We Study Billionaires - The Investor’s Podcast Network - TIP570: Back Together w/ Stig Brodersen and Preston Pysh

Episode Date: August 13, 2023

On today’s show, Stig Brodersen and Preston Pysh are co-hosting an episode for the first time since 2019. They talk about how they met each other and the early days of their company. They also discuss how their investment approach has evolved over the years.  IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 04:18 - How Preston and Stig met each other and how The Investor’s Podcast got started 08:20 - How the early days were at TIP before it became a real company 24:32 - If Preston invests in stocks and how his portfolio looks like 39:45 - What Stig’s bitcoin portfolio allocation is 54:51 - Whether Preston will attend the Berkshire Hathaway shareholder’s meeting again 1:17:35 - What the future holds for TIP Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Stig and Preston’s book, Warren Buffett Accounting Books – read reviews of this book Preston and Stig’s book, The Intelligent Investor, 100-page summary – read reviews of this book Preston and Stig’s book, Security Analysis 100-page summary – read reviews of this book Warren Buffett’s 3 Favorite Books – read reviews of this book Michael Saylor’s website, where you can track equity returns measured in Bitcoin.  Tony Hsieh’s book, Delivering Happiness – read reviews of this book. SPONSORS Support our free podcast by supporting our sponsors: River Toyota Range Rover Fundrise AT&T The Bitcoin Way USPS American Express Onramp SimpleMining Public Vacasa Shopify Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. I can't remember when I was as excited to publish an episode as I am today. For the first time since 2019, Preston and I are co-hosting an episode together. We start the story in 2013, the year before TIP was founded, and we talk about how Preston and I met on an online forum about Warren Buffett. Later, but still in the early days, Preston and I were sitting in his basement, editing our first book together at 4.45 in the morning. It was a very humble beginning, and for years,

years, we pay to go to work. We then discuss how our investment philosophy has evolved over the years, including whether Preston is investing in equities or only Bitcoin. We also touched on my portfolio allocation and investment thesis around the cryptocurrency. Join Preston and me on this trip down memory lane, and what better way to start than the old jingle? Here we go. Broadcasting from Bel Air, Maryland. This is the Investors podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies.

Your host, Preston Pish and Stig Broderson. Welcome to The Investors' podcast. I'm your host, Dick Broderson. And today I'm here with my co-host, Preston Pish. What's going on? What's going on? And people out there might be thinking, like, what? Did he say that he's there with Preston?

Like, what's going on? Is this, I don't know, 2019 or what? whatever. It's like, not really. Preston, what's going on? Why are we sitting here together today? You know, it's funny. We have these conversations still, but they're private conversations and they're not recorded. And the last time we were talking, I told Stig, I was at a conference and it was a Bitcoin conference and people were like, I just want to hear you and Stig talk again. And I was like, yeah, I know, we should probably do that. We just have it. I mean, we talk all the time, but not in a recorded kind of way. So we should probably just do it for old time's sake

because it's fun and we enjoy these chats. So yeah, here we are. You're doing one of the big conferences and we always get like, or at least I can say whenever I go to Berkshire or whatnot, I typically get the same five, 10 questions, stuff like that. And I kind of thought it would be fun to talk about some of those questions. And one of the questions is that why don't we record episodes together anymore. So why don't we really, why don't we do that anymore like we used to back in the day? A, it's easier. B, I'm so focused on Bitcoin that, you know, if we're recording a conversation about equity markets and all I'm doing is talking about Bitcoin, it doesn't really fit. I know what your note is here. And I'm going to steal it because it's just

so pertinent. The time zone was always like, I mean, we can do it. But like right now, it's 730 for me, which I can do. But the time zone, if you're up to U.S., is, we dealt with it for so long stick. I want to say it was actually a lot easier in the beginning in some ways, because in the beginning it was just you and me. And then we started to interview guests. And then it became like a bit tricky because you were doing your day job. And you used to be Eastern and now you're central. So if you had someone in California, but even if they were Eastern, you're like, people don't want to get up at like 6, 7.30 in the morning, whatever, to do interviews. And then, or it would be like super late for me.

And if we have someone in California, it was just all the big mess, like, yeah, the time zones back then were just, but I mean, hey, it's great now. We're having a ball. And there's plenty of the talk about whether you're talking about Bitcoin or regular markets or whatever, it don't matter. There's always something crazy happening. So, yeah. Yeah.

Yeah. And I should also just say for the record, it's not like we plan to do a lot of co-hosts the episode again. I think, you know, once in a while it could be a lot of fun to do. Honestly, I don't know the last time we did that. What is it? Is it like four years ago, five years? I don't really remember, to be honest. It seems like that.

It seems like it's been about that long. Yeah, it's been a while. The plan is not that we're going to start co-host again. It was just like an idea. you, like someone told you, and you were like, yeah, let's just jump on behind the mic and talk about the good old day. And I wanted to sort of like use that to transition into one of the questions that I often get, which is the founding story of TAP, how we met, like, like, the era of the days. I don't, do you even remember? I don't know if you do. So we met about like 2013,

something like that. So what was the deal back then, Preston? Yeah, I guess it was a decade ago. Well, we met on the website, on the Buffett's Books website on the forum. And Stig showed up. I built this forum, this Buffett's Books site, which was just some videos of me, like talking people through like value investing. And I mean, this is really early. I think the site had only been up for a year, maybe two years at most. And Stig shows up and he's just blasting out these like 10-page summaries.

and investing analysis on random company, XYZ. And I think I went to Berkshire. You didn't go on this one stick. I went to Berkshire. I met Hari. Were you there for that? I don't think you were there. Yeah, yeah.

I was there because we... Oh, yeah, yeah, yeah, you were. Yeah, yeah. So we hung out there was what? Five of us? Five of us from the four, six. Well, five and then your dad. So we were six in total.

Bill was there, right? Yeah, that's right. He was there. So, yeah, there was six of us. Wow, this is bringing back some memories. There was six of us from the forum that showed up to Berkshire. And we're, we still talked to, I think, everybody that was there that, that time. And I was flying out and I met Hari.

And you were, you were on a different flight, different gate or whatever. And so I met Harry. He had the LinkedIn jacket. And I just started up a conversation with him. And he was like, hey, have you ever listened to podcast? So I was like, no. I've heard of it, but I've never listened to one. Right.

And he says, oh, you got to listen to this guy because we were talking about the website and how we had like, you know, and it wasn't, Harry didn't know what it was, the Buffett's Books website. And so he was like, you need to listen to this guy. His name's Pat Flynn. He does like passive investing. He has this podcast. It might be able to help you out with the website that you got that you guys are having fun with.

And I was like, okay, I'll check that out. So literally on the flight, I download. the show, this Pat Flynn show. And as soon as the flight took off, I'm there listening to this podcast and was like, oh my God, this would be incredible to do something. Like, I wasn't even like listening to what he was saying. It was just like, we could do a podcast about investing and it would be so much fun. And what I was really thinking, because I just built like this whole video course,

Stig, where the editing, the video editing is just painful, right? Like, yeah. I mean, you know the deal. it's not just your audio. Now you have to create these graphics that make it all make sense. And it's just, it's a lot of work. And I'm listening to the audio on this podcast. I'm thinking the whole time, all I was thinking was,

this would be so easy to create this content versus making videos like I did for this Buffett's books course. Like, this would be awesome just to sit down and have a conversation and not have to do all the editing afterwards. And I don't think it was more than a day or two after. that trip that I shot you a note and I was like, hey man, like, would you be interested in just recording conversations about our financial picks or the investments that we're looking at? Instead of like writing up these big long posts on these forums, like, hey, let's just record

our conversations. And like, I don't even know if anybody will listen to it, but, you know, like, what the heck? And I don't know if you remember your response back to me, but I remember your response back. Do you remember it? I think it was something like I was bit, you definitely didn't over promise. I remember, because you said more than once, like, I don't know if it wants to listen to it. But what was once like, I think I was pretty worried about, I have to do it in another language, first of all, but also like the whole technical aspect.

Like I am and was terrified of all the, you know, equipment that you needed to have a podcast. And this was, and this was, I know I'm going to sound like really, really old. This is got to say, but this wasn't like today where you could get like everything is just in a box. Then you just plug it in. Like this was like, it was very different back then and it required different equipment. And to your point before Preston, like the whole editing and that stuff, it wasn't like today when you had like can then that anyone could do XYC. It was like, you had to like learn really painful software to get started with whatever you want to get started with. Oh my God.

It sounds like, you know, if your kids were listening to this, they would be like, they even have telephones back then or whatever. I was just, I was like, what's an RSS feed? Like, what the hell's that? Like, there was so many things. We just, we had no idea. We had no idea what we were doing, that's for sure. But yeah, you responded back and you're like, you know, Preston, like, I have a foreign accent.

Like, I don't even speak English for like my first language. I just don't think anybody would want to listen to me. And I was just like, I need somebody to do this with because I just can't talk to myself. And like, I've read your posts on the forum and like, you can jive on this. this stuff, you actually understand it really well. And I just didn't care. I was just like, well, I think my reply back to you trying to sell you on the idea is like, well, I mean, like half the world or plus more doesn't, you know, English isn't their first language. So maybe it would be the perfect fit that you know that English is your first language. But yeah, I got you to say yes. And

geez man what was our first I think our first set of downloads was like on a show it was like 150 downloads or 300 oh really yeah I think I don't remember I it certainly it certainly wasn't a lot I remember like back in the day with the forum it was like exciting if it was just one of us not posting you know but someone else did you know I remember like I was really excited about that and I remember you shooting me a message about jumping on a Skype call yes It was something called Skype. So if you're not, I don't know, older than 30, you might be like, so what is that? Yeah, that was early.

Yeah, it was early. Yeah. Because we were writing a book together at the time. Yeah, the Warren Buffet accounting book. And actually, so we did a few, you know, it was way more you than me with the intelligent investor and security analysis. Yeah. Because you already wrote, you don't already self.

published, I think it was called Warren Buffett's three favorite books or something. Sort of like they were spilled together with Buffett's books at the time. And you already started working on the summary books of the intelligent investor. And because I think you gave one of the books to me whenever we arrived at this somewhere in Council Bluffs outside of Omaha. I remember that just to jump. It's really turned down memory lane because I remember one of the things we did was it was in, because you were based in Maryland at the time, because my wife and I, we flew in,

we were living in Sweden at the time. Sophie was doing a part of her degree there. And so, I think we were living in Sweden and then we flew, I don't know, but we arrived in Maryland. And then we sort of like did the final editing of the book in your basement. Yeah, I remember that now. Like 4.30 in the morning. You always been like a morning person, but I probably had jet legs up. It was probably up anyway. But it was like 4.30 and like, hey, let's go. There have been many shows that I recorded at 4 or 430 with you over when you were in, yeah, early days, yes. Oh, my God. Thank God, I don't have to do that.

No. Oh, good Lord. But it was, I just remember, like, thinking it was just a different world. Like, you were talking about self-publicing. I didn't know anything about it. I didn't even know you could self-published books. Yeah, you know what? It was the whole self-publishing thing was.

crazy. So, this is a funny story. I've never told anybody this story. So I wrote this book about going the West Point. And I'm thinking, oh, you know, I'll just, you know, write the book. And then I'll go to a publisher. And, you know, I think I can just get it published. Like, I'm sure somebody out there would want to publish this. Well, I find out. And this is probably, oh, man, 2008 time frame, I want to guess. 2007, maybe. And this is like totally out of order. I didn't know this because I didn't really do any research on like how to publish a book before writing the entire manuscript. I just was so naive. I had no clue, right? And so I went and started shopping around this to try to find a publisher

and I realized like this is really hard to get a book published and nobody wants to publish you if you don't already have some type of marketing engine behind who you are or any of that stuff, which I had none of that. And so I floated it out to a couple publishers. It was a swift no. So then I was like, I don't want to go through an agent because they like take so much, right? And people don't understand the numbers on books are just atrocious from like a profitability standpoint.

Yeah. Like you go just to give people kind of an idea. Like if you publish a book for $20 is the retail. price, if you go through like a publishing house, what are the numbers? It's like a couple percent, like two or three percent off of retail that you'll, that it's like your take home. Yeah, I think you probably get it. So it's different.

At least the book contracts we see today is like six, six, seven percent on the fiscal book and then probably 25 on the ebook. Yeah. So it's pretty brutal. And so you might be thinking, yeah, rolling or I don't know. Stephen King, like, yeah, I'm sure they make a killing, but, you know, if you're not them. Yeah. The book sales, people don't realize this, too.

The book sales are very, they're not linear at all. So, like, if you're in the top 100 or I'd say the top 1,000 on Amazon, like, those books are pretty profitable. If you're in the top 100 on Amazon, you're very profitable. But after 1,000 to like 10,000, and this is based off the Amazon ranking, the profit. the profitability goes down drastically. If you're above 10,000, it's like, the thing practically makes no money at all. I mean, it makes some, but nothing that's going to feed the family.

So obviously, I didn't know any of that stuff whatsoever, right? I just wrote this book. And all I was, I didn't really write that book for profit. It was more for me just to, like, capture these funny stories that happened to me when I went through the Service Academy. So anyway, I try to get this thing published and it gets out there and nothing back. So then I have to go through the agent. The agent's like, oh, yeah, I think I can get this through.

So he goes and he's shopping it around. And after like, I don't know, three or four months, he came back to me. He's like, we're just going to rip up our contract because I can't get this thing published. And I was like, this is crazy. This is, I've never seen anything so difficult to like pull off. That was a big tangent, but it's interesting. It's business. It's interesting.

business, yeah. It was just such a different time. It was, and it's fun to do the whole reminiscent of, you know, everything that happened back then. I remember whenever I met you and you introduced me to this new universe, because I didn't know anything about Warren Buffett before I coming on the forum, and very, very little. So I come from a traditional business degree and like went through the whole academic route. And whenever you do that, you were taught that the Magus are efficient. And I remember, we actually talked briefly about Warren Buffett and one or books. And it was just about how he was the luckiest coin flipper because, you know, if you continue to flip coin, someone has to win. And that's why some people, you know, have better track records

than others. And they were sort of like seen as, oh, that's probably just how it is. And so whenever I stumble into Buffett, there was just a really quick story to that. It was actually because I was sitting there with some friends back home in Denmark, and we were talking about replicating what successful people did. And I didn't know, it didn't know president at the time at all. It was just like me and hang, I was hanging out with some friends, having a few beer or whatnot. And so one of my friends had this idea that, you know, if we just do what other successful people do, we probably would be as successful. Like, it was like, oh, that sounds reasonable.

And so the number one on that list at the time was Bill Gates. And, you know, I was, you remember what I said before? I was terrified at just, like, setting up a microphone by myself. So I was definitely not going to be the next Bill Gates. But number two on that list, that was Warren Buffett. And I remember hearing about Warren Buffett and I was like, oh, picking stocks. just like sitting at home, reading stuff. And I could sort of like, I could jive with that.

It wasn't like I had to come up with the operating system and learning how to code or anything like that. And so I just starting Warren Buffett, it was just super interested. And that was whenever I saw the videos that you had on YouTube. And then through that, I went into the website and we sort of like connected and we talked about, you know, the whole Buffett thing.

So, yeah, that was, for me at least, that was how it all started. And yeah, how we met. I want to say probably back in 2013, something like that. Yeah. You know, sticking back at the past decade, I think the reason that we have just been able to harmonize so well, even though like our communication with each other is so efficient, I'll call it efficient.

The reason I think that it works so well, honestly, is because we read so many books together though. Yeah. Right? Like, we both conditioned our brains on, like, all these top tier business books for years. Like, we read them at the same time. We then talked about what we learned. I mean, it's all documented in the feed here.

Heck, all the executive summaries that are out there of these books. And I think it just, it's so funny because we'll have a conversation and about whatever topic that might be a really, it could go really deep. But we're both just like, yep, nope, this is how I see it. This is because I think we're approaching it and we're like seeing it from this like same lens. And I guess so like what's the takeaway for people listening to that? I would tell you, I think it's really important for partnerships of business, marriages, whatever it is.

Like if you're going to have like this lasting long term relationship with somebody, it's really, really important to like ground yourself in principles or like these books for us. It was books that just allow, it's not that we're thinking the same, but we're, but we're thinking about things from somebody else's past experiences that we've kind of harnessed and like taken in. And I think it's been just a massive advantage for us to grow the business and to just operate and to trust each other. And I don't know. I really look back at that the first, what was it, the first five years, maybe more,

that we were reading a book once a month, twice a month, something like that. I don't remember what our tempo was, but it was pretty aggressive. Yeah, and I think you're absolutely right that it meant a lot. And especially if you're into the whole Warren Buffett ecosystem, like there was so much of that where it's just so much easier to work with people who have the same values. I want to say that whenever you go to different type of conferences, and the more needs they are, the less you need to explain. And that is just such a huge advantage.

So, for example, one of the things that I also do here on TAP is that we have our own library. And one of the reasons, like, there are many, many reasons why you have our own library. First of all, is because of the gift of reading. I think that's the most important thing. But based on what you said before, because I remember you were talking to me about that before, Preston, about the whole idea about reading the same books and how advantageous it is. You know, I experience that the same way. We have our own library here at the TEP where, you know, everyone who work on TAP can just, like, there are a number of books and they can just like invoice that and all of that stuff. And it makes everything so much easier because you could say things like, yeah, we're doing this because of this good to great principle about using.

tech as accelerating. And that person would be like, yeah, I know exactly what you mean. That's that chapter, let's go. And I think that it's so true in all of your relationships that, yes, we learn that opposites attract and they probably do that to some extent. But life is generally so much easier if you do it as someone who have an equal perspective of life, not because one is better than the other, because there's just so much friction that you avoid if you do that. And I remember one of the things you said to me as we were starting out, we probably have known each other for a year or two at the time. And you're talking about how it was like a marriage.

I remember thinking that was a weird metaphor. It's like, hey, what's going on? But I see what you mean like, sort of like whenever you go into an investment, the perspective should be you're doing this forever. And with relationships, it's a recent season and a lifetime. But if you go into a relationship thinking, this is a relationship I really want to have forever. Yes, it's probably not always going to happen that way.

But that's had that as a perspective. You also start to think differently about which type of relationships you want to build on. And if you read the same 100 books or the same just 10 books and you agree on these fundamental principles to life, I mean, oh my God, so many things just become so much easier down the line that it's just incredible. Yeah, totally agree. 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.

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Very interestingly. So I want to go to the third one that I just get asked a gazillion times. One is, is stay investing in Bitcoin. I don't think that's too interesting. No, I'll get to that later. I get that ass to be all the time. The other one is whenever I go to different meetups or just like emails, I get so many asking about, so is Preston not investing equities anymore?

Is it 100% Bitcoin? What's going on with Preston? So let's start there. What's going on with Preston? Yeah. Yeah, I think the answer will surprise people. The answer is yes. I'll give you an example.

My thesis has been so polarized by Bitcoin. And I think everybody knows that. And if you don't agree with Bitcoin, then you can just ignore everything I'm about to say because it might torque you or upset you. But my investment thesis has come down to the central planners have so aggressively manipulated markets at this point that it's difficult for me to look at anything through a lens other than using Bitcoin as my unit of account. And so it's really a war between the US dollar and Bitcoin that's taking place.

and depending on what central bankers are doing, you're going to want to own one or the other. 2022, I was pretty vocal that I felt like the dollar was going to outperform everything. Although I continued to talk about Bitcoin the whole year, and I have this all publicly posted and timestamped on my Twitter feed, and I've done numerous interviews that talked to this thesis where I thought 2022 the dollar was going to outperform and do well. and any free cash flow that I was making was being retained in dollars. My entire Bitcoin position up to that point was continued to be retained. I didn't sell it. I just kept it. But any new free cash flows that I was making in dollars were retained as dollars. And then whenever I felt like

the dollars bull run was over, then I was just going to convert it into Bitcoin, which I did in November of 2022 and continue to just buy Bitcoin now with the free cash flows that I have coming in each month. So what's driving this? And there's no better representation of this thesis for me that people, like, if you're hearing this and you're like, that just sounds nuts. Going from like a Warren Buffett investing, like valuing equities and doing all this. That person who's hearing me say that is like, this guy's off his rock or he's lost his mind. What I would encourage that person to do is go to this website. Michael Saylor built this incredible one over the world view that I would tell you completely

captures how I view the investing from a global standpoint landscape. And it's strategy.com. And if you go to strategy.com, he has everything denominated in Bitcoin for the performance of the S&P 500, all the major currencies. bonds, you can literally go to, he has all 500 companies for the S&P 500 listed all on this one page that you can go to at strategy.com. And like, so I can look at the top 10 companies on the S&P 500. And I can hover my mouse over each one of these companies and I can look at it. And what he's doing is he's showing the return of that company in dollar terms. And then

he's showing it in Bitcoin terms. And he's showing it for the last year, the last one month, the last three months and then the last five years. And he's also showing the sharp ratio and the volatility as a comparison as well, because people want to know how volatile and violent the moves are going to be. And when a person goes and looks there and they look on anything that's a long tail five years, what you're going to find is there's literally nothing on any of these investments that are outperforming Bitcoin. And so I get it.

It has tons of volatility. I think the volatility scares the bejesus out of people. But for me, it's a very long play, and it's a long play based on central banks continuing to get more and more aggressive with their debasement. And that's the thesis, right? And there was a point, and I think I might have talked about this. I don't know if I talked about this or not in 2020 when I kind of like really broke off and just started covering Bitcoin completely.

there was a point where I went and it was a real aha moment for me. I think I took Apple and I looked at their revenue and I looked at their net income over like the past five years. And it was just, you know, it's just going straight up in dollar terms. And I was like, what if I went back and redenominated the top line revenue and the bottom line net income for the price of Bitcoin at each one of those discrete points in time? And I looked at the revenue in Bitcoin terms instead of dollar terms. And I did this and I plotted it and like the revenue was just going down for like over a five year, 10 year trend. Like the revenue was just going down.

The net income was just going down. And I'm thinking to myself, so this is like my new hurdle rate. This is the rate that I'm trying to outperform. And it was just this really like aha moment for me. It was like if I do this for any company. And so I'll tell you looking at strategy.com right now, I'm looking at it. Tesla, for example, unbelievable.

Like if you've owned Tesla for the last five years, you've crushed it. It's been really bad for the last year. But if you owned it over the last five, it's really performed, right? So when I'm looking at that, in Bitcoin terms, it's down 5% over the last five years. The sharp ratio is a negative. 0.49 in dollar terms, but in Bitcoin terms, it's a 1.12, right? Bitcoin's performance relative to Tesla. So not only did it outperform it slightly over the last five years, but it's also outperformed

it in a sharp ratio kind of way as well, where the volatility that was associated with that absurd return that you got on Tesla over the last five years is worse in risk-adjusted return kind of way. And that was the best. So like Apple, Microsoft, Amazon, alphabet, Facebook, Visa, Walmart. Mark Johnson and Johnson, Procter & Gamble, every single one of them have underperformed Bitcoin, which are the top 10 holdings in the S&P. And people should know, those are the companies that are driving the S&P index. Like, you can just erase everything else. And if you own those

top 10 companies, you crushed it. You outperformed everything, right, except for Bitcoin. And here we are. Now, I have to emphasize, I'm sorry, stick, I have to emphasize. because a person hearing all that is saying, hey, Preston, past results aren't a predictor of what's going to happen in the future. And you're exactly right. And I'm not saying that it is. But what I am saying is you can't ignore something that has outperformed in such an aggressive way without going into the fundamental thesis of why is that happening? What's causing that? And whatever caused it over the last five years, is it going to cause it to continue to occur in the coming five years? My opinion is yes, and I could get into, well, heck, I got over 100 episodes on why I think that's the case, right? I don't have to get into it here. But yeah, that. So to answer the question, is Preston invested in stocks now? Did I hear it correctly, it's more or less just Bitcoin right now. Yeah. Yeah. I know that sounds crazy, but that's, I have to be truthful with you. That's it. You know, and I love that you say that, not that you're crazy, but I love that you say that you have to be truthful.

because one of the things that we talked about all through, you know, ever since we started TAP together was we have to be authentic in everything we do, which was also why, and I don't know exactly whenever this occurred, because like the years sort of like start to blend together at some point in time. I want to say it was around 2020. I could be completely wrong. But around that time, we started talking about and setting up a Bitcoin feed or Bitcoin episodes running in the We Study Billioners feed, and we weren't really sure about how to best go

about it. But it seemed timely that I just, I remember, I think we had like, you know, we're doing the master meeting, which is with Toby and Harry, which is very timely because we wouldn't have, you know, TIP without Harry in the first place, which is wonderful to think of. And so he's part of the master meeting. And so we were having those, I don't know, once a quarter. And I remember we probably had like three times, consecutive times where you were talking about Bitcoin and we're both thinking like, huh, how the next 10 miles I mean is going to be like. And, you know, it's just very important. Because I think people can, can smell that. You know, one thing that I took away from

the book Power versus Force, which is one book that's highly praised in the value investing community. I personally don't like it. But I do like the main point about people can sort of like smell if you're not authentic. They can't. Oh, no doubt. Yeah, the cat is a little tell why you're not being authentic. but there's just something there's like, ah, this just doesn't sit right. You know, those people where you just want to run away from them, and you're not really sure why. And so we have to be authentic to what we do. And we were in a situation where, you know, I was stock in my ways still looking at equities

and you're looking at Bitcoin and it just made so much sense that we would split up the feet and have a Bitcoin show. Yeah, and just because, you know, I have this enormous amount of control. behind it, like absurd amounts of conviction behind it. I get that. Doesn't mean that that's what I'm recommending the other people, right? Like, I don't think that for most people that that's appropriate at all because I don't think that they have, I don't think that they can match the conviction behind the position size. And I think that if there's one thing we've talked about through the years, is like, if you're going to own something, like, A, you have to actually understand it. And

B, you got to make sure that the position size doesn't exceed your understanding or what you think your understanding of it is. And for people that hear me say that, they would look at my Bitcoin position and be like, well, you're not doing what you're saying. There's no way you can have that much conviction behind it. Yeah, but you don't also understand the other things that I own beyond Bitcoin, private equity and things like that, that scope the position size. Like, we're talking about the free cash flows that I generate and what I do with them,

which is completely different than if you actually cracked open like my net worth and looked at what it is I own, right? There's a big difference there. People only hear me talking about it and talking about what I'm doing with my free cash flows that come in each month. It's something that's very different. Yeah, you're not saying if you're 30 years old and you're a dentist and you want to retire at age 67. You're going to put all your money into Bitcoin. That's not what you're saying

at all. That's right. That's right. I think it's important for people, because here's the thing. People will listen to the show and be like, I love this. This all makes sense. And then they take 10% of their net worth and they drop it in the Bitcoin. They never really understood it. They were just, they heard a couple talking points. It has 70% annual volatility. And it goes, down by half, right, in three months. And they're like, what that I do is putting 10% of my net worth into this thing? And then they sell it. And then it probably rips 100% up from there or more. Like, just as like an example, like November of this past year, it was like at 16,000. Now it's at 30, right? And it's not even a year later. Like, it's up 80% on the year right now, right? Which in traditional

markets, those moves are mind-blowing insane moves. Like, if you're doing 20% in your portfolio on an annualized basis, you're murdering it in traditional markets. So, like, these moves are insanely volatile. You don't need a big position for it to work in your portfolio. And you don't have to even have a position. That's, it's totally up to you if you even buy into the thesis to begin with. Like, I'm not promoting people to, like, people need to, like, people need to, to do their own research. People need to come up with their own investment thesis. They need to make sure that they're not taking positions that exceed their competence or their understanding of the position because that's a surefire way to lose money. So yeah, I'm very passionate about it,

but I'm also, I like to think I'm very realistic about how other people should be employing it, if at all, based on their understanding and their competence of it. So Preston, whenever people ask you, so is stake investing in Bitcoin? What are you then saying? I've been saying, yeah, he's owned it since 2017. And hasn't sold a single, yeah, yeah. No, I never sold a single, or even send a single set my entire life. I got forced into Bitcoin by my good friend, Preston Pish.

No, I, you know, it was a lot of fun. We read the book, I don't even know what it's called. Oh, the age of cryptocurrency. Yeah, yeah, sounds about right. I think early 2015, maybe even late 2014 was when we... It was pretty early and I'll look it up. And you send it to me or sent me a link and I was like, I don't know what to say. But let's real, because it just like, it's sort of like...

Neither did I. No, it was like you always thought the world was flat and then someone tells you, no, it's round. And you're like, huh, I really need to think about that. So anyways, it took me some time to buy. I think I tried buying it and like, because I bought in 2017. I want to say I tried buying it before. I just, I have no technical skills, so I don't think I've managed to do it. I think it was actually one of the reasons why it was today.

Obviously, I would have lost a significant game for not being able to do that. But I would say that I own a decent amount of Bitcoin. It's 16% of my portfolio, not including generally not including private equity, some private equity, but not all of it. So I want to say it's around 1-6. That's not my cost price. I was lucky enough to have my good friend. The classic Bitcoin problem.

Yeah. Yeah. And I remember having a conversation with a friend of mine because he was really like, it wasn't you, Kristen, but he was like, this is so volatile. What do you do? And I said, you know, my thesis is pretty simple. I can see why it would replace gold as a store of value, perhaps even more. And at the time, it would be equivalent to half a million dollars a coin.

It's more now because gold has prices increased. But so I said to him and I still hold to that that I'm not going to sell anything, not even consider it before he hits half a million dollars a coin and perhaps not even then. And so I sleep really, really well owning Bitcoin, as I'm sure you do. But, you know, people go into Bitcoin for a number of different reasons. And we're not, I just want to say for the records, we talked about this for car. some time. That was actually not so much the intention of this episode, but now we're talking about it always seems like to be a rabbit hole to fall into. And then we probably got to talk about

something else afterwards. I don't hold Bitcoin because I think it's going to change the world. I don't own it because I think it's going to be the new reserve currency. Not any of that. I bought Bitcoin and I'm holding on to Bitcoin because to me it's a highly asymmetric bet. So I put a part of our portfolio into it. I feel I have a very limited down. side. Part of that just comes from Bitcoin and Sell. Part of that also comes from my sizing. I know some people would probably say that 16% is crazy. But to me, I don't feel it's such a lot. Let your winners run. Let the winners run. And it's just very asymmetric bet to me. So it makes a lot of sense why I'm holding on. There are different tax reasons for it too. I don't have to pay taxes

on it before I potentially would sell it. And another reason why, and you also influence, me here at Preston, because you introduced me to Red Dalio, I remember some time ago. And I think probably Red Alio would find that ironic that I would say that he's one of the reasons why I own Bitcoin, but he's also one of the reasons why I don't own more Bitcoin. Because he's such a, he read so much about financial history. And the irony is that whenever you read enough, let's say 100 plus books, if that, if not more, you become really humble about your ability to be able to predict things, at least, at least I do. And you just see how everything is just ever-changing.

And there's this wonderful quote from Milton Friedman, I just wanted to mention. Nothing is as permanent as a temporary government policy. So I love that quote because it reminds me of the current monetary system that we have. And we had this system since August 15, 1971, when Nixon took the world off the gold standard temporarily, I should mention. And I think it would be crazy to think that we're going to stay on the current system. system forever. Why would we? We had a major shift in 1944 with Red and Woods. And you know, you can just see if you're a student of history, you know, in the 20th century, how countries went on and off the gold standard, also at different, at different peck prices. We had the

world wars, everything that happened there. And so to me that makes it, makes me very, makes me very humble about that. I don't really know what's going to happen. But I can see why in this monetary system, why it makes sense to hold Bitcoin. And I'm quite sure that the next monetary system, and I don't know, I have no idea of the next monetary system is tomorrow or 10 years or 50 years. But there's going to be a new monetary system. And if you don't believe that, you haven't studied history well enough. I think Bitcoin would do really well too, not because the world of resourced currency would

be Bitcoin, but it would do well in the new system. Give me a call whenever Bitcoin hits 500,000 and then we can have a discussion again. That's going to be my teaser here. But Preston, I'm going to throw it back over to you. Two things. I would argue when Bitcoin hits 500,000, that's the time to definitely not sell it. And I think that that's going to be the ultimate, that's the thing that's going to mess with people's heads the most is when it gets to those levels, 500,000 or a million, that is going to be the moment in time when you, that is the last thing you want to sell because it's demonstrating a total takeover of settlement and unit of account status on a global scale. which potentially comes next is that it really takes off, right? Because everything's going to be denominated in that instead of the old currency system that people are accustomed to. But that's a whole

another conversation, right? The other point that I wanted to talk about Stig was your comment, I'm not investing in it for this. I'm investing at it as a hedge or an asymmetric position that has demonstrated tremendous value by holding it over the last decade. And I think that's exactly the thing that Wall Street is just on the tip of the iceberg of adopting as their own way of thinking with this BlackRock ETF that's going through the process right now. A lot of people are suggesting that they're going to have the approval by the end of the year.

And I think if something like that happens, you're going to have all these. bond investors, you're going to have people that are holding 1% or whatever to offset. I mean, just look at the selling that's happened in fixed income over the last year and a half. It has been the bloodbath of bloodbaths. And there needs to be something that offsets those losses for these people that are holding these types of positions. And if you have a SEC approved BlackRock I shares Bitcoin type vehicle, that's a spot,

It's not, this is not a futures, this is a spot ETF. I think it just, I think it changes the dynamic massively for people to hold this on their balance sheet in a way that is an asymmetric position to just guard against just moves that people have not seen in traditional markets in their lifetime, right? This move that we're seeing in fixed income over the last year and a half is a move that nobody has ever seen in their lifetime that are participating in markets right now. Let's say that Bitcoin would hit 500,000 acquiring. That's the time when not to sell. And because I would argue that could be potentially time for me to sell.

And I think the important thing to understand there, and this is quite an arbitrary number. I'm sort of like saying it for a number of other reasons. But it's one of the things I want to say that we learned having TIP for what was out in 2014 has been achieving your financial goals. And how should we achieve, like how should we define that? And I've come up with some kind of vague, do whatever you want to do for how long you want to do with whoever you want to do that with, you know, freedom. That's one of the reasons why we do TAP.

That's one of the things we learned from TAPE and from speaking with guests, from reading books. So whenever I relate back to, say, the price of Bitcoin going to 500,000 of coin, I think you're absolutely right that at that point in time, that really has proved the thesis right about Bitcoin. And then I'm still going to say, but then I would consider. selling it. And you might say, that's super counterintuitive. Why are you saying that stick? Well, it really goes back to what I said before about financial goals. I don't need to be

financial independent 10 times over or 100 times over. I need to be financial independent once and make sure that I stay financial independent. Because whenever Bitcoin hits that kind of a price level, there's going to be huge pushbacks from a lot of authorities around the world who want this, in my humble opinion, wants to constrain that. And I think that's going to be a real issue. And so I'm just going to take some of the tips off the table because no matter then in that case what happens, I'm still all set. And I can understand if you're optimizing for dollars, if you're optimizing for expected value, that you would say that's not the right way to do it. But I would also say that whenever you're talking about financial goals, to some extent,

they're correlated with the dollar value, or Bitcoin value, if you want, but they're not symmetric. Over a getting threshold, what you get extra is not as important as what you can potentially. you'll lose, considering the obligations that you might have. So that's where it's coming from. I think the battle you're talking about is actually taking place this past year. The question that I would have for you, Stig, at 500,000, what do you buy after you sell it? Because you're not going to hold it in Fiat. That's for dang sure, which only leaves equities, right? And then you have to ask yourself, because this is one of my favorite things to actually talk about is at what point, if we're moving to a Bitcoin standard, at what point do the multiples make sense in equities?

Because I can tell you, for me, a multiple of 30 on equity in Bitcoin terms, especially if the company's not denominating their retained earnings in Bitcoin-type savings or some type of, you know, other equity that's growing at a breakneck pace. Like, if it's not giving me like a 20% yield, I'm not giving up my Bitcoin for it. So that means that the, that the PE needs to be like around a five in Bitcoin terms, right, for me to start buying equity. So at 500,000 have equity premiums been compressed that they're throwing off PEs of five or 10 in Bitcoin terms? Because if they're not, like I have nowhere to go to even at that price other than continuing to hold it. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and

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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. Yeah. So to your question, some of that probably would go into equities, but not a not public

equities necessarily. Okay, so that makes sense. Yeah. Yeah. Like real assets. So my question to you, I got asked this a few times in Omaha here not too long ago. Will Preston, is he here in Omaha? The answer to that was no, he was not.

And then the follow question, would Preston go to the shareholder's meeting in Omaha again? So I have to be quite honest. Like Buffett and Munger's comments on Bitcoin in particular have like totally turned me off. like big time turn me off. Because here I have guys that have quotes that if you can't make the argument, the counter argument better than the person who's making the argument, well, then you don't understand it and you shouldn't be voicing an opinion. But yet Charlie Munger's out there saying it's rat poison and all these other things.

So like for me, it's a huge turnoff. There are all of their China comments with respect to some of the things that are happening in China should be happening here in the U.S. And this should be banned. and like it's just been you know the saying like kill your heroes is is pretty pretty real for me with respect to those two I am deeply indebted for what I have learned from both of them I really am but it's also hard for me to sit down and listen to them pontificate on something that in my humble humble opinion they are clueless on. If I go to a Bitcoin meetup, it's going to be because of the

people that are there and to interact with fellow members of the TIP community and just good friends that I know from that community, Guy Speer, just plenty, plenty of people that I am, that I just love deeply. They're great people. And that's why I would go. I wouldn't be to go listen to, I've heard Warren talk about seize candy enough times that like I get it. I know how that all I feel like I have a pretty good understanding of like what their approach is and how they don't go outside their circle of competence and all like all that the whole bit, right? It's interesting that you say that Preston and you mentioned Guy. How did he had a conversation with Guy off the record and oh, it's about to come on the record.

Sorry. No, no, no, no. No, no. Yeah, I made it sound like it was some sort of the investigation or or something. I think that was probably me misusing what that meant. But it was so, so yeah, before we typically talk with a guest or before we hit record,

we typically just like small talk. And with some of the guests that we have on multiple times, sometimes those conversations can be pretty long. And one of the time, I don't remember when, it was probably last year or the year before.

I had a conversation with Guy and, you know, so it was just like, yeah, what's going on, yada, yada, yada. And he, He asked about you, Preston.

I don't know if I even mentioned this to you, but he asked about you and how everything was. And he was very excited to hear about, we had a discussion about Bitcoin and how coming from a traditional value investing community and how that blend in together. Because he's doing the Value X and what he's having clusters in Switzerland once a year. And he talked about how there were quite a few of the old school value investors who went into crypto, not just Bitcoin, but different areas of cryptocurrency. crypto and how they didn't see it at all as mutual exclusive to be into crypto, but at the same time being an old school value investor.

And he asked about you and like how their experience has had been for you. And so I kind of feel that's interesting. And I, you know, there's almost something about it where, you know, I kind of feel that if Buffett and Munger has something nice about Bitcoin, there would be so many people in the value investing community would just buy Bitcoin because of that. But because they're taking the very opposite stance instead of perhaps just saying, I just don't understand this or don't invest it. But they really have taken the like very opposite. I think it would be very different.

Because they're almost like, you know, it seemed like people are almost ashamed if they're all like if they value investors. The same they invest in they invest in Bitcoin. But then there was also, I can just sense there are a movement of people in the space who are like to them. It's not an issue. And I think some of it is probably, I think there are some front runners there who just been in the space for a long time and just very independent thinkers, and some of them have, I don't really care about the crowd and therefore have turned to Bitcoin because they think it's an asymmetric bet, you know, people like Bill Miller. Perfect example, by the way. Yes. But then I think there's an age gap too, whereas if you're

28 today and you're building your portfolio, you're not really into the whole Buffettmonger ecosystem and you're like, yeah, you know, I learned from them about picking stocks, but then I also learn from other people, the Michael Salinas of the world, about why I should invest in Bitcoin. So I'm going to take some in stocks or some at Bitcoin and some in reals, whatever, right? So to them, it's completely natural. There's nothing weird about it. My transition into asking you, so I come from this value investing background and sort of like see what happens to people who invest in Bitcoin coming into that. Now I want to ask you the other question. How has it been with someone who made a name for himself in value investing, writing books about Buffett, having a

podcast about Buffett, then coming into the Bitcoin community. How has that been Preston? Well, they've been very accepting and open to being there. I don't think a lot of them really, I think a lot of them look at the whole Buffett thing is like worshiping and like way like over the top, obsessive, compulsive of talking about Warren Buffett and his picks and things like that. The people in the Bitcoin space, they just don't really get the whole obsession with Buffett.

You know, having been a little bit like, away from the community more because I'm talking about Bitcoin all the time. I have to say, when I look at the Buffettmonger approach, if you're going to call it that, I think it's just really quite simple. I mean, it's just figuring out the value of a company through an internal rate of return calculation, an IRR calculation, and making sure that you're buying. I think Buffett's big thing beyond Graham, because that's really gram, right, is just calculate the value of the business based off the free cash flows, which you could argue there's people way before Graham. Graham just maybe popularized that more by talking about intrinsic value

and Buffett also talking about intrinsic value. But Buffett's thing and Munger's thing was that they find quality businesses. They're not sucking off the cigar butt, right? Like, that's it. Like you can buy any business book, any type of MBA student is going to go do IRA calculations. They teach that in every single MBA class. They talk about finding businesses that have a competitive advantage. They talk about business. You're going to learn all of that in an MBA program. Where I think Buffett and Munger are distinctly different than what you learn in an MBA program

is they don't believe in the efficient market hypothesis, right, which I totally agree with. And what's the calculation that they use to, oh my gosh, I'm having a, you know what I'm talking about where you're looking at the beta. Yeah. It's so useful. They don't believe in any other. Cap M models, right? So like you're going to learn about cap M models in business school.

And Buffett and Munger would tell you those are the most useless calculations a person could ever do. I completely agree. And that's the difference. That's all there is to their approach. So really, they're saying cap M is worthless. You should do IRRs and you should actually calculate what a business is worth. You should look at the assets. It should make sure that they have a competitive mode, should be buying quality.

I don't want to understate what they've done because what they've done is tremendous, right? But it's not like there's this really like obscure like thing that isn't accessible to anybody that goes out and buys a business book, right? Like you can, a lot of this stuff is pretty basic for the most part. So, and going to answer your question, I just want to put that out there. I think that all that stuff's important. I think it's great information. but I think that there is a little bit of over-the-top worshipping of these guys with respect

to what makes them so different. And there's plenty of people, plenty of brilliant investors that do these same things, and they probably would have done these same things, whether Buffett and Munger talked about them or not. Bill Miller's, in my opinion, is a fantastic investor. I mean, just look at his Amazon call, which was so opposite of the Buffett Munger approach for years. And Bill was beyond right. Like probably one of the best positions he's ever held because he didn't do what they were saying,

which is we don't understand technology, therefore we stay away from it. Like that whole mantra, which I like calling it a mantra, because if you take it, tell yourself something long enough, you're going to realize it. And if you tell yourself you're terrible at tech and you're terrible at understanding these things, well, congratulations. You just realized it, right? That's why you were out of Amazon. That's why, in my opinion, you were out of Bitcoin for the last 10 years is because you told yourself you didn't understand tech. So, you know, I really admire people like Bill Miller because they do the Buffett things, but they also have the courage to not just buy into this mantra and repeat things.

Like, I don't understand technology, therefore I'm going to continue to buy candy companies. And I think that that's really important for an investor, for somebody that's listening to this is like, hey, Buffett's right about a whole lot and Munger's right about a whole lot, but they're not right about everything. And you have to have the courage to maybe go against the grain a little bit. Think for yourself. Like, that's one of their things they talk about all the thing for yourself, right? You don't have to, just because I'm doing it doesn't mean that it's right.

It goes back to the Geico thing, right? Buffett went in there, sat down with the CEO of Geico and was like, I want to buy this stock. And the guy was like, well, why? And he's like, I don't know how old. He's like 18 in this story, right? Or really young. And Buffett's response was, well, because you're buying it. And the guy looked at it and said, that's the worst reason that you could ever give for

buying something is because somebody else is doing it. And I'll never forget the story. It's a, it's a very profound story. And I would highly encourage value investors to dust that story off and think about it because it applies the Buffett and Munger, too. They don't know everything. Yeah, I think the story was that Benjamin Graham at the time had invested in GEICO, which meant that Buffett also invested in GEICO. Yeah, yeah, that's right. That's right. And so, and he got asked about that. And he said, well, you know, Graham also invested in it. It was like, so this was, I don't know how old Buffett was at the time.

He wasn't that old. He was probably still a stewarder right after graduation. But that was probably not one of his proudest moments. But I think you're right that, you know, with success comes a certain obsession. I'm not necessarily talking about Buffer and Munger. I think you can go into the Forbes top 10 list or top 20, whatever, pick one and say, say that because they've been materialistic successful, you have a tendency to say that what they say is probably correct. They're probably correct on some things and there are probably

others where they're less so. I want to say that I've learned a lot from Buffett and Munger also about life. And I also think that to your point before about some of the things are very basic. I think that there's an element of we tend to get accustomed to things. So what do we mean by that? Back in 2013, I didn't know anything about Buffett or close to very little and I watch your videos. And I think someone who's a value investor today might go back to your videos and be like, why are Preston's video having like a million views each? It's so basic. It's like a stock is a company.

You have to discount caselo's. But, you know, for me at the time, and keep in mind, I come with a worst background. I come with a traditional finance background from a university. So, like, I'm trained to think one way. And all of a sudden, I'm watching Preston's videos about what you could argue are, like, the simplest things in the world. But it was still like, oh, but you know what? The earth is round.

It's not flat. Oh, you can think about it like that. So I think you're right that some of the concepts are, like, very, very basic. But I also think that if you're not used to think like that, it's just a brand, like, Something new just opens up. I was speaking with a candidate for a position the other day. And he talked to me how he started doing long-term investing. No, he started to talk to me about how he wanted to do long-term investing, which he hasn't done in the past. So now he wanted to hold on to stocks for perhaps two quarters, perhaps even three. And I know you might be laughing,

like, but that's not long-term investing. But if you're used to like go on Robin Hood and do like do calls on your end of day, it's long-term. Like, so it's, it's, It's just like seeing the world through a different lens, you know. And I remember the first time I heard about Buffett Among some of that click, but also some of that was like, but that's not the efficient market hypothesis. Like that doesn't make any sense. Or the first time someone said to me, well, instead of using CPI, why don't you just use M2, you know, and this come with M2?

And it's like, huh, I remember M2 because you trained that in business, but you use M2 very differently in business. Like so, but that's also like, if you want to talk about it. you could also say that concept is pretty simple. Like, use the money supply and discount with that. But if you never heard it before, it is actually quite profound. And there was this tendency sort of like, let me see if I can tie a bow around this long rent here. But like, if someone who's like really, really successful tells you about one thing,

all of a sudden you might lose some of your own criticism to whether or not that's correct, whether you then listen to this and you're like, yeah, but is Dick referring to Buffett talking about Bitcoin or Is it Saylor talking, Michael Saylor talking about using M2 to discount like pick your poison? But there is more my way of thinking about different problems and how ironically after interviewing hundreds of really really smart people for the podcast, reading books written by the smartest people in the world, it makes me more and more humble about not knowing what's going on, which is quite a running, I guess. Yeah, I would agree with all of that stick.

The other thing that I think is important to kind of highlight too, I think we read this book together. Who was the individual? He had a 40% annual return. He was a mathematician and his like average holding time was like one day or two days. Oh my God, I can't remember. Was it the Simmons? Yes, yes. That for me, even though like none of it was applicable, like I couldn't take what I learned from that book and apply any of it.

But what I did take away from that book is here's a guy. was his net worth like $40 billion or something absurd. It was absurdly high. And his annual return was 40 percent. Are you looking up the number stick? It was so high. It was double buffets, double buffets return. And it wasn't like he did it for a couple years. He did this for decades. And my takeaway from that is there are so many different ways that people can outperform markets that to just try to replicate one of them, I think it's really important to focus, like, hey, this is my wheelhouse, this is my technical competence, this is what I'm good at, and I'm going to marry that up with this style of investor. It took me a while years to really

have an appreciation for, hey, Preston, like, you're not completely geared the same way as this type of investor. You're geared more in these areas. And so, Like, to pick and choose the types of investors that I feel work with my personal style, that's something that, like, you just have to be in the markets for a while. You have to stay alive in the markets for a while. You have to be open to not one person or one specific investor that you're just modeling everything after. I think that that's kind of a, I think it's possible.

but I just, I think everyone is just slightly different and they need to be open to learning about other ways to go about things, right? I'm not of this genius mathematical mind like Simmons was. I would argue, I don't know anybody could maybe do what he had pulled off ever again, right? So like you have to really kind of, you have to be open to learn from multiple different types of investing styles. And that was also why I thought it was so good that you mentioned Bill Miller before, who came from the old school value investing. You know, I was watching the, you know, I'm still stuck my way, so I still watch the Q&A with with Munger with the Daily Journal, which is always a lot of fun.

He's a bit more unbuttoned there than I guess he is in Omaha, believe it or not. And he talked about how, I want to say, so this was the time where Becky Quakes, he was just reading the question. So it wasn't like traditional Q&A. it was probably because of COVID, whatever. But she talked about, she asked him about what had surprised him the most being in the markets for so long. And he said it was how everything goes to die, actually not just in markets, but just general

how everything just dies. And she said that he had a conversation with Bill Gates about how Gates found it ironic that the disruptors become disrupted. Because it's so difficult mentally to keep on learning and keep on. doing new things whenever you have found a framework that really works for you. And the listener out there can read into that what they want with the different personalities that we talked about here today. But I want to highlight that for someone like Bill Miller who continues to learn and how he's continuing to keep up with his time. And how a lot of this also is not just

tied to what any duke would call resulting, so not necessarily actual results. but also what is your thought process of going into something? And let me try to paint a bit more color around. I remember we read this book, Outliers. Michael Gladwell wrote, and I absolutely love that book, and he's such a brilliant writer. One of the key takeaways, because he actually tells a story about Bill Gates and how he was, of course, very, very skilled, but he was also very lucky with that timing. And Malcolm Gladwell highlights that there were a number of people like Steve Jobs and what I say Steve Case and a few others like, or quite a few others who were born around the same few years and who were all made a ton of money with the rise

of personal computers because they were just, they had the right skill set at the right time. And I'm not, please don't listen to this and be like, oh, well, Sticks just saying that Bill Gates isn't a smart dude. He's just been like, no, he's a smart dude. That's not what I'm My point of saying this is that you need to have the process right. There are so many things you cannot control. Your process, the way you learn, the way you've been critical, the way you perhaps kill your heroes or don't kill your heroes. Like, your process have to be right.

And then, you know, the universe will reward you in terms of good results. But also depending on the timing, it might be 10x or 50x or whatever. That skill set will be rewarded. But in any case, you will be more than financial independence. And if you acquire that skill set and you get the process right. Yeah. And we're just talking about the statistics, right? Like one and six billion for somebody to be of Bill Gates net worth.

So yeah, you have to have multiple things that line up to provide that four standard deviation event beyond just skill and intense competence. Like there's luck that also aligns with such a. a rare number. Yeah. We actually had an outline, but I got to feel that it really hadn't gotten to. And I kind of feel that we probably touched on a few of the, few of the things. And we also went for a long time. Do you have anything you want to talk about?

I'll be honest with you, Stig. I've obviously taken some slack from people, especially early on when I started covering Bitcoin. But for the most part, people have just been really nice, respectful. like they know that Preston's over there doing his Bitcoin thing and that's all he ever talks about anymore. I wish you would talk about value investing or whatever,

but it's really actually been a testament to the community and the space that even though they might not really see it or want to understand it or whatever, they've been very respectful of me and nice and just, you know, there's onesies and twosies. But for the most part, like,

it's been really fun to cover it and to do, something so different, especially the tech. So like the engineering person in me, like my undergrad was in aerospace engineering. So like for me, it's really fun to dig into the tech behind Bitcoin and all the encryption and the hardware infrastructure and things like that that. I've been able to go very deep on that when I'm covering traditional financial markets, you really don't have enough time to, because there's so many companies that cover an opportunity cost to cover, that this has really allowed me to go deep into something. And I guess I just want to thank everybody for just being so respectful of this adventure

that I don't know what to really call it, but while I'm covering Bitcoin. So, and I'm very bull, by the way, I'm extremely bullish in the coming year. I've been bullish since the beginning, but I'm like after 2020. And what we're seeing, like it's up, like I said earlier, it's up 80% on the year to date. like I am very bullish on where this is going to go through the end of this of 2023. I think it's going to be gangbusters. What do you think the future holds for TAP? And you can read into that whatever you want to is if it's for you, for the company, for whatever.

Like, what do you think the future holds? You know, Stig, we have never been trying to grow for the sake of growing. Right. And I think that that's really important. Like, if we think that we have a host that can actually bring a lot of value to this media of talking about finance, well, then we bring them on board. And if that person's not there, well, then we just continue to do the show that we've been doing. There's always going to be a ton of things to talk about no matter what, like, happens financially and in business and whatnot. So maybe our lack of ambition has been a asset.

I don't know how to say it other than that. It's just like you and I have been hyper focused on quality. You know, whether the listener believes that they're getting quality from the two of us or not, that's yet to be, you know, seen. But we just, you know, I think as long as we continue to focus on quality and think about the listener instead of ourselves and try to deliver on top quality interviews and cut out all the garbage like side chats and things like that. I think that's just really important. And that's what the mission has always been is just to deliver real conversations that are really kind of getting

to the heart at things and not some like 10 second CNBC segment. So like as long as we continue to focus on that, I don't know where it's going to lead us. But I just, I don't know where it's going to lead us. but I suspect that it'll continue to benefit not only us, but also the community at large. It's always been about the community with us. And I think we just need to continue to be hyper-focused on that. So wherever that leads us, I don't know, but I know that's your point of view as well, is focus on the community and the listener and everything else should fall into place, I guess. One of the things that I remember we talked about in the beginning was how important it was to have fun.

I actually think it's set there at the very top of the website. And I'm pretty sure that you wrote it because everything was programmed in HTML and I have no clue how to program it. And I still don't. Neither did I. I'm pretty sure that you wrote it. I think that's very important. You know, whenever you have a platform like TIP, it's very easy to be caught up on new shine items for sure. And there have been quite a few.

and I often think back at the early days and think back at not in the sense that oh, everything was like better in the good old days. I mean, Preston had to get up at like 4.30 in the morning. So I don't know if Preston think kind of like things that there was the good old days. A true test of love. If that doesn't show you that I love this stuff,

then I don't know what does. But I mean, we short did a lot of silly things in the very beginning. And we continue to do a lot of things. silly things. And one of the books that really made a big impact on me was the book delivering happiness, which I want to say it was a book that you recommended. I remember thinking, so something but there's shoes or something? I was like, what was going on? But I always felt it was really interesting with the books you were reading. And we read that book. And I absolutely

loved that book in so many ways. And I ask so many members of a team to read that book. because they talk about optimizing for happiness. And it's such a weird concept to talk about in corporate life. You mean you optimize for happiness? Like, how do you do that? It just makes sense. And so in the appendix, the author, the late Tony Shea, he got asked about, or anyways, I don't know if you got asked, but he said that if you keep on saying why to people,

first of all, they're probably going to be offended because people tend to feel like they need to justify things if you ask them a why question. But he said, if you ask them why five times, At some point in time, even perhaps before the fifth, why, they would say because it makes me happy. And perhaps that happiness is misguided. Perhaps he won't make them happy. But no one's crazy.

People tend to do what they think makes them happy. And I know that probably sounds like a terrible business strategy. And it probably is a terrible business strategy. But whenever I think about what the future holds for TAP, I got asked quite a few times. So what's the five-year plan for TIP? And I don't know. I have a pretty good idea of the next five days. I don't know about the next five years, but I do know that we want to optimize for happiness.

And I remember, and this is probably going to come across as like super spoiled, but it comes from a good place. And probably also people are probably going to shake their head and said, Stig is the worst capitalist in the world. And it probably would be right. And I was speaking to someone who asked about whether or not their company could acquire TIP. And it wasn't because I was like super excited about selling JP, but I was really curious. And I remember I was giving you a call and you're like, uh, I don't know. And so anyways, so I jumped on this call and I spoke with him. And so he talked about like different.

He generally they wanted to have founders on board and like all of that, how they will work. And I was like just asking him just because I was generally curious. Like, so how would that work if I were to report to a board? he said, well, you have to do that like once a week, like for an hour. And I don't really remember the things. Things like, I'm out. Yeah, I just don't want to do it. And then he started talking about like, it was only an hour.

And he talked about, you know, the amount of money. I don't want to talk with someone for an hour unless I'm 100% sure. I know I like that person, even if I like that person, aside from my wife, I don't think I speak with anyone consistently for an hour like every week. And I kind of feel like that whole notion about optimizing things. for happiness, that's like the main strength, but also the main weakness of TAP. That's probably why we made it thus far, but probably also why we would never be a huge company, because you kind of run a company like that.

You can't run a company saying, let's just optimize for happiness and make sale of financial decisions, but make sure everyone is okay. But as soon as you also want to make sure that all your stakeholders, so your listeners, your team, everyone you work with are happy, wonderful things just are happening. Because I remember we were talking, I think this was probably like in 2017 or 2018. And we made like close to no money. You could even make the argument that we paid to go to work. Which is like a great feeling if anyone has tried that.

Many years. Many years. We paid to go to work. And I remember because I was definitely at times a bit frustrated because I think I just at that time started going full time, not going full time as in we were making money, but going full time as I wasn't making any money on my regular job. because my wife and I was relocated that part in time and I was following her and what she was doing with her career. And so I went full time because I couldn't do my teaching job because,

well, I wasn't there. And so I remember you were telling me that we just need to do good things in the world and then the universe would come back and help us. And I don't know if you remember that conversation. I really loved it. In a way, it's also frustrating whenever you appear to go to work. But I also think it's a very healthy attitude to have to like. within reason. I don't think you can do that after like 50 years. That's not what I'm saying. But I think you can make, I think that there's an element of having faith in the universe that if you help enough people, if you're kind, you don't optimize for short-term profits and perhaps not even long-term profits. Wonderful things will happen to you. So I just wanted to. I think it has to be.

So, yeah, we did have this conversation. I kind of remember where it was at. And I believe this to my core, but I would caveat it with you have to be adding value to other participants to other people in order for the universe to find a way to bring it back to you. You can go out and dig a ditch in the middle of nowhere and it doesn't benefit anybody. The universe isn't going to find a way to return that value, that work or energy that you expended back to you because the energy you put into the system was worthless energy. But if you're out, there and you are providing your energy to the system. And you're doing it in a way that's actually making other people more efficient or more

productive or more happy through entertainment. Entertainment's a source of business, right? That is going to be returned to you in some form or some way. It might be monetary. It might be some other way that you need in the future. But I believe that to my core. And so really it comes down to is like, how can you, provide that efficiency to other people in the most replicable abundant way with your time.

I tell people all the time, it's like, I use this example, and I'm not using this example to diminish the efforts in the work of a professor or like a teacher. But like, you can go into a classroom and you could teach a class for 30 years. And let's say you have, if you're at the university, you might have 100 students and you might have two or three classes a semester. and if you added all those students up through the 30 years, like, I'm pretty sure we could, now, I don't know that the quality of the contents is good. That's for the listener to decide, but I think we could knock that out in a couple minutes with this platform, right? A couple minutes. And that's not any testament to you or me. That's just a testament to the abundance

that technology brings by harnessing technology. And so if you're, If you're adding value through that technology to other people's lives to make them more efficient and productive. I just think the universe has to find a way to bring that back. But, you know, that's the you get into a lot of theory. I'm sure there's people listening that just like roll their eyes. But like, I don't know. I believe it. I guess I feel like I've seen it in my own life.

And I'm going to continue to believe it until I have reasons to not believe it, I guess. Well, just before, whenever we started to APA, I was a teacher at the local college. and having like 30 students or whatever at the time. So on that note, I can say I completely agree with you. There's only so much value you can bring whenever you have those constraints. I remember that conversation because it was a very fancy hotel. And I want to say who picked it. I'm not completely sure.

But I remember thinking Preston still has a full-time job. And I had it via lasagna. And it was like 20 bucks or 25 bucks. And I remember thinking, it must be nice to have a full-time job. So, hey, what can I say? There's been a lot of these moments that we've never talked about. We need to record them and capture them. This is great.

This is hilarious. Preston, this has been absolutely wonderful to have a chance to take a trip down memory lane. Any concluding remarks here before we round out the episode? Watch oil. watch oil into the end of the year. It's the one thing that I haven't quite figured out, and I've got a sneaking suspicion. It may bid, and if it does, things are going to get spicy into the close of the year.

So, yeah, that's what I know we talked to all this other stuff, and we didn't even talk about finance, but that'd be the one finance thing. And if I'm wrong, I don't know what's going to happen. But when Luke Roman's telling me, I have a couple other people that are saying, watch the energy markets, because it's very counterintuitive to where I, I think people are looking at in the energy space. I think they're expecting the traditional recession and the traditional wipeout and energy because of the loss of demand and all of that.

Then I have a couple of smart people suggesting to me that it's going to move in a direction that a lot aren't expecting. And if it does, there's treasury ramifications that would pop out of that because you'd have higher inflation prints if it would run and all these other things that are dependent on that really critical variable. So the thing I'm watching very closely into the rest of this year is the oil market and the energy prices. You know, that's why I miss these conversations, Preston. I can say lasagna and then you transition into what's the price of oil.

You really have to pay attention to that. Anyway, so perhaps we should let that be the final words of this episode here. Preston, thanks for jumping on the traditional we studied billion-ness episode here. It was a lot of fun, and let's do it again here. I was about to say soon, let's in any case not wait four years, five years, whatever before we do an episode like this again. That's too long. All right.

It's been a blast. It's been a blast. All right. I'm going to end the episode here. Okay, everyone, take care. 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 AsktheInvesters.com and win a free

subscription 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.

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