Episode Transcript
[00:00:00] Speaker A: Hello. Welcome to the Money Adjustment. I'm your host, Dr. Mark Kramer, DC. I am a chiropractor who loves investing and trading. Are you interested in what's moving markets and your money? Great, too. Let's get started.
[00:00:27] Speaker B: I'm so glad you brought up Ayn Rand's masterpiece, Atlas Shrugged and the Fountainhead, but Atlas Shrugged in particular, because it really goes after the money system, right? It goes after everything that's happening to us today. Usaid. Wow. Wouldn't that have fit in the book just perfectly?
All of the corruption, the kleptocracy. Ayn Rand wasn't the greatest genius in the history of the world. She was just an observer of history and what she saw happen and what she understood of socialism and communism and the forces of corrupt, corrupt politicians on money. That's what she put out there because she saw that starting to creep its way into America in the 1950s. 19. So we're now 75.
[00:01:11] Speaker A: I know.
[00:01:12] Speaker B: Five years later, and her story is literally coming true before our very eyes.
[00:01:19] Speaker A: She's almost ahead of her time.
[00:01:23] Speaker B: Yeah. So far ahead of her time. But the story, you know, is the story of the collapse of the American corruptocracy. And here we are where we're witnessing it right before our eyes.
[00:01:32] Speaker C: Now, may I define what my morality is? Because this is merely an introduction. My morality is based on man's life as a standard of value, since man's mind is his basic means of survival. I hold that if man wants to live on Earth and to live as a human being, he has to hold reason as an absolute. By which I mean that he has to hold reason as his only guide to action. And that he must live by the independent judgment of his own mind. That his highest moral purpose is the achievement of his own happiness. And that he must not force other people nor accept their right to force him. That each man must live as an end in himself and follow his own rational self interest.
[00:02:27] Speaker D: May I interrupt now?
[00:02:28] Speaker B: Yeah.
[00:02:29] Speaker A: Oh, wow. That sounds like maybe.
[00:02:31] Speaker B: Yeah, let's not go down that road.
[00:02:33] Speaker A: I was going to say. Yeah, yeah. It's a little. That's not. That's not what we're aiming for here. Sorry, I'm just adjusting this a little. It kind of played around with this yesterday, and now it's a little.
All right. Seems good. Feels pretty good. You look handsome, sir.
[00:02:51] Speaker B: Thank you. You too.
[00:02:52] Speaker A: All right. I started recording, but I'll. I'll let you know. We're doing the intro and we'll, like, warm up into it. I'm Gonna frame it kind of like the way that we did it last time. You have the. You have the depth and the wealth of knowledge from your background in traditional finance. And I'm like that retail guy who is just trying to gain a little deeper insight into what's going on. Sorry. This is how I should be facing the camera, but I have to veer off this way because of my setup. It's really weird. I'm trying to. I'm at some point going to fix that up, but at this point I've done it on everyone, so I hope it's not too off putting that. It's like this. Almost like when I'm like this, I'm looking at you and then when I go like this, I'm looking at the audience. So that's for whatever that's worth.
[00:03:38] Speaker B: Yeah, yeah, yeah. I think we're gonna have a good time.
[00:03:41] Speaker A: Yeah, I think, I think we will too. I figure we'll go. We'll go. Mr. Just because they reported earnings and I think be worth talking about that. Then we'll go dive into Misty and then we can dive into your personal strategy.
[00:03:57] Speaker B: That's good.
[00:03:58] Speaker A: Awesome. All right, so hello everyone.
Today I'm welcoming back a special guest, darkside2030erscore.
So when you follow this guy on Twitter, it's an underscore, not just Darkside2030. I actually had a Darkside 2030 follow me and I was like, nope, not the same guy.
Just to get bring everybody back into the conversation here, Darkside 2030 and I did a podcast. It was a couple weeks ago now. And in that podcast we talked about hard money, specifically bitcoin. We talked about bonds, and we talked about bit bonds and we talked about the current state of our debt in the United States of America. And at the end of that episode, we, we teased that we're going to discuss MSTY, which is a strategy that uses Mr. As well as options. I'll get into what I did with Misty as we get into this conversation. But just to refamiliarize everyone, Darkside 2030 has a 25 plus year history in traditional finance tradfi, and he is a bridge now really into the world of defi decentralized finance. He has a rich history of options trading experience. So we're going to discuss mstr because they reported earnings this past week. We're going to get into MSTY, which is a strategy that uses MSTR and. And then we're going to get into Darkside 2030's personal strategy, which I'M most looking forward to because he teased that out the last time. So I think people watching know Darkside 2030 better than me. I'm just a retail investor trying to gain some insight, and I'm hoping by having this conversation with Darkside 2030 that we can all learn something. So without further ado, Darkside 2030, welcome.
[00:06:02] Speaker B: How you doing, Doc? It's good to see you again.
[00:06:04] Speaker A: Good to see you again as well, sir.
So I was listening to your spaces. You do a lot of spaces? I don't know. Just out of curiosity, how many spaces do you do per week?
[00:06:14] Speaker B: It varies, but I do bitcoin today, Monday through Friday. That's at 11:30 Eastern Time. And then I host a bunch of my own. I do some with Gary Cardone.
Yeah, I just try to stay active. Dave Weisberg has one in the morning early that I'll hop on from time to time. So, yeah, I try to stay busy.
[00:06:35] Speaker A: Yeah, these spaces are great. If you haven't listened to one or haven't had a chance to jump in on one, they're very insightful. And it's a lot of really smart people. It's cool when you hear smart people talking to each other because then you really learn something. So on this particular spaces that I was listening to, it was the MicroStrategy post earnings spaces. The interesting thing about what MicroStrategy did this last round is they committed to buying $84 billion. Not. Is that right? 84 billion. Right. I always feel weird when I say it with the B, but yes, $84 billion worth of Bitcoin. One of the things that I try to wrestle with in my own mind is microstrategy or strategy now. No. Is a traditional type of company. It's no longer a traditional corporation. It's not selling you a product per se, and then having earnings based on the product it's selling you. It is a bitcoin proxy, for lack of a better word. So when they're reporting earnings, what are they actually reporting?
[00:07:46] Speaker B: So it's a great question. As of the new FASB accounting rules, they will be reporting the profit and loss on their bitcoin on the bitcoin on their balance sheet and add that to the profit or loss of their old traditional legacy software business. Hi.
[00:08:04] Speaker E: Let's cover FASB accounting rules in 30 seconds. The Financial Accounting Standards Board, or FASB, sets US accounting standards called GAAP. These rules ensure transparent, consistent financial reporting companies recognize revenue when earned, match expenses to related revenue, and report assets and liabilities accurately. FASB's guidelines help businesses create reliable financial statements, building trust with investors. That's FASB in a nutshell.
[00:08:37] Speaker A: Okay. Is there old traditional legacy business still existing?
[00:08:41] Speaker B: Yes.
[00:08:42] Speaker A: So, I mean, I'm assuming it is because you said that, but that's another thing. I don't even really know what that business does.
[00:08:49] Speaker B: Yeah, it's a business intelligence software software company.
[00:08:53] Speaker A: Okay.
[00:08:54] Speaker B: It's legacy. I mean, it's old school, but they still have a significant number of clients that are on, on the platform and they support the platform. And I think it's important because without the old legacy business, right, then you might see MicroStrategy be reclassified by the SEC as something other than a technology company. So, so the way, the way Saylor looks at himself today, he's a software technology company that has a Bitcoin treasury strategy, right? So they actually invest in bitcoin, they hold their cash in bitcoin and they offer all types of financialized bitcoin products. But they do maintain the legacy software business. Without that software business, they would purely be a bitcoin financial services company. So I think there's a big difference there. I don't think they want to be classified as a bank. I don't think they want to take on new regulators. So I think that's the driver behind maintaining MicroStrategy, the old business intelligence company.
[00:09:57] Speaker A: What percentage of their company is the legacy at this point, do you know?
[00:10:01] Speaker B: I would say less than a tenth.
[00:10:04] Speaker A: So it's almost like they just keep that tenth to be classified a certain way versus just being like another Bitcoin etf. Then they're like competing with other very similar products. Maybe they were first to market in a sense, but because they maintain that legacy business, they are a unique entity in that way that can differentiate themselves from like an ibit.
[00:10:27] Speaker B: Well, ETFs are trusts, right? This is a corporation. It's a bitcoin treasury corporation. And you know, they have this legacy software business and they support it. I mean it really, you know, by modern terms it's an extremely small business. But you know, I, I believe they do hundred, you know, 100 plus million dollars worth of revenue. And so it's a real business, Right? Like, you know, it's not a, it's not a, it's not some made up entity.
[00:10:53] Speaker A: So. But this is interesting, you said what they do like 100 million maybe? Something like that.
[00:10:57] Speaker B: Yeah, so something like that.
[00:10:59] Speaker A: So, so that relative to what they're reporting for Bitcoin?
[00:11:05] Speaker B: Well, we don't know. Right. So according to the new FASB accounting rules. Until Bitcoin trades above 96,000 at one of their earnings, they're still under the old system. Now they'll be under the new system with Bitcoin above at that target price. And then they will, they will actually mark their earnings as their profits on the Bitcoin they've acquired.
[00:11:25] Speaker A: Why the 96,000?
[00:11:27] Speaker B: You know, it's kind of this unique little. The way the rule was constructed, I believe is the driver behind that number. But the SEC has changed the FASB accounting rules.
[00:11:38] Speaker A: Do you think that Next K then plays psychologically in the market in any way?
[00:11:43] Speaker B: No, no, I just don't think the market understands the company and they understand their holdings. The one thing you can say about Saylor and Strategy is that they are the most transparent public corporation I have ever seen.
They literally have no off balance sheet. This, that like it is. He's out there. This is what I hold. This is what I'm buying. You know, basically gives weekly updates on their positions. I mean, I've never seen anything quite like it.
[00:12:12] Speaker A: So this one, this call that I was on, on spaces, you were talking about the strategy itself, which I had never investigated or into too deeply, and it was understanding the difference between you are you were talking about convertible bonds versus Preferred, what was it?
[00:12:31] Speaker B: Perpetual preferred.
Perpetual preferred stock.
[00:12:36] Speaker A: Perpetual preferred stock. So you are making a case that you think that would be maybe a better strategy to use than the convertible bonds.
[00:12:48] Speaker B: I do.
[00:12:48] Speaker A: Did I hear that correctly?
[00:12:50] Speaker B: Yes, you did. And I feel pretty strongly that here's the issue is that when you issue a convertible bond, you have a maturity date, like a bond has a date which it matures. And the risk in issuing any type of bond, especially in Strategy's case, is should the price of Bitcoin, for whatever reason at that time that bond matures, be lower than the conversion price, then they would be in a tough spot where they'd either have to sell Bitcoin, right. Or they would have to raise additional capital to pay off those bondholders. If he uses perpetual preferred stock, which he's issuing now, that's strife and strike, he could create a third type of perpetual preferred which looks exactly like a convertible bond, but it doesn't have a maturity date. It's perpetual. Right. So therefore he doesn't run the risk of any type of squeeze situation in which they have a cash. They have a cash call from the bondholders, right? So the way the way strategy is constructed, look right now he has a very low leverage ratio, something like 15% or less. Right. But you know, if he were to issue the $42 billion worth of convertible debt, he. He'd have significant leverage and he doesn't need that leverage. There's no reason for him to leverage the balance sheet. He can acquire those same characteristics on investment vehicles without the leverage. So why would you take the leverage if you don't need it?
[00:14:11] Speaker A: That makes sense to me. But that's not what he's doing. Right. You think that's what he should do?
[00:14:16] Speaker B: We don't know.
[00:14:16] Speaker A: We don't know. We don't know.
[00:14:19] Speaker B: We don't know. So remember last year it was 21 billion of common stock and 21 billion of convertible debt. That was the 2121 plan. So look, I'm not sure where exactly he's going. Right. He talked on his conference call about using debt instruments. He used that term. So maybe he's thinking the way I'm thinking. He's going to create debt like instruments. I'm not sure. But it really doesn't make sense for him to lever the balance sheet of strategy when he doesn't need to.
[00:14:49] Speaker A: Yeah, that makes sense.
Like with it.
[00:14:53] Speaker B: So can we break for one second?
[00:14:55] Speaker A: Yeah, of course, no problem.
[00:14:57] Speaker B: My dog's losing his mind.
[00:14:58] Speaker A: Yeah, yeah, no problem.
[00:14:59] Speaker B: Doc, can you hear me?
[00:15:00] Speaker A: Yeah, I can hear you. So this is good because that actually was good because it gave me a chance to think about what you were saying because I saw, I heard you say the 18 billion before and then I was trying to think of where that number came from. But now I have the context. There was he was going to do 21 billion. He had set aside for the convertible bond and he wound up only doing 3 billion, which means 18 billion in convertible bonds still available.
[00:15:24] Speaker B: 6.2 billion of the. Of the 21 billion. He did 6.2 billion.
In a previous earnings call, he had announced a 2121 plan and that got converted the 21 billion of at the money stock he sold.
Right. That was supposed to be a three year plan. Right. But it turned out to be far less.
And now he's issuing another plan. Right. 4,242 plan.
I think it was six months ago if I remember correctly.
[00:15:57] Speaker A: So relatively recently.
[00:15:59] Speaker B: Yes. And that three year plan got accelerated to I believe, six months.
Yeah, that was October 30th. So six months ago. Yeah. Let's rewind.
[00:16:10] Speaker A: So on October 30th, which was six months ago, two earnings calls ago, he reported that he was going to do. Was it the 2121.
[00:16:23] Speaker B: Yeah. He announced a three year, $21 million at the money stock offering and a $21 million convertible bond offering. That was October 30th of 2024. By just the other day, by May 1st he had completed, that was supposed to be a three year plan, you know, within six months he had completed the $21 million of at the money stock and he had sold $6 billion of convertible debt. So now he has now issued a new plan that he calls the 4242 plan. That's how we get to the 84 billion, 42 billion of at the money stock and 42 billion of debt instruments.
[00:17:04] Speaker A: Okay, 42, 42, 42. When we say the stock, can we say equity? So 42, half equity, half debt. In simple terms, is that fair or is that too simple?
[00:17:19] Speaker B: Yeah, I think, listen, I listened to that conference call carefully and he used the term debt instruments, which I thought was really interesting because he didn't say convertible debt, convertible bonds, he said debt instruments. Well, I would argue with you that if you look at the perpetual preferreds he's been selling, they are debt instruments, right? So he's not, he's not committing to selling $42 billion in convertible notes. He's, he's committing to selling 42 billion in debt instruments. Now that could, you know, you could, you could create a perpetual preferred that mimicked a convertible bond that would not have the risks and the leverage put onto the shareholders of a convertible bond. I'd like to see that product. I would love to see that product.
[00:18:12] Speaker A: I see, now I see why there is still like, for lack of a better word, ambiguity in the sense that he used the term debt instruments. So he didn't say what type of debt instruments. And that's where it opens it up for convertible bonds or man, I'm going to have to say this word like so many times, perpetual preferreds. Perpetual preferreds. Those were like the two terms when I was on that spaces that I had to look those up and like try to educate myself on what those actually were. And it's key to understanding his strategy because that's how he's acquiring money to be able to purchase the Bitcoin.
[00:18:49] Speaker E: Hi, let's break down the difference between convertible bonds and preferred stock in just one minute. Both are hybrid secure securities, blending features of debt and equity, but they work differently. Convertible bonds are corporate bonds that pay interest and have a fixed maturity date, but they come with an option to convert into a set number of common shares at specific times. This gives bond holders the chance to benefit from stock price increases while enjoying the safety of regular interest payments and principal repayment if they don't convert. Preferred stock, on the other hand, is a type of equity. It offers fixed dividends, which are paid before common stock dividends and often comes with higher priority in case of bankruptcy. However, preferred shareholders don't have a maturity date or guaranteed repayment and dividends can be suspended if the company faces financial trouble. Some preferred stocks are convertible into common shares, but unlike bonds, they don't accrue interest in short, convertible bonds prioritize debt security with an equity upside, while preferred stock leans toward equity with fixed dividends and less repayment certainty. Choose based on your risk tolerance and investment goals.
[00:20:08] Speaker A: That's the leverage aspect of it, right? When you're, when you're issuing the debt, you're. That you're.
[00:20:15] Speaker B: So let's talk about that. Leverage assumes that you're leveraging your balance sheet. He's not right. If you sell a preferred stock, there's really not leverage on your balance sheet. It's a piece of equity that has a preference in the waterfall, which means that if the company would go bankrupt, the preferred shareholders are senior to the common shareholders. Those preferred shares pay a dividend. Right. So they pay some form of interest. In the case of strike, that interest can be paid in cash. Or that interest could be paid in stock in the form of a pick a payment in kind. Right. In the form of strife strf, that interest has to be paid in cash, but it's again, not a gigantic amount of interest. He could always sell common shares to raise the cash to pay the interest.
So you're not putting the leverage onto the balance sheet the way you do. When you sell a convertible bond, that bond has a maturity date. If that maturity date comes and people dug and converted their bonds, they want their cash back. And that would be, you know, imagine you have $6 billion note outstanding and all of a sudden you have to pay back $6 billion.
[00:21:27] Speaker A: Is that like a run on the bank and would that be like that type of mentality?
[00:21:31] Speaker B: Yeah, you could set up a scenario where there could potentially be a run on the bank and that would be dangerous. That's why I'm not in favor of him selling any more convertible bonds. So it was up to me. Saylor would retire the convertible bond idea altogether and stick with perpetual, perpetual preferreds, equity type instruments that don't carry that leverage and don't carry that risk. Because if I'm a common shareholder, which I am, I don't want, I don't Want that potential on the balance sheet. It makes no sense. And he's proven that the market will take these perpetual preferreds. Just give it to them. Give them or give. Look, the one thing Saylor's been so good at is he financially engineers products that the market wants. Well, the market wants, I can tell you, Michael Saylor, if you're listening, the market wants a perpetual preferred which mimics the convertible bond. Please, please bring that to market.
[00:22:24] Speaker A: I like that. I could just see that being a clip later and then when Saylor posts something, we could add that on there. So like again, this is just me trying to make sense of it in my head and hopefully for people who are listening, I'm assuming if someone's listening, they're either interested in Bitcoin or they're interested in MicroStrategy or they're interested in. We're going to get to misty. We haven't even gotten to mist at. But just to help in that understanding, when I hear now when I'm thinking the 4242 to get to the 84, does he have to equal the, the shares that he's creating, the equity with the debt instruments to Matt, does it have to be like that or is that just the strat, like that's just the way he's presenting it?
[00:23:06] Speaker B: No, he's just presenting it. He could go ahead and sell $42 billion worth of equity and not sell a dollar of, of the other of, of debt instruments. But he's going to do what he's going to do. They're going to do what's best for the company. Look, as long as Micro Strategy is trading at a Multiple Greater than 2, right. Their, their common stock versus the amount of assets they hold. Well, every time he sells a share of common stock and buys Bitcoin with it, he's buying that Bitcoin for essentially half the price. Right? Because he's, he's, he's mining essentially fiat dollars and converting those fiat dollars into Bitcoin. So if the market's willing to pay 2x his, his net asset value, the Bitcoin's net asset value, and he buys Bitcoin with the proceeds from those sales, well then the, the common shareholders are acquiring that Bitcoin for half the Bitcoin's price. I mean, it's a very simple equation.
[00:24:01] Speaker A: Yeah, no, that makes sense to me. But is that where that's, is that where he gets criticism? Is that where like nobody should be.
[00:24:08] Speaker B: Criticizing anybody who's doing that strategy? That's that's common sense, right? Like that is literally fiat mining. He's, he's as long as, as long as the net asset value stays above 2x or even 1x. Right? You would argue that this is a money glitch of some type. This is a problem in the fiat system. Look, if the fiat system was healthy and if our debt based Ponzi scheme was in good shape, then theoretically, why would anybody want to pay more for MicroStrategy than they would for the Bitcoin that MicroStrategy holds? But that's not the case. Our fiat money system is broken, and that's what's creating this M nav or market net asset value that's substantially greater than the NAV asset value.
[00:24:55] Speaker E: Market net asset value or mnav is the total value of a fund's assets minus its liabilities priced at current market rates. Think of it as the real time snapshot of a fund's worth. It's key for investors to track performance and make informed decisions.
[00:25:13] Speaker B: Right now it's above 2. He's just executing an absolutely brilliant and rinse and repeat strategy of converting fiat into Bitcoin. And it's working and it continues to work.
[00:25:26] Speaker A: So this is, this is fascinating to me. So let me just say it this way. Usually when a corporation issues more shares, they're just diluting the shares that are available and then in a sense decreasing the value for the individual shareholders. So like, how come people are like, where are people accepting of this first strategy?
[00:25:46] Speaker B: It's a very good question. So realize that when he's doing dilution, I call it accretive dilution because he's taking the cash and buying Bitcoin, right? That's actually accreting value to the common shareholder. If you're a common shareholder, this is the, this is your dream come true, right? This guy found a way to sell shares to dilute the amount of the number of shares, but to do so in an accretive fashion. Right? And it's so accretive, like 50% accretive the second he does it. When you have a two times multiple that wow, that's like just instantly printing money.
[00:26:24] Speaker A: Right?
[00:26:25] Speaker B: Again, this is a form of a money glitch. Now we could debate what's causing that money glitch, right? The fact that MicroStrategy has such high volatility and you've got the misty folks coming in and investing in MicroStrategy. Is it the fact that trapped capital, people that have money and exposure in IRAs find it better to buy micro strategy than it is to buy ibit. There's a lot of different. We could debate that subject for hours. But the real story here is that he has found an accretive dilution strategy where if you're a common shareholder, keep diluting, dilute, dilute away. Because it's accretive to me. Right. I'm buying bitcoin at half its current market price through this methodology.
[00:27:10] Speaker A: Yeah. It's not like the first analogy I gave where it's like a traditional company when they're adding more shares, but they're not necessarily adding more value when they add more shares, where in this case, every time he's doing the dilution, he's actually adding a lot of value on the back end of it by buying the bitcoin. And to your point, he's buying it for. In a cents because of that. For half off.
[00:27:31] Speaker B: Exactly. Perfect.
[00:27:32] Speaker A: All right. Yeah. No, I love it. And, and because it was the lead into Misty. Right. Because you brought Misty up. So why don't we jump into that now and how Misty is taking advantage of what MicroStrategy is doing.
[00:27:46] Speaker B: Yeah. So Msty, let's just kind of back up, talk about what is msty.
[00:27:51] Speaker A: Sure.
[00:27:51] Speaker B: MSTY is an etf. Its goal is to create income, an income generating strategy to pay a large dividend based on owning MicroStrategy and writing calls on this high volatility asset, which is the strategy mstr. So they're buying MSTR and they're selling MSTR calls and call options. They're also buying some call options. They're doing some different strategies, some call spreads, some verticals. They're actually buying the stock synthetically using options. I don't want to get too technical, but ultimately the MSTY concept is because MSTR has the highest volatility of any S&P 500 company, of any company of its size. This MSTY has come along and said, we're going to monetize that volatility and pay it back to the investor in the form of a dividend. And they do so by capturing the, the spread, the, the, the income from the covered call sales and also return of capital. So they have an incredible strategy. Right. Which is just working and working and working. And you know, I mean, you can bring on MSTY investors that are just, they've never seen anything like it. You know, returns have been somewhere in the 80 to 100% range. Right. On an income generating strategy that's paying a dividend. It's not the most tax efficient dividend in the world. But it's still, I mean, at 100% a year, you can deal with paying some taxes.
[00:29:23] Speaker A: That's very. Yeah. This is all very interesting to me. I recently on Monday took a position in MSTI because I am starting to, based on our last conversation, and I was like, I just wanted to test it and kind of see how it works. So I took a small position just to get a sense of this income producing strategy.
It was, this was a good week to do it, by the way, because it had like a double bottom on the chart and it looks like it really wants to break out. I might add, when I, when I edit this, I might add the chart of Misty here to, to illustrate how it does look like there was a double bottom recently. And we're, we're touching to a near recent high. And if it breaks above that, I almost wonder how much it's signaling of what might actually happen to bitcoin. Because if we're still going off the four year cycle, I don't want to get too divergent here, but if we're still going off the four year cycle, assuming the four year cycle isn't dead, and now there's debate on that, recently I've been, it's dead. You're just flat out saying it's dead.
[00:30:28] Speaker B: Yeah, it's dead.
[00:30:29] Speaker A: So I saw it was dead. Because now that institutions are in, that's now that retail isn't in control necessarily of the narrative of what's happening with bitcoin, that four year cycle ideology is no longer the case.
[00:30:42] Speaker B: So we're speculating that and we're down to 3.125 bitcoin per block per 10 minutes. Right. So the amount of supply that's entering the market is so small and the amount of institutional buying is so large that the concept that you're going to have some type of supply crunch where you have too much supply and every four years that supply gets halved and miners go bankrupt. I just don't see it. I don't think it plays anymore. You know, I just, I think that you have nation states, sovereign nations now mining bitcoin. You have mining companies that are hodling bitcoin. They're not even selling the bitcoin they mine. So I just think that the underlying thesis of the four year cycle has been completely broken.
[00:31:26] Speaker A: That's very interesting. It's interesting to me in the sense that we're in it like this is, this would be year four of that traditional cycle model. Me personally, when I understood bitcoin and how the Cycles work. I was like, it's showed the same pattern since its inception in 2008. So 16 years, four cycles. It's been doing the same similar type pattern that the chart doesn't look always exactly the same, but every cycle brings a new high and there's usually like a little bump, not even really a little bump. It would be for this cycle. It would have been, we went from like 30 to 40,000 to the 100,000. And then now we're anticipating the super part of that which would bring it from. I mean, who knows? It's all speculative. But let's say, you know a number I hear thrown, thrown around is 250,000.
[00:32:13] Speaker B: Yeah, I think so.
[00:32:14] Speaker A: If we, if we. What's that?
[00:32:16] Speaker B: I think you're low.
[00:32:17] Speaker A: You think it's low?
[00:32:19] Speaker B: I think it's very low.
[00:32:20] Speaker A: That sounds, that's a sound bite. I'm going to be curious what some of the clips are from here. So like, so, so let's say I'm low at 250,000 by year end. We're saying year end. I'm saying like end of this year 2025.
I the one of the larger numbers that I've heard that I can kind of just. Everybody speculates on numbers. So like in my mind I'm thinking okay, like 250. It's like a game almost. I'm like, okay, kind of 250is, is a target, it's a price target and that's by the end of the year. And assuming that if the 250 was right, we're under 100k right now. That's a 2x from where we're at today.
More than a 2x from where we're at today. And you're saying I'm too low?
[00:33:08] Speaker B: I think so. I think we've crossed the chasm into full blown institutional adoption. I think that there's still a debt based fiat Ponzi scheme crisis looming. I think the dollar's being devalued quickly. I just think all of these ingredients come together and they can create in a sort of, how would you say like almost an ignition of fuel being thrown onto the bitcoin story. And I think Saylor knows, I think Saylor knows this. He's going as fast as he can for a reason. He's front running something. And I think what he's front running is some type of crisis, some type of banking crisis, some type of systemic Crisis a la 2008 in the banking system. Or, or we could just go to Bitbonds. I mean, just the announcement of bitbonds. If the government actually took, took a step down that road, I mean, I couldn't even imagine what the price would be.
[00:34:03] Speaker A: This is fascinating. Okay, because my next question to you before you, you continued was going to be, what do you think the catalyst will be that will perpetuate, will propel us to that significantly higher number?
[00:34:15] Speaker B: Look, it's very important, it's very important for the audience to understand that it's not the volatility of bitcoin. One bitcoin equals one bitcoin. What we're talking about is the volatility of this fiat based, debt laden Ponzi scheme. So if we know it's a debt based Ponzi scheme and we know what happens when Ponzi schemes run into trouble. We saw it in 0809, we saw it in 2020, they're left with one solution and that's, to quote Larry Lepard, that's the big print. They have no other choice but to rescue their own system. And when they do, the big print, right, that devalues all of money. So it's not the volatility of bitcoin per se. What we're really talking about is the volatility of the US dollar, the volatility of a Ponzi scheme that at some point is going to break. And when it breaks, it's going to be fuel, really. Oxygen and fuel thrown on the bitcoin story.
[00:35:14] Speaker A: That's surreal because I could just picture people hearing. That was a great line, by the way. It's not the volatility of bitco, volatility of the dollar. Because I could just see heads spinning on CNBC or something. You know, because they're traditional finance, they're biased in one direction. I, I still don't feel like even though they show bitcoin on the bottom of the screen and we're following bitcoin like we used to follow gold, there still seems to be a question mark. Even as far as we come, even with institutional adoption, you still see people on Twitter saying like that it's bs, that it's like, you know, one word I keep seeing come up is shilling. Like they're shilling. Yeah, we're just trying to sell this narrative like it's still some kind of bogus story that, that we're trying to get. I say we because I subscribe to the bitcoin narrative. But there's still like this idea counter to what you're saying and it speaks to your line to say the dollar is the volatile thing and not bitcoin is a real, kind of like it's the polar opposite of what I think the current mainstream narrative is.
[00:36:19] Speaker B: Yeah, well, because people don't understand bitcoin, we say in, in, you know, the bitcoin community, we have a saying, TikTok, next block. Now the way, the way bitcoin is, is, you know, the mathematical equation, the perfect math behind bitcoin is that it's perfectly predictable.
Every, you know, it's not every 10 minutes, but if you look over any period of time, on Average, you know, 9 minutes and 48 seconds, whatever it is, there's a block created. Tick tock, next block. We know exactly how much bitcoin will be created today. We know at what time approximately it will come. Right. Everything about bitcoin is perfect math. It's completely predictable. It's open source. But anybody can, can go and audit the code. Anybody can go and audit the blockchain. They can verify that everything that's in the perfect math is coming true. And it has, since its inception, it's been perfect. Right? So you can't say that about the dollar. Nobody has any idea what the supply of the dollar is going to be. Nobody knows what the Federal Reserve is going to do. No one knows what the treasury is going to do.
The volatile asset here is the dollar, the dollar and all fiat currencies are the most volatile assets ever created. Right? Like, you have no idea what the supply is going to be. You have no idea how to verify, verify the actual supply money is created. We have this, we have an M2 mint, whatever that is, right? Like, who knows?
[00:37:50] Speaker A: Right? Right. I have the meme in my head with the Fed, Jerome Powell just spinning out the money. And so to your point, and that's the fundamental nature to the story of both bitcoin and gold, is the scarcity aspect it of it. And what you brought up on our last episode was that even gold is. I love the way that you said it because it was very succinct. But even gold is counterfeitable, which is, was kind of not.
[00:38:20] Speaker B: It's not audible, it's not verifiable, it's counterfeitable. Right. It fails at all of the, the base characteristics you need for good hard money. Right. The only thing that the gold bugs can tell you is that what gold's been around for 5,000 years, it's been used, so it'll be used tomorrow. Right? Well, you know, you could have said the same thing about silver. You know, 150 years ago. But silver got demonetized by gold. Right. The gold to silver ratio in the ground is 17 to 1.
The ratio of the gold to silver price is over 100.
So why is that true? That makes no sense. Right. It should be somewhere around 17 to 1. But gold has this monetary effect. It demonetized silver. What's funniest about that story is, you know, what country stayed on the silver standard for an additional 50 years and then got destroyed?
[00:39:20] Speaker A: Which country?
[00:39:21] Speaker B: China. The same country that's stacking gold today. Yeah. Wouldn't it be funny if history repeated itself?
[00:39:28] Speaker A: Bitcoin, to look into that.
[00:39:31] Speaker B: Yeah. Bitcoin demonetizes gold, The Chinese get left holding the bag of all this gold, and the US stacks bitcoin. So, look, I think that's the narrative going forward.
If I'm the US government, I let China, Russia, let all my enemies acquire all the gold they want. Then I turn around and I sell my gold and I buy bitcoin.
[00:39:52] Speaker A: This is all. We're really getting into something here, because now I. I know China, at least from what they say publicly, is that they banned bitcoin and they're not. They're not. Bitcoin miners aren't existent in China anymore. That was the narrative.
[00:40:06] Speaker B: They're there. They're there.
[00:40:08] Speaker A: Yeah, they're right.
[00:40:09] Speaker B: They're there. But China has.
[00:40:10] Speaker A: If they are there, or assuming they're there, that's not what they're saying publicly.
[00:40:15] Speaker B: Well, I wouldn't trust anything that comes out of China. Right. So, you know, Russia, we don't even know how much gold they hold, but.
[00:40:23] Speaker A: Russia, I don't think Russia has that narrative. Russia, still. No, is.
[00:40:28] Speaker B: Matter of fact, they've gone pro bitcoin.
[00:40:30] Speaker A: That's what I was going to say. Russia's different. Russia's pro bitcoin. They, they. They understand. And maybe to your point, maybe China does, too, but they're going to keep their cards down. They're not going to show their hand. Yeah. Which is all fascinating because, again, to your point, it's because I've seen. I think you tweeted this sometime, like, gold bugs are going to have a rude awakening at some point. Like, the Peter Schiff followers of the world are going to see that what they thought was the hard asset, the hard money is going to be overturned. Like, to your point, you said we're going to sell the gold to buy more bitcoin, which is kind of interesting.
[00:41:09] Speaker B: Yeah, Yeah, I would.
[00:41:10] Speaker A: Yeah. So, like. So my head is going in a lot of different places. That's Why I love talking to you because then I'm like, you're better than caffeine for me. Because my mind's like, okay, all right, this is cool. So, like, when I think about gold, we're diverging a little bit from what I, you know, I want to get back to Misty at some point, but I want to finish this thought. One of the criticisms that I heard from the gold people with regards to why gold versus bitcoin is I could touch it. I love gold because I can hold it. I can hold it in my hand. I could wear it on my neck if I want to. I could actually use it and put it somewhere if I. So, like, there's this tangible nature that people like about gold versus bitcoin is like you said, and I put this out there. So like, math, to your point is that's what I like about it is it's the, the mathematical aspect of it. If I look at it as like, I'm a chiropractor and my background is in understanding the physiology of the human body. And if I think about the brain and the right brain and the left brain and I just go back to just like the classic what people think about, like, right brain is creativity, left brain is logic. And then so left brain, like our math side of the brain. And so one of the things, like, throughout history, we've tried to understand our reality through math, like physics and bio, even biology. But physics in particular, we have to explain things. Things become accepted when we have a mathematical component to understanding them. So that's one of the things I love about the bitcoin narrative is that mathematical aspect of it. I was thinking about what I put out there was like, you're investing. And this is. I would love your just your, your, your, your reaction. You're invest. You're investing in math, you're investing in numbers, logic.
[00:43:00] Speaker B: Let's go back to the first thing you said, which was that the gold bug say that I want to be able to touch it, I want to be able to see it. I want to be able to put it around my neck. That sounds very similar to me to the Blockbuster Video argument as Netflix was coming. I want to go into the store, I want to look at the. I want to look at the videos. I want to take the video home. I want to be able to rewind it. I mean, listen, you know, I heard the same. Those all of these arguments, right, are the pre digital realm arguments. Think about retail, think about malls. I want to go to the mall. I want to see My friends, I want to go to the store, I want to touch the tv. Like look where we are today, Amazon.
Even Walmart has a huge presence on the Internet. There's still some brick and mortar stores. Blockbuster is clearly gone. But the point being, we've left the brick and mortar realm. We've left the physical realm. We live in a digital realm. Everybody here knows how to use the Internet. Everybody knows how to use email. We have transitioned away from the post office.
If you're hunting gold, if you think gold, the 5,000 year history of gold is tried and true. Well think about retail. Retail had a long, long history of going to the store and buying your goods. We didn't have doordash, we didn't have, I mean just go right down the line. The digital realm has taken over. Bitcoin is a digital scarce asset. It's unlike anything that ever existed before. You couldn't have bitcoin without the Internet. So we've now transitioned away from Blockbuster, we've transitioned away from the great shopping malls and we now live in this digital realm. So if you want to fight it, fight it. But ultimately to your point doc, perfect math is going to win. Why do we believe, why do we accept gravity? Well, Newton came along and then we were able to calculate math and the earth spins and whatever it is, whether you believe it or not, there are mathematical formulas behind all of these concepts, right? Whether, whether they're, whether you want to believe them or not. Galileo, right. The world's round. We had to develop these thesis and come up with these mathematical equations that for us began to prove out the theorems. Well, you know, to your point again, Bitcoin is perfect math. Not only is it perfect math, it's open source math just like other great sciences, right? It's not like one guy invented bitcoin and won't tell you how he did it. No, it's completely open sourced. Everybody has access to it. Everybody can audit it. Not just audit the bitcoin blockchain, but they can audit the code. The code is open source.
[00:45:40] Speaker A: That's what, that's when I was, let's say I don't remember now, even maybe five, 10 years ago when I was debating the asset class, the assets, like I think about portfolio management and it's like you should allocate so much to gold and then at some point they're like gold or crypto, like crypto got involved in there but it, but in terms of just sticking with just bitcoin and gold bitcoin, I imagine I kept Projecting myself into the future. And I'm like, these gold bugs are saying the dollar's gonna crash and you're gonna what? You're gonna have all these gold bars in your basement and then you're gonna doordash. You're gonna pay doordash with like your gold bars. Like, I just doesn't work. Visualize a future where we're going back to giving somebody exchanging. There's like no reality to your point. Amazon, Netflix, Facebook, social media, all of these things, we're going to somehow like, go back and be paying for these things in gold. Like, there's nothing about that that made sense to me, which is why I was attracted to bitcoin more. So because bitcoin makes sense in this world. Bitcoin is something that is still part of our current reality. That could still as a hard money class can exists if, if the dollar completely collapses, we're not going to go back to the way it used to be. Even though it was 5,000 years, we've been doing it this way and we have this 5,000 record. It no longer makes sense in today's reality. So I love what you said because that's absolutely what resonated with me in terms of deciding whether I wanted to allocate more towards gold or more towards bitcoin. And in all fairness, like, I still have just like a little bit of gold and part of that gold is like legacy. Like, I commented on something recently, but. But my grandmother, when she passed away, like, she had these gold Krugerrands that she gave. Like, the kids each got a couple gold Cougarrands and it was just like, it was not a lot of money, but it was just like a reminder of the valuing. Something like valuing a hard asset.
[00:47:45] Speaker B: Yeah.
[00:47:46] Speaker A: So without getting.
[00:47:47] Speaker B: Yeah, I'm just thinking, I'm thinking about gold and vinyl records.
Vinyl records are making a comeback. They're analog, they're cool. It's fun to put it on the turntable. It's nice to hear that little cracking from the needle. But what percentage of music is consumed from vinyl? I mean, are we talking a hundredth of a percent? I mean, you know, it's a cute thing, it's analog, but eventually, you know, it, it, it will serve its purpose. Gold will turn back into jewelry, and it's, it's good to look at. I enjoy it, I enjoy it as jewelry, but, you know, the fact that it's $3,300 an ounce and silver's $33 an ounce, that makes no sense.
[00:48:26] Speaker A: Yeah, yeah. No, I love all of this. And one more note on this, because the visual in my head was there's a clip of someone talking about electric money from years ago. Like they said, oh, this guy predicted bitcoin before we had a term for it. And it was something about, in the future we're going to need electric.
[00:48:45] Speaker D: The one thing that's missing, but that will soon be developed is a reliable E cash. A method whereby on the Internet you can transfer funds from A to B without a knowing B or B knowing A. The way in which I can take a twenty dollar bill and hand it over to you and there's no real record of where it came from.
And you may get that without knowing who I am.
That kind of thing will develop on the Internet and that will make it even easier for people to use the Internet money.
[00:49:18] Speaker B: The cyberfunks were trying to solve the double spend problem, the byzantine general problem. These were problems that were set out to solve with the creation of the Internet. You know, they got there, Satoshi got there with bitcoin. I mean, bitcoin is perfect money. There's never going to be a second bitcoin. Bitcoin, right. There's no need for one. You've solved the perfect money problem. Now people will argue about medium of exchange. It's not fast enough. Look, the reality is, the reason why blocks come every 10 minutes is because if they come faster, weakens the system, it weakens the security.
Right? So ultimately, will we develop layer two technologies, you know, like lightning that settle onto the bitcoin network and you can transact in milliseconds. Sure, that's coming. It's absolutely coming. Right? It already is here. It just isn't here at scale. But as far as bitcoin is concerned, it does not need to be faster. It's a settlement layer. Think how slow gold is. Imagine putting gold on an airplane and sending it from London to New York, right? Then someone's got to unload the gold and then it's got to make it to the vault.
The concept of using gold as a settlement layer makes no sense.
[00:50:28] Speaker A: Yeah, it feels heavy when you say it. Like literally feels heavy.
[00:50:33] Speaker B: And it's not secure. Imagine moving around metric tons of gold. Imagine how many people have to touch it before it gets from point A to point B. Can it be counterfeited in that time period? Can it be like the whole concept is just ludicrous. When you compare it to bitcoin.
[00:50:48] Speaker A: Do you go on chain? Do you look okay? How often are you checking in?
[00:50:53] Speaker B: I would say I run a node. So I would say, you know, probably every few days.
[00:50:59] Speaker A: Awesome. I didn't even know that you run a node. So are you. Does that mean. Do you mind? Do you mind? Is that okay?
[00:51:06] Speaker B: I have miners. I'm not mining today, but I actually just got my solar on my roof and we'll be hooking my miners up to scrub off all my additional power that I create and that will all go into mining Bitcoin.
[00:51:19] Speaker A: Man, I love it. I think this is like episode after episode. I want to have you on as much as I possibly can. Do you still have. Can we still talk about Misty? Can we still get into that strategy? Okay, so. Because this is great for like the retail investor and myself included. And I was talking to Darkside about this.
Investing in bitcoin is not going to make you rich because it's like a joke. The per. The bitcoiner people, this is what you think. They look like they're driving around in Maseratis and jets are flying around. But the reality is, is that if you have the hard asset, you're not selling it. It's not an income generator, which is the whole point of Misty. So if you, if you have adopted bitcoin and you accept that part of the asset, if you accept the asset now, how do you generate monthly income from that, knowing what you know?
[00:52:13] Speaker B: Yeah. So MSTY again, this is a, a fiat investment on US dollar rails, as is MicroStrategy. But MSTY is an ETF which buys either through buying the common or buying synthetically using the derivatives. They buy MSTR and they sell this enhanced volatility and they're able to generate income and they pay that back in the form of a dividend. They also pay back some return of capital. It's an extremely efficient product. It's been like clockwork, generating, I don't know, 8% a month, so almost 100% a year. Now there is some risk because remember, every covered call strategy is really a naked short put Strategy. So if MicroStrategy goes down right, you are going to lose in MSTI. Right. So you need the kind of core MicroStrategy thesis to do well. So there is exposure to MicroStrategy. Right. But if you're comfortable owning MicroStrategy and you're looking for income on a monthly basis, there is no better product for you than MSTY in the current marketplace.
[00:53:21] Speaker A: Yeah. No, I love this.
So let's say I just like, I'm just going to start throwing numbers out here. If I put $50,000 into Misty. What's the current monthly percent on Misty? Because I saw a number out there that I couldn't believe.
[00:53:37] Speaker B: Yeah, what'd you see?
[00:53:39] Speaker A: Percent.
[00:53:40] Speaker B: Yeah, I think that's a little high. But yeah, again it varies month to month. It depends on how MicroStrategy behaves, how the covered call writing strategy behaves. But I think you can, I think as far as the dividend return, I think you're safe to say 6 to 8%.
Now of course that can change.
[00:53:58] Speaker A: Is that per month?
[00:54:00] Speaker B: Yeah.
[00:54:00] Speaker A: So that's super. That's, I think a huge distinction because, because most things when they talk about percents, percent is per annum. So like if you look at a Treasury bill and it's 5% and you're like, well it's safe, it's 5%, but that's not 5% per month, that's 5% per year. Now if you're talking about an asset that's or a strategy that's generating even modestly 5% per month, that's huge. That's 60% per year.
[00:54:29] Speaker B: It's unbelievable, right? Like this is the MicroStrategy story. What Saylor's been able to create is nothing short of a fiat money mining system. It's not just MicroStrategy that's mining fiat like we talked about earlier. But now you have ETFs like MSTI that are coming along. There's also IMST that's doing a very similar strategy with I think a little more upside exposure and you'll see more of these come about because people want these products. Right. Wall Street's very good at creating products that people want. So as long as MicroStrategy continues to execute and doesn't do anything stupid and there's no reason to think they won't execute and Bitcoin continues to show dominance the way there's no reason to think it won't, then MSTY will be an amazing financial product.
[00:55:18] Speaker A: Right. And I love this. So like on our last call this was your tease because you said MSTI is great and it is great for the reasons we just mentioned.
What's your strategy?
[00:55:30] Speaker B: So I, I actually have been active basically doing my own variation on MSTY which is an actively managed Bitcoin complex income generating fund.
And you know, it's extremely interesting because MSTY is extremely formulaic, but I think it leaves well in comparison to what you can do with alternative investments. We're preparing to launch the Bitcoin Complex Fund fund, a hedge fund. What we're able to do is we're able to trade Bitcoin against Marathon, against MicroStrategy, against Semler Scientific, against IBIT using futures, using spot bitcoin to trade 24, 7, 365 and it just provides so much more opportunity from different correlations, different investment theses. You know, like one of my favorites right now is long MSTR and short marathon against it. Now that's not something you're going to find in any etf. Nisty's not going to provide that for you. But ultimately the miners have tremendous headwinds And I think MicroStrategy has tremendous tailwinds. So from an investment thesis perspective, long microstrategy, short marathon, that provides outsized returns and being able to trade around these positions because they're actually, you know, what I'm doing is actively managed. I would argue that msty imst they're more passively managed. They have sort of a charter, right, that this is what we're going to do. They do it every week, they do it every two weeks. They continue to manage their charter, their chartered strategy. But inside of a hedge fund we're able to be extremely flexible. And a perfect example is the tariffs, right? The tariffs are a negative for the miners because they have to buy equipment from China. They're a positive for bitcoin, right? So long ibit short miners has done really, really well, really well in this latest run up. So this is, this is the advantage of a hedge fund over any type of structured product that has a set charter and is passively managed. The hedge funds able to quickly react to, to market events and capitalize on broken correlations on risk arbitrage on all kinds of different market events. Whereas you know, Misty is simply I'm going to buy MicroStrategy, I'm going to sell call options and I'm going to produce a return.
[00:57:59] Speaker A: Right? Okay. So my, as always, my head is spinning for people listening. This is I think a good part to add in. This is not financial advice. No, we're, we're discussing different strategies that people use and one of the things like MSTR versus Misty, MSTR is highly volatile with increased volatility with increased risk typically comes high rewards. So, so in MicroStrategy's case, I forget what the exact percentages are. But like MicroStrategy was up, whatever, let's just, just do your own diligence. But let's just say it was up 100%. Misty relative to MicroStrategy was capped. It's capped to the upside because of the way the Strategy.
Oh, so it was only up relatively like 60% to their 89% or whatever the numbers are. It's going to cap you in terms of what you would get from MicroStrategy. But in that capping you are going to get a little bit more stability. So like I was looking at what, what Misty actually holds in the ETF and they actually hold majority is treasury bonds. They hold treasury notes and bonds. It's like they hold very safe assets to offset this high risk version of their portfolio.
[00:59:12] Speaker B: Okay, so let me.
[00:59:14] Speaker A: Yeah, please do, please do.
[00:59:17] Speaker B: So what happens is when you put a dollar into msty, they're going to buy a dollar worth of treasury bonds, then they're going to pledge those treasury bonds as collateral for their options trading strategy. That's why earlier I mentioned, well, they don't really buy MicroStrategy, they buy synthetic. Micro strategy.
[00:59:36] Speaker A: I was going to ask you about the synthetic part.
[00:59:39] Speaker B: Yeah.
[00:59:39] Speaker A: And so I'm glad that we got there because now I understand synthetic.
[00:59:43] Speaker B: Yeah. So a synthetic. As an example, if you bought a, let's see, MicroStrategy is trading what, 390 right now if you bought a May 390 call and sold the May 390 put. Right. That's synthetically buying a share of stock.
[01:00:00] Speaker A: Right, I understand.
[01:00:01] Speaker B: Okay. So they're just using what we call, you know, or synthetics to synthetically buy the stock and then they buy the treasury bond and that gives them the liquidity to meet redemptions and withdrawals. But ultimately the strategy is long mstr, whether that's, you know, in their case, they use synthetics. I think IMST uses synthetics as well. I think that just works easier for them from the perspective of dealing with withdrawals and redemptions and investments.
[01:00:37] Speaker A: So is it a fair way to say it's a derivative? You're not actually owning the stock itself, it's a proxy. It's mimicking as if you own the stock.
[01:00:46] Speaker B: Exactly.
[01:00:47] Speaker A: Yeah.
[01:00:47] Speaker B: It's a synthetic investment in the company.
[01:00:50] Speaker A: So the Bitcoin complex fund.
[01:00:54] Speaker B: Yeah.
[01:00:55] Speaker A: You said you're going to launch this?
[01:00:57] Speaker B: Yeah, we're looking to launch this in the next six weeks. Getting my documents together. Now, of course, the hedge funds are kind of limited to accredited investors. There's limitations on who can invest the minimum investment sizes. But yeah, we're going to be launching a bitcoin complex fund. And the goal there is to trade the components of the bitcoin complex. Miners, ETFs, bitcoin, treasury companies, spot, Bitcoin, you name it. Anybody who kind of tangentially has Bitcoin, Bitcoin as a focus of their business, then we're able to trade them and looking for different correlations, opportunities that present themselves through events in the marketplace. It's just a dynamic space right now and ultimately we feel comfortable owning Bitcoin. The underlying concept, the underlying thesis is that Bitcoin is the best, the purest form of collateral that's ever existed in the history of mankind. Kind right. That's, that's our core thesis. So now how do we take that and generate outsized returns with marginalized risk? Right. How do we, how do we make, try to produce, you know, 125% returns of what Bitcoin does with only 50% of the downside risk. And we do that through trading the bitcoin complex.
[01:02:15] Speaker A: Man, this, this is really fascinating. And you brought up accredited versus non accredited. So this isn't going to be a product that's just available to retailers, investors to jump into. This is going to be for like you, you said in the last episode, I love it because this is what, this is. I think what excites people in general about the stock market or a lot of any asset class really is big returns on big numbers.
So like when you're talking hedge fund and accredited investors, these are serious players. They're putting in real dollar like large amounts of money. And they're, and they're, and there's always risk associated. But the potential for. You take the risk for the potential of outsized returns. And to your point, if you have already adopted the concept of Bitcoin and you appreciate the value of that asset class, then there's going to be this whole slew of opportunities available for people, to lack of a better word, leverage that knowledge.
[01:03:15] Speaker B: Sure. And remember, institutions and large investors, they're not looking to self custody Bitcoin. It's very difficult for them to.
That's not in their kind of mindset. They're looking for investments on Fiat Rails US dollar investments that can gain exposure to Bitcoin. Thus money pouring into microstrategy, pouring into iBit. Now the Bitcoin complex fund provides them with an ability to get into an actively managed Bitcoin strategy that looks to reduce downside exposure. So if they're, if they're concerned about the downside exposure that Bitcoin provides, then we look to limit that downside exposure and even increase the upside potential. So that's what we're able to do in a hedge fund.
[01:03:58] Speaker A: That almost sounds counterintuitive to me because usually when you decrease your downside, the trade off is you cap the upside, but you're presenting it in such a way where you can decrease the downside. And you said increase, potentially increase the upside.
[01:04:14] Speaker B: Yeah.
[01:04:16] Speaker A: I'll be honest with you, that almost sounds too good to be true.
[01:04:19] Speaker B: Yeah, well, I mean, look, nothing's too good to be true, but we're able to take risks that I would call them intraday risks. Right. So you see, you see a trend developing, you're able to capitalize on that trend in the very short term and then get back to managed risk, you know, during the overnight hours or, or again, this is a 24 7, 365 product. So we're able to hedge like dynamically at all times. Right. So if there's news that comes out, we're acting on that news in real time that provides us with the ability to hedge the downside, exposure.
[01:04:55] Speaker A: Is this going to involve active. I mean, I imagine it has to. Like yourself, active traders.
[01:05:00] Speaker B: Oh, yeah. So I spent, Yeah, I spent, you know, my entire career on the floor of the exchange, yelling and screaming with my hands in the air there, wearing one of those funny color jackets. So. Yeah, no, we understand. My partners and I, we're, we're professional options traders. This is what we do. It's what we've done our entire careers. And we just, we know this game. This is, you know, the same way a baseball player, you know, a ground ball to short seems pretty easy to a baseball player. Right. Even if it's hit pretty hard. I would say the same thing for an options trader. There are certain things that, that's just come naturally to us because we've been doing it all our way.
[01:05:33] Speaker A: Love that. And it's funny to me too, because you're retired.
[01:05:37] Speaker B: Yeah, well, was. Yeah, I haven't, I've been retired for, been retired for almost six years now.
Look, I've had so many inquiries about doing something with Bitcoin and people want to get involved, but they don't want to do this and they don't want to do that and they're nervous about this. And I said, look, I got to get back into the game. And I've had really good friends that I worked with for many, many years, decades that I'm looking forward to launching this fund with and put the band back together and having some fun.
[01:06:07] Speaker A: No, I love that too, because I feel like it's a passion project. So. So you could be retired. I've heard Kevin O'Leary say this. He took three years off. He was traveling the world and, and, and he got some form of depression. Because when you're used to having a certain amount of. This is like a stimulating activity. Especially when you talk about being on the floor and like getting that energy pumped up. There's, there's something that, that you can't. It's, it's like you said, it's in your, it's in your DNA. Right. So it's like, how do you retire from that?
[01:06:38] Speaker B: Well, I had a really good time.
[01:06:40] Speaker A: Yeah, no, I know. I'm glad you. They're like, not like Bob Iger, where he got pulled back in because he had to. You know, he was happy being retired and now he's like sucked back in to try to make Disney.
[01:06:51] Speaker B: No, I'm, I'm coming back because I, I'm looking forward to it. I enjoy it. I enjoy the whole bitcoin store story, this concept. And this might come across the wrong way, but I'll say it anyway. I mean, everything that has to do with bitcoin is in a way a speculative attack on a broken, fiat based, debt laden Ponzi scheme. So being able to take in fiat dollars and convert that into outsized returns using bitcoin is in itself my part in helping to put the final nail in the coffin of the dollar.
[01:07:27] Speaker A: Yeah, this is. Oh, man, there's. I don't. There's such a calling for this because let me just put it this way. When I looked at your Twitter page on there, you have like, where you're from Galch. And that just brought me back like 20, 25 years ago. I read Atlas Shrugged. And it's funny, even if I, as I say the name Atlas Shrugged, I just feel a chill in my body because that was one of the books. After I read that book, I like couldn't even. There was something. I was like, dazed for weeks afterwards. I'm like, what? I just witnessed something. I don't even know what to do with it. And I would try. I would even. I remember sharing it with smart friends, smarter than me. And I was like, oh man, you got to read this book. You got to read this book. And they're like, they read it. Read some of it. And like, I wasn't that. I couldn't believe it. They're like, I wasn't that into it. And I'm like, like, are you nuts? This is like second to the Bible. And so when you're talking about wanting to contribute and wanting to make a difference and wanting to see an end to this insanity, I just Draw. I'm drawn back to that book. And I think this is just a, A, a reasonable person thinking through the current situation. And once you see it, you can't unsee it. And then what are you going to do about it?
[01:08:43] Speaker B: I'm so glad you brought up Iron Man's masterpiece, Atlas Shrugged and the Fountainhead, but Atlas Shrugged in particular, because it really goes after the money system, right? It goes after everything that's happening to us today. Usaid. Wow. Wouldn't that have fit in the book just perfectly? All of the corruption, the kleptocracy, the corruptocracy that we're living in today, it's all about broken money. And Atlas Shrugged is a story set in the 50s based on the Bolsheviks. Look, history repeats itself, right? Ayn Rand wasn't the greatest genius in the history of the world. She was just an observer of history and what she saw happen and what she understood of socialism and communism and the forces of corrupt politicians on money. That's what she put out there because she saw that starting to creep its way into America in the 1950s.
So we're now 75.
[01:09:38] Speaker A: I know.
[01:09:38] Speaker B: 25 years later, and her story is literally coming true before our very eyes.
[01:09:47] Speaker A: Ahead of her time. Ahead of her time.
[01:09:50] Speaker B: Yeah. So far ahead of her time. But the story, you know, is the story of the collapse of the American corruptocracy. And here we are, we're witnessing it right before our eyes. Trillions of dollars being stolen, or just yesterday, $5 trillion being spent that doesn't have a layer. Billions of dollars being sent to who knows where for who knows what, and that's our money. But if the average American doesn't care, what am I going to do about it? Well, that's the story that Ayn Rand put out there. This is how it ends. We're not at the beginning of the American story, the US dollar story. We're at the end of the US dollar story. The future going forward isn't gold and US Dollars and bonds. It's bitcoin. Bitcoin, like, that's the story going forward. Man, I wish Ayn Rand was here today to understand bitcoin.
[01:10:37] Speaker A: Could you imagine if she was on a spaces crazy? Yeah, that would be wild. That would be wild. All right, I'm gonna, I'm gonna wrap it because I always. We love, I love where we land, because we always land on something that just feels very inspiring, and I want our viewers to take that with them. And, and honest, if you haven't read Ayn Rand's book, Atlas Shrugged in particular and Fountainhead is also fantastic. And she wrote fountainhead in the 40s. She wrote it before she wrote Atlas Shrugged. But in when I read it in the 90s was I read Atlas Shrugged for I read him back. I read Atlas Shrugged first and after I read Atlas Shrugged I'm like, I want to read anything that this person has written. And then I went and read Fountainhead. So I think Atlas Shrugged is a thousand page book and it's tiny print. So I'm like not making a great picture. At the very least, least it's not doing it justice. But at the very least get some summary or get some understanding of what the concepts that were talked about in that book because it really is, it's almost biblical in the sense that if you want to understand the monetary system, that book is, is I think a fundamental. Like you. There's something about that book that, I mean people could argue it. Anything that's great is going to have some kind of controversy behind it and people are going to have their sides to it. But as two people have read it and, and I know it's been an impact on your life and it's honestly, it's been an my life. I'm hosting a podcast called the Money Adjustment. It's like that my 20 years ago ran got in my head and so like we're. I'm having these great conversations now with people like DarkSide 2030 underscore. Follow DarkSide 2030 on Twitter if you're interested in anything. I'm assuming the last interview I did with you was like a breakout one for me on the podcast. Like, people love you. I don't know if you had a chance to go to the comment section on YouTube but like people are just like, oh, dark side. I'm so happy to see him. I love this guy.
There's a lot of fondness for you out there and you're just getting. It's interesting. I love this too.
You're retired, but you're really just getting started. This should be an inspirational story for anybody out there. If you're alive, then you, you got it. There's. If you're alive, you can't sit in your cozy chair. You vacation, go travel the country, get the RV and take the wife and go break down in a town somewhere. Like go live for sure and then come back and just hit it hard. So Darkseid, before we go, would you like to leave our viewers with a takeaway?
[01:13:07] Speaker B: I would look before you jump in and read Atlas Shrugged which you must do. There's an interview with Mike Wallace of the old 60 Minutes fame. It's on YouTube. Just Google Mike Wallace. Ayn Rand. I'm sure Doc will put this up. We can put a link up. This is one of the most dynamic hours of television, and it's television, I believe, from the 50s or early 60s you're ever going to see. So I recommend everybody watch that video. And if after that video you say, I want more, hop right in and start with Atlas Shrugged and you can listen to it. It's not a small book, but it is an absolutely riveting read. Or listen. I encourage every one of your listeners who wants to know the history of how we got to where we are today. Man, get into Atlas Shrugged 100%.
[01:13:58] Speaker A: I love that you said that, because video is definitely going to be an easier way to do that. And I will. If I can't include a link, I'll slap something on here as a reminder so people can see it. And you heard it. And you heard Darkside2030 underscore. Say it. And I hope that you will come back and talk with me more, because I really. I really love talking to you.
[01:14:17] Speaker B: Absolutely, Doc, anytime.
[01:14:18] Speaker A: Awesome. Awesome. All right, everybody, thank you for listening to this episode, listening, watching to this episode of the Money Adjustment. And we'll see you on the next one. And you stay on because I definitely want to talk to you a little bit more.
[01:14:31] Speaker B: You got it, brother.
[01:14:32] Speaker D: As we said at the outset, if Ayn Rand's ideas were ever to take hold, they would revolutionize the world.
And to those who would reject her philosophy, Ms. Rand hurls this challenge. She has said, for the past 2,000 years, the world has been dominated by other philosophies. Look around you. Consider the results.
We thank Ayn Rand for adding her portrait to our gallery. One of the people other people are interested in. Mike Wallace. Goodbye.
[01:15:03] Speaker A: Thank you for watching this episode of the Money Adjustment. If you want more like comment and subscribe, you can follow me on X rccramer until the next episode. Stay healthy and wealthy.
