Welcome shiness.
I'm Joel Webber and I'm Eric Belchernis.
Remember that time that ETF we had, We simply have bitcoin ETFs. What's the what the other side of that been like for you? Is it a big come down? Eric?
A little. I've phased out slowly, Joel. I didn't want to go cold turkey, right, so I in fact, I was telling, uh, somebody somebody like, oh, what are the stats for day eleven? And I'm like, look, I'm phasing out. Now go track this other site. I'm going to point out things that are interesting, but I'm not doing like a daily look at the race every day.
Uh.
These ETFs are up and running. By all measures, it was a fantastic success, although it's been a little clouded. The GBTC outflows have kind of made this an interesting launch. It's not launch, it's just all volume is inflows here. You have this unlock of GBTC. So it's been a complicated launch with eleven of them, but largely I would say it's successful. Black Rock and Fidelity leading the way
ark and bitwise having a lot of success. We're talking already in the billions of dollars after two weeks it's pretty good. So now I'm you know, I got to work on my Vanguard primer. I've got to do this ETF survey. We did, and we're starting to phase out a bit from it, but it's still going to be probably like one of the biggest stories of the year as we roll into you know, the spring and summer for sure.
So one thing we haven't done is talk to a financial advisor about any of this. Who'd you bring today?
Yeah, I thought we just all issuers. And I've been going out on media when this was coming up, and I've been saying that a target market of this launch is the advisor world and advisors that managed thirty trillion dollars. I mean, they control all of the boomer money in America pretty much, and that's largely who these ETFs are aimed at. And advisors love ETFs, they trust them, they like the low fees, and so we should talk to somebody who actually uses them or doesn't use them and
has to sort through which one to pick. And the guy we have with this is Douglas Bonaparte, and he is a Twitter celebrity. I think an ex celebrity Twitter sounds better. Still, I got to be honest. Okay, he's a Twitter celebrity. If you haven't follow him his self deprecating tweets are really funny, like he's and he's just got he's a human on Twitter, you know, and it's nice. And he's a good advisor. He's part of what I would call the big long advisors. These are advisors who
are the opposite the big short people. They don't see bubbles and everything, but rather they see the optimism in everything, and they're trying to get their clients just to hang in there, so the magic of compound and could kick in. So in my opinion, they're part of the sort of new generation of just just hang in there, keep costs low. Let the magic happened advisors.
Okay, joining us this time Douglas Bonaparte. He's the president and founder of Bona Fide Wealth. This time on trillions, a little bitcoin in that portfolio. Douglas, welcome with trillions, Happy to be here. Okay, So I want to talk about how you speak with clients, but we want to start with this bitcoin thing, Like, at what point did you start telling folks now's the time to actually do this, and how is that conversation different today than it was a year ago.
Oh, it's still happening, very very slowly, almost in real time. When those ETFs debuted, I was the first person to place a trade in my own account, just to see what this would be like, do we have discretionary on these you know, discretion on these trades? Do they need to be marked solicited? I noticed that I needed to mark my first trade as unsolicited, and that prompted a call like, hey, what can we do with this? And the answer was, we're having conversations around this. So take
that for what it is. I mean, you have wirehouses, you have broker dealers, you have everybody starting to develop their policy around this, and I don't think anyone really did anything until it actually debuted the skepticism that was out there. You know, why why move resources around or have these conversations until we know we can actually put them inside a brokerage account.
But just explain this solicit unsolicited, Just just break down what that means.
Absolutely so in my world, if you're managing money on behalf of a client, you have three ways that you can go about placing orders. The first one, let's go with discretion. That means the advisor has the ability to place, buy, or sell orders.
As they please.
They don't need to call the client and say, hey, you know, this is what we're going to do. We have discretion makes sense if not, you have unsolicited versus solicited. Solicited means that the broker or in this case, advisor is going out to their clients to say, hey, I think this should be in your account. Can I place this trade? And they would say, yeah, I want that versus unsolicit. That's the other way around. Client calls you, hey,
buy me one hundred schairs of Microsoft. That was an unsolicited So what they're saying, and for the longest time for broker dealers, that would allow there to be something, in this case gray Scale, that was one of the very few options that you would see allowed inside a brokerage account that was compatible. A lot of broker dealers would say, you can't go out to your client and say, hey, you know, I recommend that you put let's say gray
Scale in your portfolio. They would have to call you and say I want exposure to bitcoin, and you would say, okay, the only option I have here are these tools, and then you would take that order, maybe even have to sign some paperwork or do a little bit of disclosure here. That's and that's a function of the compliance offices who are naturally skittish around cryptocurrencies.
What about having conversations with your clients and you know, this looks like a pretty risky assetah with no real meaningful applications. Yet how do you balance that as somebody who's got the you know, fiduciary responsibilities that you do.
So I think you have a fiduciary responsibility to educate your clients if they're asking about this, and unless you are living under a rock over the last let's say five to seven years and your I don't know how your clients weren't asking about crypto or bitcoin, and I think it's our job to educate them. And most compliance offices again are like, hey, don't touch this with a ten foot poll. I mean, that's a tough spot to
be in, right. So here I am wanting to educate, but you might be told, hey, don't talk about this. That's number one now comes the product, right And I think banks and institutions are still trying to figure that out. I'm not going to put myself in the position that I was like, hey, I can't wait for this to come out so we can just.
Start to load portfolios with it.
It's probably more the stance of all right, when this is kosher right, and we get approval to do what we want to do, Let's say, have discretion. How can we build models or integrate this into our risk adjusted portfolio so that we could offer clients, Hey, are you educated on this?
This this something you want?
We're now offering portfolios that maybe have a five percent allocation.
That data is out there.
I mean, we've got ten plus years of data on bitcoin to see and almost like any brochure from I remember Gray Scale having one, what would happen if you added one too? Up to five percent of bitcoin on an eighty twenty or sixty forty portfolio. Those results were pretty compelling. I mean there wasn't a single time like wow, non correlated generated alpha. That's because bitcoin has had a
magnificent ten years. So you have the public, you know, from not knowing a thing about it twenty thirteen fourteen all the way to everyone and their grandmother knowing about it twenty Thanksgiving twenty seventeen, twenty thousand dollars, and then
you know from there on, here we go. We got a lot of rides in there, so everybody knows what this is now, and we're just seeing the you know, broker dealer, investment advisory world get this new shiny object and we're going to figure out what they're going to do with it. I'm still figuring out what, you know, we can do, how to roll it out, how to package that with a maybe handful of clients that are like all right, it's go time, and there's a reason for that.
Let's talk about the client. So of all your clients, what percent do you think would be interested or are you planning to maybe allocate one of these bitcoin ETFs into their portfolio?
And give us a little bit of a primer on like how many clients you have, how much money are overseeing?
Yeah, we got over one hundred and fifty households.
We're seeing close to ninety two one hundred million dollars in assets and under management. But the thing you need to know about my practice is how young it's skews. I'm thirty nine, and I would say the average age of our client is mid.
To late thirties.
And you know, you said in the beginning, like boomers love eat you know, boomers would love this, and I agree with that because five years ago, the number of clients that would have a question, want exposure or think about having exposure was relatively low. And four years from that, you know, I would say one in four clients would want to know more about it. I mean, it just
ballooned the interest in this. My point being here, My clients that have exposure don't don't need an ETF, all right, they've already figured out how to use coinbase or have already been indoctrinated in how crypto works. But for the clients that do skew older, Yeah, there's been some inbound calls to say, hey, this is out, can we do something with this.
How do you use ETFs in general in your portfolios?
Yeah, I mean we use ETFs primarily in our portfolios. Our core risk adjusted model is maybe six ETFs from large cap all the way down to you know, emerging markets and bond funds. We do like to use some active strategies for a fixed income.
So let's talk about the older clients who have some inbound calls. I had my mom over last Sunday, Joel, and she saw me talking about biccoin ETFs on etfiq for like three weeks straight, and she's like, you know, someone needs to do a show for me and my friends and talk to us like we're second graders. What this all means to me? It all just seems like funny money in space. That was her but Space money. Yeah, he's closed. But she said I wouldn't have looked at
it before because the SEC said it was bad. Now that these are out, I you know, i'd consider it that alone.
Did you tell her to read Chairman's Leonard?
I don't recommend. The only thing I recommend to my mom is just trying to keep cost slow. I don't really I don't want to get involved with like pushing my mom my family members. I don't want. Yeah, I told her what I think, you know, I you know. To me, I'm it's a little like, you know, religion. To me, it's like I'm gonna believe in the mystery a little bit here. I'm not negative, but I'm not all in. But I'm like, I try. I respect it because of how relentless it is and how creative and
intelligent some of the people in the space are. That that is what I think. You're kind of betting on. But the older people when they call you a was the sec approval and you know Larry Fink on Fox talking about it, was that sort of what made them feel comfortable. And when they ask you about it, are they interested in like a little hot sauce or do
they think it's like an alternative to you? Or are any of them really into this like Mad Max potential world where all the societies break down and bitcoin is the currency that everybody.
Uses, like in a gold kind of way.
Right, Yeah, see there's the word. You just said it, But no they don't, So I'm glad you said gold. They don't think the Mad Max, you know, got to build a bomb shelter, you know, doom shelter in the backyard type scenario. I think a few things. I think, Look, there's bias that I have. I've been involved in bitcoin and you know and having mind it back in twenty fourteen. I've written articles about this. I've shared my thoughts and feelings around this and clients who've been with me for
a while. No, no, my story. So on one hand, they might think like, oh, Doug, Doug likes this, has been doing this and has been successful in this, should I follow suit with him, and I urge caution there. You know, just because I've had success in this and took the risk you know, long ago, doesn't mean you should, you know, do that. Just don't don't you know, monkey see monkey do kind of thing. But you mentioned gold, right, and I think this is the best way. Now. I
keep it very simple. I believe that there's room for digital gold, an asset that's an asset class that's digital store of value. Let's just stop right there, right, I think there's space for that. Do you think bitcoins half as good as good, a quarter is good, double as good as gold? Then you can kind of get an idea if now what, depending on what your belief is, you get idea of where you think it's gonna go.
All right, I know gold can be turned into jewelry, right, but when you're fleeing a country you want to Yeah, you're gonna interrupt me.
I am because if you charted bitcoin and gold, bitcoin makes gold look like a money market fundah in terms of the chart. So I thought that bitcoin for even boomers would be used as a Foamo cure. Like Look, Doug, I don't really care about this, Douglas Douglas. Sorry, we're good gonna happen. This might have taken me a couple of tries, Joel. I just know you as Doug. I don't know why, and we don't even know each other that well, but you're Doug to me, Doug. Okay, Douglas,
it's my fault, Okay, I made this. Sorry, all right, So Douglas, listen. I I just don't want to kick myself in ten years, and let's just put two percent. Don't mess with my sixty forty. I like that. That's how I think they think. Yep. But the right the gold argument to me is a little more like, hey, Doug, put some gold in the fund, just because I want something that's non correlated, possible hedge. It's not always a hedge, no, but gold to me is much more stable.
Yeah.
It just seems like gold is an alternative and bitcoin's hot sauce and fomo cure.
Well, two things can be true, right, They can cure their fomo and get access to an alternative aset class that's non correlated. I just compare it to gold because it's the best comp that I got. You know, sure, you're right, you know, look at those look at those performance charts. Then again, Bitcoin's only been around ten years, so comparing a ten year timeline to gold's ever existence,
you know, is kind of a tough comparison. You've got technology imbued in this thing, the blockchain, you know, you got a lot. Yo is Saitochi Nakamoto hiding in a bush around the corner, and he's just gonna pop out and be like gotcha, and you know, boom, everyone's everyone's been suckered, Like it's in the back.
Of everyone's mind. Let's not kid ourselves.
But no, you know, I don't. I don't think that's the case here. But I think both of those things can be true. I think we can view it as a digital form of store of value. Yeah, that's the joke, like store of value, Like, look at that chart. How many eighty percent draw downs have I lived through all of it?
Like all of them?
Like, I think three at this point, if not more, you know, and then fifty or twenty percentowns unlimited? Is that something you know people look to when they say store of value And the answer is probably no. But do we get to something that's more steady state after we get to indoctrinating or a mass adoption. I don't think we've adopted, you know, to the degree that you know, gold or you know, your main stay asset classes have not even close to it.
So now that we actually have legit products that you can you know, trade on on exchanges, how do you go about evaluating those options?
Like which of those eleven we're going to do well in our portfolio?
As we lean heavy on black Rock? Shout out, guys, I share it, and I'm agnostic, Like, if my client wants Vanguard over you know, black Rock.
Well work in the scenario.
No, but it would not, you know, apparently it's not mature of enough of an asset here.
But we're hold on just quick background. So what we're referring to is Vanguard has a brokerage platform and they basically said we will not let the bitcoin ETFs trade on here, even though they do allow golditfs roll. Obviously, Vanguard doesn't love commodities in general because they don't have any actual like intrinsic value, But when it comes to gold, at least there's a use. They say, so Vanguard really
and all the crypto people are triggered. They want to take their like, boycott Vanguard is trending, and I'm like, listen, you are not going to take down Vanguard. They get so crazy. But I don't, you know, I don't know why Vanguard. In my opinion, Vanguard's just trust their clients a little more sure. But they don't allow leverage either, so it's somewhat on brand. Vanguard's like a family friendly audience kind of thing.
But I mean I made a joke at their expense because everybody was let's be honest, they got memed by me. But you know that that is the point, like at least they don't offer those triple leverage you know, or triple long, triple short or whatever, you know, typer whisky stuff, so that remains on brand for them. I could it, and you know, and the Bitcoin iss would be like
long term, this is a terrible move. You know, well if their clients aren't demanding it, first of all, like their clients can you know, buy this in another brokerage account. I mean, the sensitivity around you know, Bitcoin Maximalist is super high, and I don't fancy much.
It's also isn't there some irony in them getting pissed off about Vanguard? Because hey, we're supposed to be outside of the system. It's a currency outside of the system. And now we're pissed off that someone like the literally the largest asset manager in the United States won't accept us. Isn't that kind of Isn't there a a inconsistency there?
Well, there's irony that black Rock has the biggest one, you know, and then the second biggest you know, or first because you know the day of the week. It just shows you how new this all is and how people are figuring it all out.
I'm not sure there's a lot of.
Smart minds at these institutions. But the thing about bitcoin and crypto is you said it, how many smart minds are now existing outside of this. If you're a bitcoin maximalist, you're probably pissed off and etf exists in the first place. Like that is not the spirit of what a decentralized currency called bitcoin is supposed to be.
I mean, it.
Literally was forged in the Occupy Wall Street days, like fight the banks.
Yeah, it seems like like when I'm uh like like back, like you know, twenty years ago when rock band started selling their songs to commercials, like you saw like a led Zeppelin song on a four truck and it pissed people off. Yeah, it's the same vibe, you know. It's like, but I think you know, there's also the number go up.
It's helpful for that so I can Sometimes there's there's pure number go up people, but then there's more like I'm in it for the religion and I can see and then some people have both inside of them and there's they're so tribal.
We're so tribal in everything now, Like you either are a maximalist or you're a Wall Street suit. And I'm wearing a suit today and I'm an og bitcoin guy. Yeah, but not a max.
They call me a suit and a boomer and I'm gen X and I rarely wear suits only on the TV show and it's our gray hair. They're calling me a boomer. Now, well, my kid calls anybody over the age of like seventeen boomer one hundred percent.
Yeah, So back to nuts and bolts of like how you actually bring this into a portfolio for clients, Like what is this displacing in your client's portfolio?
It's replacing large cap equities and developed international. So if you wanted a five percent allocation. The first trade we made unsolicited boomer client calling up, I want five percent exposure in my sixty to forty portfolio.
Literally that so that happened. That happened. Nice that happened. And I saw that. Did theave request the actual tick or two or just you pick it.
I guided them through like what we're thinking, and bit Wise was a firm that you know, it actually broke away from our bias towards I shares. I like what Bitwise was doing. I think their CEO is fantastic, you know. I think they're competing very nicely on fees, and I love the fact that they're giving money to developers as well.
Great story there, h And that.
Was the trade and we put that in the portfolio. Three percent came out of IVV and two percent came out of EFA.
Wow, that is dude, this is win fascinating.
Stuff went from like super safe to just like full on.
Yeah, but five percent you know, yeah, alt also in a portfolio that doesn't have alts. I mean, really, is that is that big?
Is that a big deal? Two things on this adding a couple things sixty forty. Everybody loves it, love it. That said, I have to explain to crypto people why people love it. They're like, why would you even use thocks and bonds? I'm like, are you kidding me? Anyway, they're all in. They can't even understand a sixty forty. But for a normal person, yeah, a sixty forty, low cost Vanguardian style portfolio, in my opinion, is actually super beneficial for the behavioral stomach you need for a product
like this. Because Bitcoin goes up down a lot. Let's say it goes down fifty percent in a year, you don't need to panic that much because it's not your core. It's not what your whole thing is on. Yeah, that was two and a half percent drag right there. Whereas back in the day you would buy a hot portfolio manager and then when they started going down, you panic because that's your kid college money, and you'd jump into
the next one and the behavior will be awful. Now, I think Vanguard really helps solve behavior, not only for the sixty forty because they never leave there, but for the hot sauce too. It's way easier to behave when you've got that really good deal and you're secure in it, So in a way, I think the sixty forty helps hang in there for an older investor. These crypto people they're gonna hang in regardless, But for the older people just seems like the sixty forty well helps. You're taking it.
Out of equities, not their fixed incomposition. So you could have been more extreme. I guess with your five percent take into a bitcoin ETF, you could have taken out of intermediate or long duration ponds and then like, hey, we're going going from the soft stuff to the hard stuff real quick here, right, But like you know, your two biggest positions on the equity side in a sixty forty or eighty twenty is the international piece and most most of all the large cap equity piece.
But is that a conversation that the the fact that these are now ETFs enabled, right, because you wouldn't have had this same conversation with this investor if they if.
You hold the phone, there's a thin line there, right, Like again stressing the word education, right, So I fortunately had the knowledge base and the experience in my own dealings with bitcoin and being an early adopter to provide a level of education to my clients. You have, in my mind that duty to explain how if client calls you up and wants to know about something that you
know about. You know, you're not out there saying yeah, yeah, yeah, you gotta sell ten percent of your portfolio right now and open a coin base account, get that money over there and buy some bitcoin. I mean, that's not a good day from a compliance standpoint. That that puts you in hot water. But when clients are saying, how do I do this? I'm going to do this and I don't want to mess it up, and you have the ability to educate them on how to do it, you
do it that. That's your job. You build value that way, even if it comes at the expense of your own portfolios that you're managing for your client. So that interesting line of oh man, I love bitcoin, let's get the clients in it too. Let me make sure you know what you're doing. Let me make sure you understand everything there is to know about this and the risk you're taking. We can go deeper than that. Let's understand what this risk means to your financial planning. Because I'm not sitting
here as an investment advisor extraordinaire. I'm sitting here as a financial planner extraordinaire. We lead all our relationships and conversations with financial planning, not the investment management piece. This almost comes last.
Now in terms of advisors, I know there's sensitivity to not wanting to have a nasty phone call from a client down the road. So I think, you know, we used to have this phrase like I shares and Vanguard ETFs are like the new IBM. You can't be funny. You can't get fired for buying IBM. This is in the eighties. You can't really get fired for buying a
Vanguard and black Rock ETF. I guess I am a boomer for now, but that but that generally applied to stocks and bonds right and low cost is do you worry at all that let's say there's some I don't know, a black swan event with crypto another FTX it goes down. How worried are you that you're going to get the angry phone call? Or do you have that deep of a conversation with beforehand that you almost eliminate that.
Twofold You have that conversation, I think you make it very clear what those drawdowns have looked like. And I bring my own experience into that. You know, mining bitcoin when it was four hundred, seeing it go to twenty thousand down to three up to fifty nine, sixty nine thousand down to twenty or seventeen and now or what forty two today? Oh my god, I mean I'm playing with Yeah, I'm playing with house money.
Hold on, No in your portfolio though, I'm assuming you have a sixty forty base something like that.
For me, it's eighty twenty. So for the younger clients, just crank up that sixty forty to eighty one.
Let me ask you this. Let's say you were all in on crypto. Could you have stomached that?
No?
Okay, so do you sort of explain to them, Look, we're only going to put a little in here, like, yeah, you'll live.
I don't believe in concentratet Yeah, outside of your main state ETFs like IVV or SMP five hundred, and you know what's part of the portfolios. We have conversations around clients like what do you do with concentration risk of your own company stock? Clients that work at Netflix or Amazon or your fangs or Fancy seven whatever, Magnificent seven whatever, Fancy.
Seven, Fancy five. So I like super seven. He likes Magnificent seven. I don't like any of it.
Okay, but what do you do for you know, your Roku client, you know, got a grant and forty percent of their net worth is made up of you know RSUs that invested. You know, I'm not a fan of that. I kind of draw a hard line at twenty percent. I don't like seeing more than twenty percent of any asset outside of your home, you know, being in your portfolio, unless it's the S and P five hundred or you know, your your international develops core fund.
And sorry, and the older investors who come to you and want this exposure, how do they hear about it? Was it reading about the bigcoin ETF launch? Was it knowing about it from maybe their kids? Or like what than that they should like maybe now call you all of the above.
I mean again, if you've been a client of mine for a long time, you know my story with it. I've written about it. You know my experience, my journey, what it means. I mean, I remember in twenty seventeen writing a piece for mainstream financial media titled one Bit one in Financial Advisor's Bitcoin Journey. I mean, I didn't know of any other financial advisors who you know, bought a bitcoin minor with their buddy in twenty thirteen did this and had held the entire time like I forgot
about it. And then twenty yeah, I remember friends calling me up and be like, hey, don't you have this stuff like congratulating me. I was like, it's weird, Like should.
I get them? Like I can't talk about that, you know, not enough to retire, but you know, and you brought up an interesting point all that, you know, how do I deal with it?
This is an outsized position, you know. And I'll get a little personal here, like we got lucky. You know, my wife and I made a really interesting decision back when we had no money to go on a little adventure with a friend, paid three thousand dollars for a Bitcoin minor uh to get some get some of the space money out of the internet, Internet space, internet space,
funny money in space. So you know, I won't reveal how much that is obviously, but it turns into you know, something that will compare that to like our four you know, our four one k or like you know, retirement savior. I mean, how do you how do you think about that as an interesting well.
How much of the performance made you a believer versus the story well, that's a great question. I mean, seeing that I've.
Held with it, you know, going from multiple six figures back down to five figures, if not lower. I believe in it. I can tell you that with that, there's conviction. Okay, I have conviction more than I am.
Price go up. This is great for my pocket. But you'd be.
Crazy to think that, Like I'm gonna sit here before you and not say yay, price go up, which which is kind of the interesting position I find myself in. Like we talked about tribes, you're either you know, Bitcoin maximalist or Wall Street you know shark, you know fat cat.
Soon Yeah, I'm both. I'm both.
Like I want price up, Like, let's get that. Let's get the ETF, Let's get the have an ing, Let's get this, you know, supply shock. Let's get this demand from the ETF. Let's watch number go up. You know, I'd like to retire, you know earlier you're kidding yourself. But at the same time, you go back, take a look at the technology and what this can provide people. You know, I take a page from the maximalist playbook. You love to see it, you do love to see it. Two things gonna I don't think DeFi.
Can exist without traditional finance.
I think it's a symbiotic relationship. So if you're trying to like go one or the other, oh, you want the the people calling for the end of traditional finance and the fat and then like, what are you gonna do climb to the top of garbage Mountain to get a cell phone signal so you can like send someone bitcoin. It doesn't work like that. You can have the end of the world end bitcoin.
Okay. So you're out there looking at the Internet, you're watching stuff, and you've got Jamie Diamond on one hand, yeah, pet Rock. Then you got Larry Fink out there literally telling a reporter, well, you know, if you don't trust your government, and that's sort of him like totally orange pilled, explaining it from the mindset of a total maximalist, and it's like making heads explode on both sides. My head's explodes hearing these guys. These are very influential people to
advisors and boomers. Of course, how do you square that? Like do they ever come to you and say, like, is Jamie Diamond more right than Larry Fink? What's going on here?
I don't know if my clients are getting into you know, CEO, institutional financial institution CEO, you know, battles and what they're saying there I few and far between. I guess my clients you work in finance, you know, can have an intelligent conversation with me or bring it.
Up, but I'll agree with you.
That's pretty wild to see the dichotomy between Larry and Jamie. You know, what are their incentives is the first question that I have. Well, Larry has an ETF, you know, and the more flows into that bad boy, the better for black Rock. I mean, it's pretty simple.
I get that that part. I get.
Like Larry's easy to understand going out there and saying if you don't trust your government, I mean it's factual.
If you don't trust your government, by.
The way, then you want to go buy bitcoin itself and stick it on the Ledger, right you don't.
Like Yeah, Larry like it. It's fascinating. Yeah, Like Larry, we.
Had to take a page out of the Maximalist or the Real Bitcoin or playbook here, but it's not going to be in your product if that's the case.
One question I get a lot from the crypto people on Twitter is why just not have your own walth. So as an advisor, can you explain why not just do your own col Yes?
Yes, yes, this I think is the biggest point of all of it and crazy that I didn't get here, and I'm glad you brought it up.
People.
I think bigcoiners and crypto fanboys and girls underestimate.
How lazy people are.
Sure, you know, guys, you know what did we learn at? I did the whole NFT thing as well, and let's go there for one quick second. I remember my wife was like, what are you doing. I'm like, oh, I'm checking out the hype around these NFTs. You know, you had to get money onto in exchange to buy ethereum and the we're moving away from bitcoin here to buy ethereum to get it to a MetaMask squallet to go buy a pixelated frog on you know, Open Sea to then you know, show it to your friends on your phone.
I said, honey, let's see if you can figure this out, like I want you to go buy a boss beauty or whatever. She was into and you know, over her shoulder. Shit, she turned her after doing it all, she turned around and looked at me and said, there's not a single friend that I have that would ever in their mind do what I just did sure to make this happen.
And that's probably the most complex like series of transactions. Now, like scale it down to just opening an account on coinbase, getting money from your bank account to coinbase, and placing an order for the first time on a trustless system.
Guys, people don't want to do that. They just don't want to do that. Yeah, theyource it, Yeah they don't want to do it. What do they know?
Like I love blockchain technology, I love web three. It is not easy to get involved unless you have a high degree of acumen when it comes to technology and these types of things. That's such a small piece, you know, of the population. But what can most people do? Log into their brokerage account and place a trade for an ETF super easy. People love that. They love that, and that's why this product exists, so people can do that and for institutions to make money.
Are you are you ready for the moment that there's going to be potentially more ETFs and more crypto products on regular normal exchanges or are you gonna gonna kind of just draw the line at the bitcoin stuff, or are you gonna try and.
This should be bitcoin in ethereum. I think you know you're two.
And that's it.
Yeah, yeah, I can't quite go that. I don't know enough about others. If you're like a cardono person or a ripple person, or like coins your thing, or you're like, can you imagine, Hey, honey, I bought some doge coin you know ETF today? Oh great, our allocation looks wonderful. I I don't know.
I don't know. Love you dogecoin people. I hope everyone makes money. I truly do. I'm a I'm a good guy here. I don't know.
It doesn't work like that, but yeah, I think you'll see ethereum next. I think there's some real use cases that will pop up there. I think, you know, NFTs, weren't it as far as showing the world that proof of work and you know, digital signatures on you know stuff is going to be very powerful.
So we've got these newborn nine ETFs and GBTC. Gbtc's bleeding, the newborn nine taking in money. Let's just say over the next couple months they even out at about twenty five thirty billion. Now we'll call that the starting line, because all that unlock will be done and we'll be ready to start just inflows. Mostly where do you see this going?
Like?
How big does this get? Just for context, gold ETFs have one hundred billion dollars that's one percent of all ETF assets. So let's say we're at thirty billion in the summer. Yeah, where do you see this in five ten years? Like you think it'll bypass gold? Be about gold less than gold, slightly pass gold?
Okay, I think my conservative case is it's as good as gold. My aggressive case is it's multiples better than gold, but not like a hundred times better than gold. Come on, let's be easy with that.
So what's the market cap of gold?
What?
Ten trillion? So yeah, gold? But also interesting going outside the ETFs now, yeah, so if you go more than gold, we'll say one hundred and fifty billion, that would put it at two percent of all ETF assets, which is you know, again that's healthy.
It's an aggressive that's my aggressive, more aggressive case.
The also interesting thing is just one more future gold ETFs only own one point five percent of the gold above ground something like that. Yeah, gold ETF I mean bitcoin ETFs already own like four percent of bitcoin. If you go to Goldian levels, you get to ten, fifteen, twenty percent. How it's interesting what do you make of that? Like, is it possible the ETFs eat up the market a little too much and then there's like a lot more volatility because there's less actual traders.
I mean, I'll put my you know, tinfoil hat on here and say, you know, you've got institutions getting involved. I mean they're they're gobbling you know, what was it this morning? How what does black Rock have in uh fifty thousand bitcoin supporting their ETF right now? I mean, you put enough bitcoin in the hands of institutions. I mean, take a look at the gold ETF and what happened, you know, in the year's leading of that. Can they manipulate?
Can they move? Can they shift their weight around? Can they body some things? And I think the answer is yeah. But look at who's selling their bitcoin out of bitcoin holders. Guys like me are not you know, going to touch this forever, and that supply is going to be eventually, I think it's going to get hard to tap.
We've managed to go almost full bitcoin in this segment, so I want to bring it back. Imagine a client comes to you and says do not use the word bitcoin or crypto in the conversation with me. What are you going to have? What kind of conversation you're going to have with them about what's happening in the world in markets and portfolio construction.
And that's ninety nine percent of my conversations right now. It's like the cooin and crypto is not being used here.
You know, again, it's a lot of self selection. You've got clients who have already come in. It's a younger base, they're informed. I don't have to you know, they've already educated themselves or we've had the conversation around what this is and what they should do.
So your answer is go find a different financial advisor.
No, if they don't want to talk about it, we're not going to talk about it. I'm not here to put any product down any client's throat at any time. I think if I start doing that, regardless of the product, I'm not doing my job.
Do you get clients who get jealous of the cues unless say, the whole S and P five hundred and the cues are like double Do they ever go, hey, why aren't we buy that instead?
No? That also doesn't come up The beautiful part of leading with financial planning is that you give people an understanding of how they get to their goals, what rates of return they need, the levels of risk that they're going to take to achieve those rates of return, and then they get back to their very busy lives. All right,
we love talking about this. You know, go talk to your friends who don't work in finance, who have you know, a couple of kids, maybe three kids, and you go try and have the level of conversa even a fraction of the level of conversation not gonna happen. You're gonna talk about football, You're gonn talk about the kids and their school or whatever. It's just not gonna happen. Boomers, however, they get to read. They got a lot of time
on their hands, especially if they're retired. Yeah, you know, so maybe you'll get a few more inquiries from them around this ETF. But for my clients, they know where I stand. They're pretty savvy. I think they've already you know, the ones I expect to have exposure already have exposure, which is interesting.
Final question, what is your favorite ETF ticker?
Oh? Right now, it's QQQ. Oh you mean like what's my favorite life for like a novelty ticker like forget investments. Yeah, yeah, yeah, I understood.
That, but also tell I like the q's answered.
Yeah, as far as like what's hot, yeah that, but as far as like what's my favorite people love ETF tickers, so we just try to end on a on a sort of god, I don't care it's but for a vanity plate. Wasn't there Nerd out there?
Yeah?
Yeah, that's good. That one that was one of the best answers. Yeah, that's a video game ETF toool that is now defunct. Yeah, I think that's.
Whether it is or it Isn't you know that one was cast off some hats with Nerd on it.
By the way, did you notice that there's only two ETFs and bitcoin ETFs that have like Q tickers total and b R r R. The rest I thought were sober on purpose because you could have fun with tickers here. But I thought they were sober fidelity black rock because they want to.
Yeah that's a hedge against like this goes awry and like they even named it like hot.
Or also the bitcoin's crazy enough, you don't need to add the ticker on top.
I mean, have you have you met Black Rock's compliance department? How many lawyers are there?
Yeah?
Do you see there? The they the videos and like the way they're presenting it. It's so fascinating showing like Blackrock marketing to the crypto crowd. You know, they're like, oh my god, this makes one of fall asleep. But they're like, hey, wait, guys, this is how you talk to old people. And it's just funny them talking amongst themselves about these like older people like getting into their business, and it's such a clash of cultures. I find it
endlessly fascinating. I went to a Black Rock influencer day.
They got a bunch of you know, Twitter accounts and TikTok accounts, that's all together. They were debuting their lifestyle target date. ETFs invited us all down to the exchange to a bell ceremony, and I remember, I'm now in black rocks new headquarters and everybody that was I mean, we're weeks months out from this was maybe a couple months ago, and all I wanted to ask people was about the Bitcoin ETF. It was lock and key, like
we cannot will not talk about it. Almost with like us, I could almost sense the smirk behind it, because they, like someone, knew it was coming, and it came.
Doug let'spen a past. Thanks for joining us in.
Trillions, Thank you for having me, Thanks for listening to Trillions until next time.
You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you'd like to listen. We'd love to hear from you. We're on Twitter. I'm at Joel Webber Show. He's at Eric Baulchunis. This episode of Trillions was produced by Magnus Hendrickson. Bye