#1285 Bill Miller IV | Bitcoin Will Dominate Wall Street In 2024

Bill Miller IV serves as CIO and Chairman at Miller Value Partners, he also serves as a Portfolio Manager. In this conversation, we talk about the bitcoin market, ETF’s, miners, regulation, halving, stablecoins, artificial intelligence, and a non-bitcoin yield focus fund that Bill also manages. ======================= Base is making it their mission to bring a billion people onchain. But what exactly is Base? It's an Ethereum L2 offering a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the onchain world. Base is a canvas for everyone, with hundreds of apps in the Base ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the onchain space for the first time, Base is designed to bring your ideas to life. So, if you're looking for a platform where the future of onchain is being built daily, Base is your destination. Join in and make onchain the next online. Learn more at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠base.org⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and follow along on Twitter at @BuildOnBase to see cool things to do onchain, everyday. ======================= Trust and Will has simplified the process of creating and managing your will or trust online. They leverage a data-driven, design-first approach and amazing customer support to help you protect your legacy from the comfort of your home starting at just $159. Sign up today for 10% off using ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://trustandwill.com/pomp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Bill Miller IV serves as Miller Value Partners CIO and Chairman, and he also serves as a portfolio manager. In this conversation, we talk about the Bitcoin market, spot, futures, ETFs, and Bitcoin miners. Then we move on to regulation,

• 0:46Anthony Pompliano?

  the Bitcoin halving, stablecoins, artificial intelligence, and a non-Bitcoin yield-focused fund that Bill also manages. I really enjoyed this conversation with Bill, and I learn something every single time I talk to him. I really hope that you all enjoy this conversation, and here's my episode with Bill Miller IV.

• 1:04Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:28Anthony Pompliano?

  Today's episode is brought to you by Base. Base is making it their mission to bring a billion people on-chain. What exactly is Base? It's a layer-two offering, a seamless experience for both builders and users. With near-zero gas fees and rapid transaction speeds, Base is shaping the future of the on-chain world. Base is a canvas for everyone, with hundreds of apps in the ecosystem, whether you're an emerging creator, a seasoned developer, or someone exploring the on-chain space for the first time. Base is designed to bring your ideas to life. So if you're looking for a platform where the future of on-chain is being built daily, Base is your destination. Join in and make on-chain the next online. Learn more at base.org, or follow along on Twitter at BuildOnBase.

• 2:11Anthony Pompliano?

  Again, that's at BuildOnBase to see cool things to do on-chain every single day.

• 2:18Anthony Pompliano?

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• 3:00Anthony Pompliano?

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• 3:45Anthony Pompliano?

  All right, guys. Bang, bang, I've got Bill here with me. Bill, you have two jobs, you've got two lives. You do public market security selection, and then you also are a Bitcoiner. I'll leave it to people to guess which one you enjoy more or which one they oversee with you more. But I thought we could start talking about Bitcoin first. And it seems like the Bitcoin market, obviously, there's a lot of exuberance. Price has risen 150, 160% year-to-date, but it's still down, you know, 40% or so. You talk with folks in the traditional financial system, more so than many of the guests who come on the show. What are you hearing? Are they excited about it? Do they even know the price has gone up? Do they care at all?

• 4:29Speaker 02

  I think a lot of traditional financial investors actually own Bitcoin personally, and maybe not in their professional products for a variety of reasons. There's certainly awareness of it. I don't know how many are, I'll tell you, very few are as heavily invested as we are. But it's, there's, there's an awareness, there's still a hesitancy, there's still a fear that, you know, there's an axe eventually going to fall. There's all kinds of fears that have been the same roughly since the launch of Bitcoin and it's spot on people's radar. And the interesting thing to me is you could have made any of these arguments that are still the big fears out there about Bitcoin five years ago, 10 years ago, when Bitcoin

• 5:12Speaker 02

  was at 100, 200, 500, none of them would have made you any money. You're just sitting on the sidelines. So the way we got into it was, you know, it's traditional portfolio risk management, which is we said, wow, this could be really, really big one day. I mean, still, from even from this market cap and level, it still could be absolutely enormous. So how do you invest in that? What's the right way to do that? Well, you put a very small percentage of your portfolio in it, and you watch it and see what happens. And that's what we did. And the more work we did on it, you know, we actually have added to it personally along the way. And now it's a very big part of our portfolios personally.

• 5:47Anthony Pompliano?

  Now, when you think about that small percentage and it could become big, I think there's two ways to look at it. I know people who put a little in, as it went up, they sold, and they were taking their profits. You guys did the opposite. Why did you put more in as the price went up versus just taking the profits and going and reallocating it somewhere else?

• 6:08Speaker 02

  I think Bitcoin becomes less risky as it goes up in price, just because it means that there's increasing ownership of it and adoption. And the broader that adoption is, not only in the US but globally, the less likely it is to go to zero. Because it's on everyone's radar screens, people care about it, they're paying attention to it, they want to own it. And so the broader, the, the adoption is, the less risky it is.

• 6:35Anthony Pompliano?

  Now, as that asset becomes more and more valuable, an ecosystem gets built out around it. There's people who are in and around Bitcoin, which opens up a whole plethora of investment opportunities, right? Things that you could go and you could buy. You could buy Bitcoin spot, you could play in the futures, you could go buy public miners, there's asset management firms, you know, you could go into some sort of node management. I mean, there's all kinds of different ways to play this. How have you all thought about maybe the areas that you're excited about and see as a really good investment opportunity? And then maybe areas where you see other people allocating capital and you're like, you know what? We actually have a lot of concerns and have refrained from investing there in the Bitcoin ecosystem.

• 7:17Speaker 02

  Yeah, so one of our bigger wins, at least for me, earlier this year, I, you know, I took a tax loss on a portion of my Bitcoin and ended up reallocating the proceeds I had bought at a higher level. I needed to offset some things. So sold it at a tax loss and ended up buying GBTC at a big discount to the underlying value of the Bitcoin it held, just because the thought process was either there's some sort of egregious amount of fraud in here, which I thought was very unlikely, or this is just a supply-demand imbalance that'll eventually work itself out. And that's seems to be what's happening here. But that's one way to do it. So GBTC owns underlying Bitcoin. It's a closed-end fund. It's not necessarily going to trade in lockstep with the underlying value of its holdings.

• 8:00Speaker 02

  There's supply-demand issues there, but that's one way to do it. The interesting thing there is you potentially get margin credit for that, depending on where you hold it. You can own underlying Bitcoin directly, which is how most of mine is held. Now, with that, you can either go through a custodian or you can self-custody it. I currently have it at a variety of custodians, but at the end of the day, for me, I think you need to eventually be looking toward that self-custody. If you look at what's going on from a regulatory perspective right now, and you look at the theoretical underpinnings of why you own Bitcoin, you need to be able to self-custody and get that. So I'm working towards that. I'm having some discussions now. We want to eventually get there. I'm intrigued very much by this

• 8:45Speaker 02

  bitkey situation just released by Jack Dorsey. So he's a very trusted voice and party in the ecosystem. So that's super interesting.

• 8:55Speaker 02

  But so you can own it directly, you can own GBTC, you can own MicroStrategy, which we do personally, as well as in our funds. The thought process on MicroStrategy is a little more broad than just Bitcoin in and of itself. Because if you look at what Michael's doing there at the helm, he obviously understands math very, very well. And when the shares trade above the enterprise value of the firm trades above the intrinsic value of the core business, plus the underlying value of the Bitcoin holdings, what I think he's going to keep doing, it's been a pattern so far, is he's selling shares when it trades above that. So when it's trading at a rich price, benefits shareholders to sell shares and then buy Bitcoin with it. Right?

• 9:39Speaker 02

  And potentially, if the shares ever get massively undervalued relative to the value of their holdings, he could potentially buy back shares. So there's a very interesting mathematical component there at the helm of that enterprise. I think there's also massive optionality longer term for being the largest corporate owner of Bitcoin in the world, not only from a financial services perspective, but all kinds of other things. So you can own MicroStrategy, we love that as a way to get exposure. You can own miners. I would be very careful on my timeframe as an owner of a miner. I think miners are a critical component to the ecosystem. I think longer term, that is a very challenging business. And why is that? It's a very challenging business because it's a highly capital intensive business,

• 10:24Speaker 02

  and it's very competitive. So you constantly have to be putting money into your machinery to stay competitive, to mine it at a relatively efficient price relative to your energy you're consuming. So it's capital intensive, super competitive. And also, the subsidy goes down every four years for the business, for what you... So the price is naturally declining for the business, the service you're providing, which makes it a very tough business to operate in longer term. Now, when Bitcoin goes up, they're going to trade like turbocharged Bitcoin. So there're going to be Bitcoin beta. I think longer term, again, it's a very challenging business, and I'm certainly thankful for the services they provide. And there always will be a provider of the service too, because there's always someone that's looking to, that's able to buy a machine on the cheap

• 11:07Speaker 02

  and plug it in somewhere on their cost advantage energy. So, you know, there's, the amount of computing power securing the Bitcoin network's never been higher. That's going to be a trend that should continue almost indefinitely.

• 11:20Speaker 02

  So miners, I, you know, that's not something we, that's something we have made a mistake in, in the past and probably not gonna buy anytime soon.

• 11:31Speaker 02

  What are some other ways you're thinking about getting exposure to it?

• 11:34Anthony Pompliano?

  There's private markets, which, you know, historically, I think people from the outside would look at kind of your investment philosophy as being much more public oriented, but I don't know if you guys have done anything private markets?

• 11:47Speaker 02

  Yes, private markets are, I mean, they're the effective, in my opinion, the wild west of investing. I mean, the private markets are bigger than public markets, but they're also more opaque, potentially more dangerous.

• 12:02Speaker 02

  Bitcoin services funds are interesting to me. So we did make an investment in one of those. I almost think if you made a ton of money in Bitcoin or your value of Bitcoin you hold has run up, you kind of owe it to the system to give a little back, whether it's on a marketing front or it's on the investment front and getting the world up and running. Michael Saylor is obviously doing an amazing job, leading the charge on services being built around Bitcoin. But there's also funds that are investing specifically in that. So if you believe in the technology and you believe that one day longer term, it becomes a medium of exchange and accounting system that a lot of assets are priced in, it makes a lot of sense to participate in some of these first mover private Bitcoin funds.

• 12:49Anthony Pompliano?

  When you think about Bitcoin, you mentioned medium of exchange. I think that the promise of the white paper is that it would be a store of value and a medium of exchange. There's a lot of people who say, hey, look, maybe it becomes a medium of exchange, but even if it doesn't, just a store of value will be wildly more valuable than it is today. How do you think about it from an investment thesis in terms of, you know, what is it? If it's just a store of value, what is it if it becomes a medium of exchange? And then what do you think in terms of the likelihood that we can cross over into a true medium of exchange? Is there a way to handicap that or think about maybe probability?

• 13:24Speaker 02

  Well, Pomp, I remember when we were in Miami, one of the things we talked about was how Bitcoin has a description problem, which I think is a really important idea. And you flagged this, which is, a lot of times people ask us, hey, what are you investing in? What do you like? We say, oh, we like this stock. We like that stock. These things are interesting. And we also own a ton of Bitcoin. And the answer, the response generally is, okay, I don't like that. I don't get that. And that's weird, whatever. Or they own a bunch potentially too. But, you know, the people that don't understand it, if instead of giving them a name of a stock we liked, we had said instead, I'm investing in the world's fastest growing monetary payments and technology network. Oh, that's pretty interesting. There must be a private company, huh? No, well, you

• 14:09Speaker 02

  can, it's very, it's very liquid. It's very public. You can see exactly the status of the entire network and technology 24 hours a day, seven days a week, 365 days a year. There has never been a currency or monetary payments system or network in the history of the world where you can say that. And, you know, maybe you don't care. Maybe everyone in America doesn't care because the dollar is relatively stable versus other governments. But I care. I'm paying attention to what's going on with the currency supply. People don't understand how the system works, are paying attention to the currency supply and what's going on. The Fed lets us know every, every month what's going on, you know. But this is the, the information around Bitcoin is unprecedented in terms of what you own and what's going on with it. And I think that's immensely

• 14:51Speaker 02

  valuable. So it's done a lot better than be just a store of value over the past decade. Best performing asset class. There's a ton of people working on it on an open source basis, which is amazing too. It's a global phenomenon.

• 15:04Anthony Pompliano?

  The medium of exchange, I think, is replacing actual currencies for people versus having a store of value. And then you have a fiat currency, whether it's a stable coin or kind of a, an electronic that you're actually using for payments on a day to day basis. How do you think about where we end up? Maybe the probability of getting to medium of exchange?

• 15:22Speaker 02

  Yeah, the way I think about it is assets that have limited supply will eventually be priced in Bitcoin, whether that's waterfront estates, whether that's rare paintings, you know, artifacts, stuff like that. That'll eventually be priced in Bitcoin, capital goods kind of things.

• 15:40Speaker 02

  Everything else, you can deal with a local government or some sort of other depreciating currency or medium of exchange. And so I think that's eventually how it eventually shakes out. It's many, many decades away potentially, but that's, that would make sense to me from a theoretical perspective.

• 15:57Anthony Pompliano?

  Mm hmm. It is basically the, the, once you get the pricing, then that naturally leads to the medium of exchange because people are actually using it as a, a unit of account.

• 16:07Speaker 02

  That's a fair way to think about it. You know, they're, from a medium of exchange perspective, the Lightning Network has immense potential when you look at the transaction throughput relative to Visa, Mastercard, other alternatives. So that, I think that could eventually continue to supplant, uh, you're, that will eventually hopefully take over from a medium of exchange perspective. But what, what the point I think we're dancing around here, which is, people don't necessarily think through the right, uh, they don't necessarily put the right context around the, the innovation, right? So why is Bitcoin so important? Why do you, why are

• 16:48Speaker 02

  you and I obsessed with it? Why are people out there so interested in it? And I think only a handful of people will articulate this, but the tri-party ledger system that Satoshi invented, there's one real implication for it, which is, you don't need a third party who tells you what the rules and laws are to do things anymore. Because there is now, effectively, um, that's what fiat means. It's because I say so. And the reason that fiat things exist, or existed way back when, once upon a time, was to protect against big violent threats and clashes between tribes and that sort of thing. Like, we're in a new age in time here, and there's been no innovation in monetary technology in centuries

• 17:33Speaker 02

  until now. And it's a real breakthrough that you can actually store value independent of what someone else says or does to the yardstick that you own. And so that's the real innovation of Bitcoin. It actually, and, and that's why Senator Warren's so unhappy about it. It's why these lifetime politicians who want to have a big government control perspective around the thing are so upset about it. Because at the end of the day, if, if they're, uh,

• 17:59Speaker 02

  You know, colleagues can't change the yardstick and change the rules all the time. It's an immutable store of value over time. And so that is the real benefit of it, is that people can't take from you what you have.

• 18:13Anthony Pompliano?

  When you think about some of the threats to Bitcoin, I think of there's technology, right? You still got to write software, still got to maintain the software, it's got to work, if you will. But probably the one that most people would point to currently is regulation. And really, I think US-based regulation, how are you viewing that, both as maybe getting clarity in the market, but also as a potential obstacle or friction for Bitcoin specifically?

• 18:39Speaker 02

  Well, other than politicians that are nervous about their jobs potentially longer term, I don't know if there's a huge constituency that wants to shut this thing down. I mean, so that's one way to think about it, is who's actually against this? I don't know. Number one. Number two, the government has sold at current market values, tens of billions of dollars of Bitcoin to its citizens. So can they do that and then turn around and say, no, sorry, this is illegal? I mean, sure, but that's, that's some crony stuff, right? Like, we hope the US doesn't work that way.

• 19:18Speaker 02

  Also, if you look more broadly around the world, the trend is positive, unless you live in a dictatorship, right? I mean, El Salvador, now in Argentina, you've got a pro Bitcoin president. Japan is talking about lower regulation, Germany, so everywhere around the world, the trends are very, very positive.

• 19:40Speaker 02

  It's a, you also hope that the US gets it right, right? Like, generally speaking, from my perspective, the US is fantastic, because they get most things right. The system of governance is better than in other places. And you hope that the system understands that technological innovation, such as the one, such as the context I brought up earlier, should not be stifled and shut down. I mean, that's just depressing to even think about. So we got to, we all, it's on all of us to comment on this FinCEN proposal, let people know what we think, and get our voices out there. So that's next on my list.

• 20:11Anthony Pompliano?

  When we see maybe the threat of companies in the US saying, hey, if the regulation doesn't get clear, if I can't operate my business here, I will go abroad. Have you seen that happening? Like, I think maybe Coinbase and Block are like the two companies in the public market that have spent a lot of time kind of voicing their opinion. And it seems like Coinbase has tried to keep the business they had, but also start to become more crypto native over time. They're launching wallets and, you know, kind of all these technologies and stuff, but they're still US-based and it doesn't seem like they're gonna actually leave. Is that your read as well?

• 20:48Speaker 02

  I think most of these, well, if most of their developers and teams are here and they're from here and they're citizens of the US, there's gonna be hesitancy to do that until it's absolutely necessary. And politicians will keep trying to tighten the screws, but the response has not been all that positive, right? I mean, you have certain loud voices that benefit from centralizations speaking out against it, but in reality, people don't want centralized power, you know? So, longer term, you know, people say, oh, this is a libertarian fantasy. Well, most people are libertarians. They don't want to be told what to do, right? I mean, who sits there and says, yes, I want the governments come out and tell everyone what to do? No, every one of our generations

• 21:29Speaker 02

  says, I'm fiscally conservative, but socially liberal, right? Okay, well, take a look at Bitcoin then. So, I think people, he hasn't to leave until it's absolutely necessary and there's no signs yet that it is necessary.

• 21:43Anthony Pompliano?

  How do you think the Federal Reserve and like monetary policy plays into Bitcoin as a market or kind of as an asset that you can buy and sell? You know, if you look at maybe Bitcoin denominated by M2, it seems pretty highly correlated. If you look at, you know, the fact that the Federal Reserve said, hey, we're gonna destroy investor demand and Bitcoin's price went down 80% and, you know, it seemed like they were winning. They're still tight and Bitcoins come ripping back, you know, hundreds of percent. Like, how important is the Fed maybe to watch and pay attention to when it comes to Bitcoin's price?

• 22:17Speaker 02

  I think central banks that print money that people care about collectively are really important. It's not just the Fed, Fed being the central bank of the world. They would be the most important, but you know, when we went back and looked at the history of the Fed, their balance sheet or their, their, you know, the outstanding money supply has grown roughly at the rate of nominal GDP for the past hundred years. World addicted to debt and deficits, and that's going to continue. So you know, the money machines are going to keep printing. That's important to watch. One of the things I think that's interesting about Bitcoin's recent price dynamics actually is that they've occurred at a time when Fed's shrinking money supply. So yes, money supply, it is a correlated thing, but it's not necessarily the sole driver.

• 23:02Speaker 02

  It's, it's more technologically interesting than that.

• 23:08Anthony Pompliano?

  The most interesting or surprising data point that I've seen recently is the rise of stablecoins. And stablecoins now on-chain are settling more transactions than Bitcoin, at least at the layer one. There are a ton of anecdotes in Argentina, in Lebanon, in Venezuela, areas where the economy basically has fallen apart. Inflation is, you know, at least high double digits, if not triple digits. People want dollar exposure and they're doing it via this, you know, kind of digital dollar phenomenon. Does that serve as a tailwind for Bitcoin? Is that a headwind and it's kind of like taking market share or potential capital flows?

• 23:51Anthony Pompliano?

  How do you see, you know, the quote unquote rise of stablecoins and what appears to be some product market fit there in relation to Bitcoin and its popularity?

• 24:00Speaker 02

  Stablecoin is just another fiat idea, right? It's because some central entity says it's worth this, it's worth this. Also, the US government certainly seems to be most focused on not having that. They view that currently as the biggest competition. Bitcoin eventually becomes a stablecoin, I think in the next 10 to 20 years effectively, not, not from an underlying technology perspective, but the volatility goes way down as adoption broadens out and people understand, hopefully, the benefits of the underlying system. So stablecoin is not something we own. It's not something we've seen any reason to own. We're not involved in those.

• 24:40Anthony Pompliano?

  When you think about artificial intelligence, another thing that becomes pretty interesting is right now, specifically in the public markets, but even in private markets, I think that we're seeing like Bitcoin and cryptocurrencies are kind of lumped into an industry and then you have artificial intelligences like this other thing. And if you go and you look, you know, Nvidia up until recently was the only stock in the stock market that had outperformed Bitcoin. Bitcoin, you know, rightfully took the throne back, if you will. But it's very much like, hey, I'm going to allocate to Bitcoin and crypto, or I'm going to allocate to AI. What I think is happening or likely to happen is as systems become more automated, Bitcoin becomes an important part from a payment

• 25:22Anthony Pompliano?

  system standpoint. Like, it's pretty hard to have machines transact with each other with a one-day settlement time, if you want to have automated systems. And so have you guys done any work or thought through at all this concept of like Bitcoin is money for machines, or how maybe some of these other technology trends could serve as a tailwind for Bitcoin itself?

• 25:43Speaker 02

  Bitcoin as money for machines is an interesting idea. You mentioned people buying Nvidia and other types of things like that, or Bitcoin. That seems to me just like a momentum-oriented investor perspective. Bitcoin, at the end of the day, is the ultimate financial system collateral, right? Because you know exactly where it is. It's completely transparent. There is no better collateral for, if you want to actually run a bank, you know, that's what they should be holding, you know? Maybe not today, given the volatility of it, if they don't, you know, from a

• 26:17Speaker 02

  acceptance perspective, but longer term, that's really where the, all of the, the value lies, is in that tri-party ledger that's secured by more computing power, well ahead of every other coin, and no one will ever catch up to it. So it is the ultimate collateral, longer term. People don't necessarily realize that. They use as a trading instrument. Part of the issue with trading stuff is you also then have to pay taxes on it. So if you realize a big gain, the only thing you know for sure, when you realize a big gain, is that you owe somebody money. So at the end of the day, if you look back at what's happened with Bitcoin for the past 10 years, I personally sit there and say, I'd rather not pay taxes on this right now. I'd rather have hoped that this 10-year incredibly strong trend continues and sell something else instead if I need to raise money. But it sounds to me like that's more of an investing style

• 27:02Speaker 02

  perspective if somebody's choosing between Nvidia and Bitcoin or something else.

• 27:08Anthony Pompliano?

  What about Bitcoin ETFs? Obviously, the rumor is that we'll get the approvals in early January. Whether that happens or not, when it does occur, there is a pretty good reason to suggest that tens of billions of dollars will flow into those products, you know, in maybe 12, 24 months. On one hand, tens of billions of dollars coming into a market is material capital. On the other hand, you know, $900 billion asset or so, it's not like Bitcoin will triple in price overnight. And so how do you view ETFs, potential approval, assets flowing in, and maybe even impact on Bitcoin itself?

• 27:44Speaker 02

  There's a great cartoon in the investment industry that says the punchline is something along the lines of, I don't do something because other people are doing it. I do it because lots of other people are doing it. So the reality is, once the ETF is approved, and everyone's doing it, then that whole fear of career risk and people losing their heads if somebody doesn't like Bitcoin goes away. I mean, that's institutional. There's no more institutional acceptance. And I also think that's why the back and forth continues. The rejection was completely compresious. Certain people don't want it out there, but it's ultimately, I feel like it's baked in the cake. I think for me, a potentially interesting

• 28:26Speaker 02

  question is, okay, you know, day one, does ETF approval mean Bitcoin goes to the moon? Or does it mean that the supply-demand kind of, I mean, you could see that supply-demand balance potentially going the other way in the short term, and Bitcoin going down on that, right? Because then people can actually get exposure via ETFs. They may not understand why they should hold the underlying coins or spots on the ledger. They may sell that to buy the ETF. Who knows? At the end of the day, long-term ETF acceptance is a massive, massive tailwind for Bitcoin.

• 28:57Anthony Pompliano?

  The having is coming, feels like, you know, Game of Thrones or something. Historically, that has preceded a pretty large run-up in price. Some people think that it doesn't matter anymore. I probably would argue that anytime you have a significant supply change, and whether it's known in advance or not, it likely will have some impact. How do you think about it? Is it as simple as having occurs, price goes up? Or is there more nuance to it?

• 29:28Speaker 02

  There's not much more nuance to it.

• 29:31Speaker 02

  Look, the reality is there's a strong, underlying group of people that get the technology, and they're not selling it. And then there's a base level of demand. Not only is there this strong base level of demand, you have the speculators on top, and you have the growing adoption via the wallet numbers, as you pointed out in the past. Adoption's growing, so there's a growing base of demand. And then the marginal supply, all pricing happens at the margin, the marginal supply gets cut in half. What happens when the marginal supply gets cut in half? Only one thing, the price goes up. I mean, unless the demand changes, or the bottom falls out. So people always talk about markets are perfectly efficient, they're not perfectly efficient. And, you know, there is a catalyst every four years for Bitcoin.

• 30:16Speaker 02

  And it's not much more complicated than that, pump, that's it.

• 30:21Anthony Pompliano?

  When you see all these other coins that are becoming popular, people are talking about them, they're getting capital, is it all a zero in your mind? Is it just, hey, Bitcoin is, you know, one of your maybe 10 to 20 good ideas that you're allocated in your life, and you just stick with the thing that you know? How do you think about the rest of the market?

• 30:39Speaker 02

  I think other coins, altcoins, are effectively venture capital by another name. That's it. It's just teams of people building new technologies that are untested, unproven, potentially very large, if they figure it out and get all the wheels turning in the right way. Again, it goes back to what we were talking about earlier around contextualizing the whats and the whys of what we're doing here and the original invention. You look back at history, there's plenty of examples of technologies that eventually were improved upon, but the improvements ended up going in the dustbin because there's this element of path dependence, right? So as an investor, the ecosystem, the, the computing power going into it, it's just

• 31:21Speaker 02

  so much larger and bigger with Bitcoin than anything else, that at some point you go, okay, this is, you want to be real, the reality is there's path dependence here and Bitcoin is the winner. And so you can speculate on some of these other coins, and that doesn't mean some of them won't be huge, most of them will be zeros. You know, from an investment perspective, Coinbase is a really good way if you want a broad-based exposure to do that, because they're going to have their hand in all of these things. They're also giving themselves a good number of shares and diluting shareholders every year, but that's fine.

• 31:52Speaker 02

  But, you know, that's a good way to get exposure to all these things. If you want to do it, you don't actually want to dig into the underlying technologies and make bets on them.

• 31:59Anthony Pompliano?

  Speaking of Coinbase, they were the equity that got me going down the rabbit hole of comparing what I called crypto equities with Bitcoin itself. And so far, whether it's the miners, whether it's Coinbase, you know, other publicly traded stocks kind of in the Bitcoin or crypto industry, they seem to be outperforming by about 2X Bitcoin itself. Is that just a function of what I'll call kind of the classic buy gold or buy the gold miners debate? Or is there something else that may be going on there?

• 32:28Speaker 02

  Good question. I think it's going to be very relevant to, you said it's it up two times roughly the amount of Bitcoin. All these public market things are massively sensitive to start and end dates and when you pick them and that affects all kinds of relative performance comparisons. And so I think that's really important to keep in mind.

• 32:49Speaker 02

  You know, it is, I don't want to say it's a natural monopoly, but other things like it will spring up, assuming the system continues to develop. And I mean, what's the market cap on Coinbase right now? Let's see, it's

• 33:00Anthony Pompliano?

  It's like 35 billion last time I looked, or around there.

• 33:04Speaker 02

  Yeah, right there.

• 33:08Speaker 02

  And you know, one of the things that could be driving that too is what we talked about earlier, which is as a professional investor, this is one of the only ways to get exposure to a really cool technology. So you're going to pay a premium potentially to actually owning the technology because it can't be owned and directly by institutional investors. So that could be part of what's driving it too.

• 33:28Anthony Pompliano?

  Yeah. What's interesting to me, and I will quickly get out of my depth in the public markets, but it almost feels like whether it's the miners, Coinbase, et cetera, there are some similar to MicroStrategy, some like indirect exposure to the assets themselves that are held on these balance sheets and things like that. And then there is almost like revenue denominated in an appreciating asset, right? Especially with the miners and even Coinbase to some degree. And so that is a concept that is foreign, you know, in public markets. And so I almost wonder, are they getting some sort of premium performance simply because people are excited about things

• 34:07Anthony Pompliano?

  that they just never have seen before? Where, once it is better understood, especially a miner who is just going to get it and sell it. And really, yes, it may be denominated in Bitcoin, but actually you should just be looking at the fiat amount. Does that premium go away? I'm not, I'm not sure. But it's a pretty interesting thing because it seems to be across the board. The other part of the analysis, I guess, is like, just because it went up a lot, that actually may signal that it's like, the bad thing to allocate to now, right? It's like, it's the overvalued thing to some degree.

• 34:41Speaker 02

  No, I totally agree. That's a really good insight and perspective on revenue in an appreciating currency. That's an interesting idea. I hadn't framed it like that. That's cool.

• 34:53Speaker 02

  Yeah, I agree with with everything you're saying, though.

• 34:55Anthony Pompliano?

  Let's um, let's finish up talking about some of the public market work you do outside of Bitcoin. You and I could talk for hours about Bitcoin. People will be like, all right, guys, shut up.

• 35:04Anthony Pompliano?

  What are you excited about in the public markets? And maybe you can explain a little bit about the the yield fund and what you guys are doing there as well.

• 35:12Speaker 02

  Yeah, well, the the two things I'm sort of focused on just at this moment are getting these two ETFs out the door. So we have registrations out, statements out there, they're effective. We can talk about it. It's actually the first time I think we talked about it.

• 35:29Speaker 02

  But one of the big learnings for me from business school, there's a couple of, you know, parts of your life and you can pull away the insight statements from those institutions or whatever, right? So business school, one of my key learnings was, this came from a real estate class, like always be in a growing market. You don't want to be in a market that's shrinking, like growth solves a lot of problems. You know, mutual funds are a dying rapper. They're less tax efficient than ETFs, so they're hard to compete in. I'm excited just to get into a growing wrapper in terms of the ETFs, but if you think about how do you outperform a broad-based index? There's two ways to outperform a broad-based index. You can manage systematic risk, which is

• 36:13Speaker 02

  just your overall exposure to the market's basket and risk, right? And then there's the unsystematic, you can manage the unsystematic risk, which is what do you own and what weights? And how does it differ from the underlying index? And so these two ETFs effectively, one is trying to take on the overall exposure aspect in a systematic way. So when do you want to be levered long the market? Can you, can you time your leverage or use market-based indicators to efficiently time your leverage? Some people say, no, you can't time the market. That's impossible. We're not timing the market here. We're timing the, we're timing when we're using leverage. So it's a very different framing, I think, which is, which matters. And then the other one is,

• 36:53Speaker 02

  we're looking to manage unsystematic risk against the, the market. And we're just looking to do it in a very concentrated way, trying to own things that are just kicking off tons of free cash flow with really aligned management teams who are allocating money in the right way. So that's what I'm focused on right now. I'm also focused on our content strategy. I'm excited to do more things like this podcast with you. We may be launching our own podcast in the next year, doing things once a month on markets generally. My dad has actually expressed interest in me, a co-host on that. So we're excited about doing that, hopefully next year. So content, getting these new funds out there and continuing to hopefully outperform our benchmark and, and

• 37:37Speaker 02

  everything we manage. We're the largest investors in, in every product that we manage and own, and that's what we're focused on. So excited about 2024.

• 37:47Anthony Pompliano?

  The Miller family, when if somebody externally said to me, hey, I know nothing about them. What's their deal? I would basically say disciplined and highly concentrated. Like, those are like two of the things I would immediately think of, which are both great advantages, especially when you're right. Talk about concentration, especially in the public markets, because I think that that's something that, obviously, you know, your dad doing it, I think, has been very well covered. And I get the sense, talking with you a couple of times, that like, okay, this is in the genes and you're not going to go buy, you know, shotgun half a percent across every fund and have a gazillion investments to manage. So how do you think about concentration today?

• 38:28Speaker 02

  I think what's interesting is if you were to look at, you know, my dad's portfolio, his own personal account, if you're looking at my personal account, they're just drastically more concentrated, even though we are the largest investors in all of our funds and we own them in size, they're still, our personal accounts are far more concentrated than any of our funds or any financial advisor would say is prudent.

• 38:51Speaker 02

  So, no one got rich diversifying their portfolio. This is a fact.

• 39:00Speaker 02

  So, at the end of the day, I think the ultimate goal is to put yourself in a position where you can concentrate what you own in your investments and actually have it working on your behalf instead of just accepting the status quo and doing what everyone else is doing. And I've been really fortunate because my dad's got us to a point where we can now do that and it's incredibly fun. And so that's what we're focused on.

• 39:22Anthony Pompliano?

  And if you look out over maybe the next 10 years or so, I would say that you are unique in public markets in that you are young, you have a ton of experience and you've already got a track record that people can evaluate in terms of what you've been able to deliver from a returns perspective. What is like the North Star or what are you kind of building towards in the next decade or so, you know, as you continue to launch more products and kind of build out an investment business?

• 39:52Speaker 02

  I'm trying to build a platform of active management that actually achieves its goals.

• 40:01Speaker 02

  I know that sounds like a long shot, but the customer experience in active management has not been good. It's a very challenging business, right? I mean, fees continue to go down as they should. Markets are incredibly efficient. But I think over the past 15 years, I've unlearned everything I learned at business school. And I actually do believe now I'm in a really good place to achieve our objectives and over the long term, deliver for our shareholders. And so, you know, I do think markets are not efficient. I'm increasingly optimistic about, you know, the more learning you do, the more likely you are to outperform the markets. One of the biggest lessons I've learned from my dad is, you know, there really are no shortcuts in

• 40:43Speaker 02

  outperforming the market. I mean, you gotta be sitting at the machine all the time and figuring out what's going on. You gotta be reading. I mean, I could spend 24 hours a day just doing research on names. Generally speaking, I spend most of my time closer to the top of the funnel.

• 40:59Speaker 02

  Just trying to find collections of attributes across securities or in a security that makes it likely to, that I think makes it more likely to outperform.

• 41:09Speaker 02

  You know, that's a combination of valuation, thought about properly, contextualized properly, insider alignment, and just supply and demand dynamics. Like, that's ultimately what I think it comes down to. And so if you spend all your time doing that, you should, if you're using the right effort, be able to outperform. And that's the goal.

• 41:33Anthony Pompliano?

  So far, doing a great job. Where can we send people to find you on the internet personally? And also find the business if they want to learn more about that?

• 41:43Speaker 02

  Appreciate that. At Bill4, B I L L F O U R is my Twitter handle. At Miller Value, firms Twitter handle. Subscribe to our mailing list. We put out content on public markets, often on, sometimes on Bitcoin as well. Subscribe to our mailing list at millervalue.com. So thanks for, thanks for putting that out there. You do a great job, by the way, on the, on your own marketing front with your own stuff. I know we could learn a ton from you and others could too. You're a rock star on that digital.

• 42:16Anthony Pompliano?

  Yeah, I have the blessing and the curse of I just say what I think, which sometimes probably gets me in trouble.

• 42:24Anthony Pompliano?

  All right, Bill. Thank you so much for doing this. We'll do it again in the future.

• 42:27Speaker 02

  Awesome. Thanks, Pop.