Downtown Josh Brown: Where Does Crypto Fit in Your Portfolio?

Josh Brown is famous on Twitter and is the CEO of Ritholtz Wealth Management. In this conversation Brown and Anthony Pompliano discuss ghosts, aliens, bubbles, stocks, Bitcoin, Tesla, Tilray, a mysterious fidelity investment report that disappeared, and how Jim Kramer was once harassed in Costco.

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

• 0:00Speaker 00

  Like seriously, if you died, you outperformed the people who were alive, who were logging in and screwing around with their money all the time.

• 0:09Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:22Anthony Pompliano?

  Josh Brown is famous on Twitter and is the CEO of Ritz Holt's Wealth Management. In this conversation, we cover ghosts, aliens, bubbles, stocks, Bitcoin, Tesla, Tilray, a mysterious fidelity investment report that disappeared, and how Jim Kramer was once harassed in Costco. This is an absolute must listen. I hope you learn and laugh as much as I did. This podcast is presented by Blockworks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur, and want to attend exclusive events and dinners, visit them at blockworksgroup.io. I promise you won't be disappointed.

• 1:01Anthony Pompliano?

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:29Anthony Pompliano?

  Before we get started, I wanted to tell you about our sponsor, BlockEstate, a security token project in the $200 trillion industry of real estate. They've partnered with Polymath and Coinlist Comply API to create one of the first tokenized real estate funds, and they have a unique buyback and burn model. To learn more, visit blockestate.com.

• 1:48Anthony Pompliano?

  All right, guys, I'm here with Mr. Downtown Josh Brown himself. Thank you so much for coming.

• 1:54Speaker 00

  What's up, Pomp?

• 1:55Anthony Pompliano?

  This is gonna be a great episode. So you've got this huge social following and I think everyone says, "What the heck does that guy do?" So let's go through kind of your background and how you got into asset management and financial planning.

• 2:07Speaker 00

  Yeah, so I tell people that I kind of like fell into the financial advice business through the backdoor. I worked at like these third-tier broker-dealers on Long Island, all of them since acquired. No one really paid much attention to them at the time and essentially I spent the first 10 years of my career, like most retail brokers of that time, cold-calling. And I had a front-row seat for some really terrible investment behavior, not on the part of the clients, quite as much as on the part of the brokers themselves. And the irony of that was, these were the senior brokers, quote-unquote, "senior brokers." So I watched guys fall victim to every cognitive bias, every mistake that you could possibly

• 2:49Speaker 00

  make, without realizing it over and over and over again, whether it was trading, or IPOs, or tech stocks, or recommending the wrong funds. It was just this endless cycle of, you know, fear, greed, and wash and rinse, repeat. So I took all those lessons when I left the brokerage side of the business, and I joined the investment advisory side. Simultaneously, I started writing a book about everything that I saw that I thought was wrong, about the way individual investors interacted with Wall Street. And the book was called Backstage Wall Street. And I think it was kind of like, as I was writing it, I wasn't sure what I wanted it to be. I knew what the message was, but it kind of, I think,

• 3:32Speaker 00

  formed the basis for how I would run the blog from there on after. And November will be 10 years, writing the Reform Broker blog, which is millions of uniques, and I love doing it, and people come back, and people subscribe, and apparently I still have, every once in a while, something insightful to say. I try. I mean, it's not easy to like, every day, say something insightful, but if I can say a few things a month that help people, or are meaningful, then I feel like the blog is just a great outlet for me. So that's what I do. I'm a contributor to CNBC. I'm on a couple days a week on the Halftime Report, and I'm the CEO of Ritholtz Wealth Management, which is 26 people, about 500 client households,

• 4:17Speaker 00

  approaching a billion dollars in assets, and we're five years old.

• 4:20Anthony Pompliano?

  Awesome. And so the blog's really interesting, right? First of all, great name in The Reformed Broker.

• 4:26Speaker 00

  Thank you.

• 4:27Anthony Pompliano?

  But as you started writing, like, what was the goal? Was it literally just daily thoughts? Was it to share kind of, you know, historical things that you had seen that you thought were important for people to learn about? What was that goal?

• 4:39Speaker 00

  Well, I, so I start, it started as a venting exercise. So you have to understand, it's November 2008. It's like two months after the fall of Lehman.

• 4:47Anthony Pompliano?

  Everyone's real excited about finance.

• 4:48Speaker 00

  Yeah, and I work, live and work in New York City at the time. Everyone I know works for Bear Stearns, for Lehman Brothers. They're bond salesmen, they're this or that. Guys walking out of these buildings, next door to the building I worked in, with everything they have in a box. Like, the world feels like it's coming to an end when Bear disappears on St. Patrick's Day. And then a few months later, Lehman is gone. And it's just like, and everyone else is merging. And you're just like, oh my god. And I think what's different about then versus now? The reporters covering the crisis really didn't understand finance. Now they probably know too much. They're, I mean, we have incredible journalists covering our industry now. I really don't think there were that many that understood what was going on at the time.

• 5:33Speaker 00

  And it's not their fault. Like, there was very, there were very arcane and esoteric things being bought and sold every day. And they just didn't have, they didn't have that incentive. The financial media is selling ad pages. And the ad pages are being sold to growth mutual funds. And they want positive stories. They weren't looking for negatives. That's changed. And I think the journalists covering the industry are now very sophisticated. But I felt, at that time, I can say some stuff about what's going on in finance that you might not read in the Wall Street Journal. Because they're just not quite as, you know, in the trenches as I was. So I had that little edge. And then... But a lot of the stuff that I was doing was really just editorializing on the news. I'm not a reporter.

• 6:16Speaker 00

  So I was just like, alright, Bloomberg is saying this, or CNBC is saying that. Here's my take, or here's what I'm hearing from people I know in the industry. And I think the audience around the country and around the world just love that kind of perspective. The other thing is, I had nothing to lose. I was working at a firm that was itself on the verge of going out of business, like many financial brokerage firms. And so basically, I was just telling the truth.

• 6:44Anthony Pompliano?

  Yep, it's so funny because I think a lot of people want news, but there's a whole nother subset that they want the analysis of the news, right? And they want it from an individual that's got insight, that's got some entertainment, humor to it. And they just want the truth.

• 6:57Speaker 00

  Well, if you, right, so if you just give someone the news and they don't have the context to understand why it's meaningful or why it isn't, then people are like, okay, I don't know what that means for me. Or worse, oh my god, that sounds like something I should react to. And there are classic examples every day. Like, once a year, we get that article, George Soros is buying puts.

• 7:19Speaker 00

  Now, if you're unsophisticated and you don't have the context to understand that he's probably buying puts all year round, and it's billions of dollars that he's hedging at all times, and he's a hedge fund, and he's not investing for college savings like you are, you're like, oh my god, it's like the wealthiest, smartest global macro expert investor in the world, and he's betting against the market? No, that's not what's going on. And it's always going on. And so that's what we do with our blogs, and it's not just me. We have like six or seven incredible financial blogs in the firm. And it's not that we say nothing matters. We try to explain to people, okay, you're hearing this news, what does it mean to you? Should you care? Should you make a move in your portfolio as a result of it?

• 8:03Speaker 00

  And, you know, frankly, usually the answer is, don't do anything. And it's been the right stance, like for a long time. So that's where the perspective that we're coming from.

• 8:14Anthony Pompliano?

  It's a, what's the saying, like, patience and diligence, or patience and discipline could be the best investment strategy?

• 8:20Speaker 00

  Yeah, so that's easy to say now.

• 8:22Anthony Pompliano?

  Yeah, of course.

• 8:23Speaker 00

  You got a VIX at 12 and you have 10 years in a row of gains for the total return S and P. It's pretty easy to say.

• 8:29Anthony Pompliano?

  Absolutely. All right. So you've been going around the country and you've been, you know, pushing crypto and blockchain and why you're excited about it, what some of the risks are.

• 8:40Speaker 00

  Yeah, pushing is probably the wrong word.

• 8:42Anthony Pompliano?

  Talking about, right? But having a kind of, again, a real truthful conversation with people about, look, this is a investment opportunity that currently exists and how they should think about it. What are those conversations like? And what's the response been?

• 8:55Speaker 00

  So I'm a fairly sought after speaker at like financial planning conferences.

• 8:59Anthony Pompliano?

  Can we just call you, can we just say you're famous?

• 9:01Speaker 00

  Okay.

• 9:02Anthony Pompliano?

  All right. Downtown Josh Brown is famous.

• 9:04Speaker 00

  In certain circle, like, so I, I will get recognized like in airports and steakhouses. I will not get recognized at like a shopping mall, which is fine. I'm not looking, that's not what I want. Believe me. I had a woman come up to me in O'Hare last week and she goes, I forgot where I know you from, but could we take a picture?

• 9:22Anthony Pompliano?

  Perfect.

• 9:23Speaker 00

  So I'm like, all right, can I just tell you who I am? And, you know, I'm assuming she's seen me on CNBC. So she goes, no, no, no, no, no. I want to realize it later. I want to figure it out. All right. So believe me, I'm, I'm good with where I am. All right. But what was I saying? So I, I go on this speaking circuit and I talk to, I love it. I talk to groups of advisors or high net worth investors.

• 9:45Anthony Pompliano?

  Yep.

• 9:46Speaker 00

  Or I speak at like investment conferences to asset managers and rather than just like give this same presentation all the time about here's the right way to invest, or here's how we're building the front, like I've done that already. So I put together this presentation about blockchain cryptocurrency. I call it talking to your teen about the blockchain. And it's like, I, I picture all the questions that the audience has because they only hear shreds of information and they're not doing deep dives. And I try to answer them from a wealth manager's perspective. I'm not a crypto expert. Like that's, I listened to your podcast, by the way. So much of what I know is from podcasts like yours and Patrick O'Shaughnessy's.

• 10:26Anthony Pompliano?

  Yep.

• 10:26Speaker 00

  Like I, I don't present myself as, okay, let me explain the blockchain. I try to talk about it in terms of investing and, and, you know, fear and greed and the things that I do know very well.

• 10:37Anthony Pompliano?

  And, um, you know, one first Patrick's podcast is amazing. I think he does a great job with it. And then two is what, what is the? Yeah. Okay. Patrick's famous too.

• 10:46Speaker 00

  Yeah.

• 10:47Anthony Pompliano?

  So what do you think is, um, kind of the response from people? Are they, are they scared of this stuff? Do they not understand it? Do they, uh, kind of buy into the hype and they've just jumped in? Where, where are they?

• 10:57Speaker 00

  Well, groups of financial advisors are skeptics.

• 11:01Anthony Pompliano?

  Okay.

• 11:02Speaker 00

  And.

• 11:03Anthony Pompliano?

  In general or about crypto or both?

• 11:04Speaker 00

  Both.

• 11:05Anthony Pompliano?

  Both.

• 11:05Speaker 00

  So like, if you picture, if you picture my industry, 20 years ago, everyone was a commission-based product salesman. And then 10 years ago, about a third of the industry started to get this certified financial planning designation and moving more toward this fiduciary bent where they're not selling their ability to generate alpha for a client. What they're really saying is I'm going to help you behaviorally, financially, I'm going to help you with your retirement. We're going to use goal, goals-based planning. And now I think all of the dollar flows in my industry are going toward people who are talking that way. So as a result, that's a self-selecting group. These are people that are like skeptical about anything that seems like it's too good to be true.

• 11:49Speaker 00

  Or that wild riches await, like, we're just natural born. And I think that's good because don't forget my industry, we're, we're managing people's, uh, future cash flows. Like they need this money. It's not fun money. Some of it might be fun money, but in general, like our job is to make sure that somebody doesn't turn around 20 years from now and say, I didn't take enough risk and I ran out of money. Or I took too much risk, more than I needed to, and it drove me crazy and I made bad decisions along the way. So we should be skeptical. However. The financial services companies that financial advisors interact with every day

• 12:30Speaker 00

  are doing large-scale experimentation with crypto and with blockchain, and they're not idiots. And they're not doing it because they have excess cash in the budget. So when you think about what F' is doing at Fidelity and you think about Vanguard talking about how the blockchain might offer savings on, I think, like, trade reconciliation. JPMorgan launching a consortium of 75 banks to do international money transfers, or at least experiment. So I think you can't just say to a client, if you're a financial advisor, and they're like, "Yo, what do you think about crypto? How much Bitcoin should I own?" You can't just be like, "You're an idiot." Like, you have to, even if you think, even if you think it's idiotic, you still have to be armed with data and evidence to have a good conversation.

• 13:15Speaker 00

  There's a Capgemini study this summer. They said 70% of millionaires under 40 want to get crypto information from their primary wealth manager.

• 13:27Anthony Pompliano?

  Wow.

• 13:28Speaker 00

  So now, if you're a wealth manager, we have this expression, I don't know, maybe it's just me, "Don't let the camel's nose under the tent." So, financial advisors use this expression about insurance guys. They say, "Don't let this insurance guy come in with, you know, get his nose under your client's tent because within two weeks, he's going to be selling this guy asset management and drinking your milkshake." So, maybe it's not quite at that point with crypto, but do you want to be the advisor that's like, "No, don't pay any attention to it, it's for idiots." And then it turns out that there is some real-world application for this stuff, and somebody smarter than you is talking to your client? You probably don't want to be in that position, especially if you're young.

• 14:08Anthony Pompliano?

  And also, it's a binary thing, right? You don't want to go kind of say, "Hey, it's absolutely worth zero, and it doesn't matter, and then you're wrong." Or the other way, you don't want to say, "Hey, this is the future, and you should go put all of your assets here," right? And be wrong there either. And so, I think the balance is what somebody's looking for, especially if they're coming to you. It sounds like for the goals-based planning and kind of the behavioral, you know, guardrails, if you will, that you can put on their financial decisions.

• 14:33Speaker 00

  Yeah, so you have to understand, like, where I'm coming from. Forty-one years old, I started my career. In the middle of the dot com explosion and I saw it all and then I my formative experience was that crash. Yep. And I lived through it as like a junior broker working on a team of more senior people with a lot to lose and just the the scale of that decimation and they were all in. The whole firm was all in, they were making markets in NASDAQ, dot com stocks, big ones. They were taking part in things like eToys IPO from Goldman, you know, getting on the syndicate. I just like I watched everyone just be so incredibly wrong but right.

• 15:15Speaker 00

  So right on the idea but totally wrong on the investment implication and you know Andreessen talks about that that book, can we curse? Can we say F company? Yeah. Fucked company? So so so there was a website called Fucked Company and I think they did a book, but he said if you turn the pages of that book, every idea that was a blown up dot com stock actually ended up happening. Yep. It just took a little bit longer, the world wasn't ready for it. So up to and including selling pet food online, selling toys online. So Netflix, there was a actually, you know who had the original idea for Netflix? Who? Enron. I swear to God. Google this, Enron and Blockbuster cut a deal for streaming movies on the internet. I swear to God. That's amazing.

• 15:58Speaker 00

  So every stupid idea from that era actually was not a stupid idea, the world just wasn't there yet. Yeah. Or the infrastructure wasn't there. So if we think that trading coins that have no, you know, intrinsic value, have no cash flows, are backed by shady cabals of people that you can't trust, have no oversight, all of that is true. Doesn't mean that you can just outright say, none of this will ever have any value. So. So what do you think about Bitcoin? I own some, I I bought it like 2300 and I announced it publicly because if if you know, I like to have some skin in the game if I'm gonna if I'm gonna try to take credit. For those that don't know, when you bought it at 2300, it was like July of 2017.

• 16:40Speaker 00

  People went crazy because there weren't a lot of mainstream financial commentators. Famous. Who were willing. Who are willing to be like, yeah, I'm gonna give it now. I didn't buy it and say this is gonna change the world. I said, let's see what happens. See what happens.

• 16:55Anthony Pompliano?

  And but hold on, we gotta call out when you bought it in July, what happened afterwards?

• 16:59Speaker 00

  It went nuts.

• 16:59Anthony Pompliano?

  It went nuts and.

• 17:01Speaker 00

  Well, that was the breakout, but I don't think I caused the breakout. It was just right at that moment.

• 17:04Anthony Pompliano?

  Yeah.

• 17:04Speaker 00

  Cause I bought it on technicals, by the way.

• 17:06Anthony Pompliano?

  But well, here's the best part is so then, uh, December 10th, right? Didn't you call that?

• 17:12Speaker 00

  So that's it.

• 17:12Anthony Pompliano?

  You said it was over. And so if you look at a chart, I saw your blog post.

• 17:15Speaker 00

  Yeah.

• 17:16Anthony Pompliano?

  When you bought it, it's like right before the bull, you know, the major bull run starts and you literally 10 days or four days before the, uh, the, the top of the market.

• 17:23Speaker 00

  So well, uh, so here's what I did. I came out in December after going to, um, I don't want to use names because a friend of mine invited me to this event and it was the most embarrassing thing I've ever seen. And I, the next morning I said, I wrote this, I said, I went to this thing last night. It was like Wall Street CTOs, like serious firms sent their tech guys. And they had a panel of quote unquote crypto experts. It was the dumbest shit. It was like some guy from China saying that. He like every question someone asked him about cloud or he'd be like, oh yeah, we do that. He's like, it's like, like, oh, and what about if, um, we could use the distributed ledger?

• 18:05Speaker 00

  But we could use DNA and we could figure out if someone's gonna get sick before they do. And you could buy in with tokens if you're a researcher and he goes, oh yeah, we do that too. Like it was just, it was like four charlatans on a panel. Um, or one guy had launched a hedge fund that was like crypto hedge fund. Had blown up to stock hedge funds and bond hedge funds. He's like, all right, here's my next thing. So it was just like.

• 18:27Anthony Pompliano?

  The next crater in the earth.

• 18:28Speaker 00

  And the guys I was sitting with, and I'm like the furthest thing from a tech expert, but they were technology. And so they would ask these really insightful questions. He'd be like, all right. So, um, in Long Beach, California, they have the port and there's a huge expense involved with making sure the right container goes to the right ship and et cetera. And, um, if blockchain were employed and there were no middle brokers and it was just the ships and the, and the containers talking to each other or whatever. And they'd be like, yeah. And so then like an, like an idiot, I raised my hand. I go, okay, that sounds awesome. How does, how is there a coin going up as a result of that? Can you explain like? Like, can that just, can that just be like a technological advance, this decentralized

• 19:12Speaker 00

  computing and peer-to-peer without there being like a Lambo? And the guys in the panel are like, no, well, of course the coin's gonna go up. Like, what, what coin and why? And they just, they hadn't connected A and B.

• 19:25Anthony Pompliano?

  Yep.

• 19:25Speaker 00

  So, I just, like, the next day, I was like, this is all nonsense. There, there, there doesn't need to be a coin if you believe that blockchain. Now, I understand you need tokens in the ecosystem, but it doesn't have to be something that's trading like a rocket ship every day.

• 19:41Anthony Pompliano?

  Yeah. So. Well, the, the best part is, uh, on the blog post you wrote, it literally is you, you know, a couple of days before the bull run starts, you bought Bitcoin and on December 10th, which is, uh, four days before the top of the market, you basically came out and said, this is nonsense.

• 19:54Speaker 00

  Yeah. It's the only thing I've ever been that right about in my life. So, don't, do not count on that to happen twice.

• 19:59Anthony Pompliano?

  Absolutely. All right. So, uh, how are you talking to clients about allocating to Bitcoin or other crypto, right? Is it, uh, hey, get 50 basis point exposure? Is it on a per individual, like, custom goals? How do you think about it?

• 20:13Speaker 00

  So, at the current moment, there is no legal way for a financial advisor to even have that buy or sell conversation.

• 20:23Anthony Pompliano?

  Okay.

• 20:23Speaker 00

  Because, based on the fiduciary standard, and I've been through multiple SEC examinations at different firms, um, FINRA on the record interviews, like, based on all of my, um, contact with regulators over the years, which is, it's good that regulators are involved. Um, the one thing I can tell you is, if you make a recommendation like that, they're gonna say, show me the spreadsheets. Like, in other words, how did you arrive at this decision for your clients? What is the, the reasonable basis?

• 20:50Anthony Pompliano?

  Yep.

• 20:50Speaker 00

  If I recommend a portfolio of REITs, I can show them, um, you know, this is the, this is the funds from operations, this is adjusted funds from operations, this is the distributions, this is my client's ordinary income tax rate, and here's why I put it in IRA. I can- Take investment committee notes from that decision and say, this is why we did this. You could defend it. Yeah, and they're not looking at, did it work or not? They're looking at process. Yep. There is no possible way that any fiduciary advisor in America wants to sit across the table from an SEC examiner and explain the process by which they put their client into shitcoins. Like, it's, could you, like, can you imagine? Like, no, nobody in their right mind would do that, so.

• 21:33Speaker 00

  Can you not defend it with a person on Twitter saying, uh, when moon? Yeah, I should print that out.

• 21:39Speaker 00

  Yeah, right. Here's, here's why, here's why I put my client's retirement account into cri- like, so, I'm not saying we won't get to that point. Yep. Very early days, but I will tell you, you're right in your instinct that the institutional market has to come along first. Yep. It's always that way. Yep. The other thing is, I've seen, the dot com is like one story. In 2004 and 2005, we had a poker boom. You ever hear about that? No. How old, how old are you? No, tell me about that. All right, how old are you? Thirty-one, or thirty, oh, thirty. Okay, so. I don't even know how old I am, is that bad? All right, so the year is 2004. We're all wearing backwards Von Dutch trucker hats. All right. Paris Hilton is a big thing. We'll talk about it later, but. By the way, I'm in high school. Yeah, it's cool, so you know, you know, you know what's going on. Uh, you're listening to Ludacris, I assume? Yeah.

• 22:24Speaker 00

  Okay. Nelly, all, all of them. Nelly. Yeah, it was, it was great, Country Grammar.

• 22:29Speaker 00

  So, uh, we have this poker boom on Wall Street. There are like six publicly traded companies that have something to do with Texas Hold'em. Either they're providing the software for online poker, or they're like B2B with the casinos, or they're selling poker lessons. One of them is an offshore and you could gamble, and these stocks go bananas. And everyone you know, for like a six-month stretch, I don't understand it to this day, is playing Texas Hold'em. It's the biggest show on TV on ESPN6 or whatever. We played in high school. Right, like, for no reason, it just hap- like, it was like a rash. It just happened, and then it was gone. And of course, those stocks were all gone with it. I'm not suggesting that cryptocurrencies are quite a, a great analog for that, but some

• 23:14Speaker 00

  of them individually probably are. Absolutely. And you, and you know this better than I do, you see these flare-ups in interest in Zcash. Yep. And then it fades, and it's like, well, why did it happen and why did it go away? There, you could, you can. You can X post come up with a reasonable explanation for these things. It's very hard in the moment to figure out why something's doing that.

• 23:34Anthony Pompliano?

  Well, I mean, let's just go right at the most controversial one, Ripple, right? So, or XRP. So last week or two weeks ago, it went up like 60 or 80%. I forget, I mean, some enormous double-digit percentage and nothing changed.

• 23:47Speaker 00

  Right. Do you find it ironic that the things that crypto enthusiasts are most excited about all revolve around centralization?

• 23:55Anthony Pompliano?

  In what way?

• 23:57Speaker 00

  Well, everyone's really excited about this backed project.

• 24:00Anthony Pompliano?

  Yep.

• 24:00Speaker 00

  Which is essentially the New York Stock Exchange inserting itself as a middleman into the crypto environment, charging buyers, charging sellers, warehousing securities, deciding what the rules are going to be with the SROs, self-regulatory organization. So that, CBOE, and CME. These are centralization things that involve centralized oversight. So how can you be a crypto hippie or an economic anarchist or whatever you call yourself? And then be like, this is going to be really bullish when we finally get legitimized, you know, centralized trading.

• 24:38Anthony Pompliano?

  Hold on, back up. I've never heard crypto hippie before.

• 24:41Speaker 00

  Yeah, I just made that show up.

• 24:43Anthony Pompliano?

  When you're famous, you can do that. All right. So I think that what you're hitting at is there's two components, right? There's the people who actually believe in the decentralization and kind of the reasons or the ethos of crypto in general, right? And why that's important. And there's the people who are looking to get rich, right? And they're looking for investment opportunities, et cetera. I think what we're seeing right now is this thirst for validation, right? Or, you know, kind of legitimacy in the financial markets. And so if you ask kind of the crypto anarchist folks, they actually hate backed and they hate, you know, futures and all the, you know, rehypothecation and all that kind of stuff is just, it's the same game, you know, different asset.

• 25:22Speaker 00

  So they want to stay poor, are you saying?

• 25:24Anthony Pompliano?

  Stay poor?

• 25:25Speaker 00

  Yeah, because those are the things that drive price increases in the coins.

• 25:29Anthony Pompliano?

  Yeah, I mean, look, I think that I think that those people, the crypto anarchist types, their belief is just over a long period of time, this stuff's gonna, you know, accrue value. And so we don't need that stuff in the short term to, you know, affect it, right? Now, if you go to the other side, which probably more like-

• 25:43Speaker 00

  The investment side.

• 25:44Anthony Pompliano?

  Yeah, the retail traders and, I mean, frankly, the people who are on Twitter, you know, pumping stuff and doing all the kind of the craziness, right? I mean, look, one, these people have no clue what they're doing. Two is, you know, my favorite thing is when people ask me about coins, I tell them penny stock tickers, right? And they literally think they're coins. They have no clue, right? And they're essentially the same thing. And then the third piece, I think that that becomes really interesting is on the, on the altcoin side. You know, your point about why do you need a token or why do you need a coin? Probably 60% of the pitches that I've heard, it's, oh, because this is our currency. Like, it's our proprietary currency. It's like, okay, so we got gift cards that were worth $5, now they're gonna be worth $15. I don't get it. I think, you know, we've come out publicly and said, we think, you know, 90% of those are gonna go to zero.

• 26:27Speaker 00

  Well, wait, it's, that's not, it's not why do you need your own currency? I understand, it's, you know, why would a secondary market forum around your, that's the, that's, so someone's like, well, should I trade like Filecoin or? Well, are you gonna use it? No, I just want to speculate in it. When you think about frequent flyer miles, let's say you have $5,000 worth of delta miles and you know you can't use it and you actually need the cash right this minute.

• 26:51Anthony Pompliano?

  Yep.

• 26:52Speaker 00

  So wouldn't you, wouldn't you want to sell those 5,000 miles for $4,000 if you could have the cash today?

• 26:59Anthony Pompliano?

  Yep.

• 26:59Speaker 00

  But there is, that doesn't, it's not a thing that people are doing.

• 27:02Anthony Pompliano?

  Yeah, of course.

• 27:02Speaker 00

  No one's buying and selling Chuck E. Cheese tokens outside of the skee ball pit. Like, there are not secondary markets for everything just because it has a price. Nor does there need to be. So that's the, my token, I understand why you would build an ecosystem that's got its own currency. I don't have a problem with that. The second derivative of, and people are gonna drive the price up because they're bullish on the service, why?

• 27:27Anthony Pompliano?

  Why would they do that? Yeah, well, some of it's the speculators are coming in and driving their price up. And then the other piece is there's financial engineering going on, right? So if you look at, you know, this happens, take the Tilray stock, right? I mean, that thing exploded and some of it is, you know, just hype and kind of everyone rushes in. Some of it's financial engineering in terms of the circulating supply or kind of the float and how they're doing that. And so I think what we're seeing is like those more sophisticated models and, you know, kind of methodology being applied to a super nascent market where there's very little controls. It's not as nearly as liquid. And so when you execute that stuff, the repercussions are, you know, on steroids, basically.

• 28:10Speaker 00

  So I'm glad you brought up the term supply because actually one of the arguments that I mock in my presentation is the scarcity argument about any crypto. So I come from this from the standpoint that anything man-made, there's no such thing as scarcity, man can make more. And so I know that I understand the 21 million Bitcoins and there would be more, blah, blah. Okay, but if there's forks, then maybe there's 21 and then another set of 21 of something else. And if there are altcoins and some of these begin to be taken seriously or have a real use case and become a thing, well, then that can be infinite too. And Tilray, this is the big marijuana stock that went absolutely crazy over the last couple of weeks.

• 28:53Anthony Pompliano?

  What did it go up like 600% or something?

• 28:55Speaker 00

  More. It was like $15, went to 300 or something. It was hilarious. But why did, why did that happen? Well, Constellation Brands took a stake in another publicly traded company, a very big stake, and that stock went crazy and everyone on Wall Street and off Wall Street said, well, what's the next blank? And so they found Tilray, which I'm not saying it's a fake company. It's got, I don't know, $20 million in sales or something. And they've got apparently licenses from the Canadian government to sell THC enriched products or whatever it is. And maybe it'll be successful. It's not going to be a $25 billion company.

• 29:37Speaker 00

  Overnight, just because it's the only other marijuana stock that publicly trades. But that's the way. So it trades on a real exchange. It's got a decent sized market cap. It's liquid for institutions to buy and sell. So that thing becomes, you know, it becomes like the thing to gamble on for everyone. And then. Well, it's greater fool theory. And then the shorts come in and they're too smart for their own good. So they start betting against it way too early. They get taken out in body bags. And before you know it, you have this phenomenon where people's grandmothers are calling them up. Should I buy some Tilray? And then, of course, that's the end. This one was a boom and bust inside of 10 days. It's pretty remarkable to watch. The sole reason that went on is scarcity.

• 30:20Speaker 00

  If there were 10 Tilray's publicly traded, or if Tilray had 5 billion shares in the float, you would never have seen that level of, um, that level of excitement and enthusiasm. And what Wall Street's really good at is feeding the ducks. When the ducks are quacking, Wall Street is very good at feeding them. And what that means is coming up with more supply. Oh, they like this? Let's do seven IPOs and we'll call it, right? Oh, they like Uber? Well, this is the Uber for clothes and this is the Uber for food. And this is the Uber for, you know, whatever. So that, I mean, I, I've watched that cycle play out probably five or six times.

• 31:00Speaker 00

  So Wall Street will give you more Tilray's. Yep. You'll have 20 of them by the end of the year if that stock stays above 100. I promise you. Yep. Now they'll be of lessening quality. Yep. And you won't know which one is gonna survive, of course, but that's the risk that's in the market. And all they're trying to do is steal market share. Yeah, but if you're right, so if you're, if you're base case, like investment, if your investment thesis for anything, I don't care if it's a coin or if it's a stock or, or, or a commodity, um, is scarcity. Understand that the demand in the marketplace will be met. This is capitalism. It's gonna happen. May not happen overnight, or it may happen already and you're not even expecting it so soon. So I think like people need to have a better reason than just, well, it's the only game in town.

• 31:45Speaker 00

  Yeah, absolutely.

• 31:48Anthony Pompliano?

  What percentage chance do you put on Bitcoin becoming the global reserve currency?

• 31:54Speaker 00

  So if I don't have a philosophy about crypto, but if I did, I would probably be a Bitcoin maximalist.

• 32:00Anthony Pompliano?

  Okay.

• 32:00Speaker 00

  So I don't care either way. I don't have like a, I don't have like a dog in the fight, but.

• 32:06Anthony Pompliano?

  But just, just.

• 32:07Speaker 00

  If I think the best thing for cryptocurrency in general is for one of them to become like really legitimate. And for that to happen, everyone should stop working on everything else, stop funding everything else. Stop playing games of tokens. Just make that a real thing. Build layers on top of that to make it more useful.

• 32:27Anthony Pompliano?

  Yep.

• 32:27Speaker 00

  Um, you know, doing transactions is a joke right now. Um, the store value argument is stupid when there's no custodian you can trust. Like all of those things have to be addressed. And if you, I feel like if you get your foot in the door with mainstream, with, with the Wall Street mainstream by actually having something that's usable for both transactions and for investing.

• 32:48Anthony Pompliano?

  Yep.

• 32:49Speaker 00

  Then all of these other projects should be addressed.

• 32:52Anthony Pompliano?

  It's interesting to hear your perspective too, because you, I mean, you are very much boots on the ground. You're talking to retail investors, you're talking to financial planners, et cetera. Right? And so things like there's no custodian to trust, right? Is, is interesting words, uh, even with, uh, so BitGo, uh, maybe two, three weeks ago got, uh, finally got a qualified custodian license, right?

• 33:13Speaker 00

  Yeah.

• 33:13Anthony Pompliano?

  And so, um.

• 33:14Speaker 00

  How much of your money did you put there?

• 33:16Anthony Pompliano?

  Well, well, so here, here's what I was gonna say is that is the legal bar to have been met, right? In terms of they, okay, now they checked the box. We are a qualified custodian.

• 33:24Speaker 00

  Not an emotional bar though.

• 33:25Anthony Pompliano?

  But, but it doesn't mean that they're trusted.

• 33:28Speaker 00

  Yeah.

• 33:28Anthony Pompliano?

  Right? So it's, hey, we don't trust is very different than did you meet the legal requirement, right?

• 33:32Speaker 00

  Right.

• 33:32Anthony Pompliano?

  And so I think that that gets lost a lot in crypto is that people are, oh, we, here's the box we need to check. Okay. We checked it. We checked it. We checked it.

• 33:39Speaker 00

  When's the ETF? Yeah, so you could listen. The emotional argument is different. Right, so on on Wall Street, you've got you've got custodians that are that are both trusted and legal and go under. MF MF Global was one of the biggest broker dealers on the street and they had thousands of customer accounts. And they were run by a former CEO and former governor of New Jersey, a former CEO of Goldman Sachs. And former governor of New Jersey, John Corzine. And when MF Global went down because of proprietary trades they were doing during the European crisis. Thousands of retail customers had to wait to find out whether or not their funds were commingled in some of these, seriously. That's nuts. That's nuts. And so and they and they were managing billions and billions of dollars of like

• 34:25Speaker 00

  traditional broker dealer money with FINRA oversight and so like now somebody comes along and gets a license, all right, that's great. Call me in a hundred years. I'll tell you if I trust you. Right? My when my ancestors live and die and their accounts are on your platform. I I was in Europe speaking to financial advisors there. They don't even call themselves that. They call themselves fund selectors. And here's why. They can't get fired. Really? Cannot. You know why they can't get fired? Because there's nothing they could do that would ever get a client to move their money. You're talking about the Netherlands. They have banks that are 400 years old. Italy has banks that are 500 years old. Italy has banks today that date back to the Renaissance.

• 35:08Speaker 00

  The traditional wealthy people in Europe in each one of these countries, Spanish people, English people. They have had money. They have had money in these banks for like 20 generations of their family. It will never it will never move their money. It will never move their money. Some of these banks were in horrible shape financially. You read about them in the Financial Times as the next bank to go under. Yep. People still don't move their money. So when you talk about trust and a high bar. Yep. That's like centuries of, well, my family for as long as time goes back has had money at this bank in Amsterdam and I'm not moving it. So the guys that work there as advisors, they really can't get it. It's very hard to get fired. Um, so when you think about a custodian coming into this business, it's gotta be Bank of New York Mellon.

• 35:51Speaker 00

  It's gotta be Schwab or Fidelity. Like, I feel like anyone lesser than that will not address the problem.

• 36:00Anthony Pompliano?

  Before we move on, I wanted to tell you about our sponsor, BlockEstate, a new security token project in the $200 trillion real estate market. They've partnered with Polymath and Coinlist's Comply API to create one of the world's first tokenized real estate funds. Tokenization is the process of creating a digital token that represents ownership in a real-world asset. You've heard me say it before, but a clear use case for this is real estate. BlockEstate aims to bring increased liquidity to this massive market. We're really, really thankful to the BlockEstate team for their support, so we'd appreciate if you checked out their website at blockestate.com to learn more. If you're intrigued by what they're doing, feel free to reach out to them or give them a tweet on Twitter. Thanks so much.

• 36:40Anthony Pompliano?

  You hear a lot about the knocks against crypto, right? Custody is one of them, but money laundering, all these different knocks. And I think that a lot of people in crypto who might not be as well-versed in traditional finance and regulation, etc., they turn and they look and they say, "Yeah, but the US dollar is used to launder more money." Or, "The criminal's choice of currency is the US dollar." And we love it because I think it's hilarious that the Wall Street Journal came out the other day and said, "All this money laundering is going on." We looked at 64 exchanges over the last two years and we found $90 million of money laundering.

• 37:14Speaker 00

  Yeah. I could get past that. That's not a... Right. So, look at HSBC, six years ago, there was like a crime wave going on. They were laundering money for the Triads and for...

• 37:27Anthony Pompliano?

  Well, Donks Bank or whatever, right? They did like 235 billion in one location.

• 37:33Speaker 00

  I can get past that. I read some statistics, like 90% of all $100 bills have cocaine residue on them. So, US dollars could be used for anything that crypto could be used for.

• 37:43Anthony Pompliano?

  It's gone down. So, it used to be 90, and we recently looked, and it's 70% now. So, the printing machine is diluting out the cocaine bills.

• 37:52Speaker 00

  I'll have to switch my currencies. Good to know.

• 37:54Anthony Pompliano?

  So, how'd you get such a large Twitter following?

• 37:57Speaker 00

  I think I was early.

• 37:58Anthony Pompliano?

  You're wild on Twitter. You're famous and wild on Twitter.

• 38:01Speaker 00

  I think I was early. I mean, I chalk up a lot of my success to just going there and spending a lot of time there and making friends with the other people who were there early. And we invented it. Like, there was no, in 2009, when I started tweeting, there was no one in the industry

• 38:18Anthony Pompliano?

  Yep.

• 38:18Speaker 00

  that was like, other than journalists who don't have the same restrictions. But I got permission to be on Twitter, and there were things I couldn't do, which I didn't want to do anyway.

• 38:27Anthony Pompliano?

  Did you have your real name on it from day one?

• 38:29Speaker 00

  Oh, yeah.

• 38:29Anthony Pompliano?

  Yeah.

• 38:30Speaker 00

  Yeah, I never, I've never written anything anonymously in my life. I feel like if somebody, I understand why some people have to.

• 38:36Anthony Pompliano?

  Yep.

• 38:37Speaker 00

  I didn't have to, so why would I? I don't have anything to hide. If I have an opinion, I want people to know it's my opinion.

• 38:42Anthony Pompliano?

  All right, perfect. So let's talk about another guy with a large Twitter account, Musk and Tesla. What do you think?

• 38:49Speaker 00

  I feel, I don't know. I go back and forth. I feel like he's, I feel like he probably, like, three years ago should have been like, "I'm not the CEO."

• 38:57Anthony Pompliano?

  Of Tesla specifically, yeah.

• 38:59Speaker 00

  Well, I don't, I think he's like, just obviously brilliant and has come up with just these amazing things and his pursuit of things that people said was impossible.

• 39:09Anthony Pompliano?

  Yep.

• 39:10Speaker 00

  Now, the whole industry is following him into electric vehicles and, like, I don't have a problem with him personally, but I just, I feel like certain leaders know when it's time to say, "I was the right person for the company up until this point, and now I'm no longer the right person." And sometimes that ends up being wrong, and the founder has to come back. Like Jobs, like Schultz at Starbucks, like Charles Schwab. You know, sometimes it's not, sometimes it's not quite that black and white. But I think other times, like, all right, they needed a visionary for X number of years. They needed somebody who had the guts to, you know, make these bold moves, and I did that, and now the company's in a certain place where maybe operationally, we're better off. And I'm

• 39:55Speaker 00

  going to tell you something interesting. This is a school of thought that Tim Cook... It's not as good as Steve Jobs um at the job of CEO and I would say um when Steve Jobs died, Apple was worth 200 billion.

• 40:08Anthony Pompliano?

  Yep.

• 40:08Speaker 00

  And now it's worth a trillion. So Tim Cook has delivered 4X the amount of shareholder. If you wanna like, if you wanna do it just by uh date and time.

• 40:16Anthony Pompliano?

  That's an aggressive statement, but I.

• 40:18Speaker 00

  I understand, but I'm I'm I'm making the point that maybe Jobs would not have been the right person.

• 40:24Anthony Pompliano?

  Of course.

• 40:24Speaker 00

  Um now that the iPhone was was conceived and put on the market, maybe what you really needed was an operational person who could get it to the point where they could sell 4 billion phones.

• 40:34Anthony Pompliano?

  Yep.

• 40:34Speaker 00

  And I don't know that that's definitely uh the case that and the other thing is Jobs was very bold and a visionary and invented amazing stuff. He might have sunk the company with a very bad investment and a terrible idea or a huge, bold, sweeping move. It it's counterfactual. We don't know.

• 40:53Anthony Pompliano?

  Yeah.

• 40:54Speaker 00

  No way to know.

• 40:55Anthony Pompliano?

  Yeah.

• 40:55Speaker 00

  So I I like, I hate when people say, so my, so here's a point I must. Maybe it's, maybe the best thing that ever could have happened to him is this SEC settlement and now maybe he's the CEO, but an adult comes in as chairman, someone that maybe knows the auto industry, and focuses him and keeps him out of doing, having to do certain things.

• 41:14Anthony Pompliano?

  Absolutely. Would uh would your head explode if he did a uh an ICO to uh to fund Tesla?

• 41:20Speaker 00

  Uh I so has he talked about crypto at all? I know he was a PayPal guy back in the day. Has has he said anything about blockchain?

• 41:27Anthony Pompliano?

  No, so I I don't think that he specifically said anything as much as I think a lot of people and and look, I've even said it that uh if there was a a major company, right, or kind of a larger company that's in the news a lot, uh that would make sense for, right? So if you take a Tesla, for example, if he was to issue some sort of token uh and use it as like credits on the enter or on the um charging stations or something like that, right? I could see him.

• 41:48Speaker 00

  But why but who, why does somebody need that? I guess would be my question.

• 41:51Anthony Pompliano?

  There's already credits, right? So the whole idea here is he'd use.

• 41:54Speaker 00

  Right, but why does there have to be a tradable market in those credits?

• 41:56Anthony Pompliano?

  There there doesn't need to be. He would use it as a fundraising mechanism. Right, it's basically he would

• 42:00Speaker 00

  Do you know, do you know what the bears would do?

• 42:02Anthony Pompliano?

  Of course, of course. Oh, and by the way, I'm not saying that this is the

• 42:05Speaker 00

  People would flip out.

• 42:06Anthony Pompliano?

  I'm not saying this is the best thing for them to do, but I'm saying you take a founder who has a lot of historical precedence for pre-selling. Right? So he pre-sells cars, he does all the, sort of pre-sell the credits, not out of the question. And then to do it in a way where, you know, his media presence and their ability to tell stories could actually inflate price over a long period of time, drive more revenue to the company. Like, you could very quickly draw, somewhat squiggly, but still draw a line between where they are today and having a tokenized credit system that brings a lot of capital to the company.

• 42:40Speaker 00

  Yeah, but so that, but then, if you're talking about a guy that just settled the SEC.

• 42:44Anthony Pompliano?

  Well, now, yeah, now it might be out of the question.

• 42:46Speaker 00

  The SEC is, is, is saying that ICOs are securities.

• 42:50Anthony Pompliano?

  Yep.

• 42:51Speaker 00

  They have a test, I forgot the name of it, but

• 42:53Anthony Pompliano?

  Howie Test?

• 42:54Speaker 00

  Yeah, so from the Orange Grove. They said, basically, you're selling an operating business and shares in it and interest in it. You're selling a security. You, you might say, well, it's just orange trees, but to us, it's a security. And it's a little nebulous, like, they can apply that where they see fit. This guy just settled.

• 43:14Speaker 00

  He just lost his chairmanship.

• 43:17Anthony Pompliano?

  He got all, I mean, he got a pretty good deal, though.

• 43:19Speaker 00

  No comment on that. I don't know. I don't know the, I don't know what's going on in the background. I just, I just say, like, is that the kind of thing that he wants to now do? Is start issuing different types of security. I would say if you, if, if, if you think about pre-selling and having a credit, he's already got bonds out there. And the bonds trade like crypto. So you're not, you're not, there's no shortage of instruments that you can bet on or against the Tesla ecosystem. You just, you just have to look.

• 43:49Anthony Pompliano?

  Absolutely. All right. So let's talk about markets, market cycles, etc. You're recently going back for somebody about, I think it's, let me see here, 1938 to 1975. Was this like 35-year bull market in the stock market, right? And you're basically making the point that, look, every bull market ends at some point, but it doesn't have to One end with a crash and two, it's not just, you know, 10 year cycles.

• 44:12Speaker 00

  Well, so, yeah, so what we were looking at, so we get this question. All right, so I was talking about the financial media earlier. Now let's talk about the financial blogosphere. There are a lot of people who do their best to attract attention by making these extremely bearish calls and predicting crashes and then crash doesn't happen and a week later they're predicting a new crash and.

• 44:36Anthony Pompliano?

  If you call a crash every week, you eventually get it right.

• 44:38Speaker 00

  Yeah, well, yeah, but it could be decades is the question you just asked me so. So like we're, we're trying to help people invest for 30, 40 year periods. Like that's what we do and we expect that there are going to be like terrible market events. So we build portfolios that we think are durable enough to allow for those things to happen. However, we don't take the next step where we start making outright bets on crashes. That's not what we do. There are hedge funds that do that. It's fine. I'm a problem with it. It's not what retirement planning is. What we're trying to do is match future cash flows with future liabilities for people on an individualized basis. What we're not trying to do is call the next 1987.

• 45:18Speaker 00

  But I understand that there are people who get in the media and the way they do it is saying these like outrageous things. It's fine.

• 45:28Speaker 00

  They're counting on the short attention span of the media and the American public. So it's gonna be a crash, it's gonna be a crash, it's gonna be say like eight times in the ninth, the ninth year you say it, there's a crash. Write your book, go on your speaking tour, you're a genius. Now, we will not let the world forget that that's not how it worked. So that's what we do with our blogs. We're not going after people personally, we're just saying like, here's why you need to tune that noise out. So to your question, from 1938 to 1972, we did some research looking into crashes versus ordinary bear markets. There were plenty of 20% declines during that period. 20% declines hurt for the stock market. They're not fun.

• 46:11Speaker 00

  There were no crashes, not one. You had one in 73, 74. You had the, the beginning of the last crash in 37, 38. And that was it. So you had entire decades, thirty-four years, thirty-four and a half years of just normal ups and downs in the stock market, viable downs, you know, rideable ups. And people forget that whatever the bull market we're in right now, sure, it could end with a crash, but it doesn't have to.

• 46:38Anthony Pompliano?

  Yeah.

• 46:38Speaker 00

  It's not a foregone conclusion. The reason why people have trouble understanding that or realizing that is the recency bias. The last two examples we have of cycles ending were 2000 and 2008. So inside of a 10-year period, we had two 50% crashes in the S and P. Think about what that does to psychology. So the next time stocks start moving down 10%, 15%, the crash calls are going to be really loud. This has to end with a cutting in half of the stock market. That's what people are going to be saying. And we will be out there on the front lines, helping people understand that while that is a possibility, it's a very low probability possibility, and that it's more likely, we just have a run-of-the-mill cyclical downturn and then recovery.

• 47:23Anthony Pompliano?

  Got it. What's the number one financial advice question you get? When you're talking to clients, what do they?

• 47:29Speaker 00

  Should I buy Apple?

• 47:30Anthony Pompliano?

  Apple?

• 47:31Speaker 00

  Yeah, not from client, like on the street. Yo, should I sell my Apple? Should I buy Apple?

• 47:35Anthony Pompliano?

  Why that company?

• 47:36Speaker 00

  It's just like a trillion-dollar stock. It's the most widely known company in the world at this point. It's the most widely held stock for obvious reasons. It's made people a ton of money. Everyone has some. If people don't own it individually, it's the largest holding in their portfolio by virtue of its position in ETFs. So people have, when I see people on the street, they want to ask me a question. Nobody ever asks, how much should I count on withdrawing each year for retirement? Or when do I have to start putting away money for college? Yesterday is the answer, by the way. But people are like, what do I do with Apple? Sometimes Amazon.

• 48:14Anthony Pompliano?

  Do people like yell this at you, like you're walking through the airport and they're like, yo, downtown Josh, like, what do I do with Apple?

• 48:20Speaker 00

  When I, one of the first times I ever met Jim Kramer, um, we were writing a book, um, and we were writing a book about financial pundits and what it's like to make public calls in the markets and then live with the consequences or the victories. Yep. And I was asking Jim about that and Jim's been, Jim's like one of my earliest idols and I started reading him in 1998. And, uh, so Jim was telling a story about he was in Costco, I think he was maybe with his daughter or his wife or something, I forget. But he was saying like in one aisle, um, a woman runs up to him and wraps her arms around him. "Thank you so much. You got me out of loose and technology and, uh, you know, I was able

• 49:02Speaker 00

  to take $200,000 out of it and I would have lost all of it." And, you know, it was like this, this like really warm, touching moment. So he's in like the dairy aisle and then he wheels the cart around to the next aisle, I don't know, poultry, whatever. And this guy's just berating him. "How dare you tell me to buy," you know, whatever. This is a guy that's said buy, sell on a thousand stocks a year for 10, you know, 20 years. Yep. So it's, you know. Can't believe he got one wrong. I mean, it's like insane, the, the, so, and here's what's interesting about, I thought about this, ESPN versus Bloomberg and CNBC. Like ESPN, every week they have the fantasy guys, play this guy, don't play that guy. Or, um, you know, the people talking about,

• 49:46Speaker 00

  they don't talk about spreads, but they talk about straight up. "Chicago's gonna win this week." Um, "No, Philadelphia's gonna win." People don't like berate these people on the street, but for some reason with finance, because I guess gambling is not legal and investing is, it's the same level of thought that goes into both. Like you're trying to guess at an uncertain future. Yep. You're doing your best to incorporate the information you have. But this idea that like someone's an idiot because they were wrong on a, you know how many stocks Warren Buffett was wrong on? Yep. Like destroyed in IBM, like last year, finally admitted defeat, spent five years averaging down on IBM and then took a loss on the whole thing. Horrendous. On an absolute basis horrendous, on a relative basis even worse.

• 50:30Speaker 00

  Because the entire tech sector tripled in that period of time. So Warren Buffett's an idiot, right? So like, that's the, I think that that gut instinct that people have to look at someone who's been wrong about something and then just extrapolate, "You're a moron, you don't know anything." "Well, no, I just was wrong about that one thing." "No, idiot, I decided." So I think you have to like, you have to accept that that comes along with the territory of having opinions. You know, public opinions.

• 50:58Anthony Pompliano?

  I I've never actually, uh, heard somebody say, "Oh, that person's always right." Right there, whenever they-

• 51:04Speaker 00

  Run away, run away if someone's always right.

• 51:06Anthony Pompliano?

  Well, just whenever somebody comments about, uh, talking head, a, you know, analyst, uh, anybody who makes a call, whatever. It's, they always comment about the negative. It's always, that person's never right, that person's never right. Oh, do the opposite of what they do. No one ever says, "Oh, that person's always right," or "That person's right more than they're wrong." And I think part of it is, uh, the losses hurt more than the gains. And so that's what people remember, right? It is, "Oh, that, that person led me to the slaughterhouse."

• 51:30Speaker 00

  Well, right, there's a, there's, there's behavioral, uh, science backing that idea that, um, losing money feels like almost twice as bad as making money. Um, becau- because it's something being taken away from you is more powerful feeling than trying to get something and not getting it that you didn't already have. Um, I, I went to like Belmont to the, the horse tracks like three years ago for a goof. And there are like all these old guys sitting on the bench and they, they show up every race day in the summer. And they're wearing their finest members only jackets and, you know, plaid sports coats from the seventies and the world has kind of left them behind and, but this is their thing and they, they bet.

• 52:11Speaker 00

  And I went with like three friends and we don't know, I couldn't name one, one jockey, one horse, I have no idea. I don't, I don't watch this stuff, I'm not even a gambler. We go up to the window and we start just randomly asking for things we don't even understand what they are. It's hilarious, we're drinking. So, so one of these guys comes over and he whispers to one of my friends, "Come here." He sees that we have a lot of cash with us. He's like, "Come here, here's what you do." And he gives us like this really complex thing. And we do it and it hits.

• 52:42Anthony Pompliano?

  Oh, man.

• 52:43Speaker 00

  So this guy's like walking toward the exit and my friend Steve, he's like, get that guy, get back here. He chases guy down the hall. And I'm, and I'm like, leave him alone, stop it. The guy doesn't know anything. He just, he was lucky. He goes, what are you talking about? This guy's an expert. I look at a guy, he's like smoking a Newport. He's like in the most miserable, physical condition. No, he's not an expert. He's sitting at Belmont on a, on a Saturday by himself. Literally smoking cigarettes. He's not an expert in anything. But that, that's how easy it is for us to see somebody have success.

• 53:15Anthony Pompliano?

  Yep.

• 53:15Speaker 00

  And then just assume that there's some repeatability. And, you know, it took me a long time to realize there are going to be people who get things right and wrong and you can't expect absolutes from, in either case.

• 53:27Anthony Pompliano?

  Yeah. Well, and a lot of it is focusing more on the process than the, than the outcome because, uh, you know, I, I think, uh, even take horse, uh, picking, for example, you know, people put machines against them and they still can't figure it out, right? Cause it's just that it's almost impossible.

• 53:39Speaker 00

  Yeah. Also outcomes are, uh, processes invisible. Outcomes are very visible. Outcomes are what pay you. So, um, everyone likes to talk about their process. But in the end, if they make a ton of money on something and it was totally wildly outside of their process, they're not going to be like, put an asterisk next to that shit. They're going to be like, look how smart I am.

• 53:57Anthony Pompliano?

  Of course.

• 53:58Speaker 00

  So that's human nature.

• 53:59Anthony Pompliano?

  All right. Let's do, uh, let's do some rapid fire questions real quick before we wrap up.

• 54:02Speaker 00

  Okay.

• 54:03Anthony Pompliano?

  What's the most controversial thought that you have in finance or crypto? Like if you were to right now tweet whatever this thought is, you would get just murdered on the internet.

• 54:13Speaker 00

  So say it on your podcast. The most controversial thought, uh, I don't know. I, I, I don't.

• 54:22Anthony Pompliano?

  What do you believe that just a huge percentage of people disagree with you on?

• 54:26Speaker 00

  All right. So, all right. So I think that my most controversial thought just on investing in general is that as a financial advisor, We put so much time and effort into educating clients and speaking to them all the time, communicating every day, blogs, podcasts, Twitter, TV, we're just constantly messaging clients, but actually be better off if they totally ignored us and they moved to a desert island, or they were like, heaven forbid, like in some situation where they had no electricity for 25 years, that would actually be better than all of that constant communication. Why?

• 55:07Speaker 00

  Because, so there's this apocryphal fidelity study, I'm convinced it existed and they buried it. Other people have said that they've seen it, and I know I've seen it, but nobody has a link to it, nobody can find it on a Google search, no one has evidence that it existed, but the study was fidelity looked at who their top performing self-directed retail accounts were, and it turns out it was people who lost their passwords, people who died. Like, seriously, if you died, you outperformed the people who were alive, who were logging in and screwing around with their money all the time. So, now, that's it, so that opinion- That's a wild study. Now, that, now you know why they killed it, because they want you logging in, you don't do trades and you don't log in, right?

• 55:52Speaker 00

  Man, if somebody out there can find it, let, uh, just tweet at one of us. No one will find, oh, believe me, I, I put a bounty, I put a $5,000 bounty on Twitter, anyone who could produce the original PDF or whatever format, and I think fidelity, a reporter called fidelity and they denied it, I think Jason's WIG called up to see if they had ever heard of it and they said no. Can we up, can we up that bounty? I'll, I'll match you. Well, yeah, do it in, uh, do it, do it in, do it in Ripple, it's fake anyway, just kidding, alright, just kidding, stop, I love Ripple, I'm wearing a Ripple t-shirt, right? Tell them. So, um-

• 56:30Speaker 00

  Oh, so what was I saying? So I, I, I think like the most controversial thing I think is that people should pay almost no attention at all. It should be, it, it should be like the weather channel. The only time you should look is if a tornado is headed to you. Um, but since that's not gonna be the case.

• 56:44Anthony Pompliano?

  Yep.

• 56:44Speaker 00

  And it's people's money and they are gonna pay attention. I think what we're doing is the next best thing, which is giving them information every day that calms them down or gives them the bigger picture.

• 56:54Anthony Pompliano?

  Yep.

• 56:55Speaker 00

  And I think mutes the scare tactics being used by others.

• 56:59Anthony Pompliano?

  Absolutely. Um, all right. So, uh, aliens, we, we gotta talk about them real quick. Uh, let's just, we, we gotta admit they're out there somewhere. Uh, do they have pets or not? Are there animal aliens and human aliens?

• 57:12Speaker 00

  We gotta admit that they're out there? I, I would believe in-

• 57:14Anthony Pompliano?

  Are you, are you a, a non-believer in aliens?

• 57:16Speaker 00

  I would believe in ghosts before aliens.

• 57:18Anthony Pompliano?

  Really?

• 57:19Speaker 00

  But I don't believe in either.

• 57:20Anthony Pompliano?

  Why?

• 57:21Speaker 00

  Did you ever read, uh, did you ever read, uh, Where Is Everybody?

• 57:24Anthony Pompliano?

  No.

• 57:25Speaker 00

  So, um-

• 57:26Anthony Pompliano?

  Where are they?

• 57:27Speaker 00

  The, what's his name? Uh, Enrico Fermi, uh, had, had this like, had this, had this question and nobody could like, uh, if there was intelligent life, where are they?

• 57:38Anthony Pompliano?

  Yep.

• 57:39Speaker 00

  And then I, this book has like 20 chapters of different theories. My favorite theory is that we're in a zoo, um, and we're being monitored by them.

• 57:47Anthony Pompliano?

  It's a simulation almost?

• 57:48Speaker 00

  Yeah, I like that, I like that one. But, uh, I would, I would, in the hierarchy of things that I find the most plausible, I would say like ghosts are more plausible than aliens.

• 57:57Anthony Pompliano?

  Really?

• 57:58Speaker 00

  Yeah.

• 57:58Anthony Pompliano?

  Oh, man.

• 57:59Speaker 00

  I know, that's pretty controversial.

• 58:00Anthony Pompliano?

  Yeah, that, that, I'm offended by that.

• 58:02Speaker 00

  Because people look at like the vastness of the universe and of course there should be, no, I think, uh, I think it's more probable.

• 58:09Anthony Pompliano?

  Listen, do you know that there's, uh, I, I saw recently they discovered like the 1,037th planet?

• 58:15Speaker 00

  Yeah, there's nothing there.

• 58:16Anthony Pompliano?

  Like, listen, when, when, in, in high school, they were telling us there was nine, right? Like now they've got a thousand of them?

• 58:22Speaker 00

  Now we're downgrading planets.

• 58:23Anthony Pompliano?

  Yeah.

• 58:24Speaker 00

  Saying like, which is the one that they, that they said is-

• 58:27Anthony Pompliano?

  Who knows?

• 58:28Speaker 00

  They're like, oh, actually it's just a rock and, and you failed 4th grade.

• 58:31Anthony Pompliano?

  Yeah.

• 58:32Speaker 00

  It turns out- They're like, they're ripping down all my monuments. They're saying now Pluto's not a planet. I, well, I think, uh.

• 58:40Anthony Pompliano?

  Like literally, they were like, there's nine planets. And then they're just like, now there's like, there's a thousand.

• 58:44Speaker 00

  Yeah, well, so I, I think that, um, the, the best movies, the science fiction movies are those, the alien movies though. Like the, what was the one where they needed a communications expert to talk to these things?

• 58:57Anthony Pompliano?

  Uh, that's like all of them.

• 58:58Speaker 00

  No, this was really good. It's like two years old. I'll, I'll think about it. I'll tell you later.

• 59:02Anthony Pompliano?

  All right.

• 59:02Speaker 00

  Uh, the audience probably knows.

• 59:04Anthony Pompliano?

  They'll tweet at us.

• 59:05Speaker 00

  Yeah.

• 59:05Anthony Pompliano?

  Um, all right. Before, uh, before I let you go, uh, you can ask me one question. What do you want to ask?

• 59:09Speaker 00

  Um, I want to ask what you think is the tipping point for institutions and individual investors? Where it's no longer a question of do you believe in Bitcoin or blockchain? Like when is the, what is the thing that has to happen? That's the moment where everyone says, yeah, yeah, why wouldn't I invest in that?

• 59:29Anthony Pompliano?

  Yeah.

• 59:29Speaker 00

  Or maybe it's not a moment. Maybe it takes long. I don't know.

• 59:32Anthony Pompliano?

  So, uh, first caveat is I'm only worried about Bitcoin. The rest of kind of altcoins, et cetera. We'll see, but I think Bitcoin's got the, the most serious chance and, and kind of the most security and, and.

• 59:43Speaker 00

  So we, we agree on that.

• 59:44Anthony Pompliano?

  Yeah, absolutely. Um, I think that there's two quote unquote tipping points or kind of inflection points of what can happen. So one is, uh, I really do believe that if all of a sudden a, a government, a sovereign wealth fund, you know, some large nation state related entity all of a sudden comes out and says, we bought 5% of the network. Like this, the quote unquote scarcity, the musical chairs, that just that race for 21 million Bitcoin explodes.

• 1:00:11Speaker 00

  Why would they do that? Why wouldn't they just buy 20% then and say that?

• 1:00:15Anthony Pompliano?

  Well, they could, whatever the numbers, right? Five, 20%. Look, I mean, people have said, uh, why doesn't China just buy all of it? Right? I mean, the, uh, people could do all kinds of different things, but I think the second that people realize, hey, this is now be gone from a technology or this has gone from an investment opportunity to there's a nation state that believes that there is global wealth and global dominance tied to it.

• 1:00:37Speaker 00

  I agree with you. That would be a major, major like watershed moment if some.

• 1:00:42Anthony Pompliano?

  Like, like.

• 1:00:44Speaker 00

  Maybe it depends on the nation.

• 1:00:45Anthony Pompliano?

  Well, we're just.

• 1:00:45Speaker 00

  If Venezuela does it, I don't know if it's as bullish, but.

• 1:00:47Anthony Pompliano?

  Yeah, but, but take a, uh, take China for, I mean, China's per example. China comes out and says, bam, we just bought 20% of the network. US is doing something, right? The other nation states are doing something.

• 1:00:59Speaker 00

  So this, so but, so the knee jerk would be, oh my God, I have to buy. But then the second reaction is, wait a minute, they're gonna, they're gonna pervert it. They're gonna do what they always do. They're gonna, they're gonna rewrite the rules or they're gonna start arresting people who don't.

• 1:01:13Anthony Pompliano?

  They can't. They can arrest, they can arrest people who own it, right? But they can't, they can't.

• 1:01:16Speaker 00

  No, arresting, arresting people running the nodes. I, I mean.

• 1:01:20Anthony Pompliano?

  But still doesn't stop it. That's the beauty of it. They can't kill it, right? So, all right, so let's, let's just hold up. So a nation state or a related entity makes some massive move, publicizes.

• 1:01:29Speaker 00

  I agree, it would be a big deal.

• 1:01:30Anthony Pompliano?

  People, oh shit, we gotta jump in.

• 1:01:32Speaker 00

  Right.

• 1:01:32Anthony Pompliano?

  The second thing is, uh, what we're starting to see now with, um, all of the currency issues and the economic chaos. Uh, I don't, I'm not a believer that it's gonna happen, like the inflection point's gonna be a third world country or, or like a developing world country. Right? Cause I think we already see kind of Venezuela, Argentina, Iran, Turkey. We can go through the whole thing, right?

• 1:01:50Speaker 00

  It's been going on since before we were born.

• 1:01:51Anthony Pompliano?

  Forever. Yeah.

• 1:01:52Speaker 00

  Every year it's another one.

• 1:01:53Anthony Pompliano?

  Of course. And, and so I believe that, uh, this idea of like the fiat experiment is failing in some places. Absolutely believe that. What I think would be the other inflection point is if all of a sudden inflation starts to tick up and people, whether it's actually gonna happen or not in the developed world, but they believe that it might happen. Then all of a sudden what you get is you, you start to get people who, again, they're not gonna go take a hundred percent of their assets and, and move into the asset, uh, into Bitcoin, but if they begin to take a portion of their assets.

• 1:02:23Speaker 00

  Why are you so sure that people will think that cryptocurrencies offer an inflation hedge in that scenario?

• 1:02:29Anthony Pompliano?

  Well, so I think.

• 1:02:30Speaker 00

  What if they're worse?

• 1:02:31Anthony Pompliano?

  I, I think that there's two things, right? So one is we know that Bitcoin, for example, is disinflationary and eventually will be.

• 1:02:36Speaker 00

  We don't know that.

• 1:02:37Anthony Pompliano?

  Deflationary, why not?

• 1:02:38Speaker 00

  How much data do you have? What do you, what do you have? Two years of data?

• 1:02:41Anthony Pompliano?

  Well, no, but, but it's not on historical data. We can actually see the code that there's only 21 million that will be created.

• 1:02:46Speaker 00

  Yes, but if there were five other rivals to it, that also gain legitimately at the same time, legitimacy at the same time.

• 1:02:52Anthony Pompliano?

  Oh, so here, all right, you ready? Here, here's, uh.

• 1:02:54Speaker 00

  So then, that scarcity, that, that, that disinflationary argument goes out the window.

• 1:02:59Anthony Pompliano?

  No, no, here's two controversial thoughts for you. So one is, uh, I tweeted this, uh, the other day and people went nuts. Uh, Bitcoin is more transparent than the Fed. Right? Because here's why. So I can see the design, or I can see the actual code of how the system's designed. I can see every single transaction that's ever occurred from the beginning of Bitcoin till today. And then I can also see what's happening right now at this moment, right? How much is being created?

• 1:03:19Speaker 00

  Did people flip out on you?

• 1:03:20Anthony Pompliano?

  And then I can see what's supposed to happen in the future, and if that doesn't happen.

• 1:03:23Speaker 00

  But do you know why people flipped out on you?

• 1:03:25Anthony Pompliano?

  Why?

• 1:03:25Speaker 00

  Because the Fed is supposed to be, the Fed is supposed to be autonomous and centralized. It is the lender of last resort. Prior to the Fed, it was J. Pierpont Morgan.

• 1:03:35Anthony Pompliano?

  Yep.

• 1:03:36Speaker 00

  Would literally put people in a chokehold and make them buy securities to stabilize the system. So the Fed came along to do that on a more systematized, in a more systematized way, and not have it be reliant on one person with a cigar. So the Fed is, I don't think the Fed's primary, I don't think the Fed's prime directive ought to be transparency. I think it ought to be the institution that stands up and says, "We are the centralized buyer of last resort. Bring everything to our window, we will give you cash for it." There's no one in the Bitcoin ecosystem that A, could do that, B, has a vested interest to do that.

• 1:04:18Speaker 00

  So I think just comparing the two things is probably the original sin there.

• 1:04:22Anthony Pompliano?

  Of course.

• 1:04:23Speaker 00

  So whether or not one's more transparent, it's like me saying, "An octopus is, has more legs than a guitar." Like, alright, fuck, you know, what's your point?

• 1:04:34Anthony Pompliano?

  How did you come up with that?

• 1:04:35Speaker 00

  Well, that's, I mean, it's, you know, so.

• 1:04:37Anthony Pompliano?

  That's where you think it is.

• 1:04:38Speaker 00

  I don't need to shit on your tweet, I'm sure it's a great tweet, RT.

• 1:04:41Anthony Pompliano?

  You favorited it, you don't even remember.

• 1:04:43Speaker 00

  I just air-favored it.

• 1:04:46Anthony Pompliano?

  And then the second thing is, if Bitcoin fails as a currency or store of value, the whole thing goes down. And the thought process here is, I can't take credit for this idea, but I really like, it's around game theory, right? So if it is the largest, most secure today, and it ends up being eclipsed by another currency that is given the kind of the king of crypto, you know, label, and it becomes the greatest store of value, all of a sudden, people are less likely to put their assets into that store of value because they're always looking over their shoulder that just another one is going to eclipse it.

• 1:05:17Speaker 00

  You can't have a store of value if you have two stores of value.

• 1:05:20Anthony Pompliano?

  Exactly.

• 1:05:20Speaker 00

  Oh shit, that's next level. I haven't really thought about that.

• 1:05:26Anthony Pompliano?

  Tweet that and then, and then think about it.

• 1:05:28Speaker 00

  So how, well, so, yeah, I like, I think gold was permanently disrupted in 1982. And it was disrupted not by another commodity, it was disrupted by information. So it's not, so gold has never made an inflationary, inflation adjusted high.

• 1:05:46Anthony Pompliano?

  Yep.

• 1:05:46Speaker 00

  Beyond the levels of 1981, 1982, like that was the all time high in real terms, which is the only terms that matter. So it's gone up and down over the last 35 years, but it's never gotten above those levels. And it's not an accident, it's not a coincidence that that coincides with the PC revolution. Um, the reason why gold had this store of value quality to it and this, and this importance in the global economy. It's because up and down the Silk Road, a stretch of 5,000 miles of a caravan new.

• 1:06:18Anthony Pompliano?

  The real Silk Road, not the crypto Silk Road.

• 1:06:20Speaker 00

  Right, but so, so somebody selling rugs on one end, um, you know, in Eastern Europe. Knew how much gold they could get for their rugs on the opposite end in Africa or, or in Asia. And so it was this thing that if you weren't bartering, here's a goat, give me, you know, give me a stick. If, um, if you weren't bartering, then what you're essentially doing is trying to exchange something for something. And gold was like this universal agreed upon thing. Um, in 1981, all of a sudden, everyone had a PC on their desk, instantaneously around the world. Everyone knew the price of everything. You no longer needed that thing in the middle that was this ultimate last resort exchange vehicle.

• 1:07:04Speaker 00

  Um, and I don't, so I don't think it's a coincidence that we saw the inflation adjusted high of gold. At the same time as the PC revolution swept the world. Um, and so when we're talking about stores of value, yeah, I, I think, I think it's a very good point that you make that. You could have this king of crypto kind of thing, and then something new comes along, neither will work. If you scare people into thinking that, hey, there actually is no commodity that's a store of value, it turns out.

• 1:07:29Anthony Pompliano?

  Yeah, all right, we're, uh.

• 1:07:30Speaker 00

  Did I, did I blow your mind, man?

• 1:07:32Anthony Pompliano?

  Nah, we're pushing you farther and farther down the Bitcoin maximalist, uh, path there.

• 1:07:36Speaker 00

  I'm almost there.

• 1:07:37Anthony Pompliano?

  All right, all right, the famous downtown Josh Brown, thank you so much for coming.

• 1:07:40Speaker 00

  Thank you, Anthony.

• 1:07:41Anthony Pompliano?

  This is a lot of fun.

• 1:07:42Speaker 00

  All right, thank you.

• 1:07:43Anthony Pompliano?

  Thanks again to our sponsor, Block Estate. To check out their tokenized real estate fund, you can check out www.blokestate.com. Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.