The Melt Up is upon us…
Retail investors are getting rich piling into stocks, irrational exuberance is at dangerous highs, and all valuations have gone out the window.
But is this the big one? Are we seeing the Mother of All Melt Ups? Dan opens the show by sharing a few increasingly troubling news items that have him worried…
Next, Dan invites Stansberry Research’s, Eric Wade, onto the show for a conversation on all things crypto. Eric is an entrepreneur, investor, screenwriter, and editor of the Crypto Capital newsletter at Stansberry Research. Dan takes this opportunity to ask him all the beginner questions others are afraid to ask:
What exactly is Bitcoin?
What do I own when I own Bitcoin?
Won’t the government try and shut it down?
If they can’t do that, won’t the government tax and regulate it to death?
Could another crypto come along and replace Bitcoin?
Eric answers everything Dan throws at him while keeping things simple. He stressed that you don’t need to have a degree in computer science to invest in Bitcoin. Eric explains what makes Bitcoin unique, how it became the leader in crypto, and why that’s not likely to change anytime soon.
Listen to their conversation and much more on this week’s episode.
Editor, Stansberry Research
Eric Wade is the editor of Crypto Capital, an investment advisory where he uses his unique strategy to find the best opportunities in the cryptocurrency space. He's also the editor of Crypto Cashflow - an advisory that focuses on high-yield, low-volatility crypto opportunities - and the tech-focused Stansberry Innovations Report.
1:43 – Could this be the Mother of All Melt Ups? Dan explores how much higher stocks would need to go to make this the biggest melt up of all time.
5:55 – Retail investors are more bullish and greedier for big gains than ever. Bank of America’s trading volume showed retail investors represent almost half of the trading volume in SPACs in January.
14:03 – On this week’s interview, Dan invites crypto expert Eric Wade onto the show for a second time to talk all things Bitcoin. Eric is an entrepreneur, investor, screenwriter and editor of the Crypto Capital newsletter at Stansberry Research.
15:41 – Dan admits to Eric that even though he bought Bitcoin and Ethereum a little while ago, he’s still got some questions about exactly what he’s holding. “What do I own?… Can you help me out a bit?”
21:25 – Eric gives Dan a unique example to help Dan get past the fact that Bitcoin isn’t a tangible product.
24:50 – Eric points out the GameStop fiasco is driving many towards decentralized finance. “Someone was 140% short?… How is that even possible? Well it shouldn’t have been possible, but someone lent more than what existed, there were special arrangements made…”
29:41 – Many people say, ‘Well the government is going to get in and they’re going to regulate and tax it…’ Eric explains why he believes that this isn’t a big concern.
33:40 – Eric says, “I think there’s no chance that this [Bitcoin] gets shut down by the government.”
38:54 – Eric explains what role the miners play when it comes to Bitcoin… “It’s like having a security guard at the bank and paying him in the bank’s own currency…”
46:15 – There’s hundreds of other cryptos out there. Could another coin come along and replace Bitcoin? “Bitcoin is worth more now than it has ever been worth, even though there’s 8,000 competitors.”
51:14 – Bitcoin is the dominant winner so far in crypto, but 40% are alternative cryptos or Altcoins. “You can’t water down Bitcoin. Because if you copy it, you’re joining it, if you change it or tweak it, you’re [crypto number] 8,001.”
55:07 – The entire crypto space is growing rapidly… “Less than a year ago, cryptocurrencies were worth in the $300-400 billion range. Now we’re at $1.4 trillion. Because more and more people, including corporations, are saying, ‘Okay, I guess I better take this seriously.'”
1:00:49 – On the mailbag this week, one listener writes in with a woeful view on the markets now that the Democrats have taken control of the government. Dan explains why he believes this thinking is flawed. Another listener asks about a prediction he heard in a Stansberry Research interview with Harry Dent… despite most evidence pointing to a strong economy, Dent says that there could be a massive crash coming soon. Dan fields these questions and more on this week’s episode.
Announcer: Broadcasting from the Investor Hour Studios and all around the world, you're listening the Stansberry Investor Hour. [Music plays] Tune in each Thursday on iTunes, Google Play and everywhere you find podcasts for the latest episodes of the Stansberry Investor Hour. Sign up for the free show archive at investorhour.com. Here's your host, Dan Ferris.
Dan Ferris: Hello and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I am also the editor of Extreme Value published by Stansberry Research. Before we get to today's episode, don't forget – Trish Regan is now a part of the Stansberry family. Check out her podcast, American Consequences With Trish Regan. The link will be in the description of this episode. For today's episode, we'll talk with my friend and Stansberry colleague, Eric Wade. Eric is Stansberry's resident crypto guru and the editor of our Crypto Capital crypto-trading advisory service. In the mailbag this week. Listener James P. says that our viewpoint is worthless now that the Democrats are in control. I will give you my answer. Hint, hint. I strongly disagree. [Laughs]
In my opening rant this week, it's MAMU. MAMU. The Mother of All Melt Ups. I'll tell you where I heard that term, and then I'll run through a smattering of bubbly news items that indicate maybe we will get to MAMU at some point in the future here. That and more, right now, on the Stansberry Investor Hour. MAMU. MAMU, the Mother of All Melt Ups. What is this all about? Well, it's just about an article that I read by a guy named Ed Yardeni. Ed's been around the block. He has a firm called Yardeni Research now, but he worked for Deutsche Bank and EF Hutton. I know he worked for Prudential bank for a while and other firms. He's had quite a career. He's an economist who's worked as an equity analyst, a strategist, been around forever.
And he's got a cool website. Yardeni.com has all kinds of charts and stuff that you can access for free. And in a recent blog post called Party Like There's No Tomorrow!, dated January 16... and he's talking about how expensive the market is, how low bond yields are. And he wound up with this one little paragraph here. He says, "Now as in 1999, there are mounting signs of irrational exuberance in the stock market. This time, there are also more signs of ultra-stimulative fiscal and monetary policies than there were back then. The combination could be fueling MAMU, the Mother of All Meltups."
And, you know, you're not going to get any argument from me. I forwarded this little link to this Yardeni post around to the Stansberry folks internally. And a really smart guy who I liked named Alan Gula, who's one of my colleagues at Stansberry – he shot back a chart that he created off of Bloomberg that showed the S&P 500 trend line. And it was – or maybe it was the Nasdaq. It was one of those. And it showed that the 1999... actually, the 2000 market peak, the very peak of the dot-com bubble, was more than three standard deviations from trend. OK? Now, right now, we're not even two standard deviations.
So if we really have MAMU potential here – for now, the dot-com bubble, by that measure, was the MAMU of the... you know, the Mother of All Melt Ups. But Yardeni is just saying we could get that. You know? The combination of the ultra-stimulated fiscal monetary policy plus the irrational exuberance in the stock market could combine and might create another MAMU moment like we got back then. I like the term. I will probably be using it. And elsewhere – look. We used to do this a lot on the program where we just ran through a bunch of news items.
And that's all I want to do today because everywhere you look, there are signs of froth. Our good friend, Jason Goepfert, and his team over at sentimenttrader.com... I love their Twitter feed among – I like their service. I like their work. But I like their Twitter feed. and their most recent post, they said, "Just one more sign that there has never been a bigger appetite for the most speculative issues from the least experienced investors." And then, he linked to a story on CNBC that says, "Unusual first day rallies in SPACs raised bubble concern." Every single one of them has gone up, right? So SPACs, you know what they are, right? Special-acquisition companies.
They basically say, "We're going to raise some money in the public markets, and the SPAC is just going to hold cash and look for something to acquire." So you buy the shares for... they usually IPO at $10 a share. And maybe they acquire something within five years, or maybe they don't. and if they don't, you get your cash back – your $10 back. And if they do, maybe they'll acquire a really good business. And some SPACs have been really successful. Like, DraftKings did really well. Some have crashed and burned like Nikola, the electric truck company. And we talked about this before when we had Enrique Abeyta on the program.
So yes. But SPACs overall are – I believe they are a sign of extreme speculative froth. Because the proposition is like, "Hey, man. No idea what we're going to wind up with here but come along for the ride. Buy our SPAC. We're going to buy an electric vehicle company. We don't know which one yet. We don't know if it'll crash and burn or not but buy it." And more and more, smaller investors are into these things. Bank of America's client flow showed retail investors represent almost half the trading volume in SPACs in January. OK?
And then, I can't help noticing another article about GameStop. You know what I've – you know what I said about this from the beginning, right? I said, "GameStop, it was just a sign of speculative excess and a sign of a bunch of no-nothing investors getting into something where they really just had no idea what they were talking about and no idea what they were doing and no idea what they owned. and the stock went straight up like a ballistic missile and straight back down." It's down 90% from its all-time high. The all-time high was in pre-market trading it was like $500. And as I talk to you, it's $50. Yeah. Yeah. It's 10% of the all-time high. It's down 90%. Already, that quick.
And that's the way it goes, right? When a price goes ballistic straight up, it doesn’t level off and go sideways. It goes ballistic straight back down. And there's just this article in the Financial Times says, "A moment of weakness. Amateur investors left. Counting GameStop losses." And they interviewed this one retail trader in England who said – her name is Tori Barry. She used the money from her savings to buy shares in GameStop and cinema operator AMC near their peaks, right? That's how the peaks get established. All the no-nothings and losers pile right in. Probably lost £2,500. And the quote from her is, "We are not big players. We haven't lost millions.
But for us, that is rent for the month. It is bills. I don't know how we'll recover. I’m sure her story is like one of many, and it's not unusual. It's exactly what you should expect. It's exactly what these things always mean every single time they ever happen in history. And another thing. You've heard of this firm Ark Investment Management? Ark Investment Management and this Cathie Woods who runs it? They've been huge boosters, huge supporters, of all the innovative crazes. 3D printing. They have a 3D printing ETF, and they've been a huge supporter of Tesla, a huge bull on Tesla, right?
So everybody thinks they're a genius now. Let me tell you something, folks. Cathie Woods and Ark Investment Management... I have seen this movie before, and I know how it ends. In the '60s go-go era, it was called the Manhattan Fund, and Gerald Tsai. Same thing. Everybody thought he was a genius. He was just a MAMU, a momentum investor, buying things that were going up. Everybody thought he was great. The returns were phenomenal for, you know, several years of the bull market.
And then, they started going bad. But he was smart. He sold his fund to CNA Financial – you know, a big, dumb insurance company – for like $27 million right near the top in 1968. Right when things were starting to go bad. He's like, "I'm out of here." But he stayed on as a manager. Cathie Woods and Ark, it's the same thing, man. It's the same thing. If you go to their Website, all their... here's their ETFs These are the names of all their ETFs. Ark Israel Innovation. Next Generation Internet. Genomic Revolution. Autonomous Tech and Robotics. Fintech Innovation. 3D Printing is a real innovation.
It's just like every innovation investing fad in existence in an ETF. Yeah. How's that going to do? It's going to go straight up, and then it's going to go straight down. And Cathie Woods is going to be a footnote in history. Oy. The stuff isn't that hard to figure out if you just read a history book. Read a book by John Brooks called The Go-Go Years. John Brooks, The Go-Go Years. It talks about Gerald Tsai, and it will... when you read that book, you'll be like, "This could be written about right now. This could be written about 2021. That's all I'll say.
And just one more little item before we move on and talk to Eric Wade. I have to give a little shout-out to former guest Jesse Felder for pointing this out. We've interviewed Jesse twice. He's a really good guy. We check in with him, you know, pretty – a couple of times in the past couple years. You know? Last June, I think it was, and then the previous May. Last June, Episode 157 if you want to give a listen to that. But anyway. Jesse posted this thing. It was an article about a guy who's really bullish on oil. And he's an investor who is a partner of a guy named Richard Rainwater who's like a famous sort of deep-value vulture investor. This guy's name is John Goff. It's a Forbes article called, "Billionaire Names Oil Stocks He Calls 'The Investment Opportunity Of My Career.'"
And he owns 24% of a company called Contango Oil & Gas. Now, let me tell you something. I remember seeing a presentation by a guy named Mark Sellers – who was a good guy, but he just got caught up in his own hubris, I think. And he had like 40 or 50 or maybe even more of that – some huge amount of his money in Contango Oil & Gas going into like 2014. And I went to the value-investing congress, and he was saying the guy who runs this company is the "Warren Buffett of oil," blah-blah-blah-blah-blah. "It's going to be a multibagger, etc., etc. Of course, oil crashed that year, and sellers went out of business. and I know one of his investors, and let's just say they were a pissed-off group of people.
But it done poorly along with all the other oil stocks lately. And so, Goff is buying it as a genuine distressed oil-and-gas play. And he's got a list of companies here in this Forbes article that he also recommends as distressed frackers, right? People who produce oil and gas through fracking. And the list is: Canadian Natural Resources, ticker CNQ... Chevron, CVX... ConocoPhillips, COP... PDC Energy, ticker is PDCE... and Pioneer Natural Resources, PXD. And he says they're all cheap, and it's the greatest opportunity of his lifetime. You know, I'm not saying that I own any of these or will be recommending any of them soon. But to me, this is what Diego Pereira... who was an investor who I kind of liked reading his thoughts now and then.
In fact, I'm going to ask... he said something about bitcoin. I'm going to talk to Eric Wade today about that. But Diego was saying there's bubbles and there's anti-bubbles, right? The anti-bubble is the thing that's dirt-cheap that everybody's forgotten and thinks is a terrible bet. And that's oil today. So, you know, all I'm saying is it's worth a look. We talked about the bubble. Cathie Woods. You know, the MAMU, right? The Mother of All Melt Ups, all this stuff. And the anti-bubble is oil. OK? That's all I’m going to say about that. All right. Right now, I just want to finish up with my quote of the week, and then we'll talk with Eric Wade. The quote comes from The Go-Go Years by John Brooks.
And I talked about Cathie Woods and Gerald Tsai. and this quote is from the section of John Brooks. Really excellent book, The Go-Go Years, where he's describing Gerald Tsai's upper trajectory of his career when he worked with Fidelity. And I just think it's kind of funny among other things. But he characterizes the way this guy picks stocks and the way he operated. And I think you'll find that it's kind of familiar-sounding with a lot of other folks nowadays. But Brooks writes, "He showed himself to be a shrewd and decisive picker of stocks for short-term appreciation.
And so swift and nimble in getting into and out of specific stocks and his relations with them far from resembling a marriage or even a companionate marriage were often more like those like a roué with a chorus line." That's the end of the quote. But a roué, I found out – I hadn't seen that word before. It's a debauched, usually older man, right? So Tsai is like a sleazy old guy chasing after a bunch of chorus girls when he buys these stocks. You know? It's not exactly a good relationship that he has with the businesses he's buying.
And I think that characterizes, you know... you think the people are buying GameStop know anything about the businesses they're buying? No. They were like sleazy old guys chasing after chorus girls. Same thing. OK. That was fun. Let's talk with Eric Wade. Let's do it right now. [Music plays and stops] Nasdaq hit 13,000 for the first time in history. Bitcoin topped $40,000 just days after cracking $30,000. The words mania, euphoria and frenzy are all over the financial press. But is there more to the story? You bet there is.
And my good friend and long-time colleague, Dr. Steve Sjuggerud – who first warned of the cash panic in 2015 – is now pounding the table about a dramatic financial event that has finally begun. Learn more absolutely free of charge by visiting 2021bullmarket.com. Again. 2021bullmarket.com. Check it out. [Music plays and stops] Today's guest is Eric Wade. Eric Wade is my friend and colleague here at Stansberry Research. He's an entrepreneur, an investor, screenwriter, and editor of the Crypto Capital crypto-trading advisory at Stansberry Research. Eric, welcome back, sir. It's been a little while since we spoke with you last.
Eric Wade: It has. Thank you. Thank you very much for having me. And this is always one of the better conversations that someone can participate in either as a listener or... it's good to be able to talk to investors such as yourself who – just you have so many good questions and such a curiosity that the conversation goes great. So I'm glad to be part of it.
Dan Ferris: Well, thanks for that. What I'm really curious about today, Eric, is like what the hell do I own? I own bitcoin and Ethereum. And I'm sitting here, and my bitcoin was this little... I think I put – I don't even know how much money I put. Maybe like $20,000 or something. And I thought, "Well, if it goes to zero, I don’t care. It's not going to change my life." But now, it's worth like $100,000 or something.
And, like, if that went to zero, it wouldn't wreck my life or anything. But that starts to be an amount of money that I kind of care about. You know? And I'm sitting here thinking like, "If this were real estate or a busines or anything else, I feel like I'd have a better handle on it." But I keep asking, "What do I own? You know, how do I square this with myself and keep holding onto it?" Can you help me out?
Eric Wade: Yeah. I hope I can. That's a million-dollar question, right? And I like that you said, "If it was real estate, etc.," because at a certain point – if it's doing its job – then no matter how much you put into it, it does grow into... and I'm talking about aggressive investments, right? That if that worst-case scenario doesn’t play out with the go-to-zero, then you're on the other side of it. And it may or may not be growing into a position that you do start to care about. And one of our holy grails with, one of the carved-in-stone rules, is the position size such that you're not emotional. And that's a tough one, right?
Because sometimes it's not enough. You don't own enough of something if you're not emotional about it, or sometimes you own too much. And I've seen estimates. And it's really hard to put a return number on bitcoin because it's so volatile. So whatever day you pick to start your analysis on, right, is 10 years or five years or whatever it is... it could be up 1,000% or down 1,000% from that. But I've seen estimates that people say, "Think of bitcoin as growing at 200% a year, but it really never does that." Right?
So if you take enough years back-to-back, you can feel like it's a 200% compounding. Even though it never really does that. And you wise investors out there who are listening to this right now are thinking, "OK. If I had an investment that was" – let's say I'm expecting 200% compounding, and it's done 1,000. Then is it going to revert to the mean? [Laughs] Right? What if it's down 80%? Which is can do as well. Then is it going to revert to the mean?
And that mean being changing day by day... yeah. You're stuck in this position of, "If I bought some beachfront property for $1 million and it was $20 million, do I sell the kitchen? You know, can I sell a piece of it?" And with bitcoin or with Ethereum, we've worked out what works for our optimization is – when something triples – you take your principal off the table. But bitcoin is kind of the core of the cryptocurrency industry, right? It's our dollar, so to speak. It's our currency moderate medium of exchange.
So it doesn’t necessarily have that same allure, right? When you get it right, you're not as tempted to say, "I got it right. I'm going to get my money off the table on a triple." It's probably good advice but harder to do with bitcoin. Because when you sell your other cryptocurrencies, what are you selling them into? And if you're selling them into dollars, that could be one optimization. Because if you're trying to optimize your investment to get you dollars, then you finally talk yourself into, "Well, I guess I'm going to take this zany speculative bet on bitcoin." And you get it right. Then you've always got that. But how many dollars is it worth in the back of my mind?
Dan Ferris: OK. Hold on a second, Eric. I still want to know what the hell I own. [Laughs] You know? I'm serious. Like, I have an idea about bitcoin. You know? I feel like I understand the inherent scarcity of it and this huge, you know, biggest-in-the-world network that supports it. And this seems like a really great idea. It's a huge innovation. I think it will change the world of payments. I don't know what the world looks like in 10 years, but I think bitcoin will change it. But still. Like, when I think about what it is, my brain is so stuck on tangibility, I think. You know?
Even with something like an online business. You know? There's a staff, and there's a server, and there's software behind it, and they're selling some product or service. Like, I get it. You know, with Stansberry, right? People buy most – people buy from us online. And when I go to the Stansberry offices, it's a big building. There's 200 people. [Laughs] But bitcoin, like the tangibility of it, kind of escapes me that way. You understand what I'm saying? I still don’t quite get what I own.
Eric Wade: So I've got maybe a somewhat unique opportunity in front of me. And that is being on the line with you, who I look up to as an investor. But you also have this somewhat specialized skillset. Maybe it helps you with investing. Maybe it's unrelated entirely... that we'll talk about in a second. But let's go down that rabbit hole of tangibility, and let's talk about, "What if we're not talking about bitcoin?" Let's set aside bitcoin for just a second and talk about maybe Brazilian rosewood.
Because it's tangible, right? Brazilian rosewood is very tangible. I don’t know. There's probably – what, what would you estimate – maybe five or 10% of the listening audience that the bell's going off in their head – that they already know the punch line of this, right? And the rest of us are thinking, "OK. Brazilian rosewood sounds good. It only grows in certain places. It's got a little scarcity behind it. It's wood, so it has utility. You know, that's unquestioned, right? You can burn it to heat your food. You could make a chair out of it, etc.
But it's also got this really special property. And music loves Brazilian rosewood. And Brazilian rosewood loves music. It's got this resonant special property that makes it worth about $1,700 for three pounds of it. And the question, though, is if I was to try to sell you three pounds of Brazilian rosewood – because you can make a wonderful guitar out of it or a marimba – then you start asking yourself, or you ask me, "Well, how do I know that's real, Brazilian rosewood?" Right? All those questions come up. A savvy person before they spent $1,700 on three pounds of Brazilian rosewood would have those same questions that you might have about bitcoin.
And pretty soon, you realize one of the biggest differences between bitcoin and Brazilian rosewood – is that tangibility, right? Like, you'd have all the same questions. "How do I know it's real? How do I know where it came from? How do I know you treated it well, that it's properly dried out, etc.?" But with bitcoin, a lot of... you know, it's not tangible, but there's no question whether it's real or not. You could check with a bitcoin explorer. So go full circle back to the, "What do I have," you have something that's immutable, and maybe it's just your place in line – it's unstoppable.
And that doesn't hold a lot of value until you get up to your GameStop moment, right? Where you've done your Brazilian rosewood check on it to see, "Is it real? Is it something that I own what I say I own," etc.," and it's got these magical properties?" Like a Brazilian rosewood. It's not just wood. It's musically resonant wood. So then, you kind of get your mind around that with bitcoin... is, it's not just scarce like a gold or like a rosewood. But it's also digital. And we're not really used to digital being scarce. Because if you take a picture of your vacation or your dinner, you can share it a million times.
So digital and scarce, we're already starting to move into something that's different, provably scarce – that's another different step – and then kind of an immutable ledger where you think, "OK. If Dan says he's got two, we can prove that and no one can change it." And then, you take that final step. And I think there's this big eye-opening moment that happened recently with Melvin and with GameStop and all these that you just... the concept of someone with 140% short? How is that even possible? Literally, technically – OK. I'll throw that back at you stock guys. How is that even possible? Well, it shouldn't have been possible, but someone lent more than what existed, right?
There were special arrangements made, or maybe there was a speculator that was willing to go that short. I don't know, right? So when I ask stock investors that, is, "Can you go short? Can you go short 100%? What if you went short 140%?" Then you start thinking, "What if there was a set of rules that just absolutely couldn't be bent? And if I pinned that back all the way to bitcoin where I say, "If you own bitcoin and it can't be bent" – can't be broken, can't be rewritten, we're still at the stage where I still have to define it by something else, right? You've to this place in line. You've got this piece of something that can't be bent.
Dan Ferris: Actually, Eric, you're there. When you say, "Can't be bent," you're there. You just have to explain to me, like, "Can't be bent? Like can't be hacked, you know, cryptographically, absolutely secure?" Is that what we're talking about?
Eric Wade: It is. Because when Bitcoin was first built – and it wasn’t the first to use this technology. But you've got this security mechanism that the idea behind it is, it's pretty darn good. And by that we mean – let's say you take the computers that were available to us at the time it was launched. You could start making guesses for how you could hack Bitcoin, like a brute force attack on it where you take all the computing power in the world and say, "I'm going to guess a key that will unlock Bitcoin." And it would take 10,000 years to guess that key because there's just so many possibilities.
And most of us look at that and think, "OK. That's good enough." Right? I like something that's secure enough that it would take you 10,000 years to guess it. Because I'll be long gone by 10,000 years, right? So that's the security level that we've reached, is you could guess it, but it would take you 10,000 years. And then if you say, "OK. So if I own my private key" – my place in line on the blockchain of this unbendable, immutable ledger – "my place in line is secure for 10,000 years. "And I don't need to necessarily know everything that's going to be built on that in time.
But I can speculate 200% appreciation compounding every year. I can speculate that when someone does build, let's say, a property registry or – hey. What if someone got the crazy idea of Uploading the number of shares that are sold short to the blockchain every 10 minutes? Once that becomes immutable, your place in line is protected. And do you want to buy that when it's $100,000, or do you want to buy it when it's $50,000 for your place in line? Right? So that's the stage we're at, is people are thinking, "Of my two minds, the security is really secure." Ten-thousand-year hack is what it would take to break this. So how much am I willing to pay for something that I'm not even sure I'm going to use it?
And maybe a real estate speculator would think, "Beachfront property" – maybe not right next to the world's nicest resort but maybe two or three lots down from the world's nicest resort is worth paying for." Right? Like, I can get a fair price for it. Because once we all know what the most secure and best-distributed... because remember. We've got millions and millions of people using this confusing technology. I think we're up to maybe... well, millions of people using it. It's distributed. It can't be stopped. It's stronger than any network we've ever seen. So how much do you want to pay for your place in line with that security? That's where we're at right now, is we're in this price-discovery mode.
Dan Ferris: OK. Tell me about "can't be stopped." What do you mean, can't be stopped? Like, because this is something that people worry about. You know, they say, "Well, the government's going to get in, they're going to regulate it and they're going to tax it. and they're going to make their own digital currency," or whatever, "and bitcoin's going to have competition from the biggest competitor that it could possibly ever have," blah-blah-blah. I keep telling people that, "No. Bitcoin was invented with that in mind." What's your answer to that? What do you mean, "Can't be stopped," I guess is really the real question.
Eric Wade: You know that one. "Bitcoin was invented with that in mind," is all anybody really needs to know. But the how-it-works part of that is, you can take a very cheap computer – raspberry pie – and you can run the bitcoin software on that raspberry pie – $100, $200 or so – and conduct any transaction you want on that. Which means that you could start up your own bitcoin node right now. So remember where we said it's immutable, it can't be stopped? The government could try. And the snarky answer to that is, "Yeah, like they try to keep us all driving under the speed limit or not using recreational drugs, etc." Right? They try to keep us all paying our taxes, etc.
So the government tries a lot of things, and how successful they are is up to anyone's guess. But there's no border for bitcoin either. There's currently well over 10,000 nodes running. And that's – a minute ago, I said when I said you take any good computer, and you could start running bitcoin on it as little as a raspberry pie," people are doing that all around the world where they're saying, "I'd like a piece of this unbendable, unstoppable thing." So at the very lowest part of this answer, if the U.S. government decided we do want to stop this" – well, first off their jurisdiction is only America, right?
So everyone else around the world would say, "Oh, thank you. Thank you. Thank you for making this harder for Americans, because we want access to this amazing opportunity." But even if all of the well-organized governments decided to stop it, then humans on the other side of it could say, "Well, you can't stop me," in the way that humans say, "I'm not going to drive 65 miles an hour," or whatever, right? So humans could just continue to Upload to their own computers, and there's even satellites in orbit that are broadcasting bitcoin transactions and the bitcoin software and bitcoin white paper so that it is literally unstoppable. It's not just, "It would be difficult," unstoppable. It's literally unstoppable because there's a satellite up there broadcasting it.
So if America decided, "We're going to shut this thing down" – and I think that's a horrible, horrible idea if America decided to shut it down, because it would throw that competitive advantage to anyone but America. But even if America decided they wanted to, they'd have to do one of those door-by-door, "Can I check all your computers," type raids And that would be unpopular. I don't think it would go over very well. And I really think where America should go is, America should say, "Hey. This is the strongest network ever built and unstoppable. We should own a bigger piece of it."
They should go the other direction. Like, if I had tank armor that was the best-ever built, you'd think America would want a piece of that, right? Or any kind of technology. You'd think America would say, "We don't want to shut this down. We want to be involved with it." Right? And why wouldn’t America want to master that? You know? So I don't think there's much of a chance, especially when we have, you know, government offices like the Office of the Comptroller of the Currency saying, "Yes, it's OK for banks to use decentralized ledger technology."
I think there's no chance that it's going to be shut down by the government. Now, knock on wood. They do dumb things sometimes. So they may try it. But I think the multiple answers on that is, you can't stop it. It was built to prevent that. And even if you did try to stop that, individuals out there can work around it. And even if you stopped all the individuals, it's flown the coop. It's out of the border already. So it would have to be the entire world organizing against that. And that's not possible.
Dan Ferris: Right. I think I get you now. Because the problem here is, like, centralized, decentralized. People believe too deeply in the centralized government's ability to do things. And bitcoin and crypto in general, it's so distributed. I mean, it's like you were saying. It's distributed like marijuana use or alcohol use. What are they going to do? Go door-to-door and confiscate all your booze. It's literally that distributed.
Eric Wade: Yeah.
Dan Ferris: So I think you've helped me a lot here. You've given me some good handles to hold onto. You know? Can't be stopped – it's not breakable, at least not unless in 10,000 years.
Eric Wade: Yeah. If you think back to the technology that sort of spawned this, there's all kinds of great stories about when XYZ government attempted to ban ABC cryptography. And a guy had something printed on his T-shirt and walked through airport security or customs or something like that just to prove you can't stop this, right? And maybe a private key or something that you memorize. There's people that have all kinds of novel technologies for... and I don't want anyone to think that this is just an outlier-edge technology.
I mean, we've got $1.3-some-odd trillion in this. We've got public companies that are saying, "We're starting to use these types of assets in our currency reserves." Right? This is no longer an edge case. This is no longer this "what if" type of technology. I think so many people thought of it as a currency as it has to replace a different currency, right? Like, we don't think of our Visa replacing our dollars. But Visa's just a technology. PayPal, Venmo, they're just technologies that move dollars. Now, bitcoin's a little different because you don't ever have to go back to dollars with bitcoin, right?
So your question of, "What do I own? And, hey, my $20,000 is worth $100,000" – you could also train your brain to think, "My two bitcoin is still two bitcoin," and maybe never make that transition back to dollars unless that's what you're optimizing for. And you know that as well as anybody else. If you're making investments without the end in mind, then that's a long-term investment that... maybe that is the end, right? "Am I going to hold this forever? Do I want to inherit this down to future generations and then not have to pay so much for it?"
Bitcoin, the having – that happened last May just got itself into a position where the inflation rate is about 1.8%. So that's in line with the target rate for U.S. dollar and right around the real inflation rate of gold. So bitcoin as a currency is on par with gold and dollars. And in three or four years, it'll cut its inflation rate in half again to be under 1%. And then, it'll maybe then start taking on a little bit more currency properties and less speculative properties, right? Because at that point, you'll think of it as, "Well, the pile of new bitcoin that's coming out every day is less and less. So we only have to deal with what we have."
Dan Ferris: Just to clarify for the listener. Like, when you talk inflation rate, you're really talking like supply growth. Like annual supply growth-type... right?
Eric Wade: Annual supply growth. Yeah. Exactly. Because obviously, the price goes up and down. And when you're thinking of – a lot of people confuse those two with the inflation being some measure of return. And what I mean is these minors who are processing the transactions on the bitcoin network. The miners get paid in new bitcoin. It's like having a security guard at your bank and paying him in the bank's own currency. So these miners who lend their resources, their computing power, to the network – they get paid in new bitcoin.
And the amount that they're getting paid goes down routinely. That's the inflation, is the new bitcoin entering the system. So we're down to – we're about – 900 new bitcoin are generated every day... 12.5 new bitcoin every 10 minutes as a reward for these miners. And that's basically, literally a reward for, ""Hey. Lend me your computing power and I'll pay you for it for solving these problems and conducting these transactions." And that is literally what was built into this largest network ever assembled... was so many different miners saying, "I want to participate in this. I want to provide my computing power to this and be paid in bitcoin for it."
So that's the inflation, is just the measure of, "How often do we pay these rewards, and what is it versus – you know, what is it as a percentage versus what's already out there?" And that's another thing that makes it kind of special, is that there aren't a lot of new bitcoin being created. So if you're doing the math of, "I like this. I like an immutable technology. I like something that's digital but not copiable. Where can I get some" – well, they're kind of scarce and getting more scarce as time goes by.
Dan Ferris: I have a question about the scarcity. Somewhat famous investor among investors, a guy named Diego Pereira. He went on LinkedIn recently. And he's actually a fairly reasonable guy. Like, he doesn’t say, "Oh, bitcoin's garbage," blah-blah-blah. But he's just trying to identify risks. And he had this idea about the scarcity of it. But he was saying, "Well, the secret fallacy" – he says, "21 million bitcoin versus 21 million cryptos" – he says, "There is no scarcity in cryptocurrencies. You can create a perception of scarcity by framing the discussion around, "There are only 21 million bitcoins," which is true. But it misses the point that there are 21 million or some large amount of different cryptos which can be created out of thin air. So to me, that is suggesting that you can create meaningful competition to bitcoin out of – as he says, "Out of thin air by creating a new crypto." I don’t really get the impression that that's rule, though. Can you help me out?
Eric Wade: It's hard to disagree with Dan Ferris, but I think he's right.
Dan Ferris: Really? OK.
Eric Wade: Absolutely. Absolutely. He's right. So why do people pay hundreds of billions of dollars for bitcoin, then, if he's right – if Diego's right? There's a little bit more to it than that. And what's more to it – what do they say? Devil's in the details, right? That you can copy bitcoin. And that was built into it. It's entirely possible. And in fact, the source code of bitcoin is publicly available. So if you wanted to make Dan Ferris coin, you could. And in fact, a lot of the best projects that are out there right now are someone taking a look at bitcoin and saying, "Wouldn't it be great if it could do," blank, right? Inset new criteria here.
And they take the source code, and they tweak it. I'll give you a good example. Bitcoin locks down a new block every 10 minutes. So pretty quickly, people thought, "Well, if I'm going to be using bitcoin as a currency, I'm not going to stand at the gas pump and put my bitcoin card in the gas pump and wait 10 minutes for the gas pump to say, "All right. You can start pumping gas." Right? So we need faster block times. So that was the first change that came to someone's mind, was, "What if we had a bitcoin that had faster block times?" And they take the code, and they rewrite it, and they say, 'Instead of 10 minutes, let's make it 2.5 minutes.
And instead of it being this particular algorithm – SHA-256 – let's change it to something else." And you can do that as many times as you want. You can do that a million, infinite, number of times. But what you have if you do that is not bitcoin. So it's a bit of a... I don't know if he's not getting what he's talking about or if he's really getting what he's talking about and intentionally trying to steer off to the right. Because if you change bitcoin – and you have every right to do that. It's public, and it's open-source... you don't have bitcoin, right? You have Dan Ferris coin or Lightcoin or Darkcoin or Bitcoin Cash or something like that.
And bitcoin was built with that idea in mind, is, "Let the best one win. So let's say you do that, and let's say he's right, and you change it – you create a new one. Then everybody who's involved has the opportunity to say, "Well, which one do I want to follow?" Do I want to follow the old bitcoin that is 10, 11 years of mining rewards and history and every single transaction followed, or do I want to try this new one?" And I don't know what's going to happen with the new one, and I don't know who owns it, etc. But you can do that.
And the crypto industry loves that. We're creating new cryptos all the time. I think there's probably 8,000 of them. So he's not just right. He's right 8,000 times over. But he's also not just wrong. He's wrong in that if you change bitcoin, you've got something else. And if you copy bitcoin, you're basically just joining end-of-the-line of all the other people who are running a bitcoin node. So we already really talked about that in this conversation, is I can Download the bitcoin software and start running it myself. If I change it, it's not bitcoin. It's unique. If I don't change it, I'm just joining bitcoin. Because bitcoin thought of that when they launched. They thought, "Do I want more and more and more people to be able to run this?"
So then, the real question is – what he's saying is – it's possible to change it and make it better. And that is possible. It hasn't happened yet. Most people have thought, "When we get to these qualities of it – faster or more private" – is another example, or, "Add smart contracts onto it like Ethereum, etc. Or instead of making it a proof of work coin, let's make it a proof of stake coin. So only people who own some can participate in it. Things like that. Those changes are all out there, and some of them are flourishing. But it hasn't hurt bitcoin at all. It's actually – bitcoin is worth more now than it's ever been worth even though there's 8,000 competitors.
Because people look at it... at a certain point, we get to the argument of, "If you're telling me you've got a 1964-and-a-half Mustang, is it a real 1964-and-a-half Mustang, or is it a tribute?" Right? "Or is it a resto-mod? Are those OEM parts?" And that's hard to get our brain around with something intangible like bitcoin. But the people who like bitcoin do like the fact that it is well-established. And let me get to maybe my esoteric of arguments on this. If you and I decided after we get off this call to create "Dan and Eric coin," we can, right? We can even copy bitcoin, make a couple of quick changes, and we launch "Dan and Eric coin." And then, only the two of us own it.
So we might think, "We want everybody to use this. We've got a decision to make. Do I give it away to everyone out there, or do I make them work for it?" And if I give it away, I can do that because it's our coin, right? You and I agree. Let's give it away. And this is the part that – I've seen arguments like Diego's before, and I've never seen anybody address this part of it. If you give this thing away – because right now, millions and millions of people are using bitcoin, and only two people are using "Dan and Eric coin." You and I, right? So if we want to get to where millions of people use it, we give it away, they're going to think, "Well, it's worthless. It's free. I have nothing vested in that.
But if we make them work for it, they might think – to solve that vesting problem, those people might think, "Well, why would I work for that coin? It's untested. It's unproven. If I'm going to put my work into something, I'm going to put it into maybe bitcoin, which is tested and proven and the strongest one possible." So those are the questions that come up with the, "OK, you want to take on bitcoin. Go ahead. That was built in. But you better come with you’re A-game." Because if you give it away, in order to get a lot of Users really quickly, what do those Users have invested in it? Nothing.
And if you don't give it away, you better have something valuable to offer to get people to want to invest in your coin. And that's out there. Those questions are out there. Those opportunities. There's lots and lots of new coins coming out that now investors have the opportunity to look at it and weight it and think, "Is it better than bitcoin?" So bitcoin right now I think stands around 60-some-odd percent. And there's a specific number in there that I could probably pull up. Let's see. I can get it in one second.
Bitcoin dominance right now is 60.5% of all cryptocurrencies that are out there. So that line of reasoning that we just went through of, "You can create something new," right now's about 40%. And bitcoin is the other 60% of the almost $1.4 trillion in cryptocurrencies. So yeah. Diego's got a point. You can copy it. But you can't create new anything that is exactly bitcoin. Because if you do copy something that is exactly bitcoin, you've got bitcoin, and you basically just join the back of the line.
Dan Ferris: Interesting. Very interesting.
Eric Wade: Maybe that [laughs] long, boring explanation is why nobody ever goes there with their LinkedIn posts, where they're taking it down. Because there's an answer.
Dan Ferris: Yeah. One question or Diego would be, you can have plenty of competition, you can create a new coin out of thin air. It's been done 8,000 times so far, and bitcoin is 60% of all the crypto in existence. You know, these 8,000, I guess they just missed the mark. 8,001 is going to be the charm. That's the one that's going to crush bitcoin, but these first 8,000... eh, couldn’t quite do it.
Eric Wade: Keep trying. And, yeah, bitcoin thought of that in-advance. And if you get it right, the market will reward you. Because there are... of those 8,000 other cryptos, or I guess we'll say 7,999 – everything that's not bitcoin – there's some phenomenal amount of money tied up in some of those because they do come to market with a better technology, right? With something that the cryptocurrency industry likes. And that's why bitcoin is 60%, but it's only 60%. So those alt coins, there's something to be said for those, but it's not copying bitcoin. He's right other than the scarcity part. You can't water down bitcoin.
Because if you copy it, you're joining it. And if you change it or tweak it, you're 8,0001 or 8,002. And hey. You're welcome to it. We literally encourage that in this industry because we want people to participate, and we want someone to come up with a better technology. And that's what, in fact, Crypto Capital is all about – is looking at these options of, "What else is out there? Is it a viable technology? Is it going to attract users? Is it something that's going to stand the test of time?" We've put together a video about that. When we're considering buying these other 8,000 technologies or currencies or cryptos – whatever you want to call them – how do we sort them out?
You can't just buy one of everything and hope for the best on that, right? That's not possible. So we put together this video. In fact, I have an identical twin brother that I was able to wrangle into my video [laughs] because he is a surgeon and somewhat skeptical and very busy and likes to invest but doesn’t like to have to do all this on his own. Because that 8,000 possibilities is intimidating. So I got my brother onto a video, and Austin Root – one of the better investors at Stansberry... and we just sort of talked through this.
And it's available for anybody to watch about how we do this and what makes bitcoin special and the different between the people that are investing in these even if they see it just as a speculation or even some of them think of it just as a novelty, right? So you can go to stansberrycrypto2021.com and watch the video, and watch for yourself a normal person, my twin brother, and what we do to sort out these 8,000 cryptos so that we know which ones are worth buying and which ones aren't. I appreciate me setting me up for the sales pitch there. That was a great question, too.
Dan Ferris: Sure. No. That's fine.
Eric Wade: Yeah. There is a way to sort them out. And we've got it nailed down.
Dan Ferris: Oh, but the whole idea of you guys just being on video and going through it... a lot of the times in the various videos and presentations we make it's just somebody talking about an opportunity, and you got to sign up for something to get anything of value. But that's really valuable to watch you two sitting there. I hope that becomes a model for how we do a lot of things at Stansberry. Because it sounds really valuable to me. And I'm definitely going to watch it.
Eric Wade: Well, thank you. Thank you. And we did have a really good conversation. And Austin is famous for being a little bit skeptical about this as well. So to be able to just take our time and air that out with, "Well, what do you look for? And give me something that I can use when I'm looking at these opportunities." Because, you know, a lot of people when they listen to any presentation on cryptocurrencies, when you say, "Bitcoin compounding around 200% a year," that rings a bell with people, right? And, sure, scarcity and decentralized and immutable – that sounds good.
But maybe it's worth doing a little bit of homework to at least understand 200% a year. Wow. Yes, it's volatile. Of course it's volatile. Is it making sense to a lot of people? It is. And that's where we got... I think less than a year ago, cryptocurrencies were worth in the $300 to $400 billion range, and now we're at $1.4 trillion. Because more and more people, including corporations, are saying, "OK. I guess I better take this seriously."
Dan Ferris: Yeah. It is cool. And there's like – you know, there's dozens and dozens of them that have $1 billion market cap or higher. I mean, there's several with a several-billion-dollar market cap. So this thing isn't going away. You know, there might be a frothy Mother-of-All-Melt-Up moment and then some type of a big correction or something. But the world has changed. And this stuff is not going away. I don't think bitcoin's going away either. It's really cool, man. Thanks for coming in today. We've actually been talking for a long time. But I’m going to do my – I'm going to do my... how about if I just do my final question for you? Which is always the same for all my interviews. And you've answered it once before. That was a couple years ago. So now, we're in 2021, and I'll give it to you again. If you could leave our listener with one thought today, what might that be?
Eric Wade: It's going to be different than it was before because I did know this was coming, and I didn't want to repeat myself. So one thought I would want everybody to have is, whatever investment you're looking at – if it's cryptocurrencies or real estate or Brazilian rosewood – figure out where the humans work into this. Whatever it is you're looking at, where do the humans work into this? Because you used the word "tangible" a lot. And that's a fair concern, right?
And getting involved in investing, everyone always has to have a first something, right? Your first real estate may be difficult – your first piece of art. Your first gold, gold coin, bullion, etc., right? So if you – when it comes to the cryptocurrencies or stocks or anything like that, in your mind at least try to pin down, "Where are the humans in this? Is there a human on the other side of this? What are the other humans doing? Is there a herd going on?" And you touched on Melt Up. "Am I part of the herd or against the herd? Right? What do the other humans who are involved in this look like?"
And sometimes, that's easier to put our brain around than algorithms or quants or earnings per share or free cashflow, right? Those are all valuable, but don't ever forget where the other humans are in this. And that's a good explanation of froth and Melt Up and herd – right – is you don't have to follow the other humans. But you should at least [laughs] have a good idea of, "What are they thinking? What are they doing?" Because then, I think a lot of savvy investors – if they do that if they reduce it down to, "Do I even know what the other humans are up to" – it may make their decision a little easier, I think. If you don't know where the humans are, then you really shouldn't be involved at all. [Laughs]
Dan Ferris: That's right. That's right. You should have some kind of idea of which way the wind is blowing. Thanks. That's a great answer, actually. That's really good. All right, Eric. We're definitely going to have you back. Hopefully sooner rather than later. And I suspect, like, if we do kind of melt up further from here, it'll be sooner. Because we'll want to know, "What does the real crypto guy say that you should do," at some point.
Eric Wade: Well, thank you. Thank you. It's always a good conversation with you.
Dan Ferris: Oh, thanks. I feel the same way. We're copasetic there. All right, man. Thanks for being here, and we'll talk to you again soon.
Eric Wade: All right. Take care.
Dan Ferris: Well, I love taking to Eric, and I kind of had to. Because like I said. I've got this portfolio of just two of these cryptocurrencies now, and I've recommended bitcoin in the Extreme Value newsletter. And it's up like 300 or maybe even 400% by now. I haven't looked at it today. But yeah. It's like 350%. So, you know, when you make 350% that fast, less than a year, you got to sort of – actually, it's almost exactly one year since I recommended bitcoin, and it's up 350%. But what do we do now? And I think Eric kind of helped me with that.
And I'll be telling my Extreme Value readers what I think and what I'm doing personally. All right. Great talk. Got to check in with Eric now and then. OK, man. Let's do the mailbag. Let's do it right now. [Music plays and stops] As a listener to this show, you know we don't talk politics. But there is a time and a place for it... on our American Consequences podcast with Trish Regan, the famed financial and political journalist. Each week, Trish breaks down the latest news from D.C. and around the world with some expert guests, including economist Stephen Moore, Senator Marsha Blackburn, and Ron Paul. If you want to know how the latest political wheeling's and dealings can affect the economic, American Consequences is the podcast for you. Check it out at americanconsequences.com/podcast. [Music plays and stops]
In the mailbag each week, you and I have an honest conversation about investing or whatever is on your mind. Just send your questions, comments, and politely worded criticisms to [email protected]. I read as many e-mails as time allows, and I respond to as many as possible. The first one this week comes from James P. And I bet he never expected me to get his e-mail on Air here. And he's probably isn't even listening because his first three words of his e-mail are, "Cancel my subscription." And I think when you write not Investor Hour – which is free of charge. There's no subscription, right?
What he means is, like, "Take me off the list, and stop giving me the updates when a new episode is out." Because his second and only other sentence of his e-mail is, "The Democrats are in control, and your output won't be worth a damn." He says, "Out-point," actually. I think he means either viewpoint our output or something like... or viewpoint. In other words, because the Democrats are in control of the White House and Congress, it won't matter what our investment advice is. And for that, I'm kind of extrapolating that he's bearish because the Democrats are in control. That's usually what we get.
So, James P., I hope you're listening because I have a message for you, sir. You're just plain wrong. Every four years in our business – and I've said this before. So some of you will definitely recognize these words. But I'm repeating. Every four years, there's an election. and every four years, people in our business and brokers and money managers and everybody in finance... they get calls and e-mails from clients saying things like, "If so-and-so gets elected, sell it all. I'm moving to New Zealand," or wherever they're going. Wherever they think they can escape to. And it doesn’t matter. Like, on both sides. "If Trump gets elected, I’m selling it all." "If Biden gets elected, I'm selling it all."
Both sides are equally adamant. And of course, they're both dead, flat wrong. Aren't they? They've been wrong every four years since – well, certainly since I was born and since there have been stock markets. Because that's just not how it works. Our system – what people don't get, and I learned this at a libertarian conference. I forget what they call it. FreedomFest. They have it in Vegas every year, I think. And I went to it once, and I was a little disappointed in some of it because I was like, "Wow. All these libertarian guys don't seem to believe deeply enough in the power of free markets. You know? They seem to be more scared of government than they are excited about the possibilities of free markets whether government approves or not.
Because there's just too much talk about the government ruining everything. And this is in that category. Free markets are too robust for government. We didn't stop smoking pot because it was illegal. There is a huge, you know, active market in marijuana in the United States in every state in the union, right? And the same for heroin and cocaine and all the other illegal drugs. You can't stop the market. Your children are no safer when it's illegal than when it's legal. In fact, when it's illegal – in addition to being at risk for doing the drug and having some harm come to them that way, now they're also at risk for getting hit with flying bullets because you've incentivized the most violent, lawless people in the culture to take over the market. So good for you if you think drugs should be illegal. You've really screwed up and made the world a more dangerous place. And it's the same thing here.
To say that the Democrats are going to – sure, they can make the world a more dangerous place economically. They can screw up and do all kinds of things. But markets will still exist. The system is too robust for these people. And, yes, you can have a Venezuela. You can have a Soviet Union. Things can get bad. But I promise you even in those places, there are still black markets because people have to live. It's not any place you want to live. I'm not saying it's all, you know, roses and sunshine. But I think we're at a point where it's still wrong to say, "If so-and-so gets elected, I'm out of here." But I'm glad you wrote in, James P., because that needs repeating every now and then. Doesn't it? Next is Adam B. And Adam B., he had other thing to say. But I'll just read this part.
He says, "Chris Camillo" – our guest last week – "Chris Camillo is right on the mark. What this country needs is more people helping the average guy to learn how to invest and reduce this ridiculous wealth gap. I have noticed as I get older there are fewer and fewer mentors willing to share the secret sauce. They want to keep their clubs and vacation properties isolated from the riffraff, so to speak. Collaboration like we have seen with WallStreetBets and guys like you and Chris is exactly how we can do it. If you're ever in Chicago, there's always a place for you to stay. No bullshit. Sincerely, Adam B."
Thank you, Adam. I'll remember that. And, yeah, I think Chris Camillo is onto something too. I bought his book. I haven't started it yet. But he wrote a book about his method, and he obviously discussed it last week. So I think for anybody who's interested in a totally different way of investing that Chris suggests... and he makes a good argument. He says, "This is" – his method is definition something that is for more people than the typical fundamental analysis or technical analysis – neither of which he uses. He uses neither fundamental nor technical analysis. So listen to last week's episode and maybe read his book, which is called, Laughing at Wall Street, by Chris Camillo.
And I agree with you, Adam. I think what he's doing is really great. Potentially like life-changing for more people than, say, reading Ben Graham books or something or Warren Buffett books. J.R. is next and last. Our final e-mail this week. We didn't get a whole lot of them this time around. And I'll read the whole thing. There's quite a bit to it. But it's interesting. He says, "Dan, good morning. I was watching the interview that Daniela Cambone did with Harry Dent on the Stansberry Terminal." The Stansberry Terminal is a service that we provide. It's a really cool little thing. It's sort of like a mini-Bloomberg kind of a thing – all the markets are there, and all the Stansberry products are there. It's really cool. And Daniela has joined us recently, and she's doing some great interview. She did one with Harry Dent.
And J.R. continues. He says, "Harry Dent is calling for a 40% market crash in approximately April 2021. I work in the construction industry. Half the people I know are so busy they could work 24 hours a day, 10 days a week and not get caught up. The other half to the people I know are making more money on unemployment than they can at work, so they're out playing, buying stuff like never before and refusing to go back to work. My wife made $15K more last year on unemployment than she did at work the year before, and she's not been to work since March. Doc Eifrig believes boat sales in 2021 will be at an all-time high, and I can confirm that because a friend of mine was trying to buy $140,000 MasterCraft boats, and all the MasterCraft boats are already sold out for 2021 – says the manufacturer.
"Do not get me wrong. There are many businesses that are hurting because of COVID shutdowns. Bur the economy and stock market are not the same thing. I believe what we are seeing in the market right now is the Melt Up Steve Sjuggerud is calling for. With all the stimulus spending and money printing we see governments doing around the world, it seems like April 2021 is a little unrealistic for a 40% market crash. I know you can't predict the future, but what is your thought? Thanks for the great podcast and newsletters. J.R."
You're welcome, J.R. Thank you for writing in. I appreciate the kind words. Yeah. You know, look. You know how I feel. Prepare, don't predict. I own a few put options. Some of them expire in – I don't know – May, some in June. Some in I think September. Some in December. If they all go to zero, I won't even notice it. But if we do get a 40% market crash in some short period of time, they will raise a bunch of extra cash for me because, you know, I bought them super dirt-cheap because nobody wants to own puts, right? So yeah. April 2021, you know, no idea. No idea.
But, you know, Dent is in that business. That's the thing, J.R. Dent is in the business of calling this kind of stuff. You know, 40% market crash in basically two months from now or – what was his thing? Dow 30,000 when it was way below that. I think that was it. He's had other crazy predictions. So he's in that business. Don't take it to heart, because no one can make that kind of prediction on a regular basis. He's not known for making good predictions. He's not known for getting predictions right. He's just known for making them. All right? [Laughs] So don't get too excited. You know?
And like I say, prepare. Be truly diversified. Keep your stocks and bonds but also have plenty of cash. I would say at least 20% and some gold and some silver and a little bitcoin too and whatever is kind of personal, right? That's one of the great things that Chris Camillo did. He made investing really... investing in stocks really, really personal in a way that most people simply have not been able to do. And he suggested that method, his personal – could be that way for a lot of people. I think he's right. But thanks, J.R., and thanks everybody.
That's another mailbag, and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did and as much as I do every week, man. This is like very often the single best part of my week, and I really thank you all for listening. All right. If you're listening to this episode and you really enjoy it, do me a favor. Send somebody else a link to the podcast so we can continue to grow it. Anybody you know who might also enjoy the show, just tell them to check it out on their podcast app or at our website, investorhour.com.
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