Mark Yusko on Bitcoin, fiat failure and building a crypto portfolio

Transcript

GM, good morning. Welcome to the Milk Road Show, the daily crypto show for investors who want generational wealth by next Monday. I'm your host Jay Hamilton. It's Thursday, June the 5th. Today we are joined by Mark Yusco, one of the best crypto Bitcoin macro specialists we have in the space. He's also the founder, CEO, CIO, managing partner, he's got so many titles, of Morgan Creek Capital, a leading investment firm which manages over two billion in assets. Today we're going to talk about Mark's base case for his investments right now. We're going to talk about macro, where Mark sees investment opportunities beyond Bitcoin.

Bitcoin being obvious, we'll cover that, but we're going to go deeper than that. Before we jump in, Milk Road is hiring right now. If you love crypto, if you love investing and you want to join a fast growing team, check out the link in the show notes. We're hiring a general operator, a podcast host, and a head of people. So, would love to meet you if you're interested in any of those roles. Today's episode is brought to you by Letin, get Bitcoin without selling your cash. It's also brought to you by Definitive, the leading multi-chain trading terminal, trusted by funds, Dows, and Pro Traders. Without further ado, Mark, welcome back to the Mo Show.

Ah, excited to be here and uh thanks for having me back. It's always good when you get invited back. I always say I have a proclivity toward talking too much, so sometimes we like, yeah, maybe we want someone else. But uh no, great to be back. Yeah, it's a pleasure. Okay, let's let's start with um frame up for us your your base case right now on how you're looking at the markets. Yes, I mean there's so many things to talk about. So the first be which market, but but so let's talk about digital markets, crypto markets, and then we can back up into into all markets. I mean, look, this is a a really really interesting time around the world. You got you got money supply rising globally. So that's

good for all digital assets and and all assets that are commodity like and what do I mean by that? You know, so take gold, right? An ounce of gold is always an ounce of gold. It it doesn't change. It doesn't grow. It doesn't get more efficient. And so for, you know, 5,000 years, that single ounce, if you gave it to somebody, they would give you essentially a a fine person's suit, literally from Cleopatra's time to a suit of armor to, you know, Savo today. And so things that hold value, Bitcoin being digital gold, right? It has all the qualities of gold, but it's better in that it's more divisible and more

portable. And so I think for the next 5,000 years it becomes the the digital version of that uh as we move into the digital age. And so when I when I look at that market and all markets related to commodity-like assets in an expanding monetary supply scenario where you got China printing and the US talking about printing uh Europe printing like crazy those assets are going to rise and you know gold's had a great year. In fact, most people have no idea. You know, gold has outperformed stocks for the last 25 years. Compounded like, "No, that's not true." Well, it's because, again, the gold didn't change. What changed is the number of dollars you need to buy the

ounce of gold. So, here's a fun fact, less fun if you are actually a stock investor. Equities, people say, "Oh, they're all-time highs." No, they're not. They're actually the exact same price as 1996 priced in gold. price in dollars at all-time highs, but the dollar buys less. I saw someone this morning tweeted, you know, two bagels and a cup of coffee for $32. What the absolute hell? I mean, and so inflation is theft, literally. And you know, from 1776 to 1913, there was no inflation. There was no devaluation of the currency. There was no central bank.

So from the founding of the republic to 1913, the dollar did move a little bit in terms of value around two wars uh and a depression caused by Andrew Jackson trying to disrupt banking and and created something called the free banking era where everybody could create their own money. Like Texas had their own money and you know companies had their own money and it was a show. But all that said, starting in 1913, the Fed created this idea of fiat currency that we stole from, you know, the UK, which stole from the Dutch.

Dutch were the first to introduce it in6007. So you ask me, what do I think about the markets? Well, what I think about markets is in an environment where currencies are being devalued because countries are too far in debt. And you've seen all the nonsense going on with Elon tweeting about, you know, the silly budget, the big beautiful bill. I mean, here's a guy who ran, not not Elon, but but Trump. Here's a guy who ran drain the swamp, you know, get rid of all the graft and corruption and then he passes the big beautiful or he promotes the big beautiful bill with a $2.5 trillion dollar deficit. Are you kid? Sorry. Are you Are you kidding me? I mean, he's the biggest.

Like, I'll say what you want to hear, but I'm going to do all the bad stuff as long as I get paid. So, what's going on fiscally around the world is so irresponsible that you can't help but want to protect yourself by owning assets like Bitcoin or gold or real estate or fine art or jewelry or or whatever it is that that is scarce. So, anything scarce I want to own. Anything you can't print, I want to own. Now, that doesn't mean all equities are bad. Overpriced equities are bad. Like, you know, people love coreweave, right? But I love it. I know you understand you

love it because it's going up. Number go up. Everybody loves I love I loved your intro. People want generational wealth by next Monday. I love that and by next week. And so, that's not the way it works. unit. I know it's a pun, but but here's the funny thing, right? Coreweave has basically two customers, and there's some accounting shenanigans, and the valuation is at levels that are mathematically impossible to make foot. Like you couldn't earn a 10% return from these levels unless you held for like multiple lifetimes. Like not even one lifetime, but multiple. So it is generational

wealth. You just got to wait generations to get it. So stuff like that makes no sense to me. But there are companies all around the world selling, you know, below book value, below par, you know, decent multiples. And so I do think there's some interesting opportunities. Bonds less interesting generally because of of what they're doing to currencies in terms of of devaluation. You know, Japanese government bonds have lost half their value in the last 5 years. shocking. Um but there was no choice right they they took interest rates to zero and as soon as they left zero which you know UASan came in and replaced corotan the the the central the head of central bank bank of Japan and he's like

well I'm an academic and I think we need to get rid of yield curve control right okay but if you do that all your insurance companies are bankrupt most your banks are going to be bankrupt and you the bank Japan's going to have a problem because you own 74% of all the bonds. Like I don't care. I I theoretically this will all work out like well practically it's not going to. Um so so there's those types of issues all around the world. And one thing I'm very sure of, you know, my wife says I'm, you know, frequently wrong, never in doubt.

Like well occasionally wrong. I am never in doubt. I mean I am prone to hyperbole and you know so people say how how can you say things like that like like what do you mean he says well you say things so forcefully well what's wrong with that well people will believe you well that's the whole idea he says well what if you're wrong then I changed my mind I mean you know Lord we're allowed to be wrong we're allowed to be wrong it's okay to be wrong although our society and it's social media and wrong is like frowned on failures. I no doing things wrong, trying things. I mean, going outside your comfort zone, that's where all the fun is, right? That's where all

the generational wealth is created. It's my pin tweet on Twitter, right? You got to do stuff that that you believe in before others even understand. And and you're going to be wrong, right? But then you just get up and do it again. And look, before Will Smith was not cool to quote, you know, he gave a talk once at a conference and and was awesome. And one one of the lines that I loved, he said, "Fail fast but fail forward, right? Just just keep moving forward and and get the failures out." And you know, Michael Steinhard, very famous hedge fund manager said it, you know, make all your mistakes when you're young. When you don't have a lot to lose, just keep making the mistakes because then you learn. Because the

thing about mistakes, again, this is nothing to do with the question you asked me, but it does have to do with investing, right? investing. Two things are really, really important. One is what coach Smith, the legendary coach here at North Carolina said, which is you when you make a mistake, which you're going to do, right, Ralph, recognize it, admit it. Oh, that's the hard part. Learn from it. That's actually the easy part. Forget it. Hardest part. And the reason the forgetting is so important is what that other coach down the road, Coach K said is what separates a good player from a great player or a good investor from a great

investor is great always focus on the next play. How many times you watched a basketball game, someone misses a shot, they go down and commit a stupid foul because they're thinking about the last play. what a great player does, they don't even remember taking the shot. They go back, play good defense, steal the ball, make a layup. Michael Jordan said it like, "I missed 19,740 something shots. I don't remember taking any of them cuz he wanted to take the next shot cuz he was sure he was going to make it." No, sometimes you don't. And so, you'll want to have that that ability to try new things, to keep pushing forward, but when you make a mistake, admit it.

And this is a big thing on investing is everyone thinks, well, you should double down, right? When something goes against you, I'm just going to buy more. Well, yes and no. I mean, if if you've done the work and and you know the value of the asset and it gets cheaper, okay, you you you could argue that that does make sense. However, the market's saying something that you missed because the market's never wrong. So, well, I'm right. The market's wrong. You're just wrong. So, there's a famous picture of Paul Tudtor Jones, famous hedge fund guy, in his

dorm room at UVA, and it says losers average losers. And it's so true. Now, it's particularly true in trading. Like, in trading, you're never right in the market. You're always wrong. Just if something goes against you, get out. Just put on another trade. And if that goes against you, get out. Because if you keep doubling down, you're going to end up in a hole. And the difference, you know, between a a trader and investor as a investor is a trade that's gone wrong and you you become a long-term investor. But the opposite this is winners press winners. And this is something that Julian Robertson, who is who was my mentor, was so great at is when something's going your way, you

actually want to do more. No, Mark Harry Marowitz and and you you studied on Dr. Marowitz and he says you should rebalance. Yes, you should. And on a periodic basis, you should rebalance. But rebalancing is more about your stay rich money. Remember, I think we talked about this last time, is is you got your liquidity bucket that funds your lifestyle. It's got a hole in the bottom. And then you got your get-rich bucket, which is to do all the fun stuff, you know, generational wealth by next week. The stay-rich bucket, which again, most young people don't have yet, right? We're still in the get-rich. I I'm I still consider myself young. I I don't look young when I see myself, but I I feel young. And the key is the

get-rich stuff. You want to press your winners and you want to have that ability to really go along with things that are working in your favor. Now, eventually you do want to take some profits and and redeploy into other ideas and at some point, you know, when things get so out of whack like Corewave today or Nvidia even today, it's not that they can't go higher. It's just that mathematically if I could find a smaller cap version and I think you know maybe this is a great segue anticipating a question you told me you were going to ask is so many people are invested in Bitcoin right and either they have you

know Coinbase account oh that's not really Bitcoin sure it is my dad has a Coinbase account he loves it he's never going to have a ledger he's never going to hold his own keys I'm not going to hold his own keys he shouldn't though right he's 87 years old he shouldn't No, no, no, no. Now, if if you want to hold your own keys, have your own that is the future. Yes, that's beautiful. Now, we have to fix some of the UIUX problems, but there's there's different things that that make sense for having Bitcoin. Beyond that, people say, well, maybe I own Micro Strategy or Strategy Now, Strategy B, which I think is eventually going to be called Strategy Bank.

Although Sailor denied it in Vegas last week. He's like, "No, no, we're never going to be called a bank." which is true because he doesn't want to be a bank. He wants to be a financial services company, but I still think he's call himself strategy bank. But so strategy, you're like, well, why is that so good? People say, well, if they own Bitcoin and that's really all they do because they flush the other business, then why should it trade above NAV? Okay, it's it's not a bad question, but the reality is it trades above NAV because they can issue more shares or debt. And the thing is, if you can issue debt with no recourse and no interest to

buy more Bitcoin, then your Bitcoin per share goes up. So, you should trade at a at a higher MNAV. Mhm. But then here's the really cool thing. Well, now if I'm trading at a higher MNAV, I can issue new shares at a premium, buy Bitcoin with more money than the NAV. So I'm again, he calls it arbitrage, and it is an arbitrage. It's basically free money. And so you should trade at a premium. Now, how big that premium should be, that's that's a question. And so, long story short, you got strategy, which is a

levered play on Bitcoin and in an app in a prudent way. Like, people lever Bitcoin 30, 40, 50 at at one point in the last cycle 80 times. You're an idiot, right? I shouldn't out a family member. I won't out him, but I have a family member. already called me up and said, "They stole my Bitcoin." Like, "What are you talking about?" Well, it was a Bitfinex. I'm like, "Stop. You're a freaking idiot. You put 80 times leverage on an 80 asset and you got a margin call and you didn't pay it and they took your Bitcoin." Now, the fact that that company maybe that was their strategy to lure people in knowing that they wouldn't make the margin call, maybe

that is theft. But but the bottom line is you're an idiot. If you did 80 times leverage on an 80 asset, you deserve to lose it. 20 times is too much. But, you know, one turn of leverage, maybe even two turns of leverage in a corporate structure where someone else is doing it. Yeah, that's good. So, on top of Bitcoin, I I could own strategy. But then there's these metos and I'm actually involved in one of them, Meta Planet. Before Before we jump into the me too, Mark, let me just ask you the a basic setup here, which is in your view, should investors have additional exposure to Bitcoin beyond whether it be spot or whether it

be ETF or whether it be a centralized exchange. I mean, sure. Look, here's the thing. And and how does how do how does that position in an investor portfolio? Portfolios portfolios have different pockets, right? So we have the liquidity bucket and that needs to be cash like stable coins like stuff that you can't lose and won't fluctuate because if I need to pay my mortgage at the end of the month I can't have a draw down before the end of the month right so if I need to buy something pay for kids college or or whatever it is there's a portion of your wealth that needs to be stable secure high quality tea bills money markets, stable coins, great. But

then in a portfolio, there's different things that you need. Maybe you you want some income to replenish the the hole in the bottom of the spending bucket. Now, I will argue personally that there's no difference between capital gains and income. In fact, I like capital gains better than income because you're taxed at a lower rate. So, I'd rather take capital gains and pay 20% than pay ordinary income on income. But that that's just me. But some people feel more comfortable with income. So, if you think about Bitcoin, Bitcoin is savings tool. It's like gold. It's like literally the best savings technology that we have. And so if you're, you

know, whatever age, let's say you're older like me, you should have x%. What's that percent? You know, to me, it's 5 to 10% at that core of your savings. As you get younger, I can argue that that number gets bigger and bigger. Now, there are those who say, "No, it should be 100%." I actually don't necessarily disagree with that in the sense that what that does is it protects all of your wealth from the ravages of inflation. Mhm. And if you have other forms of income, either salary or other passive income to to pay your bills, I'm actually not going to argue with that. And but

there's financialization. So, let's take Micro Strategy. Why would I own Micro Strategy? Well, it's Bitcoin on steroids because it's got leverage. So, I'm going to get the return of Bitcoin plus. Why wouldn't I do that? I probably would. To me, that's like owning equities. Why wouldn't I do, you know, because you own you own cash to pay your bills. You own bonds to get a little more return than cash. You own equities to get a little more return than than bonds. You own private investments to get a little more return from the illiquidity premium. Like think about it. If you have a long time horizon like I I I get on my my soap box. So people's 401k, right? So you get your first job, you go in and

the HR person, it's never an investment person, it's the HR person says, "Oh, you know, we have eight choices and you should you should equal weight and and four of the choices are bonds and four of the choices are equities." Now you're a 25year-old person. I believe it should actually be against the law to own bonds when you're 25. You can't touch that money. You literally can't touch that money for 60 years or not 60, 50 years, right? And you were 75.

So bonds are stupid. You should be all in equity. And I would argue even equity is dicey because you should be in private equity and venture capital and commodities, but those are illegal to put in the 401k. Why is that? Well, because Black Rockck and Vanguard wrote the law because they happen to sell these things that you can buy, ETFs and mutual funds. So, at the end of the day, if you can do a self-directed and put something like Bitcoin or real estate or private equity or what Peter Teal did, private company assets, you should do that. But then beyond Micro Strategy, you could take the convertible bond, right, or the

preferred of Micro Strategy, and those do generate income backed by Bitcoin. So, you could do it yourself, right? You could take a little bit of Bitcoin and sell it and pay yourself 8%. But that's a hassle. Why not let him do it for free? You don't pay a fee for it. So, there are a lot of assets that you might want to own on top of your stack. Now, for those who want to say, "No, I want it all outside fiat. I want it all protected by Bitcoin and I can fund my lifestyle other ways."

I'm actually not going to say that's not a bad idea. I I mean I mean I'm I'm going to say it's not a bad idea. I will say that in traditional finance, whales use the Bloomberg terminal. In crypto, they use Definitive, the trading terminal built by Coinbase alumni, which lets you trade across every major chain out there. Definitive's combination of low fees and advanced order types like limit, stop-loss, and take profit make it one of the best onchain trading experiences there is. The kicker, Milk Road listeners trade free on their first 25,000 in volume. Visit milkroad.com/definitive and start trading like a pro today. Selling your Bitcoin should be a last resort when you

need cash. That's why there's Leen, the trusted platform for Bitcoinbacked loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties. They've issued over 9 billion in loans and never lost a single Satoshi of client funds, even during the chaos of 2022. If you're a long-term hodler, this is the move. Get liquidity without selling at milkroad.com/letin, spelled ln. Okay, let's uh let's shift into uh the other Bitcoin corporate treasury companies because I think they all get

bucketed together and it's very easy to paint a brush and say, "Oh, yeah, well, it's micro strategy and then it's just micro strategy, copycat, copycat, copycat." Sure. But but they're not all the same. There is different. No, no, no. They're not all the same. And look, a micro strategy copycat is perfectly good. and and this let's take MetaPlanet, right? which again I'm a board member of and a big an investor in. Why? Well, they said, "We're going to take a proven playbook." Like if if you were in the National Football League, you know, 10 years ago, whatever it was, when Tom Brady was, you know, top of his game and Bill Bich, who is now down here

in North Carolina anyway, but and and you happened to be on a bus in Boston and you looked down and there was the Patriots playbook. Would you not take that and use it? Of course you would. So when you have a proven playbook, you should use it. But the the reason Metaplan's been so successful is there's really two things. One, in Japan, there was a structural arbitrage opportunity because if you hold Bitcoin yourself, you pay 52% tax.

If you hold MetPlanet, which holds only Bitcoin, and you sell it, you pay 20%. That's better. Okay. And the Bitcoin ETFs are illegal at this point. They they will be legal at some point, but they weren't. So there was this the only and and most people in Japan, they were nervous about owning US companies, believe it or not. Most of the This is it's called home market myopia. If you go around the world, people in America have more US stocks, people in the UK have more UK stocks, people in Brazil have more Brazilian stocks, people in Japan have more Japanese stocks. It's just the way we are. We think all the smart people are in our home country, which is not true, but but that's what we think. You look at that and then you

look at, you know, there's one in the UK and now there's one in Brazil and okay, as long as they're taking the the the the micro strategy playbook or strategy playbook, but even those are different because you need great leaders who can execute the same way that that Michael did, but also communicate the way Michael did. because without the communication, you're just another stock, right? So, so that's that's one group and there's a small number with great leadership. Simon at Metaplan is amazing. This guy in in the UK, I mean in Paris, not the UK, in Paris with Blockchain Group is pretty

impressive. Um, the guy at Bra in Brazil seems pretty impressive. So, there are some good ones. Then there's the corporations who said, "Oh, I'm going to buy some Bitcoin." Well, you can't call yourself a Bitcoin treasury company. I mean, yes, you're putting Bitcoin in your treasury, but if it's just a small amount and your main business is still your main business, it's different. And and some of them get a pop, some of them don't. I mean, take GameStop. GameStop had a perfect opportunity They have this business that it's not dying, but it's not really growing and, you know, they did the

short squeeze and the whole Roaring Kitty thing. Great. But they did accumulate a bunch of of cash by doing the short squeeze and issuing shares at at the higher price. And Ryan could have just bought all that Bitcoin and and told people, but instead he he kind of went, "No, I'm not going to call my shots." which I thought was a weird thing to say because then everyone else said, "Well, no, we will call our shots. We will be transparent. We will tell you what we're doing." And so his stock went down, which doesn't really make sense, but but it it kind of does in the sense that he's not a pure treasury company, whereas MetaPlanet and Blockchain Group

are. So the o strategy is the only thing you have is a lock box of bitcoin and then you have the ability to issue new shares or debt to buy more bitcoin. Yeah. And by doing that there's a flywheel effect and and that's pretty good. So you would if we were to break down the opportunities here for investors I'm going to summarize and you tell me if uh if I'm accurate. you would stay away, I'm guessing, from a a GameStop, which is not a true treasury company, unless you believed in GameStop. If I believe if I believe in the GameStop short squeeze play, okay, fine. If I believe that the CEO is is

gonna take all the five billion and and make it a really core part of his business. But the problem is there's a subtlety here in that what made MetaPlanet so good and blockchain group so good and this this one in Sweden that just did it and the one in the UK is you're starting off with micro cap companies and the law of small numbers applies right you don't need a lot of incremental to make a big return but as they get bigger and it's it's even going to be harder for MetaPlanet because they've gone from I mean I think it was like a $20 million m market cap

company when I when I got involved a year ago now it's5 billion Jesus now it's not a hundred billion like micros like strategy so it could still 20x which is great but there's a lot of work to do and it's not going to be a straight line and it's not going to be by next week and and when the mnav gets to six seven, eight times, you probably want to take a timeout, let it come back to three or four, and then accumulate some more.

Um, but like all of these things, if if the company has said, "We're in it to win it, we're in it forever, and all we're going to do is keep accumulating Bitcoin." Yeah, I would own that. Now, I would try to pay the lowest MNAV possible to dollar cost average in but that's a really good strategy because what happens is the MNAV will go up as you know there's limited supply of shares and more people buy but then they'll issue debt or equity and buy a bunch of Bitcoin and the MNAV falls that's when you buy it.

So other than Bitcoin and Bitcoin uh parallel companies or Bitcoin adjacent companies uh what are the other investment opportunities right now or are you of the mind that we're in uncertainty right now and we should be pat when things are uncertain future returns are the best and just volatility right I had this shirt and I tweet about it you know embrace volatility Everyone's afraid of volatility. The thing you want to own are high volatility assets as long as they're uncorrelated with one another. So you want to build a portfolio of high volatility

assets. And over time, what you should do is you should take advantage of the ups and downs. And take Amazon. Amazon been a public company 28 years. It's had a double-digit draw down every single year. That's crazy. Including this year, right? average 31%. So on average every year you can buy at one/ird off. So but no one does that, right? They just think the volatility is too high, so they avoid it or they bought it and held it and they never touch it and that's fine. But if you think about volatile assets, there are a lot of them around the world that in times of uncertainty that volatility goes up because think about it, treasury bills, there's no

volatility because we know in 31 days we're going to get paid and the governments don't default. So there's no volatility. Now, no volatility doesn't mean much because if you buy T bills, inflation chews up all your return. So you actually get less rich by owning tea bills. Now if you got to pay bills in 31 days, own tea bills. That's fine. But if I look around the world today, there's c there's huge uncertainty around China. Chinese tech stocks amazing faster growth than US tech stocks. Much much much cheaper, much better innovation.

We've all seen the Deep Seek versus Open AI stuff. I mean, what Deep Seek did with, you know, it's it's like uh it's like the Tony Stark uh uh the the what was his name? The his b his friend, his partner, a cave with spare parts and uh from Iron Man. And you like, why can't you make this thing work? I've given you all this money. Like because Tony Stark was smarter. And so there are there are certainly businesses that way better technology, way better, you know, like WeChat is just way better now. X Money, he's trying to create the, you know, the the vision the vision of

WeChat and We Pay and all that stuff in the US. I don't know if they'll succeed, but but you know, if you're in China, you live on, you know, uh, basically Alibaba and 10-centent. So, those businesses, I think, are are really interesting. I'm still a huge believer in private markets. So, if you think about it, uh, the long-term cash equals T bill. So, if you leave your money in C, I mean, equals inflation. So, you lose all your money. So, then you can get 200 basis points above that for bonds. It's not really that interesting, but again, better than cash. Then you get another 500 basis points, so 7% above inflation for equities, that's, you know, 10 and a half% long-term, that's not horrible. Um, so having some

equities, diversified portfolio, global equities, uh, and buying stuff that's cheaper, like Europe's pretty cheap right now. Some emerging markets are pretty cheap. I love, like I said, I love China and Japanese equities were looking really good, but the problem is U8 came in and the yen, if the yen's going up, you don't want to own Japanese equity. the yen's going down, which is where it needs to go. The yen needs to be like 175 or 200, then you want to own Japanese equities. Um, but there are some amazing great companies in in Japan in terms of of just innovation and technology. So, but private investments, you get another 500 basis points. So, you get 12% above risk-free for private, and that's venture capital, private

equity, growth capital. Now, it's harder for the average individual to play that. But now there are these marketplaces out there where you can buy secondary shares where, you know, say someone's an early employee at a private company and they want some cash to buy a boat or buy a house. So, they'll sell some shares at a discount. So, you can do that now. You didn't used to be able to. It used to be only rich people. Now, anyone can do that on some of these marketplaces. There's even tokenized versions of private. Yeah, they're coming slowly. You can do blockchain capital as a tokenized fund, things like that. So, but private investments, I mean, I'm way overweight private because I I just love that illiquidity premium. And I also

like hanging out with entrepreneurs. I mean, it's just amazing. Um, like we have this one company, it's a kid, and I mean that in a loving way. I mean, he's 29 years old, and I don't I don't mean that in derogatory way. He's a child, and yet he's so smart. And the short version of a long tale is, you know, the reason your phone heats up when you use it or your computer gets hot is because the electrons are going back and forth between the memory and the processor. And he's like, well, if we use photons, then it wouldn't get hot. And people said, we can't do that. He's like, why not? Because photons won't go through silicon. So, I could lay liquid crystal on the silicon and then it would work.

And they're like, can't do that. He's like, "Well, I did it in my lab at Duke." And like Tony Stark. Yeah. So he's he's like Timy's like a mini Tony Stark. And you we got another guy. He's a professor at Princeton. And another problem or another way to solve that problem is if you think about it, if the electrons are going back and forth from the memory to the processor, well, why not put the processor in the memory? And people said, "Well, you can't do that." He said, "Well, why not? I just do this and this." And so he did it and again created the Iron Man thing in in a cave with spare parts. So that's really cool.

Then we got another company. Mark, let me let me let me pause you there because uh our the the one thing I always want to don't want to go too far down on is the private side for our listeners because like our listeners don't have access to this, right? Not like you do, you know? So, it's exciting and I wish we did and I think crypto and blockchain will solve that with tokenization and more opportunities to get involved early stage companies to stop because exactly right and so when I think about investing to me it's about investing versus trading versus gambling right there's there's four types of market

participants so there are investors. Well, what's an investor? An investor is someone who likes to buy something below its intrinsic value and hold it. Okay, that's what an investor is supposed to do. So, if you can do a discount stream of future cash flows of a business and you can say, "Okay, the business worth 100, it's selling at 80. I'm going to buy that." That's an investor. An investor could also be someone who says, "All right, well, the fair value based on metaf's law of Bitcoin is, you know, 30,000 and we trade it all the way down to 15,000. I'm gonna buy that. Now, when it's at 69,000 and the fair value is 30,000, you're scratching your head saying, "All right, well, now I'm basically a trader, not an investor, which is still okay. Or I could be a and

a trader doesn't care about value. They just want movement." And the problem with trading, it's like going to Vegas. Most people lose. Most people are bad traders. Some are good, and if you're good at it, knock yourself out. Like my brother goes to gamble all the time. I hate it because I'm bad at it and I lose money and I don't like to lose money. So, I don't do that. But if you're a good trader, knock yourself out. Then there's speculators. Well, what's a speculator? Speculator is the opposite side of a hedger. What's a hedger? A hedger is someone who owns an asset that needs to sell it to pay the bills. Oil producers, Bitcoin miners, you know, natural gas producers. So they sell in the futures market and people take the other side of that with no interest

other than being the other side of the they're they're providing liquidity and getting paid for that. And in the futures market you you know the futures price is higher than the spot price. So you can roll down that futures price and and make a nice return. Well, then there are gamblers. And the gamblers are the ones that this is memecoining and no, no, there's value like you're monetizing attention. Maybe, maybe. But at the end of the day, if you're gambling on something and the only way you make money is somebody else pays you more for it and it's not scarce, like if if you own the LA

Dodgers, some person with a big ego is going to pay you more for that because there's only one LA Dodgers. Oh, they can make more teams. Yeah, they don't do it very often. So that's that's fine. If you own a oneofone piece of art, yeah, fine. Okay. But if you own something that they can just print more, yeah, it can go up in price, but generally speaking, those are going to go to zero. So, I'm not I'm not a big meme coiner. I mean, I do own dog and I love the dog team. I love them. I love the people around it. I think they're fun, but I So, that's that's not for me.

Now again, if you want to trade that stuff and you're good at trading, knock yourself out. It's a key decision you need to make. A key decision you need to make. Yeah. And I think a lot of the get-rich bucket, right? The get-rich bucket, I would say, should be 10 to 15%. I used to joke, you know, you're going to lose it all. So, keep it small, but you're not going to lose it all necessarily, but but be prepared to. And it doesn't mean you shouldn't do it. It doesn't mean you shouldn't try things, but but that so that's I said gambling and then gambling with leverage. That's where I draw the line. That's when people destroy themselves. And again, if you're doing with a small amount of your assets and you want to bet it all on red or black. Okay. Again, it's not my not

my style, but it can work, right? We've all seen the picture. Someone goes in the casino, they bet on red, they win, and they leave. What do most people do? They just keep betting and then they give money. And but if if you have the capacity to make a bet with leverage and it works and you take it off the table and leave and then diversify it in other stuff, you know, God love you. When when you look at the rest of this year as we talked about at the beginning or the rest or the next Yeah. Yeah.

Yeah. 12 months, 18 months. Is is everything to you based around what is happening in the money printer? It's all it's all macro. It's just one big macro trade. It's great insight. It's one big macro trade and it and you think it's the next what do you It's It's the next 12 months, next 18. What do you think the time frame is? Look, so I believe that So you got you got you got a couple things going on. You got you got a global requification of the system because of massive debt problems. On the other side, you got our current president with his wax on, wax off, tariffs on, tariffs off

nonsense. Well, why is he doing that? To make money, right? And no one's going to convince me that there's not some group that he owns a piece of that's trading that ahead of everybody else. Oh, you can't say that. Yeah, I can't. I can say it's free speech. I can say it. And no one's going to convince me that's not true. So, I think at the end Oh, I was just kidding. No, no tariffs. So, because no one's going to pay $4,000 for an iPhone. They're just not. Um, so I I do think that that game's going to play out. Uh, and you need to be cautious, but but I think the tailwind is so because I don't think Pal's going to cut interest rates because, you know, we're going to have

four plus% GDP print in Q2. No way you cut interest rates into that. Um, inflation is already a real problem. And it's not inflation the way good inflation is. Good inflation is when there's demand pull like when the baby boomers my generation came back from the war and bought houses and bought furniture washing machines washing machines and and there was demand pole inflation this is currency devaluation I mean look last 5 years 80% of all the money created in the history of the republic 249 years 80% in five years that means it cost $32 for two bagels and a cup of coffee the average person can't afford that. So,

we're going to have I don't say we're going to have revolution with pitchforks and torches, but but we're getting close to a place where the average person says, "Fuck this." I mean, like, I'm out. And even even my wife said the other day, you know, where would we go? Like, what's is there a country we should go to? And like I've already done two. I checked out Costa Rica. I checked out Portugal. Both of which Costa Rica is tougher. Still a little third worldy. It's beautiful, but felt a little dangerous.

Portugal tomorrow. I could I could move to Portugal tomorrow, but I'm not I'm not moving yet. People say, "If you hate America so much, why don't you leave?" I'm like, "I don't hate America. I hate what's happening in our government. I hate fiscal profleacy. I hate, you know, the graft and corruption and moneyaundering. But but other than that, I I love America. It's great. But I do think this year plays out in two pieces. So I think equity markets will be volatile. I think bond markets will continue to get whacked. I think I'm of the belief, and I know people hate me for this. I think the four-year cycle is not dead. I think we have another Bitcoin winter starting

in Octo late October maybe. Um why that? Well, that's Yeah, why that? Well, it's it's it's a four-year cycle, but it's not exactly four years. It's three years and 11 months based on the number of blocks. And so, you know, the first one in 17 was December. Then 21 was November. 25 to me is October. Again, based on history, that's what it tells me. And the the size of it depends on how crazy we go between now and then. Historically, summer is kind of like this. It's like a roller coaster up and down, but you end up in the same place, right? And and then in the fall between kind of September and Thanksgiving, you

have the crazy ups. So in, you know, 17, we went from 10 to 20. In 21, we went from, you know, 30 to 60. And I think this time, will we go from 100 to 200? I don't. And why don't I? because I think we don't have as much leverage this time. So, I think we get to 170, 175, pick a number, and then we have a correction, but it won't be as big because we won't go up as high. Now, if we went to 200 or 220, then we have a 70 plus% correction.

If we go to 170, maybe we only have a 40 or 50% correction. But if we don't ever get to 175 and you know META's law number just keeps going up and and we get to 120 by the fall and we're only at 125 then we won't have a correction and then it'll just continue to rise. But that that's my base case. Yeah, that's uh that's really helpful. Mark, absolute pleasure to get you back on the show today. Really appreciate it. All was fine. I I enjoyed the conversations. I I I appreciate all the the prep time you or all the work you put in to to prep and and have good questions. And you know, it's funny. I was I was on with um Scott uh from Scott. Yeah. And um the the Wolf of All Streets and uh and he

said, you know, that the key to to a great podcast is, you know, you get great guests and you you let them talk and you shut up. I said, no, no, that's actually not true. That's a good podcast. If you get good guests, you have good. But what makes a great podcast is where the the host does their homework and has good questions, but more importantly asks better follow-up questions once the person starts talking and and you do that really really well and and so as does Scott. So appreciate that. Appreciate that. I got to remind everybody listening in uh none of today was financial advice. Mark your financial adviser. I am not your financial adviser. You should do your own research. You should only invest what you're prepared to lose because investing risky and is difficult. If it was easy, everyone would be a

millionaire. And that's not the case. But if you do want to be a great investor, you should make sure you subscribe to Milk Road Macro and to the Milk Road Macro newsletter. Link is in the show notes to get you everything you need to know on a weekly basis. Thanks again for listening in folks. Have a wicked awesome day. We'll see you back again tomorrow. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5minute daily newsletter where we simplify crypto for you while making you laugh. And if you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro.

You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends.