Speaker 1: Nothing says Christmas like family gathered around the hearth Christmas Eve.
I don't know what your tradition is at home, open
one gift, maybe to some snacks, family over, some friends,
and then of course reading from Luke Orth of Jesus Christ.
And then of course Congress on Christmas Eve voting in
a continuing resolution to further bankrupt the country and to
protect themselves from any form of investigation. Well, yeah, and
the races, the races. We'll talk about this with our
friend and brother, Zach Abraham, Chief Investments for Bowart Capital
Management and through the good graces of God Almighty.
Speaker 2: But Todd Herman show is one disapproved by big pharma
technocrats and tyranne s everywhere from the high mountains of
Free America. Here's the Emerald City exile Todd Herman.
Speaker 1: Today is a day the Lord has made. These are
the times to which God has decided with She'll lives, Zach.
It's Christmas time. It means it's continuing resolution time. You're
a guy who deals with people's paychecks at all and
et cetera. As a fiduciariat Bulwark seventy thousand dollars per
year rays for congressional members as a cost of living
your thoughts.
Speaker 3: I mean, that's what I'm here for. I love it.
I would be willing to increase my own personal tax
rate to finance it. But I'm a look, I'm a
huge fan of DC in the Hill. Everybody knows that, right, No,
I'm just chuckling reading this bill out, you know, classic
classic Christmas Eve bill, right, stuff through all the stuff
you don't want, yep, the FED or excuse me, the media,
which is part of the DNC. Now, of course they're
not going to report on it. As a matter of fact,
I'm gonna jump out on a lift here and say,
I'm gonna bet you didn't get the information about this
bill from ABC?
Speaker 1: How did you know that there are a team of
people in social media who are taking this fifteen hundred
page omnibus bill apart and bit by bit by bit
it dribbles out, and it dribbles out. We'll talk about
section six oh five here in a second. But this
is the This bill represents a further permanent divorce of
DC from the country. The seventy grand a year. I mean,
you deal in the world of income. If I'm not mistaken,
that's probably fifteen percent more than the average and American
earns in a year. And Congress wants it in the
form of a pay race. Am I right, it's about
the number.
Speaker 3: Yeah, so well so seventy seven thousand, Yeah, because they're
going to increase it by seventy seven thousand. Yeah, that's
right around there.
Speaker 2: Yeah.
Speaker 3: Yeah, they're going to get a pay increase that is
commensurate or slightly larger than the average person's wage. And
here's the thing. If it was part of a larger
plan to overhaul the government, for instance, one of the
things that I have been open to if, if, if
it is combined with massive campaign reform, would be substantially
higher salaries for elected officials. And I hate saying that,
but if you want less corruption, if a bottom line,
and again I hate saying this, okay, but if we
want the best and brightest in DC, you got to
pay more than one hundred and eighty gradiator, you know,
or or you're just getting You have to have something.
You got to have something change because you have a
system now where the best and brightest are not incentivized.
You you have a system that really the only people,
the only people that would be incentivized to engage in
this system are people that are wantonly and actively looking
to be corrupt, or people that are idiots and don't
realize what they're getting into.
Speaker 1: Right, right, right, I get that, And I've heard this
are before, like, hey, make it half a million bucks.
I mean, we can't make it. We can't make it
ten million a year. Make it half a million bucks,
make it seven fifty. But then lockdown on all the corruptions.
So but then how do you do that? And here's
the deal. You can't take money out of Congress until
you take money out of the process. You can't until
you can strip their ability to have earmarks and bundle
things in for friends and hide things until bills are
single pages, yep, until you have a here's the Energy
Department bill, nothing else goes in it, Here's the Defense
Department bill, nothing else goes in it. And you give
them an inability to have anything to do with the
money supply at all. Until that happens, you can't weed
out corruption.
Speaker 3: Right Yeah, No, And that's then that's what ticks you
off about this bill, right is because a you could
make when I don't think you make the argument. I
think it's fact that a bill like this actually puts
you further away from making any serious change, right because
we like you, uh until I want them making one
hundred and eighty grand a year or as little as
possible to provide part of the incentive to get a
good bill passed. Right. And so now you're kicking them
an extra seventy You're I don't know how much further
away that puts us from a resolution, but it's seventy
thousand dollars per congressional member further away, right.
Speaker 1: And maybe one of the things we look at would
be an incentive package. And I mean this, what if
the incentive package is to get the country back into
fiscal shape. Maybe we're getting some people in there who's
seed upset in this. But the problem with this is
with the best and brightest in DC. No, buddy, you're
a million bucks from your Mirrorman's squat to me, I'm
going to be a billionaire back here. I know what
I'm doing. I'm going to go be a lobbyist. I'm
going to be a billionaire. I've got the path all
laid out. You want to pay me a millionaire chump change,
I can go get that. Being a commentator on MSNBC.
I just say some ridiculous things back here, and they
pat this career path. So but let's let's let's fall
down the road a little bit. In this continuing resolution.
I want to tell you about section six oh five
here in a second. Zach as a guy who's dealt
from time to time with government agencies coming and sniffing around.
I know I don't like it, and I've had those,
you know, situations with my companies, et cetera. So I
want to tell you something about seven six oh five
we need to talk about. The stock market was at
the lowest losing streak since nineteen seventy eight. I think
that was on Tuesday or so. Losts to get to
with Zach Abraham, who's it's a wise council day. Let
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realized that this stuff is mentioned so often in the Bible,
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Zach Section six oh five hidden away found by activists
on substack and Twitter. There's three things. It makes congress
permanent owners of a congressional data. So anything that touches
a congressional staffer a congressional device belongs to them. And
they go to the they go to the judicial branch
and say you will quash or modify any subpoena for
any congressional data. And it's retroactive, so any ongoing investigation warrants,
subpoenas are quashed. What this means is congress and congressional
members and staff could not be investigated by the DJ
the sec. Uh, the I R S no go.
Speaker 3: It's lawfair insurance man.
Speaker 1: That's the perfect way to put it.
Speaker 3: Yeah, well, I mean it's it's I was trying to
explain this to my to my uh my personal trainer
this morning. I said, look, I go, have you ever
heard the analogy if you want to if you're if
you're if you're walking down the block, right, and and
and you have somebody told you, look, there's a criminal
that lives in our neighborhood. Yep, we just don't know
who it is, right, So how do we find them?
Look for the guy with the greatest security system? Okay, hey,
why well, because of course he thinks people are going
to break into his house, because that's what he does
for a living. Right. So the people that are trying
to preemptively exonerate themselves from prosecution, shocker, they're the same
people that illegally and and in a de defamatory way
went after President Frump. Like it's it's so it's like
every time I hear these people in this stuff, I'm
reminded of the Shakespeare line the lady doth protests too much, methinks, right, yep,
because you're like, you've said you're not guilty too many times, man, Right,
Nobody that's saying that as much as you are, is right.
And so it's kind of like a confession. Did you
guys go after Trump unfairly? Well we know they did,
but you know, I look at this bill it's a confession.
Speaker 1: Well, it's a confession of guilt and that, but it's
also there's so much in this. So here's some things
that we're finding out. We found out this week that
bureaucratic agencies, using our taxpayers money, were paid paid Reuters.
They paid them what was it, three hundred million bucks.
Biden administration paid Ruters three hundred million dollars. Eleven different
government agencies targeted Elon Musk's business and all eleven agencies
paid millions to Ruters. Routers. Then when the Pulitzer Prize
for their work on on Elon Musk and misconduct at
his business. So you're talking about Transportation, Justice, Labor Interior,
National Labor Relations Board, Equal Employment Opportunity EPA, Securities in Exchange,
Federal Communications, Federal Trade Commission all gave money to Reuters
that amounted to three hundred million dollars. And interestingly, they
turn around and to write this piece about Elon Musk,
the great Enemy of the people. So that right there
is government agencies paying a media company to attack a
single American individual. To me, that almost rises above the
censorship that could not be investigated. We couldn't find more
information if there's an investigation ongoing. Remember when Lizzie Warren
was talking about the guy who shot the United Healthcare CEO,
she said something, she said, you can only push people
so far.
Speaker 2: Right.
Speaker 1: Does she hear herself? I'm like Jade Vance going to
Martha Rais, do you hear yourself? Do you know that
we know that, we know that you know that you're
making yourself immune from this stuff? I mean, you yourself
have said in many, many sectors of this economy. I
think I saw you on Twitter talking about health insurance
that one of the things you could do to lower
health insurance is get away from the web of state
after state. Each state has different rules on what is
health insurance what isn't right. So that's one aspect of this.
But tell me state governments don't follow suit if they
see Congress get this pasted.
Speaker 3: Oh of course, well, of course. And I think that
this is just this is this another uh, this is
just another version of I mean, I think it's I
think it's insane. Now, before I say this, I should
probably go back and look at the history of salaries
for congressional members and how much they've been raised over time,
and what that process looks like, but my immediate response
is whoa, whoa Whoahoa. Hold on a second. You're going
to give these people a twenty five to thirty percent
raise and we're not even have a discussion about it, right, Like,
I don't know what the process is, but I'm going
to go out on a limb here and assume that
this is sort of unprecedented. But it's not unprecedented in
this environment because like so many other things we've seen, right,
they don't even hide it anymore. It's just it's it's
just incompetence. But to even call it in competence is
not fair because it's very purposeful.
Speaker 2: Right.
Speaker 3: This isn't these aren't these aren't errors of omission, These
aren't mistakes these people are making. This is strategic and uh,
it just blows me away that you've got our elected
officials awarding themselves a twenty five to thirty percent pay
raise while approval for Congress is at its lowest market
in history, right, and we're not even going to have
a discussion with the American taxpayer on whether we approve
of that or not. Nope, No, that's just incredible time.
Speaker 1: I would love to say, and I've sat with people
who were new to Congress. I got to know Kathin
mcmarsh Rogers way back in the day, lost touch. I'm
not a person who keeps in touch with people like that.
And she was a sweet lady going back to Congress
for the right reasons, and she was astonished and shocked
at the behaviors of Congress. And I sat there and
I talked to her a Zach and I saw the
look on her face where she was shocked. And she
was talking about Nancy Pelosi crossing herself before a vote
on abortion, and Kathy said, it's a most obscene thing. Touch.
She's sit in the corner crossing herself. She's getting ready
to vote for more abortion. Fast forward six years later,
Kathy's heading up one of the big committees and she's
defending continuing resolutions. She's continuing defending things like this. On
Christmas Eve, she was still that dear sweet lady. But
manpower seduces, doesn't it. It absolutely seduces.
Speaker 3: It does unless you're It's funny because I had not
extended and it didn't get like two personal, like, it
didn't get too personal. But I was fortunate enough to
play around the golf with Steve as a former Seahawk
legend a number of congress and he said the exact
same things that you're saying. And one of the reasons
he left, he just said, you know something along the
lines of I just didn't think I could maintain my
integrity and my soul by staying in that.
Speaker 1: It's at all levels. I had a friend of mine
who ran for city council for the first time, first
time he's in politics. He's an Air Force veteran, Christian man,
honest man, level headed man, very conservative and really levelheaded,
wants to try to find agreement. He was just sharing
with us the other day how how more bunds he feels,
because how special interests actually do own processes that he
had he'd made a suggestion about a piece of legislation
and said something about a company. Next thing, you know,
he's got a note from lawyers, Oh, you know what,
you've ran a foul of city council rules. We're going
to sue you individually. You don't get to say that
about companies. And they came to one of the city
council meetings and smirked at him. Three lawyers from one
of the most powerful firms in his area, sitting there
in the front row smirking at him like, gon it
come at us, We own you.
Speaker 3: That's like the old mob trick. Right, you come home
and there's a bullet sitting on your on your countertop.
Speaker 1: Right, you know it's just who that is. Yeah, we
swung by to say hi. So's a couple of the
things I want to talk to you about that. Don't
want to get to your Twitter chain because man, this uh,
this bitcoin thing, this this this guy Michael Saylor continues
to go out and somehow get away with what to
me seems to be the biggest scam in the world.
We need to talk about open a AI, et cetera.
That one more thing from the Biden Harris people talk
economics with Zach Abraham. Hey, I gotta tell you this, brother,
I got three I have three friends, our age Christian men,
and we're cooking up a trip to Port of our
Art to go down and get the stem cells.
Speaker 3: Wait when are you doing that?
Speaker 1: See, that's what I wanted to talk about. We're gonna
think we're thinking about March. For me, it's by lower back.
I'm getting like numbing and numbing my fingers and I
know What happened is I wrestled with my friend who's
far bigger, stronger, more athletic, smarter, better looking, all those things.
I took the first three takedowns. He took the fourth
and he wrecked me. And since then I got this
like numbness. So that's me. It's lower back, I think,
And my friends it's their knees. One knee is a
cartilage chear. The other is jumper's knee that's now constant.
And I was thinking for you, I know, it's really
the aesthetics that you wanted to go down and they
can instead of.
Speaker 3: You.
Speaker 1: I don't want to get into your medical secrets, but
I can't even believe we're at an age where we're
talking about doing a wellcation as dudes to go down
to get these stem cells, because man, I've had it
done twice. I can't wait to get it done with
my lower back. The stem cells come from a biblical
cords Placenta's only never a thing to do with abortion.
They are so remarkable. If you're of our age and
you have any of this pain, please don't buy intopharma,
and you got to get Sergey. Go to renew dut
Healthcare it's our e in you e dot healthcare telling
me you're part of the top Hermannshew family. They'll take
care of you. But what what it take to get
you down there? You've to me privately, dude, I gotta
get down there.
Speaker 3: Yeah, I would love to. I got to look, March
is gonna be tough for me because that's the twentieth
anniversary with the missus. Okay, March eleventh.
Speaker 1: Well, but you can tell her maybe you could celebrate
in April.
Speaker 3: Yeah, she'd be a fan of that one. I'm taking
a wellness Goo trip go with the fellas. Yeah, i'd
like to. Well, I would like to make it twenty
one years Todd.
Speaker 1: So I'll just let me throw this out here. The
one of the the managing partner lives on a world
class golf course. He lives on the eighth eighth hole.
Speaker 3: She'd be good with April.
Speaker 1: Make you think of it, Yeah, I mean it's like
almost doing it early. Well, we'll work that out. But
I can't even believe I'm at this age where that
this actually appeals to me, and it's it's far more
about how I feel when I get back.
Speaker 2: All right.
Speaker 1: So one of the things, how long.
Speaker 3: How many days would you be down there just out
of curiosity?
Speaker 1: But four or five?
Speaker 3: You know what I might be able to do that,
I might be able to swing it. Let let's let's
discuss it, all right, So.
Speaker 1: And we'll do that. If we can get it worked
out advance, we'll make it a wellcation and you and
I will get we'll even get paid for going them.
So there's that. Can we talk about the stock market
real quick? The Dow logged its longest losing streak since
nineteen seventy eight. Yeah, so the Dow different from the NASTAC.
I always hear the business reporters say the tech heavy NASTAC,
right right, right, So that's so, so tell us what's
going on.
Speaker 3: So what's really interesting is right now we're looking at markets.
The Fed announced their cut today. Markets are getting hammered.
So SMP is down one point nine percent, nasdac's down
about two point five percent. The dollar is skyrocketing. U
this is this you're looking at a move in the dollar.
That d x Y is up a buck twenty eight
on the day, it's at one eight twenty four. It
broke a massive resistance level at one oh seven. H
So I'm getting to the dow. What we've been talking about,
and what we were actually talking about yesterday on the
Daily Dots is we said, guys, you need to be
careful here, not because we think a big crash or
a sell off is coming, but you have this market
behaving in a way that is literally impossible for it
to continue to do okay, Meaning you're watching this speculative
fervor stuff just going through the roof and what you know,
and it's impossible to know the timing on this kind
of stuff. But what basically what we think was happening
and what we've seen happening is it's sort of like
twenty twenty one on steroids again, where you see money
sucking out of all sectors of the market and dumping
into all of these crazy speculative, frothy stocks, and people
are sleeping on it. Every single metric we have leverage,
the average leverage by retail, consumer, US, everything is far
worse than it was at the peak in twenty twenty one.
We are literally in rarefied error. So what we've been
saying is it's not that we think the economy is
gonna tip, but you're gonna see noise in this stock
market in the next thirty to forty five days, because
markets can't continue to do this. They just can't write.
You start going up too quick on this stuff, and
then you're gonna get It's just the way things work,
And so that could be happening as we speak. The
dollar is moonshotting. You're up one point one percent on
the day. Put that into context, I would say that's
probably about the equivalent of a three to four percent
move in the overall market in a single day. So
not unprecedented, but big.
Speaker 2: Right.
Speaker 3: If I see the SMB down three or four percent
in a day, I'm gonna ask what happened? Right, I'm
seeing the dollar up that much in a single day,
and so I get back to it that stat right,
There was another one we were discussing yesterday on the
Daily Dots, and I was saying, one of the things
that concerns me is the Dow just had it's ninth
straight losing session, and that's the first time since nineteen
seventy eight. Guess what has never happened in a healthy,
booming stock market that, Right, while the S and P
and Nasdaq are making all time highs and fart coin
is making two hundred and fifty percent returns in a week.
The Dow's returning nine days straight of losses. Something's amiss, right, right,
That's all.
Speaker 1: That's what I was concerned about. And to me, it
goes back to the real versus the virtual. See me
things back, because there's a bunch of virtual. It goes
back to Dow has a lot more real things in it,
things that we actually, you know, need to exist. The
NASTAC has a lot more things in it that are convenience,
nice to have it. Oh, by the way they spy
on us.
Speaker 3: It could all so be. It could also be symptoms
of a market that is that overcooked. Meaning we've seen
before where the nonsense was rallying and the rest of
the market wasn't or wasn't right. But at a certain
point you run out of money, right, and so in
order to put more money into certain things, you got
to sell other things. Okay, Well, if you're chasing these
crazy tech stocks and you're sitting there looking at IBM,
I don't think they're in the Dow, but you're sitting
there looking at your Dow component stocks or your Dow
Jones ETF. What are you gonna do well, you're gonna
sell it, right, And so I think it could be
a symptom of that's how out over the skis everybody
is loaded up on this stuff that the only way
they can keep buying more is by selling other stuff. Right. So,
and all of the traditional all of the information we have,
all of the averages, all of the positioning data, all supports.
Speaker 1: That out look okay, So there's a bunch of tech
stuff tied into this because I want to transfer into
a discussion ending up at Apple because you posted a
chart that finally, I mean I sort of understood it,
but I finally get it. This this effect And we've
talked about this enough, but I want people to understand
the effect of your money.
Speaker 2: Is it?
Speaker 1: Did you say forty percent of people's money given ETFs
are going into these big companies, five companies every month automatically,
no matter what their valuation is, it's like forty percent, right.
Speaker 3: Yeah, I'd have to check the exact numbers, but that
sounds about.
Speaker 1: Correct, okay. So yeah, and I'm just doing this for memory.
So we'll get to this with Zach and a second
a statement from Sam Altman who says he runs open
API but then there's this weird corporate structure. He says,
it's not because of the money. You got to hear
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Bonefrogsellers dot Com slash Todd sam Altman in Congress being
asked about why he does what he does.
Speaker 3: Make all the money?
Speaker 1: Do you I make No?
Speaker 3: I paid enough for health insurance. I have no equity
and Open the Eye really yeah, that's interesting. You need
a lawyer. I need a what you need a lawyer
or an agent. I'm doing this because I love.
Speaker 1: It, so Zach sam Maltman says it's not for the money,
and yet as I was doing show research, it appears
that he sometime recently became worth ten point five billion
dollars more given open API. So it might not be
for the money, but it certainly looks like money is
part of that. He says. Open Eye is working to
restructure for a for profit benefit corporation. This nonprofit would
retain a minority stake. CEO Sam Outman would receive equity
with open a API recordedly and talks to raised fresh
fronts at a valuation of one hundred and fifty billion dollars,
making him ten point five billion. But it's not the money.
Speaker 3: Well, I mean, if he wasn't happy before, I'm sure
he is now right, Like, I mean, maybe maybe maybe
it is for the love, but it may not have
always been. But like I said, I'm sure, I'm sure
it is now. I look, I get a I yeah,
I get it's not as bad, but I get kind
of a somewhat like a bit of an SBF vibe
from this guy.
Speaker 2: I do.
Speaker 3: And I part of that is I thought Elon Musk
has had some interesting comments about him about Altman. Yeah,
Musk knows him really well. And the interesting thing about
coming from Musk is must is Musk. Musk's critiques of
him are mostly centered around his intent and his for
lack of a better term, morality, right, And when it
when it comes to intent and morality surrounding these types
of issues, I think Musk has a lot of credibility,
right because he's shown that he will make altruistic moves
that that have negative impacts on his on his personal wealth, right, right.
And so when he's making critic peaks like that of
a guy that he helped start Open AI with, I
think that you should pay attention. And Musk says he
doesn't trust him. And the reason Musk doesn't trust him
is the reason it was called Open AI. To Musk's insistence,
was he wanted it open sourced because he saw AI
as too big of a potential threat, and one way
to unthreaten it, right is to make it open source,
so nobody really owns it. Kind of like bitcoin, right, right?
Not kind of? I mean Bitcoin is open sourced. But
you know what it looks like is Altman started seeing
how much money could be made, and Altman started changing that.
Speaker 1: Right.
Speaker 3: So he's sitting here talking about all this altruism, and
yet every move he's made to the corporate structure of
open AI is so he can get paid, right, right,
And you know how bad? Is it bad that he
wants to get paid? No, but don't sit there and
tell me you're doing it for altruistic reasons. The other
thing is, I think Musk has a point. I think
open I think that AI being dominated by a few
tech names could be a very, very dangerous proposition. And
I think that Musk. I also agree with Musk's assessment
hundred percent, which is, if you want a d risk,
if you want to optimize the effectiveness of AI and
D risk it, simultaneously, open source.
Speaker 1: It, yep, yep. And Rason with Rogan who said that
the government has told Andrason there's only going to be
three players. Don't bother getting invested in it, because we've
already figured out who this they're going to be. I
was listening to I didn't pull the video, but I
was listening to a statement from the woman who runs
the National Archives talking about how cool AI is going
to be for searches because there's a lot of stuff
that she doesn't want people to see because our founders
were very bad people. I'm paraphrasing, but she said, like,
you know, our nation has a troubled history. There were
some very bad people that ran it, and open AI.
We'll make sure that are not open air, but a
I will make it possible for us to see those
things that come back in search results.
Speaker 3: What about Journey krantz Ukright, Italy?
Speaker 1: They have a checkered history.
Speaker 3: Well, I just this is so tired and so stupid. Right,
everybody knows this. We've got a trouble pass Who doesn't?
Speaker 2: Right?
Speaker 3: But why are we what? Why are we trying to
prosecute today the moral failures of two hundred and fifty
years ago? It's the this is so dumb.
Speaker 1: Hey, if you're not willing to prosecute the moral failage
of today, you got to prosecute something. Right, we're of
a cause bigger than ourselves. We're going to go back
and reprosecute the Civil War.
Speaker 3: Well yeah, but these are moral failures. Today we're rectifying
the moral ills of yesteryear. And the way we do
that is bi sexually mutilating children.
Speaker 1: Exactly.
Speaker 3: It's the only way we can get this blood off
our hands.
Speaker 1: Put more blood on our hands. All right, back into tech.
You have been calling the alarm on this Michael Sailor
micro strategy. You've made it clear these are your opinions.
This is you are nuts, an insider in the company,
and this is my opinion. But you wrote this on
Twitter what I find amusing. And by the way, well
let's just real quick if you don't know, this company
was kind of a i mean a player, a billion
dollar company hardware software. And then Michael Sailor said, you
know what, I'm going to become an entity that buys
bitcoin and now they're going to be worth are valued
at one hundred billion or more dollars. It's nuts. All
he does is buy bitcoin, but in a very interesting way,
he's not even really buying it. He's renting it. And
then you invest in his fund by giving him money
at a zero interest rate loan that he can convert
to equity if he chooses to so, then you'd have
equity in a company that doesn't even own the bitcoins.
Here's what you wrote in response to the fact that
Michael Saylor went to Microsoft investors at the National Center
for Public Pulsary Research and he decided to try to
get them to buy up a bunch of bitcoin. Microsoft
can't afford to miss the next tech wave, and bitcoin
is that wave, Sailor said in the video presentation which
you're released on Twitter last week. It's more than three
million views. Microsoft's investors surprisingly said, no, We're not going
to do that. You wrote this, Zach. What I find
amusing is if you believe is Sailor claims too, that
bitcoin is the ultimate asset in the future of money.
If you believe scarcity is the key to its value proposition,
why would you be lobbying others to drive up the price.
More importantly, if you're so sure it's the asset of
all assets, why would you jeopardize your own ability to
stay long by making such a massive levered bet. If
you get smoked long on this on Micro strategies. You
deserve it. That's on you. So now that we have
more longer form, it's not Twitter explain this to me.
Speaker 3: So what what And we've and we've looked into this.
There is one part about this investment strategy that if
you're a big bitcoin believer, that is interesting, and that
to me is the bonds that Sailor is selling. And
I think I've walked you through this before, but what
what micro Strategy is doing is they are selling you know,
it's forty billions so far. They got to plan to
do another forty six billion something like that, but piles
of bonds that don't pay any interest. So what we
call a zero coupon bond yep. And it is convertible
in equity yep. Right, So if you're a bond holder,
what you're hoping is that the value of bitcoin goes
up a lot, it drives the price of the underlying
equity up, okay, and then you would convert into the
equity at that point. And meanwhile, as a bond holder,
you're doing all of that backed by bitcoin effectively, right,
because as a onholder, if something goes wrong with the company,
you've got ownership rights to that bitcoin shareholders don't. And
the reason we said that this is such a ridiculous play.
If you want to go buy the bonds, and again
I haven't done deep research on this, but just looking
at it, there could be a reason to own the bonds.
There could be, it could could be it could be
a sound investment to buy the bonds. I Don'm not
saying that the equity side of this makes absolutely zero sense, right,
there's no ownership. Well, yeah, there's no ownership. And basically,
if you wanted to think about how could we own
bitcoin and neutralize all of the things about bitcoin that
we like, this is how you do it. Okay, The
biggest things about bitcoin are there scarcity, right, meaning you're
not going to get diluted over time and you won't
get inflated because they can't make any more of it, right,
And no intermediaries you don't have to work with anybody else,
don't have to have transa right, You've got it so
well by doing it this way, if you consider this
a bitcoin derivative or another way to have Bitcoin exposure,
you just neutralize those two things. And they go, what
do you mean neutralize? And I go, guys, the debt
has zero coupon on it, and it's convertible, which means
it's going to convert indequity, which dilutes you. Okay, so
you basically just fiaded your bitcoin.
Speaker 1: Huh you took it. You took the solution to the
fiat currency and you fiaded it.
Speaker 3: Yeah, exactly, Oh okay, and instead of inflation, you get dilution,
and the net result is the exact same. And if
the company goes under, you have no claim on the
underlying asset. So literally, it's literally just like a crypt
it's literally just like a fiat currency. Right, we own
a US dollar? Does that mean that we have claims
directly to underlying US assets? No? Right, but what do
we get guaranteed over time? So literally it really is
a clever structure, just like, hey, how could we own
bitcoin and fiat our bitcoin? This is how you do it.
Speaker 1: It's like lose money in every sale, but make up
and volume.
Speaker 3: Yes, And then on top of it, the underlying stock
moves typically at about three x to the movement a bitcoin.
So bitcoin goes up ten percent, this thing goes up thirty.
So not only is it ridiculous, but it's raw and
it like it's so you get less Bitcoin exposure, but
it gives you more upside supposedly. It's just it's nonsense.
It's a dream machine.
Speaker 1: Okay, So then the dream machine of Apple we'll talk
about here in a second. So we have a longtime
partnership with Alan Soaps, and I want to make one
more plea for Christmas time. There might still be time
to get this into Christmas stockings, and I haven't done a.
Speaker 3: Good job of this.
Speaker 1: There are people who have special needs kids and this
happens that they have to adjust their expectation for the care.
And this is really hard for parents. Parents say, well,
my kid's going to be he's going to go to
my college and he's going to pursue my profession. And
when they find out the kids have are non neurotypical,
a lot of times for parents it can be oh
my gosh, and it's a difficult thing to adjust expectations.
Doesn't mean that you stop loving, you stop pushing, stop believing.
If there's still time go to Alan soaps dot com,
Sash Todd and there still might be for parents of
kids who have special needs for them to understand that
Alan has it really tough. He's effectively nonverbal. He has
at eighteen operations. He's only fourteen years old, but he works.
He invents soap. He works at the company in quality control.
His brother Ian is impacted by autism. He works. He contributes.
Amy who got late on set autism. She's thriving, helping
with social media, et cetera. She was told she's hirable
and the soap is of pristine quality. There's no way
John would put his son's name on a that sucked.
So they researched a family. They found them in the Midwest.
They are three generations into the soap crafting world. That's
what that's all they do. They took on the fragrances
that Alan thought of, that came from special memories for him.
Speaker 3: They create.
Speaker 1: Those soaps are all natural, They're made in America. To
give this to families with kids with special needs, partic
of the younger kids, it's a side of hope and
every time they wash their bodies they can remember that. Yep,
our kids too can work. Our kids can contribute. What
the word saying is not true. So go to alansaps
dot com slash todd. That's alansoaps dot com slash todd.
There's a chart in the show notes, and it's a
pretty simple one, and it's this that the white line
is the price of price and revenues. Blue line is
the EPs Apple is now, that's the earning price per share.
Apple's now trading just shy of ten times sales while
revenue and earning growth have stalled. The largest corporation in
the history of markets are index is just trading at
ten times sales. That's what you wrote. And the chart
is pretty amazing to look at that this is a
visual picture of value of a company completely unmoored by performance.
So much of this is driven by ETF. What percentage
roughly speaking, and I know you have to, like you
could go check on this and be precise, but roughly speaking,
in our in this audience based podcast family, what percentage
of people are victimized by ETF taking something like forty
percent of their dollars and pumping it into Apple, Facebook, Google,
et cetera. With these five companies with no with no
performance ratings.
Speaker 3: Well, well victimized. They haven't been victimized yet.
Speaker 1: Yeah, right, right, No, this has been served them well
right now?
Speaker 3: Well yeah, I mean that's how you get Costco to
sixty one times earnings. That's how you get a company
like half times yeah costco. Man, that's how you get
Apple putting up its worst growth numbers in the last
twenty five years, and over that same period of time
when its growth is collapsed, the multiple doubled. Right, So
literally the growth and earnings went one direction, the price
of the stock went the opposite. And and and that's why, right,
I mean, that's why, because you've got this automated buying
that happens every single you know, just pretty much every day,
and it's just coming into the system and it's agnostically buying.
So for the first time in the history of of
US markets, over half of the transactions and probably and
well over half of market transactions are done agnostic of fundamentals.
Speaker 1: Right, fundamentals, No, because you've.
Speaker 3: Done because when you buy an ETF, there there, the
ETF isn't in there. It's just it's just market cap.
So if you if you have a stock that you know,
let's say, well, I mean look now, to get in
the S and P five hundred, you have to have
earnings over a certain and you have to have positive
earnings for so many quarters. There's certain criteria you've got
to hit. But let's say you had a company that was,
you know, that went on a heater for whatever reason,
you know, it captured the people's you know, imagination or whatever.
And you had a company that was doing you know,
two hundred million dollars a year in revenue and got
up to a five hundred billion dollar market cap like
every time somebody bought the S and P five hundred, which,
on the face of it is is that that's a
conservative long term investment, right, you're not speculating on individual stocks,
you're just buying the market. Well, but you're not because
investors used to determine right, buying and selling, researching, shorting,
all that kind of stuff. Investors used to determine market prices. Okay,
but now the biggest force in the market are index dtfs.
Speaker 1: It's inertia. Yeah, force in the market is inertia.
Speaker 3: Yeah. And what's really funny is that there are professional
guys out there in this industry that will try to
take the other side of this argument and try to
convince you it's not impacting price, and you're looking at
them going, how could it not, Like, why don't you
explain to me how it couldn't and it's really simple.
You look at the flows going in and out of
triple Q in the SMP five hundred ETF, you do
what six percent of that is? Because every time somebody
buys one of those ETFs, six six and a half
percent somewhere around there goes directly into Apple. So you
do that basic math, and then you look at that
amount of money versus the daily trading volume of Apple,
and you're sitting there going, wow, that's a pretty substantial chunk, right,
if not the majority of the trading activity. And then
you're gonna sit there and tell me, because remember, everybody
putting money into the SMP five hundred isn't making the
implicit decision of saying, I like Apple. Here, I'm buying Apple.
That's not the decision they're making. They're just throwing money
in the market, right, And the ETF does not make
any observations about out, you know, financial stability, affordability, price
valuation fundamentals. The only thing it's looking at is market cap.
So it keeps feeding the big companies the money, and
they get bigger, and as they get bigger, they draw
individual investors because look, those stocks never go down, so
they buy them individually, right, and then the market performs
better and people dump more money into the ETFs and
just round and round and rounds you go. And at
some point something tips over that first domino, and it's
just it's hard to know. And like I said, when
you look at the action of today, and this is
what's scary. Now, don't panic about today. Right, the market's
back to where it was a week and a half Agough, Okay,
not a big deal. But here's what's the problem. Is
in an environment like this, where the majority of money
is getting placed into these investments in a value or
fundamentally agnostic way, at some point the market focuses on
reality and at that point, prices can evaporate just out
of thin air. So you look at it today, just
out of nowhere. Market was basically trading for la most
of the session, boomin within over a twenty minute period
of time, you're down three and a half percent.
Speaker 1: Yep, that's what it looks like. And it's all in
that tech sector. And again we've talked about this that
that tech sector has some things in common like need
for electricity and the ability to be hacked.
Speaker 3: So you and that stuff so cheap, right, that stuff
so cheap. I was looking at it. I was looking
at the GDX, the gold mining ETF. Today it's getting
up right. The GDX is back to the same level
it was at when gold was at like fifteen hundred
bucks an ounce. You're you're at twenty six changed today.
Speaker 1: It's crazy, insane. It was great to have you on
my friends. Merry Christmas to you and your family. Our
Savior is born.
Speaker 3: Hey, he was born. Indeed, it's going to be a
very merry bipop Christmas at our house. And I wish
you and the listeners are very merry Christmas and God's
blessing in the new year.
Speaker 1: Appreciate you, Zach Lord, Thank you for the gift of
your son. Thank you for the gift of Christmas and
the gift of boys counsel. This is the Todd Herman Show.
Please go, be well, be strong, be kind, Please make
every effort to walk in the light of Christ.