How To Position For The Largest Digital Assets Bull Run Yet (Invest Like The Best)

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There's a long conversation to be had about how efficient [music] L1 transactions are for doing this sort of function, but I think Bitcoin is permissionless and people should do whatever they like on it. For me, it's not about money. It's about a scoreboard of like Bitcoin [music] going up in value means that the world is subjectively looking at Bitcoin. This led to a huge disillusionment and and ultimately a civil war with Bitcoin Cash where people [music] thought Bitcoin is useful that way. Just like the streets of Manhattan, I'm going to keep this quick. Over 70% of our viewers are [music] not subscribers.

Yes, you. Every week, we interview some of the best entrepreneurs and investors in the financial industry. The easiest way to support our channel is to hit the like and smash the [music] subscribe button. Now, sit back, relax, and enjoy today's show. All righty, guys. We're here in the nest in the tokenization tower with Dan Hell. Dan, great to have you buddy. >> Thanks for having me. >> Welcome to the show, guys. Dan is one of the OG Bitcoin bulls. I mean, an investor, early adopter, uh, someone would call him a libertarian, early investor, and early innovator in the space. So, Dan, it's great to have you. Um, what a day. We're pumping hard.

People are sidelined. Bears are still out. Clearly, bulls are in control for Bitcoin. Everything's go, you know, moving in the right direction. What's your read? >> Well, you know, it's always funny because it's darkest before dawn. I mean one month ago people are panicking saying it's the end of the space that Bitcoin has failed to reach its promise institutions aren't here it's all dead and now one month later we see a the bullish winds have come back so this is a classic representation of how the Bitcoin cycles work fear and despair complete apathy is what the bottom represents and I think we had that there was a widespread amount of apathy of like it's over I'm out a lot of people quitting it's usually a good bottom sign so >> say overall given that this is my fourth cycle that I think we've bottomed. Now

the strong resurgence is because of the Treasury's actions of considering buying back treasuries or sorry the Fed's actions to buy treasuries in order to lower the uh you know the effective rate on bonds. So when we see that happening basically the world is saying that we don't trust governments to be able to pay back their debt and that inflation is going to be a growing concern. Of course Bitcoin is special purpose built for that moment. That's why we pump so hard from 60k all the way up here to like 81,000 today. >> Yeah. >> I don't think this is going to stop. I don't think it's going to go rocket right up to 100 right now, but this is what Bitcoin is built for. And I think that's why we're seeing the market move as it is.

>> Yeah. I mean, some people call it like the most reflexive financial asset that exists in the world. And so as soon as uh Treasury Secretary Scott Bessant made that claim of hey guys we're buying longended you know long longend bonds and to try to you know reduce the steepening of these curves which in any normal economics class they would tell you that the current bond yields are a cause for a crisis but we live in a fugazi economic world now as you know this is why you're a big Bitcoin believer. You know, Dr. Miller, legendary hedge fund manager, came out the other day. He wrote that really interesting letter where he said like, "Look, just let the market be the market. If if rates are rising, that's fine. It's just the market saying, "We don't trust in the US's fiscal policy.

We don't trust your ability to cut spending um and or raise taxes." And so that's basically what that number represents basically getting and also getting inflation under control. So, it's funny that they go talk about these buybacks when, you know, in effect, you can't stop the market from moving against you. you can't stop the market from going a certain direction. So, you know, the Treasury's ability to really stop this from happening or these rates to increase is somewhat limited. >> Yeah. Yeah. Well, man, I mean, Bitcoin's Yeah. 81 um you know, people are stoked on Ethereum and Salana and all these other names. One name that OG Bitcoiners who I only have a couple in my network, I consider you one of them now. Grateful to have known you. Um, I got these texts over the last 3 months and really like

three to six and it was like, "Hey, Andy, just you know, you're a friend of mine. Just want to help you out. I know you work hard. We're buying a lot of Zcash at 100 to to 200. Anything in between the 2004 $200 to $400 range. I'm buying Zcash. I'm taking one, 17th, 1/8 is the numbers that I heard of my kind of long-term BTC and I'm allocating it into Zcash." So I'm like, okay, so these guys are, you know, these guys are, you know, multiple eight figures, nine figures, Bitcoin since 2013, you know, and so I'm thinking to myself, I'm like, okay, so this is obviously going to be one of the trades of the cycle, not yet a Bitcoin, right, in terms of its moneyiness or kind of, you know, network effects, but it's kind of coming on to

be like this beta asset to Bitcoin. What's your take the like the whole privacy narrative, the whole quantum narrative? What's your take on Zcash? I mean, I've seen so many crypto narratives come and go over the years about various crypto assets that >> this is one of a few thousand. Um, the whole privacy angle, look, for libertarian OG types, the privacy angle, of course, we like that, right? Like, we like the idea of a money that can't be traceable and or transacting privately or storing your wealth privately. The problem with privacy chains is that they have a fundamental trade-off between the auditability of the supply, >> correct, >> and the privacy angle, which just happened as ecash, what was that, six months ago? Yeah. years ago.

>> Yeah. >> Where there was a not an inflation bug necessarily. I forget the nuances of it, but it made it hard to know exactly how many Zcash existed and or if there's an exploit done to where the amount of Zcash was artificially manipulated. >> Yeah. >> So given that the most valuable part about Bitcoin is that it's we can trust in the 21 million hard cap, Bitcoin's community decided not to make that trade-off. Remember that the Bitcoin protocol could be upgraded to absorb any of these features of other altcoins. Bitcoin has upgraded itself numerous times.

>> So if the community decided that privacy was a huge important factor, we would have made that trade-off. >> Yep. >> However, the Bitcoin community won't make that trade-off. Whereas the Zcash community has >> what I'm trying to say in a very nuanced way is that we all want privacy and auditability. You can't have both, >> right? >> There's always going to be less auditability, even though there's all sorts of like turn styles and other ways that Zcash can audit. their supply. >> That is an inherent weakness for a store of value digital gold. That's why Bitcoin will never have it. >> Yeah. >> Zcash has decided to add that. You know, that's it entire premise is privacy.

Now, why now? Why Zcash? >> Yeah. >> I always have an allergic reaction when everyone's talking about the same narrative at the same time. >> Where was everyone shilling Zcash a year ago, year and a half ago or 10? Yeah. Or during the lows, right? Like I didn't see these eloquent this you know an eloquent thesis from top crypto VCs come out a year ago about Zcash. They all piled on after it pumped. >> Right. >> The crypto space works pump than narrative. >> Correct. >> There is no narrative that drives it. The narrative is reflexive and and produced afterwards even for Bitcoin itself.

>> Of course. >> So is this narrative true? And is Zcash all of a sudden an asset that's undervalued or not? I don't know. Because for me, anytime I don't like buying things that are really hot and everyone's talking about it because I've been so early with things like Bitcoin, >> right, >> and things like SpaceX. >> Yeah. >> I like hated assets. That's usually when they're priced well. >> Sure. >> So, right now it doesn't feel like Zcash is exactly priced at a discount. It feels very, very expensive. >> Yeah. >> I think a lot of people are buying it because other people are buying it. >> Um, again, I believe in, you know, when you have an investment thesis, you have you should believe in this before anyone else believes in it. So, I'm inherently not that type to chase a momentum trade.

>> Yeah. >> So, that's my opinion. >> Unfortunately, my entry wasn't at 20, but it was in the low hundreds, so I feel early, right? But now it's at 950,000. It's like, well, okay. >> The hard part isn't getting in, it's getting out. >> Yeah. >> Because you haven't sold yet, right? >> But the OG's that I spoke to, um, Dan, um, you know, they said the only, you know, how you know, hey, Andy, you know, you know how we did so well on Bitcoin? We never sold. >> True. But Bitcoin is a distinctly different asset than these other assets, >> right? But theoretically, if you follow like the logarithmic growth curve or something like Zcash and I'm just kind of like defending my positions, right?

These opinions are held loosely. You know, things change, >> but you know, theoretically the price appreciation of Bitcoin obviously is like those those people have a bit of uh like you know, you have a bit of like this like survivorship bias because there was thousands of altcoins that you could have said, "Oh, how do we get rich? We didn't sell." Well, it didn't apply, right? it didn't apply. So, you know, we'll see what what happens. But yeah, >> well, I have no doubt that you could outperform me in the short term, but will you outperform me in the long term? I highly doubt it. >> Yeah. If you look at all legendary investors like Oak Tree Capital, Howard Marx, Warren Buffett, etc. They don't claim to make short-term trades in order to profit. Most of them have a long-term horizon.

>> And if you look at their performance, they outperform almost everyone else. Um, >> so unless you're shaw rent where you have information or alpha that no one else has and they can win on the short term >> it's pretty difficult to win. So I've missed out on thousands of altcoin pumps tens of thousands >> and I will in the future. >> Yeah, that's fine. >> But longterm if you look at the BTC to altcoin ratio like pick your altcoin Ccash Monero Ethereum Salana whatever you like, anything Cardano, XRP. >> Oh god. Yeah, like if you look at the the altcoin to BTC ratio, yes, sure they pump and I've missed out on all of those. But longterm, you know, getting in isn't the hard part. It's getting out.

>> And that's where most people don't have a a systematic way to exit their position once they've entered it. >> For example, imagine it's at what is it today? >> Almost a thousand. >> A thousand. So your entry is let's say 100, >> you know, a little bit higher, but yeah, low. >> Let's just say 100. >> Yeah. >> Well, let's say it drops to 500. You probably won't sell because you're thinking that it's going to go back up. then it drops to 200 and you think that it's you're not going to sell and then it's down at 100 at your cost basis. >> It's a psychological game against yourself. So, if you're going to trade, which I don't recommend, I'm a long-term investor for everything I do. I'm a shitty trader, by the way.

>> Sure. >> And I only work on trading tech like where I did at Kraken and my interchange, my last startup, because I'm not good at trading. I like to build software for people that do. >> Um, you have to have your exits pre-planned before you enter, right? because you will always keep hodling it all the way up >> and then eventually it comes back down. Now for assets like Bitcoin or what I consider like Bitcoin or SpaceX like multi-deade generational assets that doesn't necessarily apply. >> Y >> but for altcoins most of these I would consider like gambling. >> Yeah. And you have to have an exit plan.

>> Exactly. >> So talk to us about the SpaceX play. So did you buy a did you buy a lot here at the lows around like 100ish 150? Like it's we're breaking up above 150 now. So, this kind of felt like the time to really get into SpaceX. I missed it. My my best friend has been just pinging me. He He's like an e-commerce entrepreneur. He, you know, just just does Bitcoin and like S&P 500 and and a NASDAQ, but he's like, I'm taking 10% of my portfolio and doing like my my account, you know, not the indexes and not Bitcoin, and I'm putting it all in SpaceX to start.

>> Um, what's the SpaceX thesis? What's the long-term thing here? This is a multi-deade investment, I assume. So, how are you thinking about this? >> Yeah. So, I have a certain personality trait where I get obsessive about things. Um, I don't know what you want to classify me as with that, but maybe it's autist, maybe it's something else, but like for different assets and other things, I get really into it. >> Yeah. >> Um, what I realized in life is that your alpha or your ability to outperform everyone else could just be because you're so obsessive about one asset. I'm gonna miss so many investments in real estate commodities >> uh all sorts of tech plays, AI, >> but for Bitcoin, uh you know, I spent the time to really obsessively learn about it, right?

>> And I would say like I spent so much time that I realized I'm one of maybe a thousand people. I'm not going to say I'm a genius and I'm not going to say I know it all, but I'm probably top 10,000 back in like 2020, like 2012, 2013. Yeah. >> That really understood it. >> That gives me an edge. that means that I know how to price this asset and I think everyone else has mispriced it. >> And that's the bet I made. Now, there was a lot of like path dependency risk of like Bitcoin could have died. Like if we re reran the universe simulation 100 times, maybe Bitcoin dies for some reason 59% of the time, 60% of the time, who knows? So, I'm I'm somewhat lucky.

>> Sure. >> Because risk is what I can't calculate. >> Sure. >> So, SpaceX, I applied the same thing. It's I've always been really obsessed with SpaceX. I went to the first Falcon Heavy launch in person with the employees. >> Wow. I went to the first Starship launch. That was after I made the investment. But five years ago, I basically sold most of my crack and equity and put it into SpaceX. >> Wow. >> Because I had spent the last year getting obsessed about the unit economics of how it would work and the potential TAM if it did work. >> SpaceX, like Bitcoin, has a certain sort of I would call it a metric crux. Bitcoin is 21 million. Like the whole world's value divided by 21 million, right? Like that that's your classic like that's like the metric.

>> Yeah. 8 billion people, 21 million coins. >> Exactly. Ultimate scarcity. Yeah. What's the value of that? Ultimate provable scarcity. SpaceX is dollars per kilogram. How much does it cost to send one kilogram of matter into space? And SpaceX took, you know, the space shuttle launches were about $20,000 per kilogram. And with Starship, it'll be $10 per kilogram 2,000x reduction. So, if that happens, that was my investment thesis. If that happens, that will unlock a TAM that is likely larger to be the global GDP.

>> Wow. >> Now that sounds [ __ ] ridiculous. Like [laughter] you know, like >> five years ago, it sounded even crazier. >> No, it sounded even crazier. >> It sounded nuts. >> Friends, family, lovers all hate me because it's like dinner time, you know? It's like I talk about Bitcoin and SpaceX. >> I'm a little bit of a one or two trick pony now. >> Yeah, I >> invested under 100 billion valuation. >> I was going to say I was going to ask that >> my risk was Starship. Were they able to execute and build Starship and launch it? And I'm like, I'll take that bet. Now, again, in universe simulations, if we had rerun the universe a hundred times, maybe 20% of the time they would have failed.

>> Sure. >> But even with that, the Falcon uh Falcon 9, they can still go deliver Starlink, which is a trillion dollar business. So, I wasn't too worried about the valuation even if Starship failed. So, Starship has massively been successful. They're launching their first uh orbital launch with a an actual usable payload of the new Starlinks. So like SpaceX totally executed on this. >> Yeah. >> People don't understand how much this will change everything. I mean SpaceX will own telco including mobile connectivity. Not just like >> you know this isn't a replacement for fiber. It's a replacement for your T-Mobile AT&T Verizon.

>> Then you have things like defense contracts. You have rods from God dropping kinetic payloads from space. So imagine like you could hit every target in Iran with no pilot risk and you could hit it within seven minutes with very little to no detection. >> Yeah. >> So pretty crazy. Um and you can also do things like a brilliant pebbles which is a program envisioned in the 1980s and 1990s. >> Uh this is essentially the golden dome project that Trump has talked about. M >> since we can detect launches from uh adversaries, we can drop small payloads, kinetic bombardments onto those ICBMs or missiles from space.

>> Wow. >> So that will give the US a complete dominance over the nuclear threat other than smuggled nukes. >> So it's not only just like it's a national security in like base thesis. Yeah. >> This is the equivalent of developing a nuclear bomb though. like you either have it or you don't and if you don't have it, you're at a huge disadvantage, >> right? >> So, the US will have complete global dominance in that in that way for about a decade before China catches up because China's space program is pretty advanced. >> So, I was just out in the national parks um with my girlfriend. We were hanging out for a couple days out in Yellowstone and in the Tetons. Beautiful. It was epic.

>> And of course, there's no Wi-Fi out there. I brought my little Starlink Mini, plugged it in, 300 megabits speed in the middle of Yellowstone National Park on the roof of my cabin. >> And pretty soon it'll be right to your phone >> and on the airplanes. >> Yep. Everywhere, which will be incredible. And then also people forget about the connectivity connectivity of robotics and IoT. >> Every single boat, airplane, every single little humanoid robot, every single robot farmer, etc. There's that. And then you have things like, you know, comput in space, right? Like uh orbital data centers. And obviously that's become a really hot narrative this year.

Or orbital data centers make sense on paper. You basically trade off um it's a higher capex to get it up there, but then your opex is zero. >> That's and so there's a cost curve analysis where that makes sense. Um so you know that's huge as well. You got a million things here. I'll rattle off a couple but not spend too much time. Earth observation, cameras in space, monitoring the globe. You could before they were really expensive to get up there. They also didn't have continuous coverage. and have the ability to stream the data because it's really data intensive or do compute which will have all of that up in up with Starlink and Star Mind.

>> Yep. >> Uh then you have things like pointtooint. You take off in New York and land in Tokyo in 25 minutes. >> Wow. >> That will exist. I mean you're just light you're riding a rocket. It won't be a comfortable ride but I travel for business on business class therefore almost once a month and I be the first one to sign up for that. >> Yeah. millions of other things like this, you know, and if you look at it, it's sort of like, you know, what's the value of the new world? Sure. >> For the uh, you know, back in what was it? Columbus came in like 14 something. >> Mhm.

>> Like basically the TAM of all of North and South America didn't exist. >> Yeah. >> It's sort of the same thing. You're discovering all these assets in space and that TAM is is one pretty uncalculable. >> Yeah. >> But we know it's large. Um, >> asteroid mining, etc., etc. Anyways, so you know, if you look at this and you start to map it out, um, by the way, if you want to dig further into this, check out Mach 33's research, >> okay? >> Uh, Aaron Bernett and Vlad are the two guys behind that. Super brilliant. >> Elon tweeted, "I haven't seen a re a company produce such good research outside of a rocket manufacturer or satellite manufacturer."

>> So Elon loves Mach 33. Those guys are fantastic. I've chatted a bunch with them. >> Yeah, >> they while I synthesize a TLDDR narrative, they spend the time to actually do the math. So, if you want to check the math out, >> that's what I'm curious a bit about on the math side. Not necessarily about like about all the rockets and the, you know, the Starship and the Starlink and the robots and Etsy, but more on the investment side. What is the investment math here? Like obviously you're in, you know, extremely early. I think the stock's trading multiple trillion dollar valuation now two and a halfish or something, threeish maybe a little less. But what like what's I mean not price prediction or like stock price prediction but like >> sure >> if your thesis is right give us like your bull and bear case for SpaceX.

>> Yeah. And think about it this way like the dollars per kilogram or cost in a kilogram into space as that decreases makes it cheaper to get into space the TAM increases. So just think about it from that perspective. So the if they keep executing on Starship mass produce them mass launch them reuse them basically that cost curve keeps going down. >> Yeah. Um, if that occurs, you know, I think I think by 20 I think by in three years SpaceX trades at a 10 trillion market cap. >> Wow. >> I think by I'm 38. I think by the time I'm old older, >> yeah, >> maybe maybe like mid late 50s. It's about 20 years from now.

>> I think SpaceX trades at 100 trillion market cap. I know that sounds ridiculous, but you've got, you know, if you look at the projected Starlink, Star Mines and other ass and these other product lines, these are huge and they predict they predict like for example Starlink, they predict the revenue to double for the next 5 years. It's two to the fifth power. >> Like people don't think in exponentials. That's why Bitcoin is so hard to value. Everyone's like I remember when people thought Bitcoin was expensive at $100 or $1,000 [laughter] and now it's close to hundred,000. Yeah. But then someday Bitcoin will be at a million and people will be like, "Oh, well 100,000 would be cheap." People's minds can't gro exponential curves.

>> Yeah. >> We're a linear thinking species. >> A deer runs in front of us. We throw a spear, it hits the deer. >> Yeah. >> Crops don't grow exponentially. You got to do all the work and it's kind of a linear process. >> Seeing things double and double and double and double isn't what our minds are made to think of. >> Right. >> So if you can see that curve or spend enough time to care about it, again, I'm not a genius. anyone else can come to the same conclusions I did. You just had to spend the time to think about it. >> 100 trillion dollar market cap. Yeah, I'm going to buy I'm going to buy SpaceX for the long term here after this show. Um my buddy's been harping on it and just been like, man, you got to get in.

You got to get in. What about the investor psychology required to see that through? Like Dan, what do I need to do? How do I like do I need to make a separate brokerage account that is like long-term holds and then like my trading brokerage account? And how do I mentally see this through? You know, I'm 27, so I'll be 50, you know, theoretically in 20, you know, 23 years. How do I hold SpaceX for 23 years as an investor? Obviously, sizing is a big part of it. So, you know, you know, let's talk about percentages of portfolio. Let's talk about the psychology of required because I right my time scale of investing career is I started when I was like 18.

So, you know, 11 years or sorry, nine years. Um, so I don't even have 20 years under my under my belt. So thinking about holding an asset for 20 years, how do I manage that trade? >> I mean, that's a fantastic question. There's a lot of different components to this. I one had the humility and the introspection to go, was I just completely lucky with my bet or were was there a method to my madness that I can reproducibly do over and over? You know, that's where I read all of Howard Mark's letters from Oak Tree Capital, read a lot of what Warren Buffett stuff. And what's funny is if you actually take all of their learnings and distill them, there's really just two things that they both that they all say be obsessive about a certain asset and know everything about it. And once you do,

you probably will either find that it's overpriced or underpriced because you've spent more time than anyone else looking at it. There's just too many things for everyone to look at. And if you know a lot about a certain industry or a certain asset, you have some alpha there. The seconds, which is funny because basically it's our core mantra in crypto is huddle. >> Yeah. >> And the hodling part's the hardest. Howard Marks is pretty kind of quirky and funny with how he references it. He's like, look, >> if you really understand the asset, if it drops, you should want to buy more, right?

>> You know, if you're feeling like, oh, I should sell after it drops, it means he really never understood the asset to begin with. >> Yeah. >> So, the huddle part is extremely difficult. And I would say Morgan Hustel with the psychology of money has a really good thought process behind this. There's investing practically versus investing rationally. >> Investing rationally would be like if I truly have this conviction in Bitcoin and SpaceX and 50% 50%. >> Right. That max full send. My portfolio is almost all that. I like a little bit of a cash buffer. Yeah. For expenses for like a year or two and then I have a small percentage in S&P because it just makes me feel good.

>> Sure. >> That's investing practically knowing my own character versus investing rationally. Now >> until 2021, my net worth was 99% in Bitcoin. >> Wow. >> So I did almost a decade in Bitcoin exclusively. >> No S&P, nothing else. >> Wow. >> So I've lived that. I was a young guy and I feel like for men me young men can handle that better than other demographics due to our whether it's stupid or smart ability to take outsized risk >> of course >> you know I think women for example will outperform most men but not for the outliers because men are idiots enough to take crazy risk like we're the one who went and go stab the bear brought it back to the tribe to go win the favor of the tribe but the other three dudes died

trying to stab the bear you know you don't hear about all the losers who invest in ultra high-risisk assets and lose Right? >> So that's where it's not for the faint of heart. It's not for the if for a certain type of demographic for yours for example in your late 20s you can stomach a lot of risk aka >> and risk is not volatility but volatility is our rudimentary metric >> to measure risk. Howard Bark says great thoughts on this because you know you can't measure risk. Risk is what's uncalculable. >> So volatility is the representation of people repricing risk for an asset or what it future value is too. So your ability to stomach that is probably higher than most. You're also born in crypto. So exactly if you can survive this asset class, you can survive anything.

>> Well, what's funny is thinking about allocating to SpaceX here for my portfolio actually feels like a bit of a d-risking like >> Yeah. You're diversified now, right? >> Like I'm in so many Bitcoin, I'm in freaking tons of coins, all these seed investments. My entire company is predicated on fin I mean it's gone from crypto to now finance, which is great. Yeah, that's why we're having this conversation instead of, you know, going into the weeds about institutional adoption of crypto or something. Um, but it feels like a diversification of a strategy somehow. >> Yeah. And I mean, part of this is both calculating like your immediate liquidity concerns to pay for expenses.

Um, only invest money you can afford to lose. >> There's your ability to stomach risk. And then you know it's kind of a factor of like which you can do interesting things by the way like Cubera is a way to track all of your assets in one one spot and it pulls in live data and it pulls in live balances. >> You can use that and then like talk to Grock or chat about it. >> Yeah. >> Where like you can analyze your live portfolio and you can chat about it. >> You know there's again the psychology of money. I think Morgan Hustle did a great job of talking about practically versus rationally. Like >> I like it.

>> At what levels should you take money off the table? like you never and you're not going to live forever. So >> money when you're younger is much more fun, >> right? >> And that's where I woke up and looked at, you know, I've invested extremely well, but then I've been such a good hodler that like I never touch my Bitcoin right? >> Or anything else, you know, >> and so there's this there's this curve in life where the longer you don't touch your assets, they compound exponentially. >> Sure. >> Classic classic return profile. >> Yep. But your health exponentially decreases at the same time. So there's a sweet spot in a way where I think that everyone teaches you how to invest. But if you become really good at it, it means you've withheld consumption for

such a long time. Correct. >> And let it keep growing that you haven't figured out how to spend it. Or >> what the [ __ ] do you need anymore for? Like >> Yeah. >> You know, I woke up and um I'm not going to say [clears throat] I'm crazy wealthy. I've done quite well. >> Yeah. >> But why the [ __ ] would I want a billion dollars at 60? >> Yeah, I know. Like those guys would trade 995 million and have five million bucks where we're at. I mean, you're a bit younger than I am, about 10 years younger. They would trade that all to be your age. >> Yeah. >> Maybe 5 million in the bank right now versus a billion at their age. They would trade all of that.

>> Hangovers suck. They wake up later. People don't view them as attractive. >> Yeah. >> Like >> they haven't they haven't been wanted in in a decade, >> you know, things like that. >> Yeah. >> There's no calculable value for that. So also you could just die tomorrow. You never know, >> right? 100%. >> So yeah, I would say there was a lot of introspection I did of like, cool, I'm really good at this investing thing, phenomenally well at it, but what's the point? >> So there and that's the intimate side of being a human, >> right? >> Rather than a robot. >> So I think there's a good balance of both.

>> Yeah. >> You know, for example, like let's say your net worth is a million just for easy numbers. um and your buddies want to take an epic lifetime trip to uh Cabo and you want to spend 5,000 bucks, >> you probably should take that trip. Like that's a pretty small percent of your net worth and it's a it's a trip with all your buddies and then maybe you know six years from now they're all married and none of them can meet up again and you definitely would have missed out on like a trip like that. Like those are important to take. Um, you know, whereas some people, especially in New York City, they're grinders. And I used to be a grinder as well. You know, it's early growth team at Uber. When I was working at Kraken, I worked 80 hours a week.

>> Yeah. >> For 3 years. Sometimes you have to grind, but at the same time, it's got to be worth your while. And that's where in New York sometimes I see these like attorneys or investment bankers and they're like, you know, they're like 30 years old and they're making maybe half a million. And I'm like, I don't think that's worth it, man. Like half a million a year, half that goes to taxes and you got to pay high rents in in New York. And so maybe you're netting like a 100k in savings a year. >> Yeah. >> To lose your late 20s, early 30s. >> Yeah. >> Probably not worth it. You need to be netting a lot more than that. >> Yeah. >> So thinking like reading the psychology of money and the art of spending money and die with zero. A bunch of these

books helped reframe what investing is all about to begin with. It's you're producing you're allocating capital wisely in order to have an appreciation of assets that then allow you to live a life. >> Yeah. So you got to remember about the living part at the same time living decrements from your investment portfolio. So it's a balance. >> So to put this into more actionable practical lens for the audience is what's your what's your rich by 2040 portfolio? Is is it Bitcoin and SpaceX?

Is that it? >> I mean if I felt any differently, I'd sell both. >> Yeah. >> Had I own something else? Vast majority of my portfolio SpaceX and Bitcoin. >> Yeah. which, you know, for me, I'm 38. Um, so, you know, maybe if they 5x or 10x, I decrement 10 or 20% off now because I've got to start rolling it into things that make me just feel more comfortable. >> Yeah, I totally hear you on that part. Like, I'm very aggressive right now with my positioning, but I have I fortunately, you know, had gotten some good like gold and silver that's locked away. I got some Bitcoin that's locked away. Some I have a house. So, it's like these small things like I don't even look at them or pay attention to them and they honestly and like you know the real estate piece just bothers me but uh

it's the mental sanity. It's the the rest of my portfolio is in freaking beta altcoins. My career is in this and all you know and so it's that mental piece has helped me a lot. >> Let's imagine you outperform your existing portfolio. Let's say you could outperform it by being all in on risk and this was guaranteed. Like let's say you could eek out 3% more a year return above what you currently have, >> but you were sick to your stomach. >> Yeah. All the time. >> Yeah. Exactly. Is is that really worth it or not? And you get a [ __ ] ulcer at like 30 or something, you know, like I don't know, you know, again, it's a knowing your body in your mind and what you can handle.

>> Yeah. >> Um and life is a game after all. >> Yeah. >> Like Yeah. Coming back to this kind of practical versus rational thinking here for the investor. Um, you know, people think about investing as a get-rich quick thing, especially in crypto. How do you remove the shortsightedness in investing and think about longer term exponential outcomes? Because as you said, us humans are hard, you know, it's hard to think in exponentials and we've spoken a lot about that already. So, you know, in a new way, kind of fresh way, how do we kind of delay gratification in the investing world and how do you how do you is it a you know, you have a shorter term kind of like perks bucket or something that you want to, you know,

if you if you got to scratch that itch, that's what you do. I mean, that's kind of what I currently have. You know, it's like a small amount. It's like, all right, if something I I think, you know, it's going to pump in a week, I'm going to, you know, trade it there as like my trade portfolio, but other accounts don't get touched. Is that like the right framing? How do you, you know, take shortsidedness out of investing? >> That's a really good question. I mean, know yourself. Like, if you need to scratch that itch by having a trading account, get the trading account, but make sure you don't top it up. Like, >> I hear you. >> Maybe it's a quarterly amount, 10,000 bucks, 100,000, whatever your number is. And that's your limit. It's like at the casino. It is gambling to some extent

when you do do day trading because you don't have any alpha. >> You might have alpha. Like, let's say if you know some information about a project, but probably don't have alpha if you're a regular trader. So yeah, if you need to scratch that edge that way, sure. Um, you know, some of it too, like maybe your concentrated position and in like an ultra high risk, high volatility volatility asset, maybe there's a price you'd be willing to sell at. >> Yeah, >> you could sell covered calls at that strike >> which would give you a yield because you're selling your upside, >> right? >> And that sort of commits you to selling in a way. So it's sort of the market paying you to sell at that price >> if it does hit that. So you could use that as a way to keep yourself honest

whenever you want to exit a position is selling calls at certain strikes and so the market is paying you that premium that counterparty and if it doesn't get called away you just write it again. >> Yeah. >> And if it does get called away then you're like cool I would have sold anyways. >> So that's an interesting way to scratch that itch where like a covered call trade as a seller of a call that is a trade and it keeps you honest with exiting a position. So that's a good way of doing it. It also makes you feel rewarded for waiting >> because the mark the premium the call buyer is is paying you a premium for that privilege to exercise that option from you. So those are other ways but basically like know your know yourself if you need a separate trading account cover calls and then finally Howard

Marks Warren Buffett understand the asset do not buy [ __ ] because your friend told you to buy [ __ ] I'm not picking on you I'm just saying in general for any asset you should be you should know all the [ __ ] details about this thing every single little piece of it you should know look did I understand Bitcoin perfectly when I got in no but after I bought it I quickly did because it's all I could think about and I knew a lot about the existing financial system. I studied finance during the 2008 financial crisis. >> I'm that old. >> So, you know, going down this rabbit hole, you got to really understand it.

And when you do, then you're not panicked when it dips. >> Yeah. >> Like my faith is unshakable. You can check all the receipts on Twitter. >> Yeah. >> Like all the way back through 2015. I didn't start tweeting until about 2014, 2015. >> Yeah. >> But yeah, you can check my receipts. You can ask rock be like, >> "Yeah, Dan never tweeted anything bearish." like it's unshakable because I understand that >> the asset. >> Yeah. >> And so hold outsized percentages of your portfolio in longer term assets that you firmly believe in and manage your psychology through, you know, potentially covered calls, scratching your per itch, scr scratching your short-term itch, however you know you want to scratch it, and stay up to

date with the asset. be be in the top 1% of understanding your biggest holdings in your portfolio. >> Exactly. >> Yeah, that's Yeah, I mean that's it. >> I know it sounds basic, right? The thing is a lot of people I mean what's funny is diversification is the price you pay for ignorance. >> Sure. That's why you buy VU or VTI or S&P which those are representations of that to some extent because you know and for example a small percentage of my portfolio isn't that and that is my ignorance diversification payment that I'm making where let's say I'm really [ __ ] wrong about Bitcoin and SpaceX.

Bitcoin has a a game theoretic exploit. Again, there's reasons why I don't think this is going to happen but let's say it does. >> Yes. Elon Musk dies from an assassination and uh three of the facilities are targeted with bombs. You know, things that would be like it's very improbable. I don't wish that to happen, of course, and I don't think it will happen. >> Um, you know, those would massively decrement. I still don't think it would make either of those fail, >> right? >> It would just delay the price path dependency up and up like up and up. >> So, yeah, I mean, I diversify because I don't know everything, right? And so that's my payment I make because I don't know >> for ignorance.

>> Exactly. Yeah. >> You know, because they say diversification is the enemy of returns. However, like you know, like my friend for example that I spoke about at the top, the guy's all in on on e-commerce. He's not he's not looking at charts every day. So, he's just S&P, NASDAQ, Bitcoin. >> And that's great. Yeah. It's you're going to get the average return. You're not going to get outsized returns, but even the average return is phenomenal. Yeah. Um, I think a lot of people don't have patience for that and that's why they're trading all sorts of stuff. But the average return is great. In fact, the average return of the S&P 500 outperforms the top hedge fund managers in the world.

>> Yeah. >> Very few of them consistently beat the market. >> Yeah. >> It's almost impossible. >> Yeah. >> So, that's where, you know, unless I have better information on these singular assets, >> then I'm probably not going to try to trade against the best of the best on the S&P on a subanualized basis. So, within a year, >> um, what's funny is hedge fund managers are only rewarded for short-term performance, >> which means that they're not valuing these assets for their long-term value. >> And that's where you do have an edge against the smartest people in the room >> because they're not playing the same game you're playing. They're playing a different game, >> right?

>> You can and you don't have any reputational risk or career risk. Yeah. >> You're not going to get fired for buying this asset that's hated like Bitcoin was >> because it's your own money. >> Yeah. That's why family offices were the first institutions really to get into crypto or Bitcoin because hedge funds, other folks couldn't take on the risk. Yeah. >> Now, venture capitalist did too. They were buying like equity and it's a little bit more complicated. >> Yeah. >> Um but yeah, like you're essentially on the same risk profile as venture capital. >> Um but even venture capitalists aren't that contrarian.

>> It's actually a misnomer. Like people think VCs are super contrarian. They're not. There's very crowded categories and they've misallocated a ton of capital because of the reputational and career risk. For example, >> yeah, I understand. >> Yeah. Like A16Z, Sequoia, if they invest and you're a smaller VC and you get in into that round, too, they don't actually do any other underwriting of due diligence. >> Yeah. It's just that they're >> Yeah. Yeah. And then they're not even wrong. If it fails, then they're like, "Well, A6Z went in." Like the smartest [clears throat] guys, >> of course. Yeah. >> Yeah.

>> So, just Dan to kind of close the loop here. Um, the last thing that I want to cover is what do you do when you're wrong? So, thesis is established, position is established practically speaking, but concentrated, right? You're concentrated. You think you you're up to date on the asset, you're concentrated, you've got a plan, you've got an exit strategy, you've done the research, but you're wrong. >> Yeah, >> you're still wrong. You're just flat out wrong. How do you change biases? How do you recover from losses? You know, maybe you haven't had as many losses as others in their career, but you've definitely taken >> on paper.

>> Yeah, exactly. How do you how do you >> how do you deal with that? >> Yeah. I mean, on paper, I've had my net worth drop 85% three times because I was 99% in Bitcoin, >> so I didn't sell, but it was uh wasn't fun. Um >> yeah, so you know, two things. One, go back to your investment thesis. You should literally write this down before you buy it. >> Yep. >> Has the new information altered my investment thesis. Like, you know, for example, if the Bitcoin community decides to change Bitcoin's 21 million, that would be a pretty serious breach of like scarce digital gold.

>> In that case, my original investment thesis would be invalidated. Therefore, I might choose to exit my position. >> Mhm. >> Um, so if your original, and remember, you got to write this down so it holds you to it. If new information invalidates that, then maybe you should reexamine holding the asset. >> Um, you know, other things as well are it's more of a trading against yourself game. >> Sure. >> At the end of the day, it's just you. It's you against you. >> So, like, you know, if it's down that much, like, can you actually stomach it going to zero, but you should have entered the position knowing that it could?

>> And then sizing is an important thing. >> Yeah. when I entered Bitcoin in 2012 is when I first bought Bitcoin, but when I started to accumulate, I was in my early mid20s. >> And so, like, for me, I didn't have that much money. >> Yeah. >> Um, that's where I do wish I was 10 years older because I would have had a lot more disposable income. >> However, it also meant I could I didn't really have any obligations. No family, no kids, no mortgage. So, if it all went to zero, I' and I'm working, I'd be fine. It would have sucked, but I'd be fine. Um, so you know, I think that is an important part about sizing, but then also knowing to, and this is about exiting the position, what is life-changing money?

>> Yeah. >> I know a guy, a very close friend of mine, sold all of his Bitcoin at $1,000 per Bitcoin. Now, here's his path. He bought Bitcoin at like $10 a bitcoin. In 2020, uh, 2013, it went from $10 to 1,200. 100x return. >> Wow. So all of a sudden he was he had a million dollars. Now he's in his early mid20s and he's like this is awesome. Million bucks and this is again a little while ago. So that's more like 1.5 million in today's dollars. And so he's like you know what I think it's going to go higher. And so then it dropped from 1,200 all the way down to 170 >> back at the bottom of 2015.

>> He then he promised himself as soon as it hits a,000 again I'm going to sell it all. And he did. But then he could have had 20 million because he missed out from a,000 to 20,000. doesn't >> he never understood the asset. Bitcoin at $1,000 of Bitcoin is a tiny uh market cap. If he thought that the Bitcoin is digital gold, why would you sell anywhere close to that? >> Yeah. >> At $100,000 a bitcoin, which is like 1.5 trillion. Bitcoin is starting to glimmer like digital gold. It's still not even digital gold yet. >> I hear you. >> Like at a 10 trillion, 20 trillion, now Bitcoin is really competing against gold as a digital gold or a gold alternative.

So, he never understood it. And so, you know, when we think about exiting a position, don't be like, I'm going to sell at 2x. Why? Like, why would you sell at 2x when you're buying an ultra undervalued asset that has long-term potential? You shouldn't be coming up with like 2x, 3x. Don't don't think about it that way. Think about if my investment thesis comes true, what will this be worth? And then what would the market cap or the valuation of that be? >> Yeah. Yeah. >> And then you can back into, okay, if we get close to that, I want to sell some, etc. Or like at that point, I might be in my mid-30s and I want to buy a house, so it' be good to sell some. And my wife's bugging me to get a house. We got two kids on the way. There's all sorts

of life considerations, but that's the way I would think about it. >> Dan, I wish we had more time. I think this is it. That was awesome. Um, yeah, awesome conversation. Thanks for coming through. Uh, beautiful day, beautiful view. Market's ripping. Um, great to have you, buddy. And uh thanks for being a part of the show. [music]