We Study Billionaires - The Investor’s Podcast Network - TIP169: Jesse Felder - FANG Stocks, Crypto, Central Banks, Inflation (Investing Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, how's everyone doing out there? Today, we've got our good friend Jesse Felder on the show. And Jesse comes with multiple decades of experience in the markets. He's the former founder of a multi-billion dollar hedge fund. And as you might expect, he always comes to the table with a tremendous amount of insights and ideas. Today, we're talking about big tech companies. And Stig, what were some of the other topics that we covered on this show?

Starting point is 00:00:26 We transitioned into a macroeconomic discussion. It seems like the central banks are currently looking to undo the quantitative easing, and it might lead to inflation. Now, this is a very interesting concept, because if you feel that stocks and bonds are overvalued and you're holding cash, if we do see inflation, does that mean that you also need to diversify your cash, not holding US dollars, but also euro and yen, perhaps? And what about this new currency Bitcoin? That's all the rates right now.

Starting point is 00:00:54 Is that a good way of diversifying the cash position? Jesse Felder doesn't think so. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right. So we're really excited to have Jesse Felder back on the show. Jesse, welcome back to the Investors podcast. Always such a pleasure to have you here.

Starting point is 00:01:31 Thanks for having me, guys. You know, you was it a couple years ago, you guys turned me on to the whole podcast world? I really didn't know much about it and it's just awesome and so it's a pleasure to be here with you guys again. Look at where we are now, Jesse. You got your own show and everything.

Starting point is 00:01:46 It's awesome. And it was all inspired by you guys. So we wanted to chat with you in particular about Fangstocks to open up the discussion. We opened up this to our Twitter followers as well. We said, hey, we're bringing Jesse Felder on the show. They threw a lot of questions at us to ask you tonight.

Starting point is 00:02:03 So talk to us about how you're seeing the Fangstock. And before we do that, just tell our audience what fang stocks are in case they don't know that terminology. Yeah, I mean, that's a good question. So the fang stocks, I think the term, the acronym was coined by Jim Kramer. And it just stands for Facebook, Amazon, Netflix, and Google, which is technically now alphabet. So I guess the acronym doesn't work so well. But I also add Apple and Vida into that. So you get a couple A's and a couple of ends in there.

Starting point is 00:02:34 So yeah, that's why I look at the fangstops. is that bill six really. Awesome. And so Jim started talking about them because they were just, you know, taken off like a rocket ship. And when we talk about fang stocks, you're of the opinion that they don't have much more to climb. So talk to our audience about this idea and why you have that opinion.

Starting point is 00:02:55 Well, really, you know, I was reading Howard Marks' latest memo. And he talked about in every bull market, you get a group of stocks that become priced for perfection. And so I started looking at these stocks. It said obviously it's the fang stocks in this bull market. And when you look at them individually, so the way I look at valuations of stocks is not

Starting point is 00:03:17 necessarily the company relative to the broader market, but I like to look at that stock's valuation relative to its own history. I include Apple and some people say, well, Apple's, you know, not expensive relative to the broader market, but Apple is actually very expensive relative to its own history. That's kind of what I'm talking about in terms of valuation. So I look at these stocks and I see they're almost across the board trading at their highest valuation relative to their own history in the last five, 10 years, if not more. NVIDIA is a great example of this trades 15 times revenues, which is just absolutely insane.

Starting point is 00:03:55 And at the peak of the dot com mania, NVIDIA, traded out about seven, eight times revenues. And at that time, revenues were growing 100% year over year. Today, it trades at 15 times revenues. And revenue growth is 30%, I think 28% in the last quarter and projected to growth, 12% or maybe even flat in subsequent quarter. So revenue growth is much, much slower today than it was at the peak of the dot com mania, and the valuation is twice what it was back then. So that's kind of what I'm talking about with these stocks,

Starting point is 00:04:28 just trading at really high valuations, despite the fact that they're, growth is slowing. Apple's growth's margins are falling. I mean, in almost every case, I could go stock by stock. Netflix is another great example. Free cash flow has plunged from 300 million positive to 2 billion negative. And even still, the stock trades at its highest valuation in its history. So it's, yeah, these stocks are absolutely priced as if things could not get any better. So, Jesse, let's specifically talk about the valuation of Netflix. So I just looked up the stock here. And it looks like the price to sell is 7.6. Price to earnings, almost 200. And the reason I ask this is because Netflix has gradually changed strategy.

Starting point is 00:05:12 And now they're looking to go into content creation. I guess to me, doesn't sound like higher margins, if anything, that sounds rather expensive. But I guess my question also comes from an appreciation of knowing that you could be wrong and the market could be right. You know, you're absolutely right, Stig. When you look at Netflix, you know, back in the, you know, 10 years ago, when they were putting Blockbuster out of business, you can make the case that they're going to own the DVD, you know, business. And so, yeah, I'm willing to pay a high multiple because they're going to take all of that business from Blockbuster. Then they went to Video on Demand. You go, wow, this is a new market.

Starting point is 00:05:50 They're doing something brand new. And so maybe that does earn it a higher valuation and growth premium. But today, you're right. They're getting into content creation. And when you look at every single one of the company's competitors in content creation, they trade one to two-time sales. So, you know, then you have Netflix, free cash flows plummeting. And the reason is because this content creation is very expensive. And the return is, you know, very minimal and very hit or miss, right?

Starting point is 00:06:18 You have some hits. You have some misses. And so cash flow goes up and down. It's a deeply negative for them right now. And I don't know how you justify seven and a half times sales when you have digital. Disney at two and a half or three-time sales, which is best in the business. And Disney is an interesting example, too, because they've decided to take all of their video, you know, product away from Netflix and create a competing platform. So it's a very interesting situation

Starting point is 00:06:43 Netflix finds themselves in right now. You know, the thing that I can't understand about the Netflix doing their own content is back in the day, you'd turn on your TV and you'd flip through the channels and try to see what was on and you'd give things kind of a try because you just had to. There wasn't like you could do on-demand TV. But now with on demand, like, when you go on the Netflix, you're looking for something specifically. You're not just perusing and seeing what pops onto the screen anymore. There was a lot of discovery that happened with these original shows that were maybe coming across the network. So I think that's a major problem for them as they're trying to, I mean, we all know why they're trying to do it. They're trying to get people to stay hooked on some

Starting point is 00:07:24 type of program that's decent that keeps them subscribed to the service. But I think that it's a harder sell than it used to be back in the day when you're just channel surfing than it is now because of the way on-demand TV works. Would you guys agree with that or do you see it a little differently? I absolutely agree. I think in Netflix also, when they had the first mover advantage, you know, for a long period of time in the video on demand, you know, there was a great case. Everybody had to get Netflix. But now you have Disney creating their own platform. You have Amazon Prime who, you know, has its own platform, HBO Go, you have Hulu, you have a lot of different platforms and a lot of different choices for people. And a lot of people, you know, who are well

Starting point is 00:08:03 placed in the media industry, you're talking about a price for on the horizon. And so I think that's another risk to Netflix. You know, something that I think a lot of people that just invest based off of the brand or they really don't, they're not a numbers person. This is how I would like to describe this for people as they're thinking about Netflix specifically. So if you bought one share of stock for $183 right now, you could expect the profit after an entire year of buying that $183 business to be $0.43. That's what it was at the end of 2016. It looks like the past year it's about $1. Let's just say best case scenario, it's a dollar. You're paying $183 to own a business that's going to give you $1 after a year. I wrote a blog post recently about this,

Starting point is 00:08:48 and this goes to the broader market too, but, you know, this was specifically in regards to NVIDIA, Facebook, stocks trading 10 times revenues or more. Back in 2001, kind of late 2001, I think, Scott McNeely gave an interview to Bloomberg. And this was after his stock had, you know, just gotten crushed. And he was talking about the valuation of Sun Micro at the peak of the dot-com mania. And I got to read you this quote because it's perfect for what we're seeing today. It says that 10 times revenues to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that past my shareholders.

Starting point is 00:09:25 That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes I have zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes that you pay no taxes on your dividends, which is kind of illegal. And that also assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock in $64 a share? You realize how ridiculous those basic assumptions are. You don't need any transparency.

Starting point is 00:09:55 You don't need any footnotes. What were you thinking? End quote. And so that's the NVIDIA today. That's Netflix today. It's Facebook today. All these companies that trade at very high price to sales ratios. And interestingly, at the peak of the dot com mania, we had 29 of the S&P 500 components

Starting point is 00:10:14 traded at 10 times revenues are greater. Today we have 28. So it's a very, very similar situation, actually. You know, so we had a comment from an individual on Twitter that said, hey, are some of these prices justified because interest rates are a whole lot lower than they were back in 2000? What do you say to something like that? So I think the best quote that I've heard about this, best way to think about this is there's an incredible dichotomy. What do low interest rates imply? Low interest rates imply very low growth. What justifies a high multiple of earnings? High growth. So Jim Grant said, you know, we have, boom time equity valuations and depression era interest rates. So you have the bond market saying there is no growth. Then you have the stock market saying growth is off the charts.

Starting point is 00:11:02 And so we could get into the math of it. But when you use a discounted cash flow model, you know, if you discount the discount rate, you lower the discount rate to 1, 2% or whatever you want to lower it to, but you don't lower the growth rate in the discount cash flow model. You're making a massive mistake. And in fact, the Federal Reserve has written a paper on this, how every single cycle investors make this mistake. You cannot lower the discount rate without lowering the growth rate.

Starting point is 00:11:29 When you lower both at the same time, it doesn't matter if you grow at 5% and discount at 5%, will grow at 10 and discount at 10. The valuation stays the same. I mean, it doesn't justify high equity valuations, although it does help explain it. Investors are desperate for returns. And so they've piled it out on the risk curve to push. Junk bond price is way too high. Equity price is way too high.

Starting point is 00:11:53 And it's just to sign a desperation on the part of investors. But it doesn't mean they're not making a great mistake in doing that. So let's talk more about valuations, GSC. You know, here with the fang stocks, I've heard a lot of different arguments in terms of how to assess valuations. Because typically we'd be talking about this kind of cash flows as you talk about, like how much money is flowing back to the owners. Now you hear other valuation metrics like the networking effect for something like Facebook or the top line growth for something like Amazon. How much should we pay attention to these new valuation metrics, also giving that these

Starting point is 00:12:34 fang stocks are impacting our lives in a way that perhaps you can argue we haven't seen before? Well, I mean, in every cycle, it's different in some respect. but the iron law valuation, you know, is never different, right? You know, literally, you know, my friend John Husband likes to say that any security, essentially that today's price is discounted future cash flows. And so, you know, for a company like Amazon, to justify today's valuation, they have to be able to turn on the profits eventually. And when I look at the valuation of Amazon specifically,

Starting point is 00:13:10 it's trading at its highest valuation in 10 years. And I just look at price to sales again. There really is no income. So you can't look at a price earnings ratio. You look at a price to sales ratio. And at the same time, growth has been cut in half or by two thirds over the last 10 years. So the growth rate is falling dramatically. And you can see this in Amazon trying to get into other industries.

Starting point is 00:13:34 The risk there is that Amazon now is drawing the interest of regulators in terms of of antitrust. I talked to my friend Peter Atwater about this and he says, you know, welcome to the backlash era. We're now seeing, you know, people around the world, this populist movie. People are tired of being taken advantage of. You're tired of being bullied. There's been a backlash towards politicians. There's been a very, very justified backlash towards sexual harassers. And that's not just a, you know, a trendy thing that's very, very justified. But I think we're also going to start seeing a backlash towards these companies that are taking advantage of, you know, Facebook and Google especially, but Amazon destroying the retail sector and destroying

Starting point is 00:14:19 its competition has so much power, so much monopoly power that it's drawing a lot of antitrust interest. And if they were to start saying, I'm sorry, you cannot get into pharmacy, better management. We will not let you enter these industries because you already have too much monopoly power, then the growth could decline dramatically. And then how do you justify, you know, a sky high valuation? Yes, a very interesting point you bring up about regulators because it seems at least so far not to be something that investors are too worried about. But obviously, if it will happen, if there will start to get regulated, this is something that we all need to consider in terms of our valuation. So where do you see this going in the future?

Starting point is 00:15:05 I think there's a very big difference to be made between the way investors feel about these companies and the way the general population feels about these companies. When you look at the way that politicians and the general population feels about these companies, USA Today did a poll. And more than half of respondents said these companies have too much power. And we're afraid of their, you know, more than half of those people said we're afraid of how they potentially use that power. And then now you have, you know, in Congress, there's a bipartisan effort. I think this is one of the things that could pass Congress very easily is new legislation to rein in the powers of these companies. Because it's not just liberals, you know, talking about this. You know, Steve Bannon came out and said that, you know, the Republican Party, at least kind of the Tea Party side of it, is going to make it their top priority to rein in these companies next year.

Starting point is 00:15:56 So you have both sides of the aisle saying, you know, it was really the Russian influence in the election. that helps people to wake up to these risks and to the unchecked power that these companies have. I think that was just a catalyst to understanding really, like I said, the power that they have. I recently just, I haven't published you yet, but I recently had a conversation with Roger McNamee, who was one of the first investors in Facebook. He convinced Mark Zuckerberg not to sell Facebook to Yahoo for a billion dollars. He also introduced Sheryl Sandberg to Mark Zuckerberg. Many guys have been instrumental in Facebook's evolution as a company. And 18 months ago, he went to them and said to Cheryl and to Mark said,

Starting point is 00:16:42 this platform has become extremely dangerous. And it's because there is no oversight. You guys will allow anybody to come in and pay any amount of money to use what he calls your brain hacking platform, hacking people's brains to get them to consume what you want them to consume, buy what you want them to buy, vote for who you want to. to vote for. And they both kind of have been rebuffing his efforts to get them to fix this. And now Congress is, you know, is realizing the dangers involved. You know, it was actually the chief Google ethicist who's now coming out and saying that this is a legitimate brain hacking.

Starting point is 00:17:19 We have used these psychological principles of gambling and persuasion in order to create a platform that manipulates human brains more effectively than anything in history. And so I think that as people wake up to this, these companies, they're going to be more highly regulated or they're going to have to find a way to take greater control of their platforms. 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.

Starting point is 00:18:02 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,

Starting point is 00:18:54 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?

Starting point is 00:19:29 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,

Starting point is 00:20:10 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, demystifying AI at netsuite.com slash study. The guide is free to you, at netsuite.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

Starting point is 00:20:47 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 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,

Starting point is 00:21:16 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.

Starting point is 00:21:51 Back to the show. You know, one of the things I think about whenever you're using social media is confirmation by, and how powerful and how reinforcing. It's like an echo chamber for people. You know, you like a couple things. Or you, let's say you're a liberal or you're a conservative. Pick whichever one you want. And you start liking things that are specific to that one thing.

Starting point is 00:22:12 Well, next thing you know, the only thing you're receiving in your news feed are those things. And so it has this positive, maybe negative reinforcement to that's the only thing you're seeing. And now that people are getting so much of their news through this stuff, it's just the ultimate confirmation bias mechanism. So you call it it brain hacking. I completely agree with you. And I think that most people aren't even aware of confirmation bias. And so how can you set up your feed so that you're not being susceptible to something like this? I mean, it is a major concern. I think it's something that I think a lot of people need to think about. You know, that's a great question. I think that social media, these companies, and I'm as guilty as anyone on Twitter. I love Twitter. I'm an addict.

Starting point is 00:22:54 I confess that it. But I think social media is just not the ideal platform to get most of your news from. I use it as my go-to source, but I also read a bunch of the major media outlets, which have to double-check their sources. They have, you know, all those types of things. So I read the Financial Times, Wall Street Journal, New York Times. I mean, I think you have to broaden. You just can't get all of your news from social media because it is so unreliable at times. I mean, you have one little preconceived notion and you start liking a few things. And now it's just, it goes off on like a total tangent. That's all you're thinking about. Yeah, absolutely. And they're not all legitimate sources either. I mean, there's a lot of different people with a lot of different interests out there trying to shape public opinion. So when we think about all this, this is from an investing standpoint. Positive, negative continues to exist for more years because it's not at a breaking point. You know, one of the things that I was looking at, Jesse, was when you look at each one of these

Starting point is 00:23:54 companies' top line, the top line's still growing. I mean, it's definitely not growing like it used to, like you'd pointed out, but it's still growing. And these things are definitely being traded off the top line and not the bottom line. So if we expect the top line to continue to grow and to continue to expand, should we expect the price to kind of go with it until that breaks? That's possible, but we might not know about the risk of the top line until well after fact, you know, it was interesting for me to talk to Roger because I said, you know, what are the biggest risks to this company? He goes, you know, investors in Facebook and Google should be praying for much tighter regulation right now. Because if Washington doesn't

Starting point is 00:24:35 regulate, because they're not going to regulate themselves because it hurts the top line too much, if they don't get regulated, then people are going to start revolting from these platforms. So they're going to start realizing I'm being manipulated and I don't like being manipulated. And I don't like being manipulated. And I don't like my data being sold to the highest bidder, and, you know, regardless of who that is, as investors, we should hope that they're going to get regulated, because that's going to make them better corporate citizens. You know, Scott Galloway, also makes a great point. In business school, one of the case studies they use is Johnson and Johnson and the Tylenol scare. And, you know, when Tylenol pills, you know, had killed a few

Starting point is 00:25:14 people. There was a huge scare about Tylenol. What did Johnson and Johnson do? They pulled every bottle off of every shelf on the planet. We are going to protect our customers at all costs, right? That is, you know, business school 101. When you have a crisis, you literally just shut it down. You do everything it takes to make it right. And what's scary, I think, for investors of these companies is Facebook's not doing that. Facebook is still allowing, you know, we're going to auction off brain hacking to the highest bidder. We're not going to change our business practices and nothing's changing. And so they're not taking that lesson to heart.

Starting point is 00:25:52 And so I think as an investor, that's a huge risk. People would have so much more faith in the platform with turning over their data and turning over their lives to Facebook and Google if they started showing those types of behaviors. Like, look, we put your interests first. We're going to make sure you are not manipulated, that you are not, you know, that would be a go a long, long way to giving people confidence and to still using the platforms. I look at all those things as rapidly growing risks to their underlying business models, really.

Starting point is 00:26:23 Okay, Jesse, so this is the last question I have about the fang stocks. And this is also the question I've been looking most forward to asking, because I kind of knew that there would be some kind of bashing. So let me ask this counter question. If you had to hold one of the fang stocks, for at least a decade. You couldn't sell it. You have to hold it for a decade. Which stock would it be? And why?

Starting point is 00:26:47 Yeah, that's tough. You know, so for me, I want to own stocks that I think are very cheap out of favor, classic value. My favorite way to think of it is the way Jim Rogers put it, which is I want to wait until I see $5 lying on the ground and all I have to do is pick it up. Like, it's that obvious. And I don't really see any of these stocks as being that $5 line on the ground right now.

Starting point is 00:27:08 but I think for me it would probably be between Apple and Alphabet. I think those two have legitimate moats to their business that are probably more proven than any of the others. And the valuation of Apple is obviously more reasonable than the others. Interesting that you should mention Apple. And reading through their financial statements, it seems to me that they are perhaps too reliant on the iPhone. Can't remember the exact number, but it's something like 70, 80% of the revenue that comes from iPhone. So as an investor, even though that this is the biggest market cap in the world,

Starting point is 00:27:50 quickly approaching a trillion dollars, should we be concerned that consumer preferences might simply change? I really do think that's a legitimate risk to Apple. I mean, the thing about all these companies is people don't remember a time before the iPhone. They don't remember a time before Facebook. But the history of technology is that, I mean, somebody had a great tweet recently. It was a cover of Forbes 10 years ago. Will anybody ever be able to chip away at Nokia's ownership of the cell phone market? And this was 10 years ago.

Starting point is 00:28:23 And, you know, so there's always a king of technology, but it changes, you know, it doesn't seem like it changes very rapidly. But it does. Every 10 years, it seems like there's a new king. And, you know, for me, I am an Apple fan, totally sucked. into the ecosystem. I was just looking at Google Trends. You look for searches for feature phone. What's a feature phone?

Starting point is 00:28:47 Does talk, text, and music? That's it. And feature phones, I think, could be the next big thing in mobile devices because people need to be able to get away from the social media, get away from the notifications. There's so many more studies coming out that these things make us depressed. The more time, the more notifications pop up on your cell phone, the more frustrated and angsts.

Starting point is 00:29:08 is built up inside of you and social media does the same thing. And so, you know, people want breaks from these things. And so I think that is maybe a risk to Apple. I don't know. I mean, they have such a wonderful ecosystem and they do have a strong mode that will protect their business. So always be fans of the iPhone. But for me, I think there are risks.

Starting point is 00:29:29 Wow, that's a great story. I'm glad you shared that. All right. So, Jesse, let's transition into talking a little bit about something you were hitting on earlier, which was inflation and growth. intrinsic values when you're doing discount models because I think that this is something that a lot of people are wanting to hear more from you on. So what would you say as you're looking at this moving forward into the next 10 years? What are you looking at for a growth rate? Like what do you think is

Starting point is 00:29:54 reasonable? Gosh, you know, again, my friend John Hussman has done some really interesting work here. And it really depends on where you are in the cycle. When you have 4% unemployment, there's just not a lot a potential left in the economy to create a ton of new jobs. And that's a lot of the times where growth comes from. You look at periods of really good growth and you start with a high unemployment rate and then, you know, the jobs take care of the rest. You guys had Eric Sinamon on the podcast recently and Eric has been writing about, you know, inflationary and pressures building, you know, here in the United States, at least, you know, for me, it's more interesting from his bottom up perspective, you know, he's tracking and listen, I don't know how he does it all 300 conference calls

Starting point is 00:30:40 a quarter, you know, and when he does all that, he's hearing like, you know, wage inflation becoming a big problem for these companies, 4% unemployment. It makes a lot of sense. The only time, you know, real interest rates were held this low for this long was during the mid to late 60s. And what was the experience after that? Was inflation just took off. And, you know, I think there's a lot of pent up inflation, wage pressures building and things. And, you know, we still have a Fed funds rate at, you know, 1% and change. I think it's very possible the Fed is far behind the curve. Wage inflation is going to take up. There was a great stat today that I tweeted, Japanese beer brewers just raised prices for the first time in 10 years. We're starting to see

Starting point is 00:31:28 wage pressures in Japan, you know, the epicenter of deflation. And so if deflation, is potentially ending in Japan. We're starting to see wage inflation there. This is a global phenomenon. And if we start to see inflation around the world, all of these central banks are going to find themselves so far behind the curve and have to raise interest rates rapidly to try and play catch up. So it's a very interesting time.

Starting point is 00:31:55 I mean, so when we talk about what does that mean for people that are listening to this and they hear, you know, let's say that that is a true statement and that happens. What happens if they have to start raising interest rates quickly like that? Well, the first thing I think about is if you justify high valuations with low interest rates, your premise is immediately evaporated by higher. I don't think that means much in the minds of a lot of bulls today. But when you look at, you know, junk bond yields in Europe at, you know, less than 3%, you know, companies have been able to borrow it incredibly low interest rates.

Starting point is 00:32:31 you have, you know, junk bond yields here in the United States at 5%. These low interest rates have enabled a whole army of zombie companies to stay alive. And that's, you know, kind of prolonged the cycle and prevented a real washout of businesses. If you have been financing your business at, you know, three, four, five percent for the last 10 years, and all of a sudden you've got to refinance at 6, 7, 8 percent. Those zombie companies are toast. And you're going to have a new credit cycle. where defaults start rising at a corporate level and then spreads start widening.

Starting point is 00:33:08 And that's not good for risk assets of any sort, including equities. Yeah, I mean, this has been the stories for so long that we've been talking about is, you know, how much longer can the Fed do this? Now, something that I find really quite interesting is when you go back and you look at the balance sheet of the Bank of England, the ECB, the U.S., and, Japan. And when you look at the balance sheet and you look at the QE that's been conducted, and you look at the time whenever the U.S. stopped doing its QE and then the ECB picked up, and you look at that transition point, we had a big correction in the markets here in the U.S.

Starting point is 00:33:46 back in 2015. You go back, I think it was in 13, 2013, was it? 2012, I can't remember. You saw another similar event where basically the quantitative easing was swapped and you saw a big correction in the market. And this is when the ECB just started doing some QE. Right now, you turn on the news and you see guys like Ray Dalio that are saying, hey, the central bankers are done. They're going to start pulling this back come 2018. They're not going to be doing the QE like they've been doing in the past. And I'm really curious to see how that plays out. And whether that's even a true statement, that's what Ray is saying. The Fed has obviously stopped, but the ECB still has it turned on full throttle. So are you hearing anything different? Are you seeing that the ECB,

Starting point is 00:34:28 is going to start pulling back on some of their quantitative easing efforts. Is that going to be something that we see a major transition in 2018? I think they're going to have to. I think, you know, they're running out of bonds to buy. You know, they're starting the Japanese own a ton of, you know, a huge percent, but more than 50 percent of their own bond market. And, you know, ECB is running up against their constraints of the bonds that they're allowed to buy.

Starting point is 00:34:51 And so they're going to have to start tapering. But it's also, you know, the inflationary phenomenon. And this is very, very interesting to me because I talked to Kirozoklov about this recently. And William White, who was chief economist at the BIS, we talked about this same topic. That, you know, it turns out quantitative easing was actually deflationary, right? Because it allowed for a massive amount of debt creation. When you pile up all this debt, it reduces the amount companies can spend or consumers can spend. So it actually slows things down and it's a deflationary impact.

Starting point is 00:35:25 And I think that's what we've learned during this cycle. So that when you reverse QE, that's potentially an inflationary impact. And so I think that's something that a lot of people aren't thinking about. That if QE was deflationary, undoing QE or tapering QE by all these central banks could potentially be inflationary, then what do they do? Then they have to, you know, obviously raise interest rates rapidly to play catch up. All right. So say that we don't want to be invested in stocks or in bonds,

Starting point is 00:35:53 whether or not we believe it's because the interest rate is going up, we just don't see any kind of yield. So basically, we just want to hold cash. Now, how do we hold cash? Should that just be in US dollar? Or should we divide that up into, call it USD, yen, euro, perhaps pounds as well, even though that some of these currencies starts to look more vulnerable than they have in the past, what do you thoughts on that, Jesse? That is a great question. And I am, you know, bearish on the dollar. I think we started a new bear market for the dollar. And, you know, to me it's very simple. Look at the way the federal deficit is going. And this is potentially the first time in modern history where the federal deficit is widening during an economic expansion.

Starting point is 00:36:44 That's potentially a big problem. That's saying, you know, this entitlement spending and stuff, every economic expansion we've had, you know, tax revenues grow and things are great. for the federal government, that's not happening right now. So that's actually really worrisome. And, you know, the federal deficit is only going to widen. And if you look at a chart of the dollar and the deficit, it's very highly correlated, right? The better the U.S. federal government's finances are, the better the dollar does. You know, the worst, the deficit widens, the worse the dollar does. And then you also look at, you know, the Japanese yen is very, very cheap relative to the dollar. You look at things like purchasing power parity or the big Mac index,

Starting point is 00:37:25 you know, and the yen is very cheap. And so if Japan is going to see an end to their deflationary scenario and the central bank's going to have to start to tighten, the yen is going to do very, very well against the dollar. I think the euro probably will do well against the dollar. You just look at, you know, relative central bank policy, the Fed has been tightening for years now, really and the ECB has been loosening for the last few years when that changes you know and the ECB has to start tightening and the Fed goes oh no we've maybe started a new recession that has to start easing again the dollar's just going to tank against the euro against the yen but honestly you know I think you mentioned Ray Dolly earlier Ray said everybody should have at least five percent of their

Starting point is 00:38:08 portfolio in gold and you know when the dollar does poorly gold does well and so if you're bearish on the dollar or say you have to be bullish on gold. And so financial assets are extremely expensive. We have bonds and stocks. I can't remember which, which brokerage room came out recently. Research House came out and showed that since 1900, the combination of stocks and bonds has never been this highly valued in history. So they're both extremely expensive. So financial assets are something that, you know, there's a lot of risk there. I think real assets are something you're going to want to own over the next 10 years. And so that to me is real estate commodities, gold potentially tips, Treasury inflation protected securities. My favorites that are real estate and gold,

Starting point is 00:38:55 I think those two probably in an inflationary environment do the best. So, I mean, a lot of these things tie in together, right? If the dollar goes down, that creates inflation. And so it's really kind of a holistic view over the next 10 years that I think real assets will do better and gold will probably do well because the dollar goes down the next few years. If interest rates are going up, wouldn't that be a concern for real estate, though, because the prices are going to go down? It could. When you think of residential real estate, but when you look at investable real estate,

Starting point is 00:39:25 it's mostly commercial. And the nice thing about commercial is when there's inflation, they can raise rents. And so, yes, real estate prices are very, very high. I agree with you. So maybe that's not the best area, but they do have pricing power in an inflationary environment. So the next question obviously becomes because this is the hottest thing that everyone's talking about. And you are smiling because you know where this is going. What are your thoughts on that thing? Yeah. Bitcoin is a classic mania. It's a classic mania. And I think it's just so

Starting point is 00:40:02 fascinating to watch it play out in real time. And I've done a lot of research on it. And I understand And every time I say this, you don't understand what Bitcoin is. I understand what Bitcoin is. And I was talking with a friend of mine today who is a reporter for Quartz because he was asking me about this. And I think Bitcoin is a technology. Blockchain is a new technology. And the blockchain possibly has a lot of potential value.

Starting point is 00:40:27 But if there's any lesson from technology, it's whatever is great today, somebody's going to come up with a better version of it tomorrow. And so, I mean, that's the simplest thing I think about in terms of Bitcoin. Somebody could create a better Bitcoin tomorrow. Central banks are talking about creating their own Fed coin and these types of things. But fundamentally, the argument for owning Bitcoin is there can only be 21 million coins created and this is limited quantity. But there is no limit to the number of digital currencies or cryptocurrencies that can be created.

Starting point is 00:41:00 And so I don't understand at all why Bitcoin should have any value over something very, very minimal because the higher the value, the harder it is to become a medium of exchange. The Wall Street Journal wrote about this last week that a lot of companies are trying to use it and accept Bitcoin, but people don't want to spend it so long as they think the price is going up. So it actually works against itself, the volatility. And there's another point to be made, too, that my friend Fred Hickey made in his latest newsletter, which is now the IRS considers every purchase to be made with Bitcoin,

Starting point is 00:41:35 a sale that has to be, you know, we have to pay cash. capital gains tax. You don't have to do that on your dollars. Yeah, I think that's a big concern. Yeah, a lot of these companies are saying, okay, we can't accept Bitcoin anymore because we don't want to be responsible for reporting to the IRS. And so there's so many issues with it and so many problems. It's modern day tulip mania in my mind. 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.

Starting point is 00:42:19 So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like RANTA, Ramp and Ryder spend 82% less time on audits with Vantta. 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.

Starting point is 00:42:55 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&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform,

Starting point is 00:43:26 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.

Starting point is 00:43:57 Visit Plus500.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.

Starting point is 00:44:22 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% percent. 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,

Starting point is 00:45:08 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. See, I'm a fan of it. I really am, but I think that there's, I have some concerns, obviously, and I think

Starting point is 00:45:26 that there's concerns of it going into the mainstream adoption. I think that's a lot of risk, a whole lot of risk if you're going down this path. And I think the point that you just made, I think, is a huge point with it being treated as if it's a security. Because companies are not going to want to accept this if it's being treated as a security for all those reasons. I think the other concern is really from the government side of it. How is the government going to play with this as it continues to mature? The part that you had mentioned there, Jesse, about people not wanting to spend it because the value is going up. I think that that has a potential to even compound the interest into it even more.

Starting point is 00:46:04 And I think that it has a potential to drive a network effect, maybe even a bull case for it based on that. But, man, there's a lot of smart people in this space. There's a lot of coins trying to beat Bitcoin. So, like, even though you own Bitcoin today, there's a lot of ones that are very high in market cap that are trying to rise up in there. And, man, I think if you're in this space, it has a potential huge upside. if it actually does become some type of world currency? Yeah, I think it's an interesting, my friend Stephen Bregman, Horizon Kinetics, I mean, brilliant, brilliant thinkers there.

Starting point is 00:46:37 Some of my favorite guys to talk to and read their thoughts, they've been in Bitcoin for a long time. They're very early in it. And the way they look at it, I think, makes the most sense that if you look at it as a lottery ticket, as that if it does take over a portion of the global transaction, you know, market, then it's worth a ton of money. But I think, you know, for people to put any more than, you know, one, two percent of the portfolio and it is taking out way too much risk.

Starting point is 00:47:06 And what you're seeing today, you know, are the classic mania signs of people selling their homes and putting all of the money into Bitcoin. You know, Neil Kashkari, the president of the Federal Reserve Bank of Minnesota, said somebody stopped, and he tweeted this. Somebody stopped him in line at LAX when he's trying to get on a plane and said, what do you do for little? Oh, I'm the president of the Federal Reserve Bank of Minnesota. And said, well, I just hold out $35,000 of my home equity to put it in Bitcoin. What do you think? You know, it's like those types of decisions are classic signs of a mania. Yeah. And so people,

Starting point is 00:47:41 most people are not looking at it like Steve Bregman and Horizon Kinetics are looking at it. That's exactly what Stig and I have been saying on the show is, you know, it's almost like a venture capital play. You know, if you're in this, you're kind of looking at it as like the odds of this turning up are probably 20%, 10%, but the upside is absolutely astronomical. It's huge. And so like if you're throwing more than five, we were saying 5%. If you're taking more than 5% of your net income, and it really depends on the person. Like, you know, 5% for Jesse might be different than 5% for Preston, which is different than 5% for Stig because it's really about, you know, if you lose all that, is that going to impact your life? That is actually a great point. And that's what I tell people about trading, about anything, you know, is create yourself a nice diversified portfolio, stocks, bonds, and real assets, which I think most people overlook. And it can be a third, a third to be very, very simple. And then if you want to speculate in the stock market, you want to learn how to trade,

Starting point is 00:48:42 you want to speculate in Bitcoin, take as much money as you're willing to lose. And I'm talking about, you know, in trading stocks, you know, don't put more money in. into that, then you're willing to lose because even just in learning how to trade stocks, if you read Market Wizards, one of my favorite books, these are the most brilliant minds in the business. And almost every single one of these guys has gone, you know, completely wiped out their trading account as they're learning how to be good traders. They're learning how to be good investors. A lot of times more than once, you know, two, three times, they wipe out their trading accounts. But they look at it like, and I love this term, tuition at the school of

Starting point is 00:49:20 trading. You know, it's okay to lose money as long as you learn something from it. And so I think most people put the money in Bitcoin, but don't put more than you're willing to lose. So, but look at it that way. And I think that's something that also Paul Tudor Jones, you know, preaches is think about your risk first. Don't think about how much money I could make. Think about, you know, the risk first. Absolutely. That's some sound advice right there. I was just going to say, I don't know how environmentalists are not already completely up in arms about the whole Bitcoin thing. You know, Bitcoin just by itself, excluding the other cryptocurrencies, the blockchain behind is already using more energy than Nigeria. And if it does

Starting point is 00:50:02 get bigger, the estimates are it could use more energy than Japan. And so, you know, for me, the energy usage too is also, that's just massive and costly. And I don't understand how you could be an environmentalist and a Bitcoin investor at the same time, because they are mutually exclusive at this point. Great point, Jesse. So I would like to bring up the concept of trust here because whenever we're talking about money in the conventional sense, it doesn't really have any type of utility. The only reason why it's worth something is because we agree it's worth something. You trust the system. You trust that you can actually get milk or whatever you're trying to buy for your dollars. So how does trust play into this discharges?

Starting point is 00:50:50 about the validity of Bitcoin, in your opinion? That is a really good question also. And I think Bitcoin has yet to be really tested in terms of trust. I worry about the platforms we saw the other day when there's some higher volatility that Coinbase went down, you know, so you couldn't be traded as the biggest trading platform for it. There was an accident where a bunch of Bitcoins were wiped out because somebody hacked a platform by accident.

Starting point is 00:51:18 And, you know, for me, I just come back to, you know, gold has been money for 5,000 years. And no matter what, you can take a gold coin and somebody will trade you something for it because it's been an accepted in society for a very, very long period of time. And every time, every single time throughout history, when money has been debased to a great extent, people have fled to gold. And that's just a historical fact. And so I think if you're looking for something that has a historical basis in protecting you against money creation, protecting you against those types of things, gold is really the answer. Bitcoin is very interesting to me, and I really do sympathize with the underlying story of it. The lack of faith in central banks who've

Starting point is 00:52:09 created these bubbles and printed a ton of money. It's something that I've written about for a long, long period of time. So I do sympathize with it. But I just think there are too many problems in the fundamental case for owning it, too many inconsistencies. It's hard to really put much more faith in it than looking at it as an option or as a lottery ticket, like I said.

Starting point is 00:52:35 Yeah, I would have to agree with you on the fact that there's no incentive. if anything, they're incentivized to manipulate their monetary baseline to manufacture growth. And so for me, it's really exciting to know that there's technology that's out there that could potentially fix that or to peg that on a global level. And that's where I know Stig is also very excited about the technology that it could potentially do that, but it's just a matter of what is this going to actually look like as it shakes out? Because there's so many unknowns. There's so much risk.

Starting point is 00:53:08 I mean, you don't even have to start going into. all the risks to know that there's a lot of risk in this. And I think that anybody that's going into this space has to come into with their eyes wide open to know and not just to buy into the narrative like, this is going to replace everything. And they have to really do the due diligence and a lot of hard work to try to understand all those different variables if they're in the space. Absolutely. And, you know, I think when you think about how do you reign in the central banks, there's a reason why there was a gold standard to begin with. So that central bankers couldn't print money because it had to be backed by gold.

Starting point is 00:53:43 And when central banks after World War II, one by one went off the gold standard, you know, that was the beginning of all these problems. Now, I'm not an expert on this, but, you know, Neil Howe's book and his thesis, the fourth turning, you know, brings up some very, very interesting points about where we are in this cycle. And, you know, I really do think at some point, if the monetary policy gets so out of control, and we do start saying hyperinflation potentially in some governments that these central banks will be reigned in. And they will have to be forced to, you know, just like Germany did, you know, go back to a currency that's backed by something.

Starting point is 00:54:22 It's a lot of, you know, speculation. But when you look at the trajectory of the U.S. federal spend, you have $100 trillion of unversely enough. funded liabilities. How much will is there at Congress to reduce Medicare, to reduce Social Security, and do these things? You vote for that, and you're going to get voted right out of office. And so there's a lot of people who have hypothesized that, you know, those things will never be reformed. And the only way they're going to get paid for is by printing a ton of money. And so, yes, I do understand. And it makes a lot of sense when I own something like Bitcoin, on something like gold that protect them against that scenario.

Starting point is 00:55:01 Hopefully, you know, someday we're going to hit some type of a crisis that forces people to rethink these central bank policies and to rein them in and take away the powers that they have abused. Very interesting discussion. All right, Jesse, such an honor to have you back on the show. We always have so much fun when you come on. If people want to learn more about you, where can they look you up? I try and write on a regular basis at the Felder Report. I put a blog post there.

Starting point is 00:55:31 I'm really active on Twitter. I do a ton of reading and research and I tweet most of the stuff. Just at Jesse Felder and follow me on Twitter. And like I said, I put up most of the stuff that I read that I find interesting, I'll tweet it out. Awesome. Thank you so much, Jesse, for coming on the podcast. All right. So this is the point in the show where we play a question from the audience.

Starting point is 00:55:52 And this question comes from Amit. Hi, Preston and Stig. My name is Zammett. I'm from New Zealand. Thanks so much for putting together the great show, and my wife and I are really big fans. My question is, what do you think will happen with the Bitcoin price if the CME offers Bitcoin futures?

Starting point is 00:56:10 Thanks, and keep up the great work. All right, so Amit kind of cheating here by answering this one, because the futures started this past Monday, actually Sunday night. So it's been active for a couple days now. We're recording this on a Wednesday, so it's been about three days since the futures went active. And what we actually saw was the price spiked up and it's plateaued and now it's coming off a little bit. But I think it's still really early to have kind of any idea what kind of impact this is going to have into the long term. Before the futures opened up, I was talking with Pierre Rochard about this and I told him that, you know, for me it was a 50-50 split as to whether this was going to make the price pop.

Starting point is 00:56:53 make the price go down. I think a lot of people on Wall Street, my personal opinion, having friends on Wall Street, are very skeptical with crypto and Bitcoin in general. So I think a lot of them are anxious to short Bitcoin and to sell it short. But I think that a lot of them aren't stupid either, and they've seen the price go wild for the last year. And I think a lot of people are hesitant to step in front of that freight train. So I think what you might see with this is if you do see the price start to pull back, which I think is a very real point. possibility at this point because the price movement has been just going wild. And I mean, on a, on a tear. And so I think if Wall Street does see this start to pull back and start getting a little

Starting point is 00:57:34 momentum in a pullback, I think you could see the futures market really heavily compound on that and really cause a pretty abrupt pullback, you know, maybe even down like $5,000 or something like that. But there's no way of really knowing. I mean, that's the thing with futures. I'm curious to hear what Stig thinks. For some of the listeners that might be, yeah, like we heard, futures, but what is it really? So I think before we talk about Bitcoin, perhaps the easiest way to think about a future is to think about a typical commodity. It could be something like oil. So if I'm an oil producer and I plan to produce 10 barrels of oil and six months time, I can log in that price already. So it's actually a very convenient mechanism for a lot of producers

Starting point is 00:58:22 in terms of budgeting and scheduling, knowing that you have that price. And obviously, the price could go up. And obviously, you'll be paying an opportunity cost for the price going up, but you can also make the counter argument. So it's basically a question about certainty. So what's going on with Bitcoin futures? Well, one thing I would like to add here is that a Bitcoin future is settling cash. So it's not like you actually see when you buy a future with physical delivery for someone

Starting point is 00:58:52 like oil, you actually own that oil. That's not the case. So it's all settled in cash. And basically, what that means, just to give you an example, is that if you buy one Bitcoin contract, and a contract is composed of five Bitcoins. So right now, here's the middle of December, you know, the price is around $16,000. So it will be around $80,000 for one contract. You would have what's called a tech. it's basically just a fancy way of talking about the minimum fluctuation. That would be $5 per Bitcoin. So if you have a tick up, there will be $25. So that means that if you are having the long position of that contract, you'll be gaining $25 and then your counterpart who will be losing $25. Probably doesn't come as surprise that most people are bull. If I look at the future with

Starting point is 00:59:42 expiration date in March, middle of March 18, it's trading up 17,000. 280 right now. It's very interesting to see what happens when the money is in the hands of the bull, if you see a transfer of wealth, if that actually materializes, or as Preston talked about, if you see the opposite, perhaps. I do want to point out again that, you know, this is not like an ETF. It's not like an ETF where you will buy that ETF in the S&P 500, and then they will actually go into the market and then buy those 500 securities in the S&P 500. That's not how it works. This is all cash-based. It's kind of like a separate market. You can now pour a lot more money into the market, but it's not like you would necessarily hold Bitcoin, which would clearly

Starting point is 01:00:34 move the market a lot more. For the new futures that you see, I expect almost all of them, if not all of them, to be cash-based, but I would definitely pay a lot of attention if it's not. The thing that I guess that I find interesting with the future side is if the derivatives are now stood up, that now opens the door to ETFs, which then adds more and more credibility to all of this. And I think that for the U.S. to step in and the government to step in and shut down exchanges, I think that that becomes so much harder, the more reinforced all of this becomes with derivatives and ETF-type products later on. I'm kind of curious to hear what you think about that, Stig. I thought a lot about that, Preston, because you're starting to see a lot of regulation. And regulation is something that we typically look at as that is bad, at least for the price of whatever. Like, if this is a stock and there's, there's a lot of red tape, you know, it might limit the growth that company and whatnot.

Starting point is 01:01:38 You know, whenever it comes to something like Bitcoin, I actually see it primarily as a good thing. And if you look at the first regulation that you had about Bitcoin, that was in Japan in 2014 after the exchange Magogs was hacked, the most welcoming country in the world for Bitcoin. That's Japan. It's probably because they're not more getting used to it. And also, if you regulated, you legalized it. You accepted in one shape of form. And I think that's very important.

Starting point is 01:02:09 So if you set up futures and perhaps even that linked directly to an exchange. You need to build a system around it. You need to have something that's public that's going in and handling it. And that just provides a lot of legitimacy to a lot of investors, not just private investors, but also institutional investors. So what would happen if we see an entire ban? I mean, because that's definitely a different concern. It's actually very interesting now currently being in Korea. And one of the reasons why the Korea is one of the biggest in the world. And we've seen all this volatility lately in this market specifically is because China, you know, regulated and said you closed down exchanges a few months ago. And basically,

Starting point is 01:02:55 that doesn't mean that people stop buying Bitcoin. It just means that they're going to Korea and Japan. I'm not trying to sell the story that you can't just ban it. It's just with something like Bitcoin, it's just a lot more difficult than for so many other things. You know, like that's impossible. That's impossible to ban it globally. even if you get the, you know, the biggest countries in the world and they all ban it together, kind of like the sequencing that you've been seeing with the ECB, the Fed, and the Bank of Japan recently with the way they've been doing monetary policy. I mean, it's totally sequenced. They could maybe come together and say, hey, we got to shut this down because this is getting

Starting point is 01:03:32 crazy. But at the end of the day, you still have small countries all around the world that would not ban it and it would be allowed. Now, I think that that would be, the price would get punished in the short term, but Bitcoin continues to march along. The protocol continues to operate. I guess for me, I'm looking at it more from like, what happens when this thing hits a market cap of $5 trillion? Does the Fed start interjecting with elected officials to start saying, hey, this thing's evil, and they start spinning it from a political and media standpoint to try to really manipulate the markets and then try to shut down the exchanges? I think all of that is a real possibility. But I think that it's a much harder possibility the longer they wait and the more

Starting point is 01:04:16 that the finance industry wraps itself around all of this, which is what we're seeing right now. I mean, that's my opinion. I'd be, I would love to hear somebody say something, you know, a good strong counter argument to that because I mean, for me, it's a huge risk and it's something that I really want to fully understand. I just haven't really met anyone that I think can really make a strong argument around why that's going to happen. I hear a lot of people say that that's going to happen, but then they have no substance behind the opinion. You know, like there's no substance on why or how they're going to do that after so much is kind of, you know, I don't know. Shoot us some good articles. If people are listening to this and you've got

Starting point is 01:04:52 good articles, please send them our way because we're really curious about that risk. And I think it's a big risk and it's a concern, but I just, I don't have any substance behind it. So we'd like to hear that. So admit, we love these kind of questions. This is really fun for us. It's very speculative. But I think it's an interesting topic for everyone to be aware of. of for submitting your question, go into AskTheInvesters.com and recording your question there. We're going to give you a free course on our TIP Academy website. Some of the courses on there are paid. We're going to give you our intrinsic value course.

Starting point is 01:05:23 Stig and I had prepared. It's 18 lessons long and we're really excited to be able to give this to you. And thank you so much for being a part of our community and asking such an awesome question there, Imit. Guys, that was all that Preston and I had for this week's episode of The Investors podcast. We see each other again next week. Thanks for listening to TIP. To access the show notes, courses or forums, go to The Investorspodcast.com. To get your questions played on the show, go to Asktheinvestors.com and win a free subscription

Starting point is 01:05:52 to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP network. Written permission must be granted before syndication or rebroadcasting. I'm

We Study Billionaires - The Investor’s Podcast Network - TIP169: Jesse Felder - FANG Stocks, Crypto, Central Banks, Inflation (Investing Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.