:50:45 They're able to get what they want for prices that are more reasonable. So I think employment issues are going to be, just as you say, they're going to be sticky and rough. We're going to have labor issues for quite a while. I think supply chain kind of issues are going to, you know, recede, so get better. And that will help kind of slowly pull down inflation a little bit. The one, this wouldn't be a black swan, but let's call it a gray swan that could happen. We could get another COVID variant that's worse than Delta. So right now, Amacron is not a big deal. It's kind of, you know, I actually tell people like, if you have to get a variant, this is the variant to get for your natural immunity, those kind of things. Delta was rough.

Starting point is 00:51:19 I mean, I was a doctor. I was watching these people come through. I was reading their chest CTs. And when it hit people hard, it hit them really hard and it killed a ton of people. And so that's what it is. But if we have another bad variant of this virus, that could ramp things back up again and cause a lot of issues as well. Do you find that the way that the variants kind of play out with these viruses, that once they start trending in a direction where this is much more contagious, the Omicron is more contagious. but it's less lethal.

Starting point is 00:51:50 Do they keep trending in that direction? Or can they kind of oscillate back to the lethality of the Delta and maybe not as contagious? There's no set rule that the viruses have to get less lethal. But the good news is, is more and more and more of people in the world have gotten it. So they have natural immunity, which I'm a big fan of, by the way, never gets talked about, big fan of natural immunity. But also tons of people have gotten vaccines, regardless of people's opinions on them, more and more people's bodies have seen this virus. And so it's less and less likely to,

Starting point is 00:52:20 you know, hospitalize them, to kill them as well. So even if we have variants that are worse than Amicron coming, I think we'll tolerate it better as a species. So I'm less concerned about that. But you just never know. We could get just some killer one, you know, so hard to say. But that would change my thesis? People ask me, when would I change my thesis and be, you know, even more bearish into the second half? It would be if something like that happened. So if inflation suddenly ramped up again and started accelerating for whatever reason. Supply chain issues got worse. Nobody wants to go back to work kind of thing. And the economy is really stalled out. I would be concerned at that point and I would stay bearish. One of the things that when you look back to the March 2020

Starting point is 00:52:59 and in the bounce, the 60-day bounce where you were clear back to all-time highs again, I think it was like 60 or 90 days. One of the key factors I think that was associated with that balance, not only did they, I think it was like $5 trillion that they dropped into it globally. how much stimulus was dropped in there. But you were also in this environment where everyone's opinion and has been for decades is that there was no inflation whatsoever, right? We were at nothing percent inflation according to the CPI gauges that everybody was using in order to conduct financial valuation. And so I think in that situation, that was one of the reasons you got such an enormous bounce. But with this, if let's say we go through an economic downturn and the markets

Starting point is 00:53:41 start getting really ugly, and these CPI numbers are still getting printed above 5%, and they're taking yields lower. You're just in a really kind of a different, I think you're in a completely different dynamic than you were back in 2020, where based on that stimulus response that we saw, and then what followed it with all these inflationary prints, it's fresh in everybody's mind that if they would come with all that stimulus again, and let's say you're already at 5%, and you're not seeing lower numbers, I think it's going to scare the hell out of people. I think they're going to be looking at that. And so I don't know that you're going to get the backstop and maybe the

Starting point is 00:54:18 response that, because think about it, all the economic calculation that's going to take place, people are going to be like, oh, we're at 5% already. They're adding all these units into the system. Maybe this takes us to 10%. And maybe, you know, maybe these valuations are still too rich. I think that's great. You bring that up. I've actually been thinking about that exact same thing. and what would happen in that scenario? What if people are just like, I don't believe this anymore? And that's where we start talking about the crisis and confidence in your currency. Like, this is not sound money anymore.

Starting point is 00:54:48 And what if the stock market doesn't believe it anymore? And we don't get that pump higher. And inflation starts ripping higher again. And people start really panicking in these stagflationary conditions. I think what is inevitable are two things. I think one is UBI is definitely coming. And that would help kind of bring it along because people are going to be so miserable living conditions in a stagflationary environment. And they already are miserable for the lower economic

Starting point is 00:55:11 echelons right now, feel terrible for what's going on. Two is that I think that's when the Fed starts purchasing equities outright. I think it's the Japanification of the equities market. And it's just completely no longer a free market anymore. They're just like, look, we're trying to pump it up. It's not pumping up. We're going to be pro America and we're going to start buying ETFs, you know, and that's the end of it. We're like talking to end stage game at that point. And that would be the time to just basically just go all in on Bitcoin because, you know, equities, they don't have any more alpha in them at that point. Bonds already don't have any more alpha in them. Real estate, that's the same kind of story, but their purchases of mortgage back securities, they could continue

Starting point is 00:55:48 doing that. They're pumping valuation so that regular people can't buy houses anymore. They're just these investment vehicles. It's just, it's such a ridiculous system. And so that's just this runaway, centralized, socialized system. It's not even worth investing in anymore at that point. And then I think the world just completely pivots 180 and goes into Bitcoin at that point. So let's talk about correlations in portfolio construction because there's a lot of people out there. Obviously, we got a lot of Bitcoiners that listen to our Wednesday Bitcoin show, but they have other positions and they don't want all that volatility in their portfolio. They want to own other things. And so when you think of the portfolio construction,

Starting point is 00:56:27 correlation is such a huge part of doing it in a way that kind of manages and de-risks the volatility of your portfolio, especially as a fund manager. As an individual, I'm comfortable with a whole lot of volatility. Next person's personal preferences are different. But when you're a fund manager like yourself and you're managing other people's money, this is really important stuff to manage that volatility in your portfolio. So how do you think about correlation? Is it something that you, that's very high on the list that you control?

Starting point is 00:56:57 Is it something that you manage more through your letters and the way that you educate the people that are with your fund? Yeah, so a great question. So first of all, I would say about correlation is that when you enter periods of risk-off periods where people are scared, where the macro environment is bearish like we are right now, I think. Correlation trends to one on all risk on assets. So I think that's the period we're coming to.

Starting point is 00:57:22 We're seeing that across Alt-Rite Bitcoin and the NASDAQ and S&P 500 are all starting to to trend towards one. They're not going to get to one, but they'll trend that direction and get pretty high.9 possibly. I'm not into the portfolio theory of having a portfolio of uncorrelated assets. That's kind of getting back to the Dahlia all-weather portfolio where you just set it and forget it. That's not how I roll, right? So I'm a top-down kind of guy. When I see the tsunami tidal wave coming in, I go all in on all of those kind of assets. Sometimes I'm wrong, but usually if you get the macro right, you get the movements of asset classes right as well. So I actually, actually like periods of high correlation. Again, like, you know, so everything's correlating.

Starting point is 00:58:02 So the dollar always tends to go up in these kind of scary environments. Stocks go down. Most equities go down. The higher the beta, the better for going down. I don't short Bitcoin, but I do short crypto exchanges and even some Bitcoin miners. And to hedge against Bitcoin in my portfolio, those all basically go to one and they all go down at the same kind of dramatic rate. So I like when correlation goes to one. I don't look for uncorrelated assets. I don't have that all-weather portfolio in that fashion. So that's kind of a misnomer.

Starting point is 00:58:32 If you think of it like the Radalia kind of thing, if people want to do a set it and forget it type portfolio, they should do that. They should look for uncorrelated assets and put them all in a portfolio together. If they never want to look at it, that's a fine strategy. I want to beat the market, though. I'm a manager, an active manager. And so if I'm not providing alpha for my clients, what am I doing this for, right? I mean, you could just go buy index funds and just be fine with that.

Starting point is 00:58:55 And most people would be better off just doing that. But I just believe that there are still some active managers out there who have that special sauce and who can actually figure out a way to beat the market over time and generate alpha for their clients. Okay. So I'm sure you promote people holding their own keys and their own Bitcoin. But for a lot of people out there, they have money in GBT, which is a ticker trust. This used to trade at a premium, and now it's at a severe discount to the underlying assets inside

Starting point is 00:59:27 of the trust. What is causing this? Is this going to go away? Is this going to convert into an ETF? What are some of your thoughts on GBTC? Great thoughts. So yeah, I think the last time I checked a couple hours ago, the discount was about 30% to NAV, which is crazy. So I have a lot of thoughts on this. First of all, I've been holding GBTC individually in my own brokerage accounts and in our fund accounts and for our clients for a long time. So we have felt the wrath of that dropping. We started buying it when it was a little bit of a premium and then we've ridden that all the way down to this to this discount now, this significant discount. Due to regulatory reasons that you have GBTC opposed to underlying

Starting point is 01:00:08 coins in the fund? Yes. So it has been. It has been, although that kind of stuff is changing, though. But I actually think as disappointing as that's been for people who have been holding it, at some point, I truly believe that that is a fantastic arbitrage opportunity. And I think that at some point, that will go to zero. And I think just as you surmised, they're waiting for a Bitcoin's, a spot Bitcoin ETF. So let's take a quick tangent on this. I think that Gary Gensler is holding the Bitcoin spot ETF hostage to all of his demands for these altcoins and crypto exchanges to get their butts in gear and to do all the stuff he wants to, I think that's the only valid reason because he's smart and he understands Bitcoin and he knows it's not a security and he knows

Starting point is 01:00:54 it is not the altcoin world. It's totally different. And so he taught the class. Exactly. He taught the class. He knows what he's doing here. And so to me, it's extremely frustrating, especially as a hardcore bitcoiner, I think he should for sure just let the spot Bitcoin come to fruition, spot Bitcoin ETF. And that would be a really easy way for lots of people, safe way for people to get into Bitcoin. A lot of boomers and people who don't like technology and don't want to hold their own keys and they think that's crazy and they don't understand any of that stuff. They just want to press a button and they want to own some sort of Bitcoin proxy and as close to owning real Bitcoin as they can within their portfolios. So I think

Starting point is 01:01:32 that's coming at some point. But like I said, I think he's holding it hostage. I think that's tragic. Back to GBTC. GBT is at this huge discount to NAV right now, to net asset value. I think at some point that is going to go to zero, probably within by the end of this year, I think we actually see a resolution. Maybe I'm too optimistic. I don't have any inside information. People just have to reason that out. If it does go to zero, that from a 30% discount to NAV, they're getting that premium on top of price appreciation of Bitcoin. It is a fantastic time arbitrage opportunity. So I would be a buyer of that still, and even more so. If we're value investors at heart, You obviously are too. When a great asset goes on sale, you buy more. If it goes even more on sale,

Starting point is 01:02:14 you buy more if you can. So that's how I look at it. So in my client portfolios, I actually like the strategy. If you can't own Bitcoin outright, my favorite kind of Bitcoin proxies in that situation would be maybe on half GBT, actually half micro strategy, which I think is a great leveraged way to play Bitcoin. It's basically a leveraged ETF to Bitcoin at this point. How do you think about all the interest that's being paid on people that have their own keys and they can put it on an exchange and have it lent out? What are some of your thoughts on that, all the shadow banking that's happening in the space? I like the development of that in general. I'm very curious again to see what the SEC does with all that and to see if that's allowed. I think there are going to be some changes, but I don't know what those changes are. I don't know if the interest rates stay that high. I think Bitcoin being what it is, those rates will come down over. time. For alt coins, they might stay high because those are so risky and crazy and junky in a lot of ways. Bitcoin as being the world's safest and soundest money, that interest rate just has to come

Starting point is 01:03:15 down, down, down, down. So I think it will eventually be very low. And that will be the world's true real interest rate to go off of much better than 10-year treasuries, I think, and much more accurate because it's truly a free market. I think that, again, I'm kind of watching and waiting with those. People love to earn interest, right? I come from finance. I want to earn interest on my stuff too. I actually have some Satoshis in those kind of places earning interest just as a kind of a diversification strategy and an interest earning strategy. But I think it's far wiser for most people to actually hold your own keys, keep them out of that because you're taking a ton of risk anytime you do that, right? We're trusting these companies that they're not going to run

Starting point is 01:03:54 away with your money, that they're not going to rug pull you, that the SEC isn't going to come in and shut them down and trap your money there so you can't get your Bitcoin. So you're taking on a bunch of extra risk for those interest rates. Probably not necessary. Some people like it. I don't hold it against people if they do that kind of thing, but I'd caution people that you are taking much more risk if you're earning interest. Jeff, I don't have anything else. I just want to thank you for coming on the show. I thoroughly enjoyed this conversation. We need to have more of these conversations. Give people a handoff if they want to learn more about you. I know you're active on Twitter and then give people a hand off to your fund. Thanks so much. So yeah, Twitter, wait.

Starting point is 01:04:33 too active on there. I should probably chill out on there a little bit. So my handle is at Velshire cap. My website is Velshire.com. You can check it out. And if you want to get a hold of me, I'm always checking my email too, just because I'm always sitting in front of a computer. So info at Velshire.com. You know, I love talking with people about anything. I just really like helping people live well and invest wisely. It's part of why I was a physician, part of why I'm a investment guy now. If I can help people with anything investment related or even health related, it, I'm happy to help. And we'll have links to all that in the show notes.

Starting point is 01:05:04 So, Jeff, thanks for coming on the show. Thanks for having me, Preston. It was a lot of fun. If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for We Study Billionaires. The Bitcoin-specific shows come out every Wednesday, and I'd love to have you as a regular listener.

Starting point is 01:05:21 If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. and it's something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I'll catch you again next week. 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.

We Study Billionaires - The Investor’s Podcast Network - BTC063: Potential Economic Tightening & Bitcoin w/ Dr. Jeff Ross (Bitcoin Podcast)

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