WEBVTT - The Mark Moss Show Dec 31, 2021 0:00:00.200 --> 0:00:02.920 Hey, everyone, welcome back to the Mark ma Show, where 0:00:02.920 --> 0:00:07.560 we're talking about bitcoin and cryptocurrencies and the decentralized revolution 0:00:07.720 --> 0:00:11.200 that we are living through right now. It's big. It's 0:00:11.200 --> 0:00:13.680 going to be the biggest shift that we have ever seen. 0:00:13.840 --> 0:00:16.520 And I have a special guest in the studio with 0:00:16.560 --> 0:00:19.880 me today to talk about bitcoin and how you can 0:00:19.880 --> 0:00:22.800 think about it in your own portfolio and some different 0:00:22.800 --> 0:00:24.079 ways to think about it. And so I'm in the 0:00:24.079 --> 0:00:27.440 studio today with Andy Edstrom. He is a c f 0:00:27.560 --> 0:00:29.640 A and a CFP. Those are a lot of letters. 0:00:29.640 --> 0:00:33.040 He can tell us what those mean. Um. He works 0:00:33.080 --> 0:00:36.200 with a company called Swan Bitcoin as an advisor. Um, 0:00:36.280 --> 0:00:40.040 and so he is a financial advisor, financial planner. He's 0:00:40.040 --> 0:00:42.880 not yours, So go talk to your own. Uh don't, 0:00:43.440 --> 0:00:45.519 he's not yours. But anyway, Andy, thanks so much for 0:00:45.600 --> 0:00:48.560 joining me today. Yeah. Mark, thanks, it's a real pleasure 0:00:48.600 --> 0:00:51.440 being with you. And appreciate that disclaimer right there that 0:00:52.320 --> 0:00:55.240 this is financial either you're a disclaiming out for you 0:00:55.280 --> 0:00:58.080 there on that one you anticipated that you knew it 0:00:58.120 --> 0:01:00.040 was coming. Yeah yeah, yeah, Well we gotta say that 0:01:00.120 --> 0:01:02.000 all the time. So it's not financial advice, right, So 0:01:02.200 --> 0:01:05.160 um So anyway, you know, I want to talk about bitcoin. 0:01:05.240 --> 0:01:07.039 Obviously we're talking about that, but I want to talk 0:01:07.040 --> 0:01:09.399 about it from a different angle that I typically do 0:01:09.520 --> 0:01:12.640 because I'm not a financial advisor or financial planner, and 0:01:12.680 --> 0:01:15.759 so um you are, and um, you know, right off 0:01:15.760 --> 0:01:17.320 the bat, I would just like to start with that, 0:01:17.400 --> 0:01:20.760 like most financial advisors or planners, they don't talk about 0:01:20.760 --> 0:01:22.680 bitcoin as a matter of fact, is I understand it. 0:01:22.720 --> 0:01:25.960 I have my sister in law and she's hopefully not listening. 0:01:26.040 --> 0:01:28.200 She works for Charles Schwab, and she told me that 0:01:28.240 --> 0:01:31.000 even if her clients ask her about it, she's not 0:01:31.160 --> 0:01:33.760 even allowed to talk about it, even if they ask 0:01:33.800 --> 0:01:36.160 her about it. And so I know that there's a 0:01:36.160 --> 0:01:38.560 lot of that in the industry. Um, where's the industry 0:01:38.600 --> 0:01:41.839 ad And how is it that you're different than everybody else? Yeah, 0:01:41.880 --> 0:01:43.640 that's a great question, and it is sort of mind 0:01:43.680 --> 0:01:46.640 boggling that we're still at that place where the people 0:01:46.680 --> 0:01:49.600 who work for Schwab can't talk about it. So, you know, 0:01:50.120 --> 0:01:55.160 I get into bitcoin in and it was when I 0:01:55.200 --> 0:01:58.160 published my book Why Buy Bitcoin? And at the at 0:01:58.200 --> 0:02:00.880 that time and I think still today, it's the only 0:02:01.160 --> 0:02:03.600 bitcoin investment thesis in the form of a book published 0:02:03.640 --> 0:02:06.520 by a financial advisor. So I'm an outlier in that regard. Now, 0:02:06.520 --> 0:02:10.480 when I put the book out in nobody in the 0:02:10.600 --> 0:02:14.920 regular way financial advice space I want to talk about bitcoin. 0:02:15.360 --> 0:02:17.520 Almost nobody. I mean, I'm sure there were exceptions, but 0:02:17.560 --> 0:02:21.440 I couldn't find him. Where we sit a few years 0:02:21.520 --> 0:02:25.560 later here a couple of years later, is the independent 0:02:26.040 --> 0:02:30.560 investment advisors are starting to take action. Um, you mentioned, 0:02:30.720 --> 0:02:33.519 you know, my involvement with Swan bitcoin. I'm watching a 0:02:33.760 --> 0:02:37.480 swant an advisor services product at the moment, and the 0:02:37.480 --> 0:02:39.760 reason I'm doing it now is I think we're at 0:02:39.800 --> 0:02:46.000 an inflection point in acceptance and adoption among financial advisors. However, 0:02:46.840 --> 0:02:49.799 it's not like everybody's on board all of a sudden, 0:02:50.480 --> 0:02:54.640 as you pointed out, folks, especially financial advisors that work 0:02:54.840 --> 0:02:59.520 for major custodians, major companies that provide services to financial 0:02:59.560 --> 0:03:02.840 advisors and by extension, their clients, the big ones are 0:03:02.880 --> 0:03:05.800 still lagging right there, not there yet. It's the small 0:03:05.880 --> 0:03:09.680 independence that are more flexible, that don't have to go 0:03:09.760 --> 0:03:13.760 through large bureaucracies basically to get something approved. Those are 0:03:13.760 --> 0:03:16.320 the guys who are taking action for the most part. 0:03:16.680 --> 0:03:21.600 But still, as you imply, the larger organizations are taking 0:03:21.600 --> 0:03:25.119 their time. My expectations that will change in the next 0:03:25.120 --> 0:03:27.840 couple of years. But that's where we are today as 0:03:27.880 --> 0:03:29.920 I see it. Do you think some of that's because 0:03:29.919 --> 0:03:32.520 they're incentivized not to talk about it because like they 0:03:32.520 --> 0:03:35.400 want to sell their company's products, or is it Is 0:03:35.440 --> 0:03:37.920 it because of legal reasons or regulatory reasons that they 0:03:37.920 --> 0:03:41.400 can't talk about it? Yeah? I think that here you 0:03:41.440 --> 0:03:45.560 have to parse bitcoin a little bit from the rest 0:03:45.560 --> 0:03:49.840 of crypto. So definitely there's legal risk with respect to 0:03:50.040 --> 0:03:54.440 classification as a security for a large portion of the 0:03:54.440 --> 0:03:57.400 cryptocurrency or crypto assets space, or the digital asset space, 0:03:57.480 --> 0:04:00.680 let's call it. Bitcoin does not have that same risk. 0:04:00.720 --> 0:04:03.320 Bitcoin is one of the very few digital assets that 0:04:03.480 --> 0:04:08.320 is unambiguously not a security under US law. So then 0:04:08.320 --> 0:04:10.280 if you say, well, okay, but why haven't they acted 0:04:10.280 --> 0:04:14.520 on bitcoin? I think some is still reputational. Let's be honest, 0:04:14.880 --> 0:04:19.160 the mainstream media had done done a very poor job, um, 0:04:19.200 --> 0:04:22.640 in covering bitcoin. I mean honestly, I I read factual 0:04:22.880 --> 0:04:27.080 errors all the time in articles in the Wall Street Journal, 0:04:27.200 --> 0:04:30.760 New York Times, Washington Post. Um, you know, outlets like yours, 0:04:31.360 --> 0:04:35.440 and you specifically had done a much better job basically 0:04:35.480 --> 0:04:38.640 telling it how it really is with bitcoin. So, um, 0:04:38.760 --> 0:04:42.520 my hats off to you there, and yeah, so so 0:04:42.560 --> 0:04:45.240 I think some of it is reputational and then some 0:04:45.360 --> 0:04:48.839 of it is on boarding and the effort and time. 0:04:48.880 --> 0:04:53.880 It takes basically two run through the legal and the 0:04:54.000 --> 0:04:59.520 compliance and the accounting and the custody issues associated with 0:05:00.120 --> 0:05:05.440 providing services to clients. And you know, Michael Sailor sort 0:05:05.440 --> 0:05:08.160 of laid out a playbook for corporations to do that. 0:05:08.839 --> 0:05:12.680 Even if you have a high incentive or really motivated 0:05:12.680 --> 0:05:15.520 to get it done as an organization, it can take 0:05:15.560 --> 0:05:18.680 you months and months, potentially years basically to UH to 0:05:18.839 --> 0:05:23.159 check all the boxes within your legal department, your compliance department, etcetera, etcetera. 0:05:23.640 --> 0:05:27.520 So I think they also face that headwind and it's 0:05:27.520 --> 0:05:30.240 a mixed bag. I mean, you had players like Fidelity, right, 0:05:30.279 --> 0:05:33.880 Fidelity was mining bitcoin, I don't know, five or six 0:05:33.960 --> 0:05:37.279 years ago, maybe even longer. Um even they even they 0:05:37.279 --> 0:05:41.440 have been treading pretty carefully in terms of the actual 0:05:41.520 --> 0:05:45.960 products that they're providing to UH to clients, and so yeah, 0:05:45.960 --> 0:05:48.240 it just takes time I think for these UH, for 0:05:48.320 --> 0:05:51.120 these large organizations to act on it. And just to 0:05:51.200 --> 0:05:54.760 your question about, oh, you know, are these guys dragging 0:05:54.760 --> 0:05:56.960 their feet because they stand to lose fees or they 0:05:57.080 --> 0:05:59.599 stand a loose economics on it. I used to think that, 0:05:59.640 --> 0:06:02.520 and I'm not sure that's the case anymore, because the 0:06:02.520 --> 0:06:06.520 reality is, you can package bitcoin as a financial product 0:06:06.880 --> 0:06:09.560 if you're a if you're an investment organization, and you 0:06:09.600 --> 0:06:12.520 can charge a fee just like any other product. Now, 0:06:13.080 --> 0:06:15.919 someday years in the future that might not be as true, 0:06:16.800 --> 0:06:19.320 but these guys can make money on it. And so 0:06:19.640 --> 0:06:22.240 I think that it has more to do with those 0:06:22.320 --> 0:06:26.280 legal and compliance and just running the traps, you know, 0:06:26.400 --> 0:06:29.720 doing the work over time, you know, sort of inertia 0:06:29.800 --> 0:06:31.800 of the large organizations. I think it has more to 0:06:31.839 --> 0:06:34.520 do with that and less to do with the you know, 0:06:34.600 --> 0:06:36.360 the the worry about, oh, this is going to eat 0:06:36.360 --> 0:06:39.920 our business. Okay, that's a good perspective. I just heard 0:06:39.920 --> 0:06:42.840 a lot of times it's like they financial advisors will 0:06:42.880 --> 0:06:46.440 sell the products that their firm offers. So a lot 0:06:46.440 --> 0:06:48.800 of times you hear that they're they're they're more sales 0:06:48.880 --> 0:06:51.599 reps than they are advisors. And that's probably true for something, 0:06:51.640 --> 0:06:54.240 but maybe not for everybody. Yeah, well, no, Look, you 0:06:54.279 --> 0:06:57.440 make a good point in that as a financial advisor, 0:06:57.520 --> 0:07:01.000 like wind back the clock a couple of years, what 0:07:01.040 --> 0:07:04.520 were your options for getting your clients into bitcoin. Well, 0:07:04.560 --> 0:07:07.359 you could have bought the Bitcoin Trust right ticker GBTC, 0:07:08.160 --> 0:07:12.440 and until relatively recently, that was a little problematic because 0:07:12.440 --> 0:07:14.720 it traded at a premium to the net asset value, right, 0:07:14.760 --> 0:07:17.120 so you were you were buying a dollar's worth a 0:07:17.120 --> 0:07:20.000 bitcoin by paying a dollar twenty five, which was not 0:07:20.120 --> 0:07:21.960 great because you had to figure out, well, there's a 0:07:21.960 --> 0:07:26.360 good chance that that premium goes away in the long term. 0:07:26.400 --> 0:07:28.760 So I think that was a barrier for sure, even 0:07:28.760 --> 0:07:33.760 though that product was carried by major custodians like Schwab 0:07:33.840 --> 0:07:37.520 and like TD Merri Trade. Um. So that's a fair point. 0:07:37.600 --> 0:07:40.440 And if the alternative was, oh, you know, tell the 0:07:40.480 --> 0:07:42.880 client I don't know, opened an account at one of 0:07:42.880 --> 0:07:46.160 the major exchanges, well then yeah, that's assets that leaves 0:07:46.480 --> 0:07:49.680 the pool that you charge fees on, and so that 0:07:49.760 --> 0:07:53.680 was that was problematic. Now the good news is most 0:07:53.720 --> 0:07:56.960 of those problems are solved. We don't yet have the 0:07:57.160 --> 0:08:00.880 true spot e t F where or you can buy 0:08:00.880 --> 0:08:03.360 a dollars worth a bitcoin for a dollar and pay 0:08:03.360 --> 0:08:06.640 a reasonable management fee UM and be subject to all 0:08:06.720 --> 0:08:10.160 the protections that the the SEC and the u S 0:08:10.280 --> 0:08:14.600 jurisdiction affords. Were not quite there yet, but there are 0:08:14.680 --> 0:08:19.880 now better usable services available to financial advisors, some of 0:08:19.920 --> 0:08:22.160 which have just popped up in the last year that 0:08:22.280 --> 0:08:26.840 actually are credible alternatives and the financial advisors can take 0:08:26.880 --> 0:08:29.920 advantage of And of course they have to do their diligence, 0:08:30.080 --> 0:08:31.760 you know, they have to look at their options. It 0:08:31.840 --> 0:08:34.640 takes potentially months of work to to get up to speed, 0:08:34.640 --> 0:08:37.760 and that's kind of where we are today. Yeah, okay, well, 0:08:38.080 --> 0:08:40.040 I'm glad you were able to cut through and UH 0:08:40.080 --> 0:08:42.400 and be one of the guys leading this UM. Now 0:08:42.400 --> 0:08:44.160 that we've kind of established that base, there's a lot 0:08:44.160 --> 0:08:46.480 of stuff that I want to jump into. UH. Specifically, 0:08:46.520 --> 0:08:50.559 I'd like to dig into UM portfolio management. So maybe 0:08:50.559 --> 0:08:53.000 you could kind of give us a background or a 0:08:53.040 --> 0:08:55.480 way to think through how the average person might want 0:08:55.520 --> 0:08:58.760 to think about UM bringing bitcoin into their portfolio, how 0:08:58.840 --> 0:09:01.160 much they should buy, and just kind of a thought process. 0:09:01.200 --> 0:09:03.920 I know that the difference or the answer is it depends, 0:09:04.400 --> 0:09:06.520 but maybe there's some framework that we'll get through. By 0:09:06.559 --> 0:09:08.360 the way, you're listening to the Mark mass Show. You 0:09:08.480 --> 0:09:11.160 we're talking about bitcoin. We're talking about the decentralized revolution. 0:09:11.160 --> 0:09:14.559 I'm in the studio with Andy Extreme. We're talking about 0:09:14.920 --> 0:09:17.520 portfolio management with bitcoin. He's gonna tell us how to 0:09:17.640 --> 0:09:20.319 think through that, how much bitcoin you should buy. We'll 0:09:20.360 --> 0:09:22.400 be right back. Don't go away, all right, Welcome back. 0:09:22.400 --> 0:09:24.720 You're listening to the Mark Moa Show. We're talking about bitcoin. 0:09:24.880 --> 0:09:28.240 We're talking about this decentralized revolution. And we're specifically talking 0:09:28.280 --> 0:09:31.600 about today. UM, looking at bitcoin as a through the 0:09:31.640 --> 0:09:34.000 lens of a financial advisor, and how you can think 0:09:34.000 --> 0:09:37.160 about putting bitcoin into your own portfolio. Um, if you 0:09:37.160 --> 0:09:39.080 should put int your portfolio, how much you should think 0:09:39.080 --> 0:09:41.640 about putting your portfolio, et cetera. I'm in the studio 0:09:41.720 --> 0:09:44.480 with Andy Edstrom. He's the c f A CFP. He's 0:09:44.480 --> 0:09:47.200 an advisor with Swan Bitcoin and he helps people think 0:09:47.280 --> 0:09:50.760 through these exact type of questions. He gets paid for this, 0:09:50.960 --> 0:09:52.800 and I've got him here to talk to you. Now. 0:09:52.800 --> 0:09:55.040 He's not your financial advisor, but he can help you 0:09:55.080 --> 0:09:57.560 talk through this. So Andy, UM, we were you kind 0:09:57.559 --> 0:10:00.240 of filled this in on maybe why I find acial 0:10:00.280 --> 0:10:02.840 advisors haven't been talking about bitcoin and how they're kind 0:10:02.840 --> 0:10:05.160 of coming around to it, but now moving forward, So 0:10:05.480 --> 0:10:09.560 walk us through some brain exercises of people who either 0:10:09.600 --> 0:10:11.960 are thinking about adding some bitcoin to their portfolio or 0:10:12.000 --> 0:10:14.440 maybe maybe we start with why people should add some 0:10:14.480 --> 0:10:17.920 bitcoin to their portfolio and then we'll go onto how Yeah, 0:10:17.960 --> 0:10:20.360 that's a great question mark. And here I'm just gonna 0:10:20.360 --> 0:10:23.760 apply the lens of pure investment. Right, there's other reasons 0:10:23.800 --> 0:10:25.960 to own bitcoin, and we can talk about those, but 0:10:26.000 --> 0:10:28.160 I'll lead those aside. So let's just look at it 0:10:28.240 --> 0:10:32.520 as an investment. So the first characteristic is Bitcoin is 0:10:32.760 --> 0:10:37.079 the best performing major assets of all time as far 0:10:37.120 --> 0:10:40.199 as I know right the last ten years plus of performance. 0:10:40.520 --> 0:10:43.000 It's basically on from zero to call it a trillion 0:10:43.000 --> 0:10:48.640 dollars um. It's also probably the fastest asset to reach 0:10:48.760 --> 0:10:53.000 a trillion dollars ever in history. Okay, so that's what um, Yeah, 0:10:53.160 --> 0:10:57.040 very very impressive. Um. The second thing to consider is 0:10:57.440 --> 0:11:00.440 in the context of an overall portfolio, and that's how 0:11:00.480 --> 0:11:02.760 I think is a financial advisor on behalf of my 0:11:02.880 --> 0:11:07.240 clients is doesn't have characteristics that play well with the 0:11:07.280 --> 0:11:10.600 other assets, And as it turns out, it does, and 0:11:10.640 --> 0:11:16.320 the reason is it's returns have low correlation to the 0:11:16.320 --> 0:11:19.560 returns of other assets, and it's low correlation to the 0:11:19.600 --> 0:11:22.720 returns of most other major assets. So I'm talking about 0:11:23.280 --> 0:11:29.560 US stocks, foreign developed market stocks, emerging market stocks, bonds, gold. Okay, 0:11:29.640 --> 0:11:33.560 in all cases, bitcoin sort of moves to the beat 0:11:33.559 --> 0:11:37.280 of its own drum. Now all caveat and say that, yes, 0:11:37.480 --> 0:11:41.640 Bitcoin has correlated more closely with stocks and especially tech 0:11:41.679 --> 0:11:45.719 stocks in the last couple of years. Nevertheless, the correlation 0:11:45.800 --> 0:11:48.520 is still relatively low. So what do you have. You 0:11:48.559 --> 0:11:51.520 have a You have an asset that goes up in 0:11:51.600 --> 0:11:56.199 value at a rapid clip right historically well over a year, 0:11:56.880 --> 0:12:01.040 um two. It moves at a different pace than the 0:12:01.040 --> 0:12:04.040 rest of the portfolio, so it has great characteristics in 0:12:04.160 --> 0:12:06.960 terms of making money even when other assets are not 0:12:07.080 --> 0:12:11.200 making money for the investor. And then three is the 0:12:11.280 --> 0:12:14.680 potential value is still much much higher than where we 0:12:14.720 --> 0:12:17.280 are today. So when I look at the valuation to bitcoin, 0:12:17.880 --> 0:12:22.520 I see at least tens of trillions of dollars of 0:12:22.640 --> 0:12:27.480 value over the long term, potentially even more. I can 0:12:27.480 --> 0:12:29.480 talk about, you know, how I get to those numbers, 0:12:29.800 --> 0:12:32.680 but suffice to say that if bitcoin is worth roughly 0:12:32.720 --> 0:12:35.160 a trillion dollars, today in terms of the total value 0:12:35.160 --> 0:12:38.480 of the network or of the total asset, there's still 0:12:39.120 --> 0:12:44.000 multiples of potential upside. So I say, Wow, amazing performance 0:12:44.080 --> 0:12:47.960 so far, likely amazing performance in the future. Of course, 0:12:48.000 --> 0:12:50.160 we don't know what the future holds, but that's my expectation. 0:12:50.760 --> 0:12:54.600 And it adds diversification benefit to the portfolio because it 0:12:54.640 --> 0:12:57.560 has low correlation. It's returns up low correlation with the 0:12:57.559 --> 0:13:00.640 rest of the assets in the portfolio. Um, it's really 0:13:01.000 --> 0:13:05.359 a star performer in the context of an overall portfolio. 0:13:05.920 --> 0:13:09.000 And then the last thing I'll say is for you know, 0:13:09.240 --> 0:13:12.040 leave aside the past and look to the future. What 0:13:12.240 --> 0:13:14.160 is this? This is something that I've heard you talk 0:13:14.200 --> 0:13:16.760 about and I'm glad you're talking about it, um with 0:13:16.840 --> 0:13:19.880 folks on your show, Which is, you know, is the 0:13:19.920 --> 0:13:22.560 world of financial assets going to look in the next 0:13:22.559 --> 0:13:24.439 decade like it has in the past couple of decades. 0:13:24.440 --> 0:13:26.719 And my expectation, I think, like you is is No, 0:13:26.880 --> 0:13:31.120 it's not. And uh. And the biggest risk that I 0:13:31.200 --> 0:13:39.040 worry about personally is durable inflation. And I categorize bitcoin 0:13:39.600 --> 0:13:43.920 as a hard money asset from from investment perspective. And 0:13:43.960 --> 0:13:47.280 so when I look at my clients portfolio, as I say, Okay, 0:13:47.400 --> 0:13:52.000 if there's a significant risk of durable, sustained higher inflation 0:13:52.559 --> 0:13:55.440 now and in the future, boy, I really want to 0:13:55.480 --> 0:13:58.840 own those hard money assets. And the hard money asset 0:13:59.480 --> 0:14:02.520 of the past with gold, But the hard money asset 0:14:02.640 --> 0:14:06.559 of the future appears to me to be bitcoin. Now, 0:14:06.559 --> 0:14:08.520 when you say hard money asset, are you saying hard 0:14:08.559 --> 0:14:10.719 money in a sense where people can't inflate it or 0:14:10.760 --> 0:14:14.120 create more of it? That's exactly right, Mark, exactly right, 0:14:14.240 --> 0:14:18.720 hard to make more of Okay. So um uh, there's 0:14:18.760 --> 0:14:22.520 the whole correlation to the portfolio, and we could probably 0:14:22.520 --> 0:14:25.360 spend an hour just talking about that specifically. Um. But 0:14:25.480 --> 0:14:27.560 if we look at bitcoin and say, okay, it has 0:14:27.600 --> 0:14:30.080 a I think it's got an easy five act. I 0:14:30.080 --> 0:14:32.000 think it's got an easy ten X in front of it, right, 0:14:32.040 --> 0:14:34.200 I mean Cathy Wood says it has a ten X. 0:14:34.240 --> 0:14:37.320 I think if it got five of SMP reserves, it 0:14:37.360 --> 0:14:39.240 could be a ten x. Right. So it has a 0:14:39.240 --> 0:14:40.920 ten X. It maybe has a hundred X in front 0:14:40.920 --> 0:14:43.160 of whatever whatever number you assigned to that um and 0:14:43.200 --> 0:14:45.320 then you go, okay, well, what's the probability of it 0:14:45.400 --> 0:14:48.760 achieving that five X or that ten x. UM. So 0:14:49.160 --> 0:14:51.200 I think there's a one percent chance that that happens, 0:14:51.240 --> 0:14:53.760 or there's a fifty percent chance that happens. Um. So 0:14:53.880 --> 0:14:57.880 if people are very bullish or there's somewhat skeptical on that, 0:14:57.960 --> 0:14:59.880 but you know, it's better than a zero percent chance 0:14:59.880 --> 0:15:03.400 that to do that. Um, how would they think about now, um, 0:15:03.440 --> 0:15:07.400 applying that to their portfolio. Yeah, that's like a risk 0:15:07.440 --> 0:15:09.840 adjusted basis. And I think that's part of this whole 0:15:09.840 --> 0:15:12.400 correlation and so forth right. Yeah, that's a great framing. Mark. 0:15:12.440 --> 0:15:14.520 I like your framing there by the way, I agree 0:15:14.520 --> 0:15:17.200 with you that to me, the upside is more than 0:15:17.200 --> 0:15:20.600 ten x, and could be x, could even be higher. 0:15:20.640 --> 0:15:22.920 But that's you know, that's kind of the brackets that 0:15:22.960 --> 0:15:24.800 I that I put around it these days, at least 0:15:24.800 --> 0:15:28.720 for the foreseeable future, let's say, for this decade. Um. 0:15:28.760 --> 0:15:33.920 And as you point out, reasonable people can disagree about 0:15:33.960 --> 0:15:37.920 the probability of success or the probability of failure for bitcoin. 0:15:38.880 --> 0:15:42.920 I personally happened to think that the probability that bitcoin 0:15:43.680 --> 0:15:47.560 reaches its potential, which is much higher than much higher 0:15:47.600 --> 0:15:51.920 in price than where it is today, is actually greater. Um. 0:15:52.000 --> 0:15:54.640 I've I've become more bullish. Let's say, since I think 0:15:54.640 --> 0:15:58.320 I put thirty or a third probability UM on paper 0:15:58.320 --> 0:16:00.640 in my book a couple of years ago. But facts 0:16:00.640 --> 0:16:04.280 and circumstances and events that have transpired since then, not 0:16:04.440 --> 0:16:07.080 least the pandemic, you know, have caused me to get 0:16:07.080 --> 0:16:09.520 more bullish. So if we if we talk about if 0:16:09.520 --> 0:16:11.120 we talk about that just for a second, like I 0:16:11.120 --> 0:16:14.280 started buying in and uh, if I would have just 0:16:14.320 --> 0:16:16.960 put the amount of money in UM that I've done 0:16:17.000 --> 0:16:19.040 this year, that I would have put that back in, 0:16:20.800 --> 0:16:22.440 I probably wouldn't be on the radio right now, right 0:16:22.560 --> 0:16:25.000 or whatever. I don't know, but I didn't because it 0:16:25.040 --> 0:16:28.920 was too risky right at who knew right in seen 0:16:29.080 --> 0:16:31.880 it had become more developed, we launched the futures like that, 0:16:31.920 --> 0:16:33.400 a lot of the risk was removed, but it was 0:16:33.400 --> 0:16:36.120 still risky. Today I almost feel like we're at this 0:16:36.160 --> 0:16:38.760 place where like almost all the risk has been removed 0:16:38.800 --> 0:16:40.280 at this point, but we still have this ten X, 0:16:40.280 --> 0:16:42.760 which makes it maybe the best risk adjusted trade we've 0:16:42.800 --> 0:16:46.560 ever seen, maybe UM. But to to your point, no 0:16:46.720 --> 0:16:49.760 reasonable person and so unfortunately there's a lot of unreasonable people. 0:16:50.040 --> 0:16:52.240 I get over five thousand comments a week across all 0:16:52.280 --> 0:16:56.640 my platforms, and people say it's never gonna work, um, 0:16:56.680 --> 0:16:59.280 you know, or it's going to zero, and it's like, well, 0:17:00.080 --> 0:17:01.960 that may be close to true, but you can't say 0:17:02.000 --> 0:17:05.080 a percent, right, there's maybe a one percent chance that 0:17:05.119 --> 0:17:07.080 succeeds or and so you have to figure out like 0:17:07.119 --> 0:17:10.160 where your conviction is based off of that. I think 0:17:10.160 --> 0:17:13.080 it's kind of what you're saying. Um, they're listening to 0:17:13.080 --> 0:17:15.280 the Mark Yeah, you're listening to the Markmah Show. We're 0:17:15.320 --> 0:17:18.920 talking about bitcoin. Um, we're talking with Andy Edstrom. He's 0:17:18.920 --> 0:17:21.760 a c F a c FP, and he is talking 0:17:21.800 --> 0:17:26.640 about how to incorporate bitcoin into our portfolio and specifically, uh, 0:17:26.680 --> 0:17:28.960 we're about to We talked about where it could go, 0:17:29.119 --> 0:17:30.439 so we think it can be worth a lot more 0:17:30.440 --> 0:17:32.720 in the future. UM, we need once you figure out 0:17:32.760 --> 0:17:34.919 what that probability is, what your conviction is, then you 0:17:34.920 --> 0:17:37.800 can figure out how much you should bring indyr portfolio. 0:17:38.200 --> 0:17:42.160 And he's gonna answer that question when we come back. Um, 0:17:42.240 --> 0:17:44.679 you can find him on Twitter, um and look him up, 0:17:44.760 --> 0:17:46.520 give him say you say you heard him on the radio. 0:17:46.560 --> 0:17:49.639 You can find him at at Edstrom E D S 0:17:49.680 --> 0:17:53.119 t R O M Andrew at Edstrom Andrew Um say, Hi, 0:17:53.160 --> 0:17:55.320 of course I am one Mark Moss on Twitter. Shoot 0:17:55.320 --> 0:17:57.280 me a message as well. We're gonna be right back 0:17:57.359 --> 0:17:59.240 talking with Andy, and we are going to find out 0:17:59.280 --> 0:18:01.600 what's your conviction level is and how to figure out 0:18:01.640 --> 0:18:04.320 how much to put into bitcoin. We'll be right back. 0:18:04.400 --> 0:18:07.040 Don't go away, all right, Welcome back. You're listening to 0:18:07.040 --> 0:18:09.160 the Markma Show. We're talking about bitcoin, and we're talking 0:18:09.200 --> 0:18:13.080 about this decentralized revolution, and specifically I'm in the studio 0:18:13.080 --> 0:18:16.880 with Andy Edstrom. He is UH an advisor financial advisor 0:18:16.960 --> 0:18:20.760 works with Swan bitcoin and he is talking through right now. 0:18:20.800 --> 0:18:22.919 He kind of gave us where he thinks bitcoin could go. 0:18:22.960 --> 0:18:24.560 I said, I think it has an easy tent X 0:18:24.560 --> 0:18:26.119 in front of it. He agrees, he thinks it has 0:18:26.160 --> 0:18:30.000 even more than that. Now, as he said, any reasonable 0:18:30.080 --> 0:18:33.080 person you have to admit it has at least a 0:18:33.160 --> 0:18:35.880 better than zero percent chance of doing that. So does 0:18:35.880 --> 0:18:39.560 it have a one percent chance or chance or hundred 0:18:39.680 --> 0:18:42.040 chance depending up what your conviction is? Now, Andy, you're 0:18:42.080 --> 0:18:44.639 about to tell us based off of that, Um, how 0:18:44.680 --> 0:18:46.919 should we think through adding a tour portfolio? How much 0:18:46.920 --> 0:18:49.480 we should have in there? Yeah? So a couple of 0:18:49.480 --> 0:18:52.720 thoughts there. Mark one is how much do you have 0:18:52.800 --> 0:18:55.479 in hard money assets, which is a different way of 0:18:55.480 --> 0:18:59.480 saying how much of your portfolio is assets that you 0:18:59.600 --> 0:19:02.359 think are going to save your bacon in the event 0:19:02.480 --> 0:19:07.760 of high sustained inflation. For me, for my clients on 0:19:07.840 --> 0:19:14.080 average today, that's roughly okay. And that is basically bitcoin 0:19:14.520 --> 0:19:19.240 and monetary medals, primarily gold. And you know, I personally 0:19:19.240 --> 0:19:22.560 think that in the long run gold there's a possibility 0:19:22.560 --> 0:19:25.199 that gold gets demonetized, right, which means an investment in 0:19:25.240 --> 0:19:27.520 gold today it's probably not going to turn out well, 0:19:28.040 --> 0:19:31.439 but for the foreseeable future, you know, next few years. 0:19:31.640 --> 0:19:36.160 Basically I want my clients to own both bitcoin and gold. Now, 0:19:37.080 --> 0:19:41.040 the question of you know how much bitcoin maybe counterintuitive. 0:19:41.040 --> 0:19:42.480 I'll just tell you how I do it for my clients, 0:19:42.480 --> 0:19:45.040 which is, most of my clients have roughly a five 0:19:45.080 --> 0:19:49.040 percent position, And partly that's because I want to have 0:19:49.160 --> 0:19:53.360 a an inflation resistant asset in the portfolio, and partly 0:19:53.359 --> 0:19:57.040 it's because I expect to make a multiple on that investment. 0:19:57.960 --> 0:20:02.480 And also partly because although I think there's almost zero 0:20:02.560 --> 0:20:06.080 probability that bitcoin loses most of its value or goes 0:20:06.119 --> 0:20:10.240 to zero, I do recognize that the volatility is high, 0:20:10.520 --> 0:20:16.119 and my clients do not have infinite patients for the 0:20:16.200 --> 0:20:19.159 volatility of this asset. And it really is a you know, 0:20:19.200 --> 0:20:22.760 it's a it's an issue of human psychology because you know, 0:20:22.960 --> 0:20:26.920 and I know, and probably your listeners know that volatility 0:20:26.960 --> 0:20:31.640 doesn't really matter in the long run if you're accruing value, 0:20:31.680 --> 0:20:35.200 if you're making money over time. But you know, the 0:20:35.640 --> 0:20:38.240 lizard side of our brain, you know that those lower 0:20:38.800 --> 0:20:42.800 baser parts of the brain that probably evolved much earlier 0:20:42.840 --> 0:20:46.879 than our intelligent prefrontal cortex, those parts of the brains 0:20:46.920 --> 0:20:49.760 get triggered the fear centers, the amygdala, etcetera, when we're 0:20:49.760 --> 0:20:53.080 losing money. So for clients, it's kind of a balancing 0:20:53.119 --> 0:20:59.879 act between the logical rational portfolio optimization versus the fear 0:21:00.400 --> 0:21:03.679 that can get triggered in the event of of of 0:21:03.800 --> 0:21:06.200 loss of value. And then the second thing I'll say 0:21:06.320 --> 0:21:10.320 is I have clients at different risk levels, right, So 0:21:10.400 --> 0:21:12.200 there are clients that want to shoot the lights out 0:21:12.200 --> 0:21:14.880 and make a lot of money, high returns, and then 0:21:14.880 --> 0:21:17.439 at the other end, they're the clients that you know, 0:21:17.480 --> 0:21:19.399 barely want to even keep up with inflation. They just 0:21:19.400 --> 0:21:23.119 want to avoid a catastrophe, you know, catastrophic loss, and 0:21:23.160 --> 0:21:25.720 then there's ones in the middle. And what's interesting about 0:21:25.720 --> 0:21:29.560 bitcoin is bitcoin is a good quote unquote high risk 0:21:29.600 --> 0:21:32.040 asset because the returns have been high and are likely 0:21:32.080 --> 0:21:35.359 to be high in the future. But it's also an 0:21:35.359 --> 0:21:38.200 important low risk asset in the sense that a quote 0:21:38.280 --> 0:21:41.760