We Study Billionaires - The Investor’s Podcast Network - TIP373: Resilient Investing w/ Anthony Scaramucci

Starting point is 00:00:00 You're listening to TIP. On today's episode, I sit down with Anthony Scaramucci to discuss the future of the finance industry. Anthony is the founder of investment firm Skybridge Capital, which currently manages around $8 billion and was one of the earliest in developing an institutional Bitcoin fund. Some may know Anthony from his brief stint as White House Communications Director under Trump or his salt conferences. He's also the author of four books. Today we discuss the hedge fund industry and how it's evolving, how we as invests,

Starting point is 00:00:30 investors should position ourselves now that Anthony believes the traditional 6040 stock bond portfolio is dead, how the language and the latest infrastructure bill might impact Bitcoin and how institutions are viewing the asset. Anthony is a colorful character and we cover a lot in this very entertaining conversation. So, sit back and enjoy this discussion with Anthony Scaramucci. 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. Welcome to the Investors podcast. I'm your host, Trey Lockerbie. And like I said in the introduction, I'm here today with Anthony Scaramucci. Anthony, welcome to the show.

Starting point is 00:01:23 Great to be here, Trey. Thanks for having me on. I'm really excited to have you on today. And you have such an interesting career, a lot of which has transpired in the limelight of sorts, you know, in the public eye. And we want to touch on that, but I want to start with the idea. We're already establishing that you're a nice person, right? Because you could have said, mooch, you're like mayhem from Allstate. You crash through the window, you roll on the floor, but somehow you still managed to get up. You could have started like that.

Starting point is 00:01:50 It sort of made me feel warm and it was building my self-esteem. I mean, if there's one thing to learn from the mooch, it's resiliency. You have had an incredible career of high achievement and gone through a lot. I want to touch on that. But I want to start with this idea of nature versus nurture because you come from fairly humble beginnings. Where did this drive come from for you early on? First of all, it was very flattering. Thank you. So the kids in my neighbor was as smart as anybody else. If their dad was putting in sheet rock or the dad was a plumber or like my dad

Starting point is 00:02:24 was a crane operator, didn't mean the kids were stupid or the family was stupid. It had to do with limitations of society where you're born, the hustle of trying to make your ends meet. In my dad's case, I would probably say his mistake that he made is when he got out of the army, rather than accept the GI Bill, because he already had a kid, he felt pressure to go right to work. He may have been better. I don't know if you ever played the game of life where you spin the wheel. You can make a choice to go to college. It takes longer.

Starting point is 00:02:55 You make more money. Or you can go directly to work. You make less money. But it doesn't mean people are necessarily dumber. I used to tell people in my law school class, kids in my neighbor, who was as smart as you, and in some cases probably smarter, but they didn't have the guidance. So when you talk about nature versus nurture, my mother is a lefty. She's 84.

Starting point is 00:03:18 She got trained by nuns and her mother to write right-handed, because if you were a lefty back in the day and you were Catholic and you grew up in the superstitious Italian family, they were teaching you how to write right-handed. But my mom, she can do the math in her head. When she reads something, she never forgets it. And so I guess what I'm saying is that there's a lot of stereotypes that we need to scrape away in our society. There are so many people out there that are incredibly smart and gifted, but just for a couple of breaks, a couple opportunities and some diligence, and to your point, persistence. When you're getting beaten up or destroyed, you've got to get up and move. You can't sit there and have any feelings of self-victimization or self-pity.

Starting point is 00:04:04 So for me, my parents said, you're going to go to college. I thought I was going to go to the local college. My father came home from work one day. He turned to my older brother, me, he said, you're going to Tufts. And then he said, it's spelled T-O-U-G-H-S. So my brother was like, okay, and he looked up in the Barron's phone, you know, the directory of colleges. He opened up the book. And he said, Dad, it's spelled T-U-F-T-S. I think it's somebody's last name. And by the way, it's most selective. We're not going there.

Starting point is 00:04:32 Okay, I don't know what you're talking about. But my dad was weighing trucks as a dispatcher at the time. He started as a crane operator. He was weighing trucks. And there was a guy named Billy Tomaso, who's now deceased. May his soul rest in peace. But he told my father they went to Tufts and that he would get me and my brother an interview there.

Starting point is 00:04:49 And he would help us get in there. And so what my father also didn't understand at the time is that it was $24,000 a year. It's probably $70 or 80 today. But back then, it was a private school, still is, and it was very expensive. So my brother went. I followed him there, and we were hustling there. You know, we were delivering pizzas, selling T-shirt. I was working in the economics department as a research assistant while I was going to school

Starting point is 00:05:15 because I didn't really have the money. And then my dad got me a union job, which is why I have tinnitus, by the way, because this is a mess everybody out there with your earpods, okay? Lower the volume, because you're going to end up with a union job. tonight is you're not going to like that tonight is when you get to my age, but I was working on a construction site without the hearing protection every summer to get myself through school. I'm probably being too long-winded, but I think there's three things I would say. Number one, nature versus nurture. There's a lot of people that are very smart, but they don't have the

Starting point is 00:05:46 nurturing trajectory. Number two, if you're getting your ass kick somewhere in your life, shut up, don't be a victim, get up and get going. And number three, take joy. in wherever you are. You can't live like some of these people live. I mean, I'm surrounded by like some miserable millionaires. You're studying billionaires, but I tell you, I got friends of mine worth $100 million. They're upset that they're not worth $2 billion. Are you out of your mind? The fact that you're living on planet Earth with that kind of money in our society, with this level of freedom and opportunity, you should be very happy. So you have to always have a good perspective. Well, that's what I admire about you because obviously you're highly educated.

Starting point is 00:06:28 But you seem to have this sort of school of hard knocks, for lack of a better term, this almost like common sense approach to most things, most topics. It's like you've jumped party lines a couple of times, you've changed careers, going from law school to finance industry. Are you sort of like a strong opinions loosely held kind of guy? And if so, where did that come from? Yeah, look, I probably am that. But I mean, I never really got myself heavily invested in any specific political party or

Starting point is 00:06:57 I would be somebody. I used to tell people it's not really about left or right. It's sort of about right or wrong. You know, my oldest son just graduated from Stanford Business School. He's probably your age. And it's like, Dad, you're killing me because you were with Trump and the Democrats hated your guts. And now you left Trump. So now the Republicans hate your guts. And the Democrats will never accept you because you were with Trump. You're killing my networking opportunities. This kid said to me, you know, I'm like, all right. Well, maybe I'm getting closer to the truth. There's elements of what Trump was saying that people do need to listen to. They will hate me for saying that, but they do.

Starting point is 00:07:33 And there's obviously elements of what he was saying that was absolutely borderline criminal and traitorous. But there's a struggle going on in the society today. The family I grew up in that you've referenced was an aspirational blue-collar family. My dad was making enough money where, Trey, I didn't grow up poor. I grew up decidedly in the middle class. I would never dishonor my pops by telling you I grew up poor, did not grow up. We had plenty of macaroni. We had air conditioning. We just put the air conditioners in the windows on Memorial Day. We had to take them out of the windows on Labor Day. That was my father's orders.

Starting point is 00:08:07 We cut and landscaped our own lawn and we shared a bicycle. I shared a room with my brother, but we were not poor by any means. And that very same family today, though, would be poor. Because my dad's job, if it was still available, then probably eliminated by the forces of automation, globalization, and the way we do things differently 40 years later. But that very same job, if available, would be down about 26, 27 percent in real wages. And so he would be on the poverty line or close to it. He would probably need an EBT card to help out his family. And so you can hate Trump, but let me tell you, those families that were aspirational blue-collar families that have transformed into economically desperational ones over 40 years,

Starting point is 00:08:54 That's something that elites should wake up to. That's something our public servants should wake up to. We have to fix that. Otherwise, there'll be more anxiety, more anger, more angst that wicked politicians will take advantage of. Well, touching on going from law school into finance, that decision, I'm sure, you didn't take lightly. And it's kind of reminding me of Joel Greenblatt in his story.

Starting point is 00:09:16 He was recently on our show. And you even similarly have a book called The Little Book of Hedge Fund. He's obviously got the little book that beats the market. I'm just curious if there's a relationship there and more importantly, how you might compare your investing style with someone like Joel. Well, first of all, I love Joel. He lives in my hometown. He lives on the water in my hometown.

Starting point is 00:09:36 He's a brilliant investor. And his book started the Little Book series. And so John Wiley asked Joel to write the book, the little book, I think on value investing, I think it's called. It's a brilliant book. I think it's in five or six different editions now. and a result of which it sparked the little book series. So I'm very proud to be a part of that series,

Starting point is 00:09:58 but Joel is the patriarch of that series and the bestseller in that series. But I would say that similar to Joel, although I probably made a step further along what people call GARP investing, which is growth at a reasonable price to growth investing. And that's not to say growth at any price, but just understanding macroeconomic trends and growth, or stocks that sort of track the arc of Medcaf's law. Robert Medcalf about 40 years ago, 1981 said,

Starting point is 00:10:31 you can measure intrinsically the value of something if it has exponential growth. It could be a phone system. It could be a network switching capability where you're selling network switches like Cisco did. It could be a retail network like Amazon. It could be information and search network. network like Google and that you may not actually see it in the earnings or the operating statement,

Starting point is 00:10:57 but you will eventually see it if you've got the growth trajectory right. Of course, that was the case in Amazon as an example. So yes, I would say that I'm a disciple of the Greenblatt Buffett School of Investing, but I think I've evolved to recognizing that the world is moving so quickly that we have to take an exponential mindset if we want to keep pace with the world, and that augurs things like Bitcoin, which I believe is a robust growing monetary network. And so it's Facebook, those stocks, people say, oh, they're too expensive. But you know what? If they're growing like that, you will eventually be able to justify the price that you pay. Speaking of the little book of hedge funds, I'm curious how hedge funds look today to you.

Starting point is 00:11:42 The book came out about a decade ago. I'm wondering if you've seen any changes with them. And if so, what you would update the book with if you rewrote it today. Well, what happened, and I said this in the book, I wrote it in 2012, nine years ago, is the monetary policy distorted the gestalt in the hedge fund community. So how can I say this? If I'm going to lower rates, rates are interest rates are the financial gravity of assets. If you lower the rates, the prices are going to go up. If you raise the rates, because of the way a dividend discount model works, the prices are

Starting point is 00:12:20 going to go down. And so they were experimenting with quantitative easing back then, and we lowered the rates. And I said, this is going to be a problem for the hedgeman industry because they're in price discovery. They're doing Joel Greenblatt like work where they're analyzing a specific company or saying, okay, that company's going to grow faster than the street thinks it's going to be worth more. That company is growing slower or it has inferior fundamentals. It's going to be worth less. So you would get long, that one, short the other one, and you'd hope that pairing would lead to a great result. And then you had the monetary policy. And what monetary policy is the rising tide is lifting all boats.

Starting point is 00:13:00 So your longs, you could be a great long picker. And let's say the market's up 10, you're up 16. But now you've got shorts on. The market's up 10, but your shorts are going up. Maybe they only went up six. If you marry the two, you're up 10. You're in line with the market or in some cases you're below the market. And that's more or less what happened to the hedge fund industry.

Starting point is 00:13:18 So if I added a chapter to the book, I would say what I'm saying to myself, what I'm saying to my hedge fund managers that we have in our portfolio, we have to adapt. We have to be a Swiss Army knife. Maybe you came into the game with a machete and you were doing a great job. You may need a penknife now. You may need a corkscrew. You may need something different for what's going on in the world today. And I will say this to you, which I absolutely believe the 60-40 portfolio for the individual is over.

Starting point is 00:13:50 You've had 41 years of ridiculous interest rate activity in the bond market has forced the bonds through these exponential prices. And they may continue. You may get negative rates. But if you're getting negative raise, it's also telling you that there's something sluggish about the overall growth in a society. So I hope that doesn't happen. But to me, I think you've got to be. in a combination of things, but growth would be the most important of those things as it relates to what's going on right now. I'm glad you touched on the hedge fund managers that you work with because I'm curious what you look for in someone like that when you're seeding those managers. Are there certain attributes that you look for most? Well, we're no longer in the seeding business because we've gotten to be such scale that

Starting point is 00:14:39 I've got to be able to put $100, $200, $300 million to. were. And so you really can't do that at hedge fund seeds because one of the things we have to be careful is you don't want to be too much of the assets of the individual fund manager. But when I was seeding, there was something that I was looking for always that Simon Cowell would call the X factor. And so Simon Cal would tell you it's not enough to be a singer or a great songwriter. Are you going to chew through this? I'm talking to you from a Macintosh hardtop computer. Am I willing to chew through this computer and eat the glass of this computer to be successful? And that's rare.

Starting point is 00:15:21 I mean, that's rare in every industry. And so, yes, good analytics, reasonably common. Good judgment on stocks, reasonably common. But the person has to run a business. The person has to understand the regulatory environment they're in. The person has to hire and train and motivate people and set an ethos for the culture of the organization. And so those are all those X-factor things. But I can tell, and I think it could be related to my upbringing, I can tell right away

Starting point is 00:15:49 when I'm in the presence of somebody that's not taking no. And it's a low entitlement person, a person that I'm listening to who may have a really good pedigree that could have come from a wealthy family. It doesn't matter. But they are like, hey, you know, I'm not taking no for an answer. And I'm going to figure this out. The Melvin Capital guys are like that. If you look at the Melvin Capital guys, they got their asses handed to them in the first half of

Starting point is 00:16:15 2021. I'm a long-term believer in those guys. I think those guys are going to come back and revert, mean reversion, and they're going to do phenomenally well because they are hell-bent on success. And so I believe you can have setbacks. I think that you also want to be with people that are comfortable with setbacks. I've had more than my share of setbacks. I got miserably fired from the White House. I was fired once and then rehired into Goldman Sachs. I got crushed in the 1998 long-term capital management Russian ruleable crisis. I got my face blown off in 2008. March of 2020, during the pandemic, I was in a price shock on my fixed income portfolio. So I've had my share of disappointment and I've had my share of losses. But as long as I'm

Starting point is 00:17:03 breathing, I don't think it's a good idea to bet against me because I'm coming back at you or with all guns ablaze it, you know, and also if I'm dead, you're probably going to want to cremate somebody like me. Because if I'm dead, I'm going to still try to figure out a way to claw my way out of the goddamn casket. So that's the thing I'm looking for in these people. And it's something that I don't necessarily know if you can train somebody for that, but you can see it in them if they have it. 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.

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Starting point is 00:21:39 One thing I really admire about Skybridge is really the basic underlying concept of the company, which is to sort of democratize access to these hedge funds. There's a low entry point hurdle rate to get over. Talk to us a little bit about the fund of funds that you run. How many funds are there? What is the vetting process typically look like for that? There's 34 managers in that fund. We're tracking 1,200 managers here with our research team. We have a proprietary database that we built, which has a lot of qualitative and quantitative analytics to it. We call it HFAN, as the hedge fund access network.

Starting point is 00:22:16 I would say there's a hundred managers that we've written reports on, which we're doing full due diligence, on-site meetings, going over their portfolio rigorously. And of the 34 that are in our fund, we require full transparency into the portfolio with confidentiality. But if you're our fund manager, we want a direct feed from your prime broker. I hate to say this, but I will say it. Everybody's guilty until we prove them innocent. That's how you avoid the madeoffs of the world or you avoid people who are nefarious.

Starting point is 00:22:49 And by the way, I'm not saying that I have a perfect record on that, but we're pretty close to perfect. We got caught in one guy's fund where he was misallocating resources and was a, ultimately he went to jail. We got almost all of our money back from it, thank God, because we have very good systems in place to protect ourselves. But I will say this to you, you have to be that way in our industry. The American court system should be innocent until proven guilty. But at Skybridge, to get our money, you're guilty until we prove you innocent. So those are background checks. It's a rigorous analysis of what you're doing.

Starting point is 00:23:24 And is there any mission creep or discipline creep? Don't tell me that you're buying and selling natural gas. and then I look in the portfolio, you've got naval oranges in the portfolio. I can't stomach stuff like that. So we're pretty ruthless about firing people who we think are off message or are doing something that we think is not consistent with what their original strategy with. Now, having said that, we're also very long-term in orientation. So if you've had a tumble, we're probably adding capital to you if we think that you've

Starting point is 00:23:55 been consistent with what you're doing and how you're doing it because we know that that's a short term, likely a technical dislocation than anything that you're doing fundamental. So going back to your point about the traditional 6040 stocks bond portfolio being dead, where do we go from here? How should investors think about building a portfolio in today's environment? I think it's almost like a barbell. I think they have to have growth stocks and dividend yielding stocks as a bigger proportion of what used to be a 60, 40 portfolio, lessen bonds. So if you came to me and you said, here's 100 cents, Anthony. What would I do with the 100 cents? I would tell you, well, you got to have five cents in venture and probably three to five cents in

Starting point is 00:24:42 privates. You've got to have five cents in digital currencies. That's 15. You probably have to have 20 in the bond market somewhere, but mostly safe stuff, liquid stuff. And then the rest of it I would put in the stock market, but a component of that would be in higher yielding, sort of blue chip, defensive names, and then I would leave a good portion of the portfolio, 30 or 40 percent of that portfolio tilted towards growth, because in this type of interest rate environment, I think that's actually ironically the most protective. If we were talking in the 1990s, remember when they, or to believe, we raised 6, 7, 8, 9%, you would want to have a different portfolio architected. But today, and where rates are likely going to be over the next two years

Starting point is 00:25:28 because of the COVID-19 pandemic, the deficit spending, you have full negative rates now on the yield curve in Germany. The sovereign bonds of the German government are in a negative yield position. The U.S. is in a negative position in real terms. So if you have a one, 20, 10-year bond, if you factor in the current inflation, and we can debate whether the inflation is transitory or not, but if you're buying that bond with a 120 basis point annual yield and you've got even two or three percent inflation, you're in negative territory from a real perspective. And so to me, I would be very cautious in the bond market right now. Well, it's interesting to hear you even bring up that 20 percent towards bonds over maybe

Starting point is 00:26:12 20 percent in something like cash, right? Either one, it seems like you're guaranteed to lose or the time being, or at least a short term. I didn't hear cash in there, which I was just kind of curious about. Yeah, well, to me, again, the space reserve for digital currencies and cash, that's sort of like, I said 5%. You could have a little bit in cash, but I don't ever really keep a lot of cash, frankly. I'm usually fully invested. The stock market is liquid enough where if I've got to get access to it, I'll take it there. I'm not a big believer in cash, by the way, because we're printing a lot of it, man.

Starting point is 00:26:50 We're making, you know, cash is not like real estate. You know, they say, oh, by real estate, they don't make it anymore. Well, let me tell you something. They're making cash every debt. You've got a 31% increase in M2 year over year. $469 billion of new money was printed in the first five months of 2021. You're in a situation now where, whether you like it or not, you've been taxed. If you own dollar-denominated assets, they have stolen or taken some of that away from you.

Starting point is 00:27:20 Just think of it in terms of purchasing power. If I've got 8% transitory inflation, that means that the $100 that I had last year is only buying me $92 worth of goods and services this year. And so that's a theft. That's taxed. Your central bank has ironically taxed you, and they've done it in that silent sort of a way. So I would rather put that stuff into assets. Let me really put it in perspective for you because we're about to celebrate the 50th anniversary of the unpegging of the U.S. dollar from gold.

Starting point is 00:27:54 That's August 15th, 1971. Richard Nixon said, we're no longer living up to the Bretton Woods Agreement and we're going to let our currency float. It's fiat currency. In that period of time, you had a ounce of gold. You could purchase it for $35. Today, that ounce of gold is $1,600 or $1,700. Some of that's down as a result of Bitcoin.

Starting point is 00:28:16 I'm happy to talk about that. But at $1,600, you crush the dollar 97.5%. $2.50 in 1971 has $100 of purchasing power in 2021. Now, I can repeat that for a dramatic effect, but you get the point that I'm making. And so I think I'm well versed to speak about this because I grew up in a blue collar family. I can tell you if you're a wage earner and that's happening, you get destroyed. The wages have never caught up over the last 50 years. But if you're an asset holder, you're actually okay because that Hampton's piece of real estate that Calvin Klein bought in 1987 on the ocean for $3.6 million is worth $85 million today.

Starting point is 00:29:00 You see what's happening? Somebody said to me, if your used cars are going for prices that are higher than when they were new. My cousin has a pickup truck that he purchased four years ago for $32,000. He has $39,000 miles on it. He can sell that truck today for $32,000. Some of that's a shortage and they're related to the delivery of these trucks. Some of that is related to inflation. Well, I'm glad you brought up gold, and I think we should touch on the crypto element a little bit. You've been a pretty outspoken advocate for Bitcoin especially, and you've even set up a Bitcoin fund, what is your take on this recent crypto tax reporting provision that was in the Senate's infrastructure bill? And how do you think that's going to impact Bitcoin, perhaps in the short

Starting point is 00:29:45 term, at least? It's a very good question. I don't honestly know. I would like to tell you that I'm a Washington guru. I think the only thing I learned in Washington was stay out of Washington. I think that's the only thing I got out of my experience there. It's a very difficult group of people. I tell my Wall Street friends, you guys think you're killers and attack dogs. You guys are a bunch of babies compared to these people in Washington. I want you to imagine the worst possible person on Wall Street. That's like the Eagle Scout or the vicar of Washington. So to me, I'm not a big believer in these people. I think they're very disingenuous. And I think that they are very self-serving. They're not into protecting or serving the American people.

Starting point is 00:30:27 they are more into the preservation of their own power. What I would say is that it seems like the document is going to be okay from a crypto perspective because of the lobbying. And that's the great irony. There's a very powerful decentralized army of Bitcoiners. There's over 46 million of them in the U.S. And they are responding to what they see as something negative or bad for crypto by inundating Washington with allegiance, tens of thousands of calls. So I think we're going to be okay.

Starting point is 00:31:03 Given that you've been a big Bitcoin advocate and you are on Wall Street and have a lot of institutional connections, I'm just kind of curious if you can give us an idea of the whisperings of the institutional world with Bitcoin. Is there interest? Is it growing? Is there a timeline in your mind where they could potentially participate in a bigger way? And how far out is that? Really good question. If you had asked me that question at the beginning of the year, I would have said this 2021 was going to be the year of institutional adoption of Bitcoin. I got that wrong, frankly. There's been no institutional adoption of Bitcoin. I heard Larry Think speaking on CNBC Squawk Box a few months ago. He said, now we have no very little interest in Bitcoin. They maybe own a small piece of it, but they have no interest. And I was like, well, he is 100% right. I do not. see institutions owning it. Are there a few smart people? Yes. Ray Dalio, skeptic on Bitcoin, learned about Bitcoin, bought Bitcoin. Dan Loeb bought Bitcoin. Steve Cohen bought Bitcoin.

Starting point is 00:32:07 Paul Tudor Jones, Stanley Druckin-Miller, all bought Bitcoin. These are some of the smartest investors in the world are in the Bitcoin space. So we're in it, obviously. I made that decision with my team back in October, November of last year, which was reasonably well-timed, at least at current prices. Anything can happen in the Bitcoin world, so I'm not sitting here, patting myself on the back as much as I am, just analyzing things. But it may not be for a couple of years, frankly. I think that Bitcoin, with 125 million users, I thought it would be institutionally acceptable, but maybe Bitcoin needs 350 million users, which is a couple of years out. But if Kathy Wood is right, I believe she will be by 2025, if there's a billion users of Bitcoin, I think the institutions

Starting point is 00:32:52 will have absolutely no choice but to be in the space. And so it's one of these weird things. People say to me, well, it's not worth anything. I laugh. I said, well, this money in my pocket, that's worth anything? No, come on, you know it's not worth anything. But I can hand it to somebody for pizza. I can hand it to somebody for a good or a service. And the reason why it's worth something is they trust that they can hand it to somebody else. And so once you get that, You recognize, wow, we've got a network, a very robust network of people that are transacting. And so the perception of value becomes real. And the reality of that value grows exponentially.

Starting point is 00:33:29 And before you know, at Bitcoin, it actually can't be corrupted. We can make these. We're making them all day in this country. All day we're printing these Italian singles. But you can't make any more Bitcoin. You're sort of stuck with the 21 million of them. We probably have three-ish million of them that have disappeared. I'm a big believer in looking at the future the way it is and the way it's going to be as opposed to the should of and it should it be this way and blah.

Starting point is 00:33:55 When Charlie Munger, who's one of my intellectual mentors, is saying it's the worst thing that's happened to civilization, he's the guy that tells you to learn the other guy's argument better than your own. How could he say that? He's got to do more homework. 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 00:37:05 annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund fund fund's prospectus at fundrise.com slash income. This is a paid advertisement. All right, back to the show. Anything can happen in Bitcoin. I agree with you there, especially these 50% declines that we have every so often. But it reminds me of companies like Amazon, who I've heard you reference before with their 50% plus declines. I think they've had six or seven of them. I know they had one really big whopper, went down 90%. And Barron said

Starting point is 00:37:51 Amazon.com, and they said that the company was no longer going to exist. But you've held on to these kind of companies. I think Microsoft was another one that you've held for a very long time. Did you see the network effect early on, or is this something that you've kind of grown to accept? And if so, where do you see that kind of burgeoning in other industries? Is it always tech or are there other industries? I think it's an interesting question. So what I would say to you is what's going to have a billion plus dollars of revenue and impact a billion people? And so take a look, take a step back. Something like Uber would do that. Something like, like an ESG company that's environmentally sound, that's helping to convert carbon into other

Starting point is 00:38:33 atmospheric properties would do something like that. And so there could be a meteor mining company at some point that launches itself into space and captures one of these meteors and brings back a quadrillion dollars worth of resources. So it's not just going to be a technology company. It could be a healthcare company. What Moderna has done, and if you look at their earnings recently. They have done something that we would have said was a miracle 100 years ago. They have figured out through CRISPR technology that there is literally a software sequencing of the chemistry of your body. And so they can use the technology known as CRISPR to splice and dice and create memory MRI that your cells can actually learn from, which can change the landscape of how your

Starting point is 00:39:22 cells protect themselves. Unfortunately, because this stuff is so startling, there's a lot of disinformation out there, there's a lot of foreign powers like Russia, et cetera, really trying to divide the country and spew all this vaccine misinformation and falsehoods. But that's an amazing technology. And that's a company. And there's advances being made in that thread, that biotechnological thread, which will be life extending, but also unicorn-like and exponential pursuant to Medcaf's law. They're making way-based protein out of plants now. There's a company called A Perfect Day. That could be another unicorn because if we're moving away from the animal kingdom, but we're going to have the same texture and flavor, it's going to be better for the environment,

Starting point is 00:40:08 better for mankind, better for your heart and your circulatory system to eat less animal fat, but yet you're going to experience the same sort of taste profile and the same nutrient benefits without the downside. Why, I think there's exponential opportunity for a company like that. What about Newton's second law, about cause and effect? I mean, these big tech companies are now worth trillions of dollars. What is the long-term impact of that in your mind? And is there a downside to these companies achieving such great success?

Starting point is 00:40:39 The society has to manage that. We've had monopoly restrictions and monopoly power restrictions for 15 hundred years. You could go back to the Holy Roman Empire where someone got a monopoly and they started taking advantage of the customer as a result of the monopoly through monopoly practices, predatory pricing, exclusion of technology, all of that stuff. You've been in a situation where we have to break up the monopolies. But what I've said consistently is I don't want to see these companies broken up, but the elements that make these companies negative on the economy or drags on the economy,

Starting point is 00:41:17 I would like to see them shaken. There's a difference between breaking a company up and splintering into the different pieces, but shaking the company from a regulatory perspective to force it to share patents, to force it to not sit on ideas or names, Apple, unbelievable company. If you're coming through the app store, then they have sort of a predatory pricing schedule or take it or leave it pricing schedule. At some point, I think that's going to cause problems. and it's going to be a disincentive mechanism, a market mechanism for growth and innovation.

Starting point is 00:41:51 So when AT&T was broken up in 1984, I was 20 years old. Judge Harold Green basically said that this would unleash the forces of greater technological advancement, this global telecommunications company that controlled all of the United States. If I think about that, that was only 37 years ago, you had a global phone monopoly located here in the United States. But what the judge said, by breaking it up, you unleashed all of those patents. You unleashed ironically the technology that we're using today for these great internet companies. So the internet companies today and these big tech companies are sitting on patents and are sitting on things that could unleash another wave of growth. And so I would like them

Starting point is 00:42:36 to share those things so that they don't get broken up. So I like to say shaken and stirred as opposed to breaking. But I've got to tell you something, if they don't play that game, they will get broken up. And they don't have to be broken up. But I would tell you from a public policy perspective, they'll end up in a situation where they're going to get broken. And I don't think they need to because, frankly, I would prefer them to compete in the global marketplace at their scale.

Starting point is 00:43:03 I'd hate to see our company's broken. And then Chinese and European companies or other international companies or monolithic. and they're growing at the, and ours have been imperiled by the lack of scale. So we'll have to see what happens, but there is an intersection. There's a healthy political and economic intersection that I hope that these CEOs and whoever is there, their court of advisors, if you will, will give them the right advice on this stuff. That's a great point.

Starting point is 00:43:31 Yeah, we definitely don't want to shoot ourselves on the foot by stifling younger entrepreneurs and giving them access to some of these tools would be good. And speaking of these younger entrepreneurs, I wanted to ask you about fundraising because you've spent a long career doing a lot of that. And attracting funds can be pretty difficult when you're just starting out with your own business. I'm kind of curious what your top takeaway might be for raising capital. I would say this. I'm a bird. A woodpecker got married to a parakeet and created me. And let me explain to you what I mean by that. I am able to repeat myself. with great enthusiasm over three decades, the same cadence, the same level of passion and enthusiasm. So there's the parakeet side of my personality. But I'm also a woodpecker. I will packet your skull until your skull cracks open and you give in to me. You know, I had one guy 20 years ago, he stole a client here. He said to me, after repeatedly calling him with the woodpecker parakeet routine, he called me into his office. He said, listen, what is it going to take for you to stop calling? So we got to.

Starting point is 00:44:38 to give me some money for my fund. He goes, what's the amount? What's the dollar amount? I said, five million. And then he said, oh, I'm getting off easy. I thought you were going to say 10. And I screwed up. I should have said 10.

Starting point is 00:44:49 In any event, he gave me to $5 million, but he said, you got to shut up. You got to never call me again. I don't ever want to hear from you again. He gave me to $5 million. And then two years later, he called me. He said, what the hell's going on? Why have you never called me? He told me never to call you again.

Starting point is 00:45:03 But the point being his money's been with me for 20 years. It's done very well. but, you know, I'm one part woodpecker, one part parakey. And my point is that, like, you're not going to have great performance every day. And there's been periods of my life where I've had really bad performance. But I will tell you why, you stay in touch with your clients, you handle them with a level of enthusiasm and passion, and they know that your money is in that fund alongside of their money. You're going to keep them for a very long period of time.

Starting point is 00:45:31 I think that's great advice. How do you see Wall Street evolving maybe over the next, 20 years. It's an excellent question. I do think that Wall Street is coming into the D-Fi space. For the life of me, I can't understand why someone like Goldman Sachs or J.P. Morgan wouldn't go outright buy Coinbase. For the life of me, I don't get it. But I can be able to build it on their own. So why not go out and buy it and get into the game? And so the world of decentralized finance and peer-to-peer, permissionless transactional activity is upon us. And so whether they like it or not, they want to block it, they want to go to their

Starting point is 00:46:13 friends in the Senate to try to legislate it away, it's happening with or without them. And I want you to think of the innovation for a second, without talking about Bitcoin or any of these individual cryptocurrencies. I just want to think about the innovation where through a decentralized networking software protocol, we can create trust among individuals that are typically non-trusting, or in some cases have incentives or motivation to hurt each other in a system or to distrust each other. You've created this playing field where computationally, we trust each other. The shit's based on math. And so that is going to have an exponential effect on the society. And it's also going to

Starting point is 00:46:59 surprise people because what we're learning about our society is decentralization means more freedom, more opportunity, more innovation. Centralization means more control, less freedom, and I think a more boring life for that matter. So you're learning something about our behavior and our mechanisms through the blockchain that I think are fascinating. We're better off together, we're better off webbed in a decentralized way as opposed to having ourselves subordinated to some type of control free. Very interesting. How does that tie into Skybridge? I know you guys have a fund also focused on definesced to a degree. Do you see that becoming a bigger portion of the company in portfolio over time? Yes. I mean, there's no question it has to be. And so we have a

Starting point is 00:47:51 $500 million position in Bitcoin, probably a $50 million position in Ethereum. We have participated in private rounds of secondary sort of in the DFI space, including Chime and Plaid, Plana. I believe that this is going to be part of the future. If you interview me next year at this time, and we have a DFI fund, which is dedicated and dedicating resources to this exponentially growing opportunity set that's taking place right now, don't be surprised by that. And I tell people, Well, listen, I don't want to be the dinosaur. I want to be a person that adapts. And Darwin said, at bet, it's not necessarily the strongest or the smartest, but it's the one that can adapt the most quickly and embrace the change that has the highest level of survival.

Starting point is 00:48:41 And so I'm not going to sit here with 46 million wallets in the U.S., 125 million wallets globally. It's growing to a billion wallets by 2025 and miss that. I'm not going to get talked out of it by a journalist or a fuddy-duddy. We talk about fud, Tray, but we have these old fuddy dutties. Or a client. I mean, one thing I really admire about you is we've mentioned $4,500 million of money in Bitcoin, and that deterred some clients. Clients have fired me.

Starting point is 00:49:11 I've actually done the calculation of the number of people are going to fire me and what the price of Bitcoin is going to be, and I'm totally okay with it. So you're going to fire me. We're going to replace you with appreciation, and you're going to sit there scratching in your head saying, well, why the hell did I get out of that? Well, you got out of it because everyone's a long-term investor, though they have short-term losses. That's how it works. You get shaken out. The best investors, like you have this, we study billioners. Well, I know a lot of billionaires by virtue of being in the hedge fund industry and trafficking in American

Starting point is 00:49:42 commerce. I know a lot of billionaires. One of the observations that I've made in my study billionaires, they don't sell. Does Buffett sell? He does not. Does Elon Musk? Is he blowing out SpaceX, he's not. Maybe Jeff Bezos is blowing out a small fraction of Amazon today to fund his Blue Origin, which is a whole other big, gigantic exponentially growing company. But he's not really selling. He's chipped away a small piece. One of my mentors, Ken Langone, the founder of Home Depot, he's 86 years young. I don't think he's sold one stock. So, you know, you got to stay in there. Whatever Bitcoin exposure I have now, I expect to increase it, not just through a appreciation, I expect to add to the positions, but I don't see myself selling. I see myself

Starting point is 00:50:27 holding or hoddling for multiple decades. That's the observation that I think I wish I had told the younger version of myself. I love that. It also begs the question around like position sizing and rebalancing because, you know, obviously as it grows, that 5% might become 20, 25%. And without selling, do you think about culling different positions when they get over-indexed? The good question, unfortunately, the answer to that is yes. Unfortunately, because we're an institution and we're dealing with other institutions and individuals, frankly, that are scaled to the size of institutions, I think that's one of the requirements of the job. And I would say that's like landscaping your front yard. Sometimes you have to prune the rose bushes and cut the grass and pull some weeds. And so if you want to stay in the good graces of these people, Remember, you're in the client facing, I am. I'm in the client facing client servicing business. So I have to listen carefully what the clients want.

Starting point is 00:51:31 But I do have a portfolio that's my personal portfolio that's managed by friends of mine, that they buy stuff and they sit on those things and they don't sell them. That was one of my questions actually was, how does Anthony Scaramucci manage his own portfolio? I would say 85% of it is in my own funds. And I would say 15% of it is in a family trust that's managed by good friends of mine where they have discretion over it because I don't want to be in the personal trading business or have a personal account. I don't think that's fair to my clients. Having said that, 15% of my money is managed away from me because I have a responsibility to my children. And even though I am very passionate about what I'm doing, and I've got, as I tell my clients, I'm eating my own cooking, 85% of my net worth is in there right alongside of you.

Starting point is 00:52:26 I think the 15% that's away is just prudent for my kids and my wife. Interesting. Let's end on a fun one. Given that you did have a brief stint in Washington, we don't talk politics on the show. But I'm just curious, given you step foot in that Oval Office, what would Anthony Scaramucci do in his first 100 days? if you were president. Oh, my God. That's some question.

Starting point is 00:52:50 I haven't thought of that because I have no plans to be a politician, but there's a couple of things that society needs. And from a resource allocation perspective, and if it's doable even, because what I did learn in Washington, and I'll tell this story real quickly, and there's a great interview, John Kennedy,

Starting point is 00:53:08 a year after he's in the Oval Office, his first year in the president, he's interviewed by Huntley and Brinkley. And these are two old journalists, from back in the day NBC News. And Kennedy's sitting there with them and they ask him a question. He looks over at them and he says, well, when I was in the House of Representatives, I said, okay, there's no power here.

Starting point is 00:53:27 All the powers in the Senate. So I'm going to quit this job. I'm going to go run for the Senate and I'm going to do this. Then I become a senator. I realize, man, there's absolutely no power here in the Senate. The power must be down Pennsylvania Avenue in that Oval Office. So forget this. I'm going to go run for president.

Starting point is 00:53:46 Now, after you're being president, I can look at you guys since it's not a lot of power here either. And this is the decentralized nature of our government. Remember, I said decentralization is good. So the point I'm making is I can give you the list. I don't know if the list is executable because of the way the thing is set up. Just look at what's going on with the infrastructure bill and the food fight there. But I think if I were president, I would list three initiatives that the country sorely needs. And the first one would be the educational system. We would have to figure out how to even up the K through 12 public educational system. And my charter school friends in the hedge fund community, my message to them is, yeah, I'm fine with those, but we really have to fix the public educational system.

Starting point is 00:54:31 And we have to even it out. And we have to figure out ways to do that. And we're smart enough. We have the right technology to do that. The second, and we have to do that irrespective of the special interests out there that are preventing that from. happening. Again, is that possible? I don't know. Number two, we need an industrial and manufacturing policy that has a 25-year horizon. And I would say to you rhetorically, what politician do you know as a 25-year plan for America? The answer is none of them because they're too short-term in their

Starting point is 00:54:59 orientation. But we need Chinese have it. They have a plan. We need a plan. And we need a plan that would be bipartisan and to be about right or wrong as opposed to left or right so that we can rebuild the nation and foster a much better experience, aspirational experience for our lower middle class people. And then the third thing, which I think is as important as the other two, is that we have to get back in the sales business. And that's about civic virtue and national purpose. So again, I would impose two things that nobody would like, which would probably get

Starting point is 00:55:33 me thrown out of office quickly. The first one would be civic participation. Just like they do in Israel, I say, look, you don't have to go into the Army. but you've got to spend one or two years of your life serving your country. It could be in Yellowstone Park picking up garbage, but we need to re-glu the country like we did after the war. And that glue came from people from disparate parts of the country serving together, where they realized that they had way more in common than anything that separated them.

Starting point is 00:55:59 I guess we've become too tribal. And then the last thing is, this would really piss off the Republicans, okay? I'd have mandatory voting. They have mandatory voting in Australia. And what happens is when you have mandatory voting, you liquidate. the extremes. You're forced into the middle. You're forced to have more moderate views because you'll having tons more people vote. You get 50% voter turnout, Trey, we're causing a celebration. About 90, 95% voter turnout. Now all of a sudden, the government would really reflect the

Starting point is 00:56:29 interests of the people. So anyway, you asked me the question. I'm answering it, but I'm also recognized it's super hard to do anything in Washington. Well, I really appreciate the candidness and the intellectual insight there. So with that, where can our audience learn more about you and follow along, also look into Skybridge and any other endeavors you want to share? Well, you can find me at Scaramucci on Twitter. You can find me at Muchfm. My podcast is a weekly podcast.

Starting point is 00:56:56 Like yours, I've got to get you now home and away. You've got to come on my podcast where I get to ask the questions. You can go to salt.org backslash talks. We do a whole series of talks with people there. and then the last thing I would say to you is if you find me on social media, you'll find that I'm very shy and unopinionated. So I don't know how much you're going to get out of it. And if you believe that, I have a bridge.

Starting point is 00:57:20 I can sell you too, Trey. Awesome. Well, thank you so much, Anthony. This was a lot of fun. I really hope we get to do it again soon. All the best, Tuchet. Thank you. All right, everybody.

Starting point is 00:57:30 That's all we had for you today. If you're loving the show, definitely remember to follow us on your favorite podcast app. And also be sure to follow me on Twitter at Trey Lockerby. And if you haven't already done so, definitely go to the investorspodcast.com or just simply Google TIP Finance and check out all the wonderful resources we have for you there. So with that, we'll see you again next time. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network and learn how to

Starting point is 00:58:00 achieve financial independence. To access our show notes, transcripts or courses, go to Instagram. the investors podcast.com. This show is for entertainment purposes only. Before making any decision consult a professional, this show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP373: Resilient Investing w/ Anthony Scaramucci

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