← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
Bitcoin vs. The U.S. Dollar: The Financial War That Will Change Everything | Anthony Pompliano PT 1
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- [00:01]
Tom Bilyeu
Support is available 247 with VRBoCare.
- [00:05]
Anthony Pompliano
We're here day or night, ready whenever you need help because a great trip
- [00:10]
Tom Bilyeu
starts with the right support.
- [00:15]
Grainger Advertiser
If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from H Vac and plumbing supplies to lighting and more and all. All delivered with plenty of time left on the clock so your team always gets the win. Call 1-800-GRAINGER visit grainger.com or just stop by Grainger for the ones who get it done.
- [00:45]
Tom Bilyeu
I'm Tom Bilyeu and this is Impact Theory I've been asking myself a question a lot lately. Have the markets completely disconnected from reality? It used to be that investing was about finding strong companies, understanding their value, and making smart, calculated moves for the long run. But today we've got meme coins, soaring AI driven trading, and billion dollar valuations on companies with no fundamentals. This isn't just market volatility, this is a total rewrite of how wealth is created. And that's why I wanted to bring back today's guest. He has his finger on the pulse of these massive shifts and I need him to help me make sense of what's really going on. Is Bitcoin still the best hedge against economic chaos? Will AI traders outmaneuver us all? And when we see a US President launching a meme coin, what does that say about where we're headed? If you're still thinking about money and investing the way that you did five years ago, it is time for an update. This conversation is about making sure you're not the one left holding the bag. So without further ado, here's my sit down with the one and only Anthony Pompliano. If you would give me a 2025 investing primer, I want to know, for the person who just wants like a set and forget investing strategy, where should they be putting their money right now?
- [02:03]
Anthony Pompliano
Well, each person is different, right? Some people have different risk profiles, other people have different knowledge sets. But I think that a lot of the timeless investing principles are really important. So you should basically create a system that you can automate and it pays to pay yourself first. So what most people do is they get paid, they take the money, they spend it in all their expenses, and they hope there's a little bit of money left over. But a great way to ensure that you're able to invest is to actually take out of your paycheck your investment money first and then spend what is left over. So that's kind of the first thing is you got to get money to be able to invest. Then what do you do with that investment money? And really I think for the average person what you want to be able to do is you want a dollar cost average. Every time you get a paycheck, you want to take some portion of it, you want to put it into the S&P 500, NASDAQ. And then I like bitcoin as well. And the reason why those three assets is because they likely have very long term resilience, they have a return profile that is pretty good. And also they're very simple to understand. You kind of know what you're buying. I think where people tend to get in trouble is if you are a amateur but you are trying to make professional moves. And so I say, just like the person who goes and plays pickup basketball on the Saturday wouldn't try to go play in the NBA. I don't think that the person who says, hey, I'm going to spend 30 minutes a month on the investing world should try to go and pick individual stocks or use leverage or short things or anything like that. And so understand kind of what your knowledge set is, understand what your kind of competitive advantage would be. And for the average person, it's actually discipline. Just simply continue to dollar cost average into very simple kind of plan and then let time and the market do its thing. And usually turns out pretty well for those people.
- [03:42]
Tom Bilyeu
All right, when I look at the market now, it feels like something is changing. It could be that I just only have one lifetime, I've only been paying attention for so long, but it feels like things are really collapsing down to very few assets. So when I look at the S&P 500, me is synonymous with the S&P 7, aka the Magnificent Seven that that's driving the bulk of the returns. That if you really just look, and I think I've heard you say this before, if you were even just to focus on AI and Bitcoin, you would have mopped up most of the recent gains. Is it atypical for things to collapse down to so few assets or is this really just a different moment?
- [04:22]
Anthony Pompliano
Yeah, what's really interesting is if you take the US economy in general, it has gone through a shift over the last 50 years or so. It used to be that the economy was dominated by industrial businesses, manufacturing businesses. You know, you can think of these companies as businesses that created physical things for the physical world. And so whether it was car manufacturers or construction or, you know, home builders, etc. But we've transitioned very much to a world where now you have what is considered these kind of capital light businesses. They're pretty much software oriented, they're able to create a product they don't need, a manufacturing facility, they don't need nearly as many employees per revenue as they used to need. And those businesses are really capturing a ton of the revenue. And so a very simple example would be, look at the media industry. It used to be all about newspapers and magazines. You had to make that stuff and you had to get that logistically out to people and you paid, you know, subscribers and all this stuff. Now you can simply just use the Internet and you can create it. You don't need that plant to print the newspaper or print the magazine. You don't need the logistics. You simply are able to just put it out there in software. And so naturally, as that transition has occurred, the businesses that are better, right, they're more capital efficient, they're able to drive more revenue per employee or more profit per employee, they continue to grow while the businesses that are left in the traditional economy have more of a headwind. And so that shift from industrial manufacturing, kind of physical world businesses to these kind of software oriented businesses really is the story of the last 50 years. And you can see that in the concentration you're talking about, right? The top seven companies in kind of the S&P 500, the Magnificent Seven, they're all software based businesses that really are pretty special by a number of different measurements. But also look at the richest people in the world, right? Really, other than Bernard Arnault, who sells kind of a luxury physical item, everyone else is based in the technology world. And so that shift, I think, is really driving changes in our everyday lives. And so naturally, that shift in our everyday lives is showing up in investment returns. And you're seeing those tech stocks are doing much, much better than maybe the rest of the S&P 500. And so that, I think is going to be the story for the next 10 or 15 years is a continuation of this software story. Marc Andreessen famously wrote this piece about a decade ago or so, and he said software is eating the world. And we now are seeing very real examples of this, right? You know, obviously Amazon used software to eat the bookstores. You can see Facebook was able to use software to eat into the yellow Pages. And you kind of go through all these examples. But software is also eating gold with Bitcoin. You know, the kind of this software based money is really kind of much better and more popular right now than gold. You can also then take that even a step further, obviously with the media companies. But I think AI is really interesting. Like AI is starting to actually eat into the number of employees a company actually hires or employs. And so software is coming for all of these different use cases. And it's going to make the world more efficient. It's going to empower some really exciting cool things around robotics and self driving cars and AI agents and kind of, you know, the quote unquote, the future. But also as investors, you have to understand, am I betting on things that I hope don't change that would kind of be more of like a Warren Buffett style of investing? Or am I actually betting on things that I hope do change and that would be more kind of a venture capitalist or tech stock investor? Once you understand who you are and what you're trying to do, then that really allows you to figure out where you're going to go put the money.
- [07:55]
Tom Bilyeu
If we're looking back though, over say the last 20 years, are you going to capture value by betting on things staying the same or would you have missed basically all of the recent gains if you don't go for the software revolution?
- [08:09]
Anthony Pompliano
Yeah. What's really fascinating about this is I always like to remind people there's multiple ways up a mountain, right? So there are plenty of people. Take a Warren Buffett who have been super successful betting on the world not changing. You know, he's owned Coca Cola and American Express and a number of these companies that are really good brands have good business models kind of integrated into American life. And those businesses have continued to compound for a long time. Now with that said, obviously companies like Nvidia or Tesla or you know, Microsoft and Amazon and Facebook and Google, they have had, you know, a pretty spectacular return over that same time period. They've outperformed in many cases. Now when you look at a portfolio, I think a lot of young people say to themselves, hey, I, I use the technology products. I'm digitally native. This is what I understand. Kind of my competitive advantage is I can actually tell you, are my friends all using Instagram or are they not right? What is going on? Am I actually shopping on Amazon? Am I using some of these technologies? And so I think that the younger you are, the more you're going to gravitate towards those technology companies. And I think the older you are, the more likely it is that you came up in a time where you really understood some of Those more physical world economies. And so it's just two different kind of demographics, really just investing in, frankly, what they know, know. And so for young people, most who are probably watching this, they're going to be much more attracted to the technology companies. And those have done very well over the last decade.
- [09:33]
Tom Bilyeu
So my question becomes though, is, is the Warren Buffett play still a valid play? Or, and, and let me define how I read that. So Warren Buffett, to me, value investing, you look at a company that you think has the fundamentals right, and because they have the fundamentals right, they are going to continue to go up in value over a long period of time. Now, admittedly I am not a Warren Buff Buffett studier, so I don't have a complete breakdown of how successful he's been over the last, let's call it seven years. But my gut instinct is that, and I think he's even said, like, you're not going to see another thing like what Berkshire Hathaway did moving forward. Our gains all came from getting into value investing a long time ago and holding for a very long period of time. And so when I think about, okay, I've got somebody out there who wants to set and forget. They don't want to be in the mix every day trying to bet on individual stocks. But it seems like the thing that they should be doing if they want to get more aggressive returns without taking undue risk would be to focus on the thesis of software is going to eat the world, that everything is transitioning from the old world of what we're betting on is that value creation maintains over time based on fundamentals in the business to technology is the thing that has the cultural energy. And therefore, as more and more young people begin to invest in a system that they understand, not necessarily a system with fundamentals, but a system that they understand that they interact with every day, that that's where the gains are going to come from. And I'm just curious if, you know, do the numbers bear that out or am I delusional and Warren Buffett is still just killing it year after year?
- [11:18]
Anthony Pompliano
Yeah, maybe. The way that I would describe the difference is Warren Buffett really is trying to do something that most people would consider value investing. And really all value investing is, although it is associated with a lot of the industrial manufacturing businesses, he's basically trying to buy things less than they're worth. So he looks at a company and he's got a bunch of different calculations he'll do. And he'll say, I think that this company is worth, you know, a billion dollars. But right now in the stock market, the market cap is only $700 million. And so if I go ahead and I buy this business at a 700 million dollar valuation, then I am pretty much guaranteed to make money because it's actually worth a billion. And so as long as I can wait and don't have to sell this stock, at some point the company will trade back to at least what it's worth, if not more money. And so anytime you're buying things for less than they're worth, if you actually do the evaluation correctly, you should make money. Right? And so I think that the value investing style will always kind of be in favor as long as you implement it correctly. Now, to your point, and a point that frankly I agree with and think is probably the focus for most young people, is if you're not a superstar investor in terms of your ability to underwrite companies and do cash flow evaluations and understand, you know, kind of cash on cash returns and things like that, your better bet is to try to say to yourself, okay, well, where do I think the technology world is going and how do I go and get exposure to that? And so, you know, my view of the future is one that people would probably put on the spectrum of very excited about what technology will do to our lives. You know, I fully believe that we are going to have self driving cars and there may be even a world where humans are banned from actually driving vehicles. I think that we will all have humanoid robots that we interact with on a day to day basis. You can see this obviously in places like, you know, warehouses, houses and things like that. But it's not a farce, you know, kind of thought process to think that we're going to have these humanoids in our homes right now. I always say that there are, you know, cleaning devices that people put into their homes and it will go around and it'll kind of clean the floor. Well, what happens when all of a sudden you can have a humanoid that'll do the dishes or do kind of household chores and stuff like that? People probably be pretty interested in that. If you go and you look at things like DNA sequencing and crispr technology and the ability to either biohack yourself to more longevity or more kind of healthy years, also maybe to avoid certain diseases with babies and things like that, that seems like a huge, you know, area of opportunity. Then you go to places like Bitcoin and obviously there is hundreds of millions of people around the world who have chosen to take some portion of their wealth and store that economic value in a decentralized asset that is software based, that can't be taken from them and can't be debased by somebody else. And then you go and you look at things like drones and it's obviously changing kind of the entire battlefield and how these things are being used. And it's removing humans and it's now becoming much more of a technology batt in these wars. And then you can kind of go even a step further and say to yourself, okay, well if all those technologies are happening here on Earth, what happens when you introduce rockets and the ability to inexpensively go up off of the Earth's surface and get into space? Whether that is to go to Mars or to explore more about the moon, or I'm an investor in a company called Varda that is literally putting manufacturing units in space. So they bring pharmaceutical drugs up, they manufacture them in zero gravity and then they bring them back to earth. And so you think about this stuff and you say, you know, the future is very, very bright because technology is now got the capital flowing to it to be able to build these things. And really we are only limited by our creativity. What ideas can we think of that we can now kind of use software to actually go and implement? And so if that is the trend, then really what it is challenging investors to say is hey, do you want to be more of a professional and go pick individual stocks? You can do that. There's more access to information than ever. You have direct access to the market through things like robinhood, public webull, etc. Or you can go and you can simply index, you can buy the NASDAQ 100 or you know, any of these kind of tech oriented indexes and say, hey, look, I actually just want exposure to technology in general. Regardless of the way you choose to actually get kind of exposed. I do think that technology has performed very well and will continue to perform very well as long as you don't have to time markets and say, I'm buying today, I'm going to try to sell tomorrow. If you can say, hey, I'm going to buy technology today and I'm going to hold it for a decade. Very hard to see how technology does not continue on the trend that it's on.
- [15:35]
Tom Bilyeu
Okay, let me give you my burgeoning thesis. This is a burgeoning thesis. So hopefully the audience will give me space to, to start formulating these thoughts versus being able to give it as crisp as I would like. But I believe, I think it was Elon, that said, over the next 10 years we're going to have a hundred years of innovation. That quote alone drives my thinking on what's about to happen. And it's a twofold thing. One, I believe that all of the stock market is gambling, full stop, period, end of story. You have gambling with COVID story and you have just pure gambling. So gambling with COVID story would be value investing. I, I, unless you're buying only dividend producing stocks that actually pay you for holding them, you are simply saying I'm going to buy this because I believe somebody else will buy it for more money down the road. And that's exactly how you make your money. But make no mistake, this is just gambling. Okay? If you're gambling, the thing that you want to bet on is cultural energy. Now I like you don't think unless you're going to be in this full time and even then you're probably going
- [16:38]
Anthony Pompliano
to lose your money.
- [16:38]
Tom Bilyeu
I don't think you want to think short term. I don't think you want to be a day trader. I think you want to look at movements that happen over years, ideally half a decade or a full decade at a time. But the next decade to me feels like it is going to be driven almost exclusively by technological changes and rapid advancement. So I'm going to be focusing in sectors that have a lot to do with AI or like Bitcoin. To me, my whole thesis there is, it is a migration from not just fiat but analog money to digital money. And so every day that I hold Bitcoin, whether price goes up or the price goes down, I'm just asking myself, is tomorrow going to be more or less digital than today? If tomorrow's going to be more digital, meaning every kid that becomes aware of money and starts dealing with that is going to prefer a software based money over an analog money, then cool. I want to be where the software based money is going to be. And I think that that trend is going to continue as far as the eye can see. With the rapid rate of change we're about to live through, I think this moment is wildly unprecedented. I think the rate of change is going to be unlike anything we've ever seen. I think it is going to be more dramatic than the printing press. I just think it's really, really going to be something quite manic. So if this is a, if this is all betting gambling and the most obvious gamble to me is that everything is going to be more digital tomorrow than it is today, then for a set and forget strategy, while I agree do it at the index level. You want to be focused on technology. I treat Bitcoin as my the place where I store my wealth. That feels like the right play and that what has been happening historically with something like a Berkshire Hathaway is it just isn't going to work on mass is my gut instinct. And it's going to be harder and harder to get value out of that. What I'll call the the boomer strategy. And a more likely bet is to bet on the continued migration from analog to digital. Does that make sense to you? Quick break, but stick with me because the real question isn't just what's happening in the markets, but who's actually winning? And that's next.
- [19:02]
Anthony Pompliano
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- [19:32]
Grainger Advertiser
If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from H Vac and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win. Call 1-800-GRAINGER visit grainger.com or just stop by Grainger for the ones who get it done.
- [20:03]
Tom Bilyeu
Thanks for staying tuned. Now let's get back to it. A more likely bet is to bet on the continued migration from analog to digital. Does that make sense to you?
- [20:16]
Anthony Pompliano
I do think it makes a lot of sense. If you think about bitcoin, right. The way I treat bitcoin is it is an asset that I buy and I'm going to give it to my grandkids. Now. The reason why that's really important is that's not a new phenomenon with just bitcoin. If you think of let's take the country of India and their culture, gold is passed down from generation to generation to generation. It could be jewelry or kind of the family gold, right? If you think in the United States land a lot of times is passed down from generation to generation to generation. And the ability to pass these assets on from generation to generation really drives quite a bit of wealth, right? Whether it's real estate, land, gold, or any other asset. Bitcoin has a lot of the same properties of these assets. So if you think about land, it's a finite asset. They're not making more of it. It same thing with bitcoin, right? It's a finite asset. It's only 21 million that will ever be available. If you think of gold, it has sound money principles, is outside of the system and no one can devalue it. Same thing with bitcoin, right? It's outside of the system and no one can devalue it. And so I like to think of there's a very small amount of assets that you can buy today. You can hold your entire life. You can pass it on to your kids or grandkids, and that is going to set up your family and kind of those that come after you to be in a really good position. So that's bitcoin for me. It stores economic value really well over a long period of time. So I want to make sure I have that for some portion of my portfolio. It comes to technology, I am not like a Warren Buffett. I don't want to try to bet on the world not changing. That's not how my mind think. It's not what I'm intellectually stimulated by. I am much more interested in how things are going to change and where that change is going to occur and who is driving that change. And so these new technologies in my mind are absolutely fascinating. And what I notice in the market is that now not only are entrepreneurs having capital available to them, there's tons of people who want to give people money to go and kind of change the world. But also the technology that is available to these entrepreneurs to do this makes them 10, 20, 50, 100 times more effective. And so if you think back to businesses, it used to take forever for them to get to a million dollars of revenue or $10 million of revenue. We are now seeing businesses launch and get to a million dollars of revenue in the first couple of months, right? In some cases, we have seen businesses that literally are getting to $100 million of revenue in two or three years. And so anytime that you can use technology to be a more effective company, to grow faster, to be more efficient, obviously value is going to accrue there. And the way that I think about kind of this brand new future is two things remain true. Who is the person who's actually building the company, Whether they're in the public market, the private market, whatever. You're betting on a person right the same way that somebody would come and bet on somebody building a manufacturing business or a food business or anything, you're betting on a person. You need to make sure you get that right. And then the second thing is you need to bet on these long trends. And the beauty right now is that technology has the tailwind because ultimately there's an economic incentive. And I think that that's really something that gets lost on this, right? If you think about somebody who wants to go start like a local restaurant and they go and they talk to investors and you say, well, how much money could I make here? There's usually a cap, right? Hey, we have 50 seats, we can turn over the seats three times a night. We're open six days a week. And you do the math and you're like, okay, the most amount of money that this business can make is X dollars. And it doesn't matter how long they're in business, it's just capped. That's what this business can do. But these technology companies, they kind of have exponential growth. So if they start today, they say, hey look, we're making X or Y product or service and we're going to sell that. And when we get started, we think we can sell it to a certain number of people, but over the next 10 years, we think that that number can literally go up 10 or 100x. And so there's no cap to the upside of these companies. And a great place to watch this is a company like Palantir. I mean Palantir hit $100 billion market cap. They literally started off basically as a service. They went to companies or organizations, they said, hey, we have this, you know, really unique technology capability. Why don't you pay us some money and we'll kind of custom solution for you. And then over time they began to build that into a technology product. Now that technology product is used by people all around the world and they built a hundred billion dollar company. It's insane. And so that's where ultimately I see from an investor standpoint is I want to be in businesses that have unlimited upside potential. And if the entrepreneur is good and continues to do what they're supposed to do, then I can put a dollar in today and get back way more in the future. And I'm not capped by physical space or the number of times I can turn over a table or something like that. And so I do think this technology trend is just really, really big. But it's showing up everywhere, right? And I think that for the people who are watching this, regardless of what industry you're in, technology is probably infiltrating it. And if you think it's not, then you're not looking hard enough. Because right now, if you take AI, maybe as the easiest example, AI is coming after blue collar jobs and it's going to come after white collar jobs. You know, the AI and machine learning and self driving cars. Is it going to take away Uber and taxi drivers at some point? Yes. When? I don't know. But it's also going to take away truck drivers and it's going to take away a lot of people who are employed as drivers. But then if you go and you take a look at, well, I know a lot of companies. I was having breakfast with a founder today and he said that he thinks that he can take his company, which currently has 85 employees, and he think he can actually use AI to shrink the number of employees from 85 to 50. But during that timeframe, he's going to 5x his revenue, which means that he can take his AI and he can actually replace some of the software engineers, he can replace some of the marketers, he can replace some of the designers, and the software is going to start to do this stuff. And so if that is the path that we're on, is things like AI are going to infiltrate every industry. It doesn't matter if you're an accounting, if you're an engineer, if you're a designer, if you're an ops, if you're in sales, whatever. The way that you insulate yourself from this is you become the most knowledgeable person at your company on these new tools because they will be the last person that they can fire is you. And so one quote, unquote, investment you can make, yeah, you can make financial investments, but I also think you can make a kind of career or personal investment by becoming an expert in using these things because it will help you continue to be employed, it will help you to continue to drive income, whether you're an entrepreneur or an employee. And that will give you the funds to then go invest in the market. And so this idea that, hey, we're just investing is partially true. I think it's really important that people understand these tools are coming for people's jobs. And the people who will survive are the people who know how to control them, who know how to use them to be better at their jobs. And so don't ignore it, actually embrace it. Go become the expert and you'll become more valuable to your company.
- [26:58]
Tom Bilyeu
Ooh, buddy, do I agree with that. So I think that 2025 is going to be the year of just massive anxiety around AI. You've got Salesforce making their announcement, we're no longer hiring any more engineers. There are going to be a gazillion conversations like the one that you had this morning where people are looking at their headcount saying, how do I shrink this? So not even staying static, but, but how do I actively reduce this? I think what that leads to is not in 25, but as we go down the road and that proliferation of AI become ubiquitous, that we're going to have to print more money to create a bigger social safety net which is going to push people. And this goes back to my thesis that all of investing is gambling. It's going to force more people to become people want me to say educated investors, I'm going to say degenerate gamblers. It's going to force people to be degenerate gamblers, to outpace the inflation of printing all of that money to take care of the people that are getting their jobs just absolutely obliterated by AI. And so now all of a sudden it's driving more people into this, okay, where are the big returns going to be? I think that those are going to be in technology. So you get this really weird loop of the more that technology begins eating the world, the more people need that social safety net, the more that we are printing money which requires more people to invest. What are they investing in? They're investing in the very technology that's eating them which causes it to eat the world even faster. And so it is this crazy self reinforcing loop. And that's where I start to get very uneasy about what's going to happen to people psychologically during this spiral. But being aware that that's where the opportunity lies, certainly for people that are paying attention, you can begin to position yourself again. I'm an index guy. Do not think that you can pick the right company, but if you can pick the right sector and hold for long enough to your point about look for those long term trends that I think people can really set themselves up to win. Now one thing I want to talk about, that to me is tied to that. When I look at microstrategies and what they're doing is I say, okay, people, people that invest actively, you are going to be able to predict their behavior far better if you think of them as a degenerate gambler than if you think of them as some sophisticated Investor. And what MicroStrategy has done a brilliant job because he has A company that adds value, it's just not growing. And so from the stock market's perspective, that's a bad company. Not interested. It's not going to grow, not going to invest. And so what he did was say, okay, I know the people want to gamble. They don't care if my company is solid, solvent, well run. All they care about is whether they're going to be able to gamble on this. So let me start doing a bitcoin treasury strategy and then overlay basically the entire stock market. All of the shorts, the options trading, all of that on top of cryptocurrency, which already attracts the most extreme gamblers. And so what you're seeing with microstrategy is gambling mainlined. Do you see something else when you look at the just unbelievable success of microstrategies?
- [30:13]
Anthony Pompliano
Yeah. So I think if you put yourself in Michael Saylor's seat, why does he buy bitcoin to begin with? Right. Do I think that there's an element of, hey, if I buy bitcoin, then the bitcoiners will notice me and they'll start to buy my stock? Definitely. But I think probably the bigger story was I'm sitting on $500 million of dollars of cash. And if I keep holding this cash and it's being devalued, you know, since 2020, the US dollars lost more than 25% of its purchasing power. That would be very detrimental to somebody who's sitting on $500 million of cash. And so I need to convert it to something else, whether that's real estate, land, gold, bitcoin, whatever. And so I think that was kind of a huge piece of this is, hey, I'm now convicted that inflation is going to be a problem. The currency is losing value. I need to convert it to something else. He buys bitcoin. And I think that it's kind of this thing where, you know, you ever, like, go to the pool, you're like, I wonder if it's cold or not. So you dip your toe in. Oh, it's not that bad. Then you put your ankle in, right? Then you put your knee, and then eventually you go all the way in the water. That's kind of what happened here, right? Is he, like dipped his toe and he bought, you know, $400 million or so of bitcoin. He waited. He's like, that worked. Let me buy some more, let me buy some more. And then eventually he was just like, I'm dumping deep end. I don't need to check the water. I'm Buying as much bitcoin as I can. And so naturally, as you go through that progression, it definitely begins to attract people who are much more kind of speculating on the stock. And really, the genius of his strategy is he's not just attracting speculators from kind of the equity market. He's also attracting speculators from the debt market as well. And the debt market is massive in the United States. And so he's giving the ability for people who have a mandate to buy bonds, say, hey, come and buy these convertible bonds at MicroStrategy. I'm going to give you underlying exposure to bitcoin. So now he just unlocked a whole new pool of capital that wants exposure to bitcoin. And so that has played out very well for them. And you see all these copycats around the world that are all kind of popping up saying, hey, that works so well. Maybe I'll do the same thing. How do I start to raise capital and go and do it? But maybe the bigger story here to me is in the public markets, companies previously had two levers they could pull to improve their business business. They could drive more revenue, so there's a revenue lever. And then they could also cut expenses, so they could pull the expense lever. Micro strategy kind of open people's eyes to know there's a third lever, which is your balance sheet. So you have revenue, you have expenses. But what he's doing is he's buying bitcoin. And by putting things on your balance sheet that go up in value, that is a third lever you can pull. And real estate investors kind of sort of knew this before, right? Because they would have their ability to borrow against their balance sheet and things like that. But this is a whole new way of thinking about it. And so I am predicting that there are going to be a ton of public companies that are going to say, wait a second, we don't pull the revenue or the expense lever. We pull that third lever, the balance sheet lever. And where some people are going to do with bitcoin, we already see companies like Soul Strategies, which I'm involved with in Canada. They're doing it with Solana, but there's going to be companies that do with all kinds of assets. They're going to say, look, let's put this on the balance sheet and let's wait for some capital appreciation to happen. Happen. And let's continue to play this game where we can now pull the lever of the balance sheet in that world, the ability to evaluate companies, the ability to be a capital allocator is going to be really, really important. And so I always say that, you know, to be successful in the world going forward, you need to be able to operate companies, you need to be able to allocate capital, and then you need to be able to create content. If you can do those three things, you're kind of a triple threat threat. And if you look at what is Michael Sailor or a Jeff Bezos or a Mark Zuckerberg, right? Mark Zuckerberg operates a business, he allocates capital and he's creating content. It may not be the content that you think of, you know, in terms of Mark Zuckerberg is a content creator, but he's able to do this. If you think of Warren Buffett, Warren Buffett operates a business, he allocates capital and he creates incredible content, writes his annual letter, he's got an amazing conference, all this stuff. And so I think the challenge for people moving forward in kind of a digitally connected world with all these technologies accelerating everything, is can you be the triple threat? Can you do those three things to position yourself to be able to capitalize, to be able to actually build the businesses, attract the capital, and then go and get customers in a cost effective way. And I think the people who can do that will benefit significantly from these tech trends. And if you are one of those beneficiaries, you'll have a lot of capital that you can turn back around. And that kind of spiral that you talked about, you're going to invest it back into the tech companies, which is going to only further your kind of economic status. If you continue to do that over and over again, again, you will be one of the big winners over the next 10 or 15 years.
- [34:39]
Tom Bilyeu
Real quick, if you think investing is wild now, just wait until AI takes over. What happens when machines run the game? We'll get into it after the break. All right, let's dive right back in. That all makes a lot of sense to me. I am trying to develop a predictive engine so that when I look at the world, I can say, when this thing happens, it's going to lead to this thing. And when I look at investors as quote, unquote, investors, meaning, oh, there's something of value here, I'm going to put money into this. It does not lead to accurate predictions. When I look at people's desire, not only desire, that the current printing of money forces people to dodge the devaluation of their money by gambling in the financial system to outpace the rate of inflation. And I look at everybody as these gamblers that are trying to beat inflation, they're being forced into this, then my predictability seems to skyrocket. And so I would love for you to point out if there's anything in the following statement that you think is crazy. When I look at microstrategies, I see one brilliant move that towers so far above everything else, but it only makes sense when you look at people as gamblers, is that Saylor was like, oh, wait a second, I'm not going to dip my toe in the water. I don't need to. I'm going to run a mathematical equation about what people would be willing to bet on. And I'm taking the highest volatility, longest performing asset, and I'm going to put over the top of it all of the. The gambling mechanisms of the stock market. And this is why I think the average person, which I will very much consider myself a. They don't understand. The stock market has almost nothing to do with whether the company is valuable. People do not give a fuck, Anthony. All they care about is the really fancy guys. They want to know, can I beat other people at guessing whether this goes up or down? Which is why in the stock market, you can make a ton, billions of dollars betting against something saying, this is a trash company and it's going to go down. And Saylor's like, hey, I don't care whether you think it's going to go up or down. I'm going to let you pick the amount of volatility that you want. It is so brilliant. I'm literally. It melts my brain to think about what he's done to go, ooh, you like this high volatility thing? Oh, word. Let me give you all of these different ways that you can bet for it, against it. Short term, long term, high risk, low risk. It's unbelievable. But it only makes sense when you look at it as the entire. I don't want to limit it to the stock market. People may get the wrong idea. The financial system, for the most part, is just a big casino. And once you understand that, oh, I'm being forced to play at the casino to beat inflation. And Saylor has built the greatest casino ever. And this is why this guy is. It is he can borrow money hand over fist. It's unbelievable. But it, for me, it didn't click into place until I was like, oh, wait, this is just gambling. Once I was like, oh, he built a casino. Now I get all made sense. Tell me why that's crazy.
- [38:04]
Anthony Pompliano
Well, I think a good kind of framework for people to think about is if you want to drive a financial return, you have to take risk. Right? And a, you know, kind of old adage in the financial world is the risk you take is the return that you make. So whatever risk you're taking, if you take a small risk, you can only expect a small profit. If you take a huge risk, then you can expect a potentially huge profit. Right? But the risk and the return is very much married together. And so obviously the best investors in the world are looking for how do I take almost no risk and make a massive return? It's just that that doesn't exist very often. Often. Right. So usually it is small risk. Big or small risk? Small return. Big risk, big return. And what I think Michael Sailor figured out is this bitcoin thing is highly volatile, you know, 80, 90, 100 Vol asset and it goes up and down, up and down, up and down. But over a long run it goes up. And so if I put this highly volatile thing into the public market, there's a ton of people who are going to have an opinion to your point and some of them are going to think that it's going to go up a lot and some of them are thinking it's going to go down a lot and they're going to bet in either direction. But again, it goes back to people who are investing in that asset. They are betting knowing they're taking a big risk and so they're expecting a big return and that's what they've gotten. If you have bet and said that MicroStrategy was going to go short, for the most part you've lost money and you probably lost money big because it has gone the exact opposite way. But if you've bet on MicroStrategy and it's gone up a lot, you've probably made a of money, lot, lot of money. And so when I think about that type of company is you can expect it to have the same volatility as the underlying asset. There have been times where micro strategy has gone up, you know, hundreds of percent. There's been times where it's been cut in half and lost 50% of its value. But it goes back to that idea of what is your time frame, right? There was this great study done, I think by Fidelity where they looked at all of the best performing accounts and they tried to find commonality between them. And so what are the best people from a return perspective did do. And two of the insights they got were the best performing accounts were from people who lost their passwords or People who had died because people just didn't look at the account for 5, 10, 15, 20 years. And so naturally, the same thing here is if you buy some of these stocks, whether it's an index or the individual stocks, and they're good companies and you don't look day to day, you just come back in two years, it's probably going to be doing better than it was when you bought it. But the problem that people have is if there's a daily ticker price, it went up today, it went down today, went up today, went down today. They're like, entire mood is affected. You know, I have some friends who are public market investors. They literally are in a bad mood when the market's down. They're in a good mood when the market's up, right? I'm like, dude, the stock market is determining whether you're having a good or bad day. Like, stop looking. And I think that is the challenge for young people is how, as you're learning, as you're investing, how do you figure out how to deploy capital but also remain emotionally disciplined so that when the market goes up or down, you don't actually get, you know, upset or excited. Because if you go back to the Warren Buffett, Buffett actually gets excited when the price goes down. He's already convinced himself I'm going to buy, you know, whatever stock. If it goes down, I'm excited because I get to buy more of it at a cheaper price. So the joke about bitcoiners is the people who really understand bitcoin, they get excited when it goes down because they can buy more at a cheaper price price.
- [41:23]
Tom Bilyeu
Right.
- [41:24]
Anthony Pompliano
Same thing with some of these, these businesses. But you got to make sure it's an asset that's going to be around in 10 years. Right. That's got, got kind of longevity, got resilience to it, etc, and so I think your point about kind of this high volatility, you know, really elicits people who want to speculate is 100 true? And Wall street is better than anyone at creating, you know, kind of speculation tools or, you know, casino games, as you said. Sure. They've got, you know, kind of better ways to describe it. They've got all these models and all this stuff. Stuff. But at the end of the day, they're risking dollars for a potential return. If they're right, the market rewards them. If they're wrong, they're. They lose. The key thing is there's probably better odds in, you know, the stock market than there is at a casino. Table. Right. And I think that that's where a lot of people get attracted to. Hey, let me go over here. And one of my favorite stories, I don't know if you know the story of Susquehanna Investment Group. Susquehanna was a couple guys in college, they actually started betting on horses and they were trying to use all this math to figure out which horses were most likely to win the races and do all this stuff. And somebody came to them and said, hey, you guys are pretty good at this like horse betting thing. But like, did you know that you don't have to wait for the horse races to bet every day? Like there's a stock market, it trades every day, right? You can go over here and there's all these horses called stocks. You could pick different ones and run your math models and whatever. And they ended up becoming one of the great investment firms. But it literally was people saying, hey, why don't we take something that works in, you know, kind of the, the risk taking and gambling world world and let's bring it to kind of a more orderly market that we have more access to, there's more opportunities, and let's go and implement it there. And so I do think that there's a lot of these stories where people have crossed over from, you know, kind of pure risk taking with very, you know, unattractive odds to a market like the stock market where they say, hey, there's much more attractive odds here. Let me go and, you know, kind of invest here.
- [43:12]
Tom Bilyeu
Okay, so to me, that is the perfect illustration of my point that the guys who are betting on horses end up doing great in the stock market because it is the same skill set. My question becomes, why do you think the government and society at large is cool with people betting on the stock market, but not cool with betting on sports?
- [43:35]
Anthony Pompliano
So I think that's changing. But what I would say is, you know, there's this really interesting dynamic where people will say, what do you want to do? Why do you want to do do it? And the why do you want to do it? Is actually a really important component to whether they like what you're doing or not. Maybe it shouldn't be that way, but that's how it is. I'll give you a couple of examples. Why do you want to invest in companies? Somewhere, someone somewhere along the lines said, you know, I want to invest in companies because I want to give capital to entrepreneurs so as entrepreneurs can use it to build products and services and corporations and create jobs and economic activity and, you know, GDP growth and all these things. That sounds really good. People said, hey, we like that idea. Let's empower. Let's. Let's fund kind of American companies. So that, that, that's okay. Somebody came along and said, you know what we should do? We should create a lottery system. And you know what would be a great thing to do with the proceeds? We can use it to fund the education system within a state. And so there's many states across the United States where they literally have a lottery and the odds are not good. You know, there's like one in a billion chance of winning or something. And the proceeds are actually used to pay into the education system, the schools, the teachers, you know, all that kind of stuff. Well, all of a sudden, what do you want to do when I create a lottery? Well, I don't know if I like that. Why do you want to do it? Oh, we're going to help fund the schools. Great idea that gets approved. Sports gambling right now is very much. What do you want to do? I want to bet on sports. Why do you want to do it? Because it's fun. That answer hasn't been so, you know, well accepted. But I do think that it is changing now because really what ended up happening is kind of twofold. One, there was like this, like, black market of gambling that had been going on for a long time, and they kind of realized, hey, we can't control this. So it actually may be better to pull it into the regulatory apparatus, put some rules around this kind of sanction this stuff. And it probably is better, actually for the market participants. But two is there's revenue source. And so states started to really say, hey, look, we should legalize this because we're actually going to make some money. And I forget the exact numbers, so somebody will probably correct me if I. If I get this wrong, but I think it's something like in the first two or three years, the state of New York has generated like $12 billion in revenue from sports gambling. And so, again, whether it's 12 billion, it's 1 billion, or it's, you know, 20 billion million, it's some big number that is going to the state. And so whenever you see that, you say to yourself, why is it that this was not legal and now it's becoming legal? Why do you want to do it? Oh, because the state's going to get money. And so that, I think, is really what's kind of transitioning it. Now. What I will say is there is a potential risk where it all comes down to the odds. Right. So again, if you're investing in a company, the company. Some are winners, some are losers, but there's disclosures. There's a lot of things that happen in the public markets that make an investment, quote, unquote, safer than maybe trying to pick what color is the Gatorade going to be when somebody dumps it on the coach at the end of the game? That is like, you know, very pure play. Kind of, you're right or you're wrong. Now I'm in the situation where I always say to myself, look, I think Americans should be able to do what they want with their money. Money, right? That's kind of the beauty of America. The. The kind of belief in financial freedom is you should be able to do what you want with your money. But I also think whether you're investing in a company, you're betting on sports or you're doing something in between, you also should have as much information available to you as as needed. And so things like company disclosures essentially is really important. The public markets, things like in sports betting, having an understanding of the odds and various other topics is really important as well. And I think you see a lot of states saying, hey, what is the standardization of that state stuff? And the beauty of this is there's going to be winners. Like, there will be people who are very good at sports gambling, right? There will be people who are very good at stock picking, and there will be people who somehow continue to be really good at lottery, you know, participation. I'm not an expert at gambling or the lottery, but there are people who understand this stuff, right? No different than somebody like an Ed Thorpe. Ed Dorp, you know, went to Las Vegas and he figured out a couple of different tricks of how he could actually outsmart the casinos, made a lot of money doing it. And so there's this economic incentive that sits out there. And if you look at. Think about sports gambling, I'm aware of a number of different outfits where they might as well be hedge funds, right? I mean, they're calculating all this data. They're really trying to get smart about what odds are priced correctly and not correctly and where's the risk reward and all this kind of stuff. And then I would actually even take it a step further. Maybe one of my big predictions over the next 10 or 15 years is that these prediction markets are going to become a massive part of society. So when I talk about sports gambling, I'm literally talking about, hey, the super bowl is coming up. There's going to be two teams that play. I can bet on the game, I can bet on the score. I can maybe do some prop betting in that specific game. But right now, a really interesting detail is there's a platform in the United States that is approved by the CFTC called Kalshee K A L S H I. And I was recently talking to their team and just trying to get an understanding. Hey, how does this work? What are people betting on? You know, where are these people coming from? Are these hedge funds? Are they individuals, whatever? And the guy pulled up the platform and he said, you want to know what people are betting on today? He goes, one of our biggest markets, people are betting $25 million a day on what the highest temperature will be in New York City tomorrow. And I sat there and I said to myself, oh, my God, there's $25 million per day that is being wagered on what is the temperature going to be tomorrow in New York City City. And so is it going to be 14 to 15 degrees? Is going to be 15 to 16 degrees, is going to be 16 to 17 degrees? Tens of millions of dollars. And this stuff just started, right? I mean, this stuff is all pretty brand new in the last year or so. So as that continues, there will be prediction markets for everything. You'll be able to bet on who wins an Emmy or an Oscar. You'll be able to bet on does a certain thing happen in the world, right? Does somebody get elected? Or we saw in the presidential election, like, who's going to win the debate, who's going to win certain seats, who's going to become the president, all of these things. Now you're going to start to be able to bet on it. But one of the things that I think is really important to call out here is, although there will be plenty of critics to say, oh, that's just another form of gambling, I do think that there is going to be this kind of meshing of many of these markets, whether it's sports gambling, prediction markets or stocks. And maybe a good example is, let's say that I am very interested in Tesla and I continue to look at the company and evaluate it. And I know that an earnings call is coming up and I want to bet not on what is going to happen with the price movement of the stock. I have an opinion on are they going to hit their delivery number or not? And right now in the stock market, what people have to do is they say, okay, if Tesla hits their delivery number or beats it, the stock's going to go up. But what in practice happens is Tesla will beat this Delivery number. And then Elon will say something in the commentary and the stock will dump because people will say, oh, Elon is bearish about next quarter or something. So now all of a sudden you said, hey, I was right on the thing that I wanted to bet on. But there was all these other factors around it that actually the stock market moved against me. Well, in a prediction market you can actually go and you can bet just on will Tesla beat on the delivery number or not. It doesn't. Nothing else matters. It's just a yes or no. It's a binary thing. And so you can imagine in the financial world all these different details that people would want to bet on. What is the delivery number you can even do? Well, Elon mention, you know, dogecoin three times or more in the earnings call. That could be a prediction market. And so you get into this very interesting world where I think the mainstream media is going to start to cover these prediction markets because these prediction markets actually are telling us the truth, because it's a market dynamic that's determining it rather than kind of opinions of journalists, bloggers, you know, people with Twitter accounts, etc, and so if that starts to happen now, you have stocks, gambling, you know, kind of in sports and prediction markets, we now become in a society where actually economic value being wagered is a signal for what you believe or how you think the world is going to play out. Which sounds a hell of a lot like investing in companies and trying to predict which one's going to succeed and which one isn't. Right?
- [52:01]
Tom Bilyeu
Ding, ding, ding. Yeah, that. That is exactly what I'm talking about. That is an utterly fascinating glimpse into a potential future that I think is all too plausible, that basically people are just going to turn into gambling machines. Yeah, it's interesting because I think the stock market has. There's so much knowledge required that it keeps out the average person. I don't know if it's a good or bad thing because as we go to things that people think that they already understand, like sports or, you know, will he mention something three times in the next earnings call that you're just going to see a lot of people gambling, Gambling, gambling. Which then brings about squid game type people getting themselves in trouble can be dystopian really fast. Okay, so speaking of people's pension for gambling, what do you think about meme coins? Coins?
- [52:52]
Anthony Pompliano
Yeah. So, you know, I should say first, before we talk about the meme coins, like the gambling in general, I actually think is a pretty big fool's errand for 99 of people I just described. In sports gambling, there are basically the equivalent of hedge funds being set up where they're calculating all this data, etc, if you think you're going to sit down on a Sunday morning, you know, go to the store, get some beers, get ready for the games, and then all of a sudden you're going to like outperform term the hedge funds. It's probably going to be pretty difficult to do. And so what we're seeing is the kind of the professionalization of these markets. And so if the odds are further tilted against you, your odds of losing obviously are much higher and there can become a spiral. It's why you see the gambling hotline numbers and stuff having to be promoted alongside any of these companies. And so I don't think we want to become a gambling society. Like, I actually think that would be pretty detrimental to the United States. And so there's like a, like a paradox of we want people to be able to do what they want with their money, but also we can recognize that if everyone was just gambling all the time, that probably wouldn't be great for the productivity of the United States and happiness and things like that. And so meme coins are kind of like the final maybe version of this. And I'll give you maybe an analogy of kind of how we get to meme coins, right? So we talk about Berkshire Hathaway. If you think about Berkshire, 90% of the value of the stock is because it's a great company. They have cash flows, they've bought things less than they're worth. Like Warren Buffett has really perfected the value investing kind of approach. But 10% is the like Buffett bump, right? People love Warren Buffett. He's kind of like the aw shucks grandpa from Omaha. He's been able to build this brand and kind of, I would argue, almost like a pseudo religion around his approach. And you know, he's got his, his annual sub stack that he sends out, but really it's just called an annual letter. He's got a conference that people, you know, kind of go to Mecca in Omaha or the financial mecca and they go and they check it out and he's kind of like this like finance influencer for boomers, right? And that's really important because 90% of the value is the company and the cash flows and the assets, etc. But 10% is that Buffett bump, the Buffett premium. And so that's been amazing for Berkshire because it obviously helps on the stock price. But more importantly, he wins Deals because of it, people want to sell their company. Because Warren Buffett bought my company, he's able to attract capital, all that stuff. So you can think of that as like 90 company, 10% meme, right? And people are like, oh, Buffett's not a meme, whatever. But like, it's the same idea, right? The brand, the meme, whatever you want to call it, 10% of Berkshire go to Tesla. Tesla is maybe 50, 60% company, 40 or 50% mean. Elon's the greatest marketer of our generation. He's got this rabid fan base online at times. Tesla's traded at massive premiums. It's been able to attract capital. He's been able to do things because he's got that brand or that meme, right? And so you get Berkshire is kind of there. Tesla is the next step. Take it to the third step, which is the Trump Media stock. DJT is the stock ticker. It's like a $7 billion company on $4 million of revenue revenue. So that's like 10% company, 90% meme or 90% brand, right? Now, if we look at, they basically inverted from Buffett, 90% business, 10% meme to DJT is like 10% business, 90% me. Well, the next logical step is literally a meme coin, which is 0% business, 100% meme, right? And so, like, we've been going down this path now for 40, 50, 60 years. It's just that we finally reached the final form, which is people are saying, like, screw it, we don't even need a business. We can just launch these things. And whatever brands tied to it, people will ascribe some value to it. And so the scary thing, for somebody who is thoughtful, who thinks of themselves as kind of a sophisticated investor, they say, what is underlying this? How do I underwrite it? And the answer is, you're never going to be able to underwrite it. So from that standpoint, you think this is insane, crazy, you'll never buy it. And you think it's stupid. Stupid, right? 80% of my body is in that category, but 20% of my body is in the category of man. Something's going on here, right? First we saw kind of no name people do this. Then we started to see kind of smaller brands or celebrities. Then we saw bigger ones do it. Now it's the President of the United States, it's Donald Trump, right? These are the biggest brands in the world doing this thing. And they've created 30, 50, $70 billion of market cap depending on when you look at the, the, at the coin. Is it sustainable? I have no clue. Am I buying it? Absolutely not. But we got to pay attention to this thing because it feels like this is some version of a collectible or a trading card or whatever. And so I think there's a lot of people looking at it through a financial lens, but I actually wonder, is that the wrong lens to look through? Instead you should look at it through the entertainment lens. People are buying these things because they want to be entertained. It's almost like a video game to them. And if we get into a world where people's portfolio starts to look like a video game, people are going to lose money. It's going to be more akin to gambling. Like, there's all those issues that we talked about, but doesn't mean that we're going to stop, doesn't mean that they're not going to be more of those in the world. And so to me, that is the difficulty of evaluating kind of the meme coin world is there's nothing underlying it. There's no utility, it's not used for anything. There's no product, there's no service, there's no revenue, there's no anything. But there's a brand attached to it. Is the brand worth $30 billion? You'd be hard pressed to find someone that's like, yeah, 100%, but it's probably worth something. But again, you're playing a game where there's massive risk and the question becomes, is there enough juice worth the squeak? Right? Like, you know, if you go and you buy these meme coins, if there is no assets, no product, no service, whatever, what do you do? Well, like, I think you're, to your point, you're just gambling, right? And if you want to go gamble for entertainment purposes, like, hey, you should be able to do whatever you want with your money. That's not my investing style. Right. So I, I kind of take a different approach.
- [58:52]
Tom Bilyeu
Yeah. I think meme coins are where we all just admit, oh, this is what it always has been from top to bottom. The stock market, all the financial system, it, it is all gambling from top to bottom. And when you get to a meme coin, everyone just agrees that the emperor has no clothes. But everywhere else, I point and I say, oh, the emperor has no clothes. And people like, oh, Tom, you're an idiot. You don't know what you're talking about. And I'm like, nope, there's, there is virtually no predictive validity to people's behavior. When I think of them as Like a strategic Investor, there is 100 predictive validity. When I say, oh, you think that you'll be able to sell this for more money down the road? Now, I'll go back to this idea of a cover story. A good business with sound financials. All of that gives you a great cover story. But I think the real reason that works is it. It becomes like legal contracts where the vast majority of people just get. They get blocked out of the system because they don't understand it. So most people don't invest because they just don't understand it. And so they don't go gamble on that thing. They'd rather just go gamble on sports because at least the sports they gamble, they can gamble based on emotion. And I get it. There are going to be people of all intellectual strata that cannot stop themselves from betting on something to your point, which is how people get themselves in trouble. They do things on leverage. And so they can lose more than everything. It can literally be a wildly negative balance. But once you understand all of it is gambling and some people just have way stricter. Like, if I go to a casino, first of all, I don't gamble. But if I were going to go to a casino, I would find the thing where I can play the longest, I can enjoy myself, that I'm not going to lose a ton of money. Cool. That that's my strategy. So I'm going to play something like the stock market, where I can be like, well, if I stay in for 10 or 20 years, I'm probably going to be fine. I'm not going to get the big upside that other people are going to get. But cool. But as we really take off the shackles when the President is launching his own meme coin, I think we can agree that we're more or less, at least for the next four years, we're taking off the shackles here. And we're just saying, all right, why do people want to bet on the Donald Trump mean coin? Because it's going to have extreme volatility. Because people are going to pay attention because he is going to be constantly in the news. And so now you're just allowing people to bet on that without having to go to Poly Market or something else like that, where it's like, okay, how many times is he going to say greatest of all time in the next speech? Instead, you just go Trump brand up, down. But ultimately it. The reason that people are going to gravitate towards these big cultural moments is because where the cultural energy goes now, you're able to bet on that. And again, it makes sense when you just go, oh, that's all any of this is. Agreed that it's degrees of risk. It's some people really need to embrace. No, no, there are fundamentals here. There's something that I can base my underwriting on, all of that, but all of that is just to facilitate people gambling. Now with the stock market, the one thing I will give it is by creating this gambling pool around these companies, you're able to let those companies raise money and do incredible things. So in terms of is it justified to let people gamble on it? I like it way better in the stock market because it does something for the economy. The betting on meme coins is never going to do. And in fact, I think there's an argument to be made that by letting people gamble on meme coins you're really dissipating capital because all the capital that would otherwise be forced to gamble inside of a system that brings capital to businesses that create things that we want, that generate gdp, all of that. That sounds like it has a better knock on effect. But to what you said earlier, oh man, it's like you got to let people decide what they're going to do with their own money, but it really won't be only positive. And so this is where I think we're. I'm very glad that we don't just do what I think we should. I'm very glad that this will be something that will be decided by a lot more people than me. But oh buddy, like this is. I don't think there's any way to say people shouldn't be able to do it other than to say you're too dumb and you need a nanny.
- [62:59]
Anthony Pompliano
One of the things that recently kind of came back up in my memory is in 2016 or 2017 I went to Nigeria. And in Nigeria, you know, most people would think about the country and they'd say, oh, they're probably way behind the United States, it's probably a very different culture, etc. Nigeria has about 200 million people that live there. It is a very young demographic, it's growing very quickly. And it's estimated by about 2050, 2055, there will be more Nigerians in the world than Americans, to give you a sense.
- [63:30]
Tom Bilyeu
Right.
- [63:30]
Anthony Pompliano
So, so growing very quickly. There's very high Internet penetration and very high mobile phone usage. And so it's a kind of a technology forward country given those demographics and the penetration. And one of the most eye opening experiences I had in Nigeria was the Country's love for soccer or what they call football. And they. Everywhere we went, they were watching games. And I think I kind of expected that part. But I saw one thing that I wrote about when I came home and I said I saw the future, which was in Nigeria. They had these betting houses, so you could basically go to physical location and you could walk up to the counter and you could make a bet on whatever game was coming up. And, you know, I wasn't really paying enough attention to know was it prop bets or just, you know, bet on the score or what people were going and they were exchanging physical money, but they had a bunch of the TVs on. So you could literally sit there in the room, you could watch the games that you just bet on, right, with your friends. And then you go back, you bet on more games, whatever. But on the far right of all these screens was one game. And when all the other games were either over or done with or a commercial or whatever, this game kept playing. And it was kind of far for me to see. So I walked over and said, what are they watching? And I realized that they were actually watching video games. It was a video game of soccer. And so I said to one of the kids, I said, hey, man, who's playing? They said, oh, no, none of us are playing the game. It's a simulation. And they were betting. They were betting on the simulated video game. So if you ever play, like Madden or, you know, NCAA or, you know, NBA 2K, whatever, now you can, like, simulate a game and it'll have the teams play each other, but nobody's actually playing. That's what was going on. And they were betting on it. And so I sat there and, you know, kind of the. The naive American saying, like, well, how do you know this not rigged? How do you know that, you know, like, whatever.
- [65:18]
Tom Bilyeu
Literally just wondering who. Who oversees the algorithm that creates, like,
- [65:23]
Anthony Pompliano
of course, right in America, there's like no trust whatsoever. But these guys were sitting there and they were playing this game. They were, like, betting on this simulated game. And so I think that that actually, if you extrapolate that out, the meme coins, there's, quote, unquote, some algorithm. The algorithm is just the market is making this thing go up and down and it's got people's attention and they're betting on it. And we're sitting there saying, like, this is insane, but it's actually just a natural progression. It doesn't mean that you should go do it, but it's not hard to see, again, going Back to volatility. If there's something with a big brand on it, with lots of volatility, they can get the media to talk about it. Of course people are going to pay attention. And then if you essentially dangle an opportunity in front of them to say, do you want to bet on whether this goes up or down? Like, go to the local state fair and people are trying to shoot basketballs that are too big to go into the basketball rim. I wonder if I could dis it, right? They're trying to slam the hedge, the, the sledgehammer to see can I hit it hard enough to make the, you know, thing go up. They're trying to shoot, you know, a paper target with a pellet gun that doesn't quite shoot straight. So when you think about all those things, you say to yourself, like, man, do you think they're not going to bet, go up or go down? Of course they're going to bet on go up or go down, right? And so I think that it, it is much more an entertainment lens than it is a financial lens. The question is going to be people are putting real money into these things. And are the regulators, are certain people going to step in and say, hey, I know that human nature is to bet up or down. We're not going to let that happen. Or we're going to. We need to change the rules or standardize or there's going to be disclosures, you know, whatever. I think that's the stuff that now is going to really come to the forefront, that the president's got a meme coin.
- [67:01]
Tom Bilyeu
All right, you have the impulse that people should be able to do whatever they want with their money. But do you think that, that meme coins should be regulated and really tamped down on? Or do you want to see people betting on anything they want, including simulations, meme coins, whatever.
- [67:17]
Anthony Pompliano
I think that there's a middle ground. Doesn't have to be yes or no. I think it's yes with changes is probably the right way to think about it. And so, you know, disclosures, who's launching this? How much do they own? Could they sell in the market? When are they selling in the market? And one of the things that I think the public markets really gets right is, is if you're the, you know, CEO of a company and you own a lot of the stock, you got to tell people when you sell. Like, that seems pretty fair, right? And so those are the types of things where rather than attack individuals ability to do what they want with their money, maybe actually what you should do is you should attack the other side of the problem and say, how do we give these people as immense amount of information as possible? You know, if you want to go and let's say that you're the CEO of a company and you want to write a tweet about your own business, there's tons of disclosures, there's tons of rules and regulations, all this kind of stuff with a meme coin, that stuff doesn't exist. And so it may actually be less about do we tell people what they can do with their money or what they can't. And more about if people are going to do this, if they're going to issue these things, if they're going to, you know, kind of offer these opportunities. There's a ton of rules, regulations, standardizations, etc that get put in, kind of in place. And you know, what this really feeds into is if you think about the public markets, probably one of the biggest maybe complaints from public market investors right now is that the public market is much less popular than it used to be. There used to be 8, 000 public companies, now there's like 4,000 public companies. So people look at, yeah, huge drop, 50% drop. And if you think about that drop, people are like, oh, companies are staying private for longer, they've got more access to capital. It's really expensive to be a public company. That's really erroneous in terms of how hard it is to comply with all the regulations and you know, all these things. And so naturally companies want to stay in the private market if they have access to that capital. But what they don't suggest is actually the public markets are more popular today than ever before. We have 4,000 publicly traded companies on what we consider the traditional stock exchanges. But there are hundreds of thousands of publicly traded tokens markets. And so people not only said, hey, if I have a company, I want to stay in the private market, but also there's a bunch of people who said, hey, I want things that are publicly tradable, but I'm going to not go to your stock market, I'm going to go to these new markets and have them publicly trade over here. And so it's very clear that it is the cost of regulation, the burden of the regulation, all that kind of stuff, but you want people to be protected. And so that's a natural tension that I think has to get worked out of. Is there a way to make this less costly for people to have public companies? Is there a way to allow more and more people to Participate earlier in the life cycle of these innovative businesses that are getting built in America, but also still get them the information they need. But that crypto world is all these new public kind of assets that are trading means that that young generation that everyone thinks is an interest in the stock market, they want liquidity, they want public markets, they just don't want to do it in the world that the stock market currently exists. And maybe one of the best examples is I invested in the private market in Reddit and Reddit went public. And when Reddit went public, I was really excited about the ipo. I was like, oh, my God, look at this. All these guys on Reddit who use it all day long that talk about stocks. They're going to go buy the Reddit IPO because that's the platform they use. Great. You have, you know, some stock, there's more demand, the price should go up. And the stock did pretty well. But a couple days before the ipo, a bunch of people started tweeting at me and I was like, what is going on here? And they kept talking about Reddit. And then all of a sudden I realized they were talking about Reddit coin, not Reddit, the stock. And I said, what is Reddit coin? I went and I looked and someone had created a Reddit coin right before the stock went public. Well, on the day that it went public, guess what happened happen? They both went up, but the Reddit coin went up way more than the Reddit stock.
- [71:16]
Tom Bilyeu
Why?
- [71:17]
Anthony Pompliano
Because you just had people who were looking for a traditional stock. Investor wants to understand what are the assets we own, what's the cash flow, what's my downside protection? Where am I in the capital stack? Right. What is our future plans? What is kind of our 2025 outlook? How are we thinking about, you know, AI as a threat or an opportunity? All these things. Things. So there's a ton of evaluation that goes into it, and there's just as much focus on what's the downside as what's on the upside. But actually, there's usually a lot of people who want to buy a stock who simply say, I want pure price exposure. I don't care if I have a, you know, a claim on the assets. I don't care if I have a claim on the cash flows. All that stuff is for the smart Wall street people. I just want to speculate on the price. And so the coin has none of this stuff. Stuff. I just want to know coin up or coin down. And you can imagine for me, from an investor seat I'm holding the equity, right? I did the smart thing I did, you know, frankly, the legal thing. And so I'm like, oh, okay, wait a minute. The world is changing. How is it that on IPO day, the people on the Internet are buying a coin that's going up more and it's somehow tied to this thing? And so I walked away from that day saying to myself, if you don't understand something, you can't knock pocket, right? Because maybe you're missing something, maybe you don't understand something. And I really went and I spent a lot of time trying to understand this and that. My conclusion was there are investors who want to own businesses, kind of, you know, the Buffet or maybe the tech investors, etc, they want to own the equity in the business. They want downside protection, they want to claim on assets, cash flows, etc. But there is enough people in the world, they just want pure price speculation. And a coin gives them more volatility. And if the Reddit stock goes up, the coin goes up more. If the red stock goes down, the red coin goes down more. And so it's almost like a levered price, you know, a levered volatility on the price. And so that's when I said, you know, look, man, this game is hard. This game is real hard, right? And you just got to kind of tip your hat and say, look, things change very quickly and try to do your best to keep up.
- [73:20]
Tom Bilyeu
What do you think? How much of that is the Wall street bets, fuck the man ethos going on with that.
- [73:27]
Anthony Pompliano
It's impossible to put like a percentage on it, but it definitely plays into it for sure. You know, one of the interesting things is if you go back and you look, you know, I recently read a book on Carl Icahn, and Carl Icahn is this famed, you know, kind of corporate raider. He is known as one of the best activist investors in history. And when you read the book, you know, he's called King Icons, title the book. And in the book they talk about how Carl Icon thought of himself as an outsider. And he had the like f the man, you know, mentality. And the reason why he became an activist investor is because he felt like corporate executives and CEOs were flying around on private jets and they had country club memberships and these big salaries, and they were taking the money from the shareholders to enrich themselves, but they actually owned very little equity in the businesses that they were running, and therefore they were incentivizing themselves to get rich at the expense of the shareholder. And so he would start buying up the stock and he would go and say, you guys are enriching yourself. You should do this, this and this to the company so that the shareholders actually make more money. And you know, activist investing, short investing, this stuff is very important to the market. It's kind of a check and balance on what's happening in the market. But people wouldn't think of famed Carl Icahn, you know, know, kind of the king of Wall street and activist investing, as the guy who's saying like f the man. But that's, that's literally why he started doing some of the stuff. And so again, people want to point to like Wall street bets back this brand new. It's actually not right, it's just that it's a new form for that same energy. And so I think that the form factor is much more kind of interesting and worth paying attention to than the energy of like, you know, f the man. There's plenty of people over the years who've had that mentality and some of the funny things are like the biggest billionaires in the world have that same mentality. You know, Elon Musk sitting at the, I think it was the Dealbook Summit one year and Andrew Ross Sorkin asked him about advertisers and he said, you know, go F yourself. And he said, what did you say? And he turned to the audience and he said, just so I'm super clear, advertisers, go F yourself. And you're like, like, all right, well that guy's like the richest guy in the world and he definitely has the like fu, you know, man energy, right? It's just a different form factor. And so I do think Wall street bets is, you know, one cohort of this rise of self directed investors. And to me, the self directed investor trend is fascinating because the self directed investor is the doctor lawyer who sits at home and is investing. The self directed investor is also the, the you know, kind of mid level manager who goes home and study stocks on the weekend. The self directed investor is the portfolio manager at J.P. morgan or at a hedge fund that's trading their personal money. And so everyone feels like they personally are a self directed investor now. And self directed investor means that you have access to information. So you're on Twitter, you're on Reddit, you're, you know, reading the news, etc, you don't need to call up the bank and say, hey, what do you think? What's going on? You just get the information yourself, myself and then there's been a Rise of these tools, things like, you know, Etoro, Robin Hood, public webull, etc, where now I don't need to call a financial advisor or a broker and actually go and execute trades. So now what I've done is I've broken down the friction to information and to the market and I've empowered individuals to be able to go and do this. Why? So self directed investors start allocating in the market, do you think some of them are going to be like, like well, screw the hedge funds, screw the, you know, the CEO, screw the man, screw the incumbents. Of course. And so you know, is the best way to kind of put that forward Buying certain stocks like you know, Gamestop and you know, kind of f the man and let's go and short squeeze people. It's one form. Buying the, you know, Reddit coin instead of the Reddit stock, is that another form? Absolutely. Buying meme coins and trying to make more money than your dad or grandfather or mother or grandma. Another is in the stock market, that's another form. Right. Like these are all different variations of the same thing where people are saying, hey, I'm trying to get ahead, I'm trying to risk capital and get a return and maybe it looks different, but it's something that I understand or I believe in or I'm gambling on whatever. And so I think the question just comes back to, you know, if we fast forward 10 years and we look backwards, who's going to make more money? Money? The speculators who are trying to time markets and you know, look at these different trends or the people who are trying to allocate capital to kind of highly resilient assets that'll be around in 10 years, they're both speculating. Right? But I think that young investors, the best thing they can do and the reason why I said, you know, buy the indexes, buy Bitcoin, things like that is what you really want to be able to do is not optimize for what is the thing that I can buy that can go up the most? Most what you want to do is you want to buy the thing that you have. The highest degree of confidence will continue to grow year after year after year for a long period of time. And it's really hard for young people to think about compounding. Right. You know, when you're 22 years old, you're not thinking about when I'm 55. When you're 55, you wish you were thinking about it when you're 22. Right. And so it comes down to this idea of Are you trying to buy an asset that's going to go up 20x in a single year year or would you rather buy an asset that's going to go up 20% a year for 20 years? That's the question people face, right? And I think that the people who are kind of more long term thinking throughout history, the data shows they tend to do much better than the people, you know, kind of just trying to win, you know, the short term, kind of get rich.
- [79:02]
Tom Bilyeu
Quick games all right, friends, that was just the beginning with the incredible Anthony Pompliano. We've broken down how speculation is driving the markets. But here, here's what I really need you to understand. If AI is getting into the game, what happens next? What happens when machines control the markets, when human investors can't possibly keep up? And who really benefits from that shift? That's exactly where we're going next in Part two. Make sure you're following the podcast wherever you are listening to this because you do not want to miss it. Until then, my friends, be legendary SA.