WEBVTT 1 00:00:00.080 --> 00:00:02.640 You know, saying with it's the same with crypto. Think 2 00:00:02.680 --> 00:00:06.000 that because the volatility has gone down and the performance 3 00:00:06.040 --> 00:00:08.320 has been so strong. You know, people who said, oh, no, 4 00:00:08.400 --> 00:00:10.880 it's going to be an investable asset class, I think 5 00:00:10.880 --> 00:00:14.439 they're just that's just wishful thinking. You know, we've never 6 00:00:14.599 --> 00:00:17.600 really had a proper test of crypto. Yeah, I know, 7 00:00:17.600 --> 00:00:19.760 there have been several instances where it's lost seventy eighty 8 00:00:19.800 --> 00:00:21.839 percent of its value on all his bats back, but 9 00:00:21.879 --> 00:00:24.760 we've never really been an environment where we've had to test. 10 00:00:25.039 --> 00:00:27.719 You know, is this thing actually reliable as money? 11 00:00:27.879 --> 00:00:31.679 You're listening to Carrie. Let's as financial survival Network where 12 00:00:31.719 --> 00:00:35.119 you get valuable information. You just can't find anywhere else 13 00:00:35.679 --> 00:00:39.280 to thrive in today's trying times. You need the Financial 14 00:00:39.359 --> 00:00:44.439 Survival Network now more than ever. Go to Financial Survivalnetwork 15 00:00:44.479 --> 00:00:48.200 dot com and get your free newsletter and gift. Financial 16 00:00:48.359 --> 00:00:52.039 Survival Network now more than ever. 17 00:00:55.240 --> 00:00:59.079 And welcome you are listening to and watching the Financial 18 00:00:59.119 --> 00:01:00.000 Survival Network. 19 00:01:00.280 --> 00:01:02.359 I'm your host, Carrie Lutz. Well. 20 00:01:03.079 --> 00:01:08.040 Investing getting more and more difficult as debt escalates, as 21 00:01:08.159 --> 00:01:13.480 volatility goes up, and so many challenges to keeping your 22 00:01:13.519 --> 00:01:17.040 wealth intact. Somebody who's been able to do it through 23 00:01:17.120 --> 00:01:21.719 the last global financial crisis. Stephen Diggle is with us 24 00:01:21.959 --> 00:01:26.920 now and Steven you closed your fund number of years 25 00:01:26.920 --> 00:01:31.480 ago after having weathered and prospered in the last financial crisis. 26 00:01:31.840 --> 00:01:33.680 Now you're opening it up again. 27 00:01:35.519 --> 00:01:39.359 What led you to that? Well, thanks, Kerry, great to 28 00:01:39.400 --> 00:01:46.840 meet you. So yeah, we at at Aartritis ran a 29 00:01:46.840 --> 00:01:51.200 a very focused fund between two thousand and two and 30 00:01:51.280 --> 00:01:55.959 twenty and ten. It was always long volatility, did a 31 00:01:56.040 --> 00:01:59.480 number of arbitrage activities, but it's principal characteristics it was 32 00:01:59.519 --> 00:02:04.280 always brought credit in the war, was always long volatility, 33 00:02:04.439 --> 00:02:06.879 and during that period between you know, late two thousand 34 00:02:06.920 --> 00:02:09.120 and seven and especially two two thousand and eight, it 35 00:02:09.159 --> 00:02:12.319 was a very successful fund. We made our investors over 36 00:02:12.360 --> 00:02:15.879 three billion dollars in that period when pretty much doubled 37 00:02:15.879 --> 00:02:21.120 our NAV and our AUM, which made us by some margin, 38 00:02:21.199 --> 00:02:23.840 the most successful edge fund in Asia, which was where 39 00:02:23.840 --> 00:02:26.719 we were operating out of in Singapore at the time. 40 00:02:27.199 --> 00:02:31.680 But you know, with the bailouts that came and and 41 00:02:31.719 --> 00:02:38.039 the enormous amount of money printing that the the financial 42 00:02:39.360 --> 00:02:44.240 the central banks felt obliged to do, you know, volatility 43 00:02:44.680 --> 00:02:48.280 went down a surprisedly started going up, and by twenty ten, 44 00:02:48.560 --> 00:02:50.400 you know, we come to the conclusion that they weren't 45 00:02:50.400 --> 00:02:53.360 going to stop, and that the more liquidity there was 46 00:02:53.400 --> 00:02:56.520 in the system, the lower the volatility would be, because 47 00:02:56.599 --> 00:02:59.080 you know, essentially they're they're two sides of the same 48 00:02:59.120 --> 00:03:04.520 Cointility only really spikes when liquidity is drained out the 49 00:03:04.560 --> 00:03:07.879 system for a variety of reasons, usually a panic withdrawal 50 00:03:07.919 --> 00:03:10.840 of you know, or margin equidation or whatever it is. 51 00:03:11.319 --> 00:03:14.319 So with super abundant liquidity, we decided that this is 52 00:03:14.319 --> 00:03:16.439 the style that this fund just wasn't going to work, 53 00:03:16.879 --> 00:03:19.599 and so we made a decision to shut it down 54 00:03:19.599 --> 00:03:22.800 and return investors the Romainian money, which was still over 55 00:03:22.800 --> 00:03:26.120 three billion dollars. There's not many people voluntarily have closed 56 00:03:26.120 --> 00:03:28.759 a multi billion dollar hedge fund down, but we just did. 57 00:03:28.840 --> 00:03:31.719 We felt it was the best way of preserving our 58 00:03:31.759 --> 00:03:34.199 track record, and we didn't think it was going to 59 00:03:34.199 --> 00:03:37.199 be a successful strategy for our investors or for us, 60 00:03:37.199 --> 00:03:39.400 And indeed that that's been the case. So, you know, 61 00:03:39.599 --> 00:03:42.879 with the exception of maybe a few brief periods, especially 62 00:03:42.879 --> 00:03:47.280 around COVID, volatility has remained pretty low in financial markets 63 00:03:47.319 --> 00:03:51.879 for a long time. And the SMP in particular, and 64 00:03:52.000 --> 00:03:55.319 US markets especially has had you know, spectacular run over 65 00:03:55.319 --> 00:03:59.639 the last ten years, attracted an increasing amount of global 66 00:03:59.639 --> 00:04:03.879 cap from all sorts of places, including Asia. We see 67 00:04:04.479 --> 00:04:08.360 you know, an enormous amount of speculative money from Asia 68 00:04:09.159 --> 00:04:11.879 at play in the US, especially in the tech space 69 00:04:12.080 --> 00:04:14.680 and the crypto space, and really you know, a complete 70 00:04:14.759 --> 00:04:17.759 lack of interest in speculating or playing in their own markets. 71 00:04:18.040 --> 00:04:19.240 You know, there's some of these some of these stock 72 00:04:19.319 --> 00:04:23.160 markets that used to be very hot we are back 73 00:04:23.199 --> 00:04:26.639 in the Asian tiger days are now stone cold. You know, 74 00:04:26.680 --> 00:04:29.360 the returns on some of these markets has been very poor, 75 00:04:29.439 --> 00:04:31.480 and the level of liquidity is very poor because an 76 00:04:31.519 --> 00:04:35.279 awful lot of that Asian saving base is now at 77 00:04:35.319 --> 00:04:41.240 play and sometimes very leathered in the US. So we've 78 00:04:41.360 --> 00:04:47.360 seen a gradual change in the market dynamics, and we 79 00:04:47.560 --> 00:04:52.920 just feel now, given a confluence of characteristics in the market, 80 00:04:53.399 --> 00:04:57.759 that the risk reward between the you know, the option 81 00:04:58.319 --> 00:05:02.360 seller or the volatility seller the volatility buyer has moved 82 00:05:02.959 --> 00:05:06.439 significantly in favor of the of the volatility buyer or 83 00:05:06.439 --> 00:05:10.079 the auction buyer, and that right now that's not being 84 00:05:10.120 --> 00:05:14.319 reflected in prices so after fourteen years of doing other things, 85 00:05:14.399 --> 00:05:20.120 largely private equity, we've reopened these long volatility funds to investors. 86 00:05:20.240 --> 00:05:27.079 And you know, we think that there are significant risks 87 00:05:27.160 --> 00:05:31.519 in the marketplace right now that aren't being reflected in 88 00:05:32.120 --> 00:05:34.920 risk prices, and that there are now fault lines in 89 00:05:34.959 --> 00:05:39.879 the market that should give any thoughtful investor pause. 90 00:05:40.279 --> 00:05:43.480 Okay, so what do you think the cause of these 91 00:05:44.120 --> 00:05:46.279 challenges that you see coming? 92 00:05:47.079 --> 00:05:50.360 What are the oka? In some ways, the market's done 93 00:05:50.399 --> 00:05:51.800 really well. I mean, here we are on you know, 94 00:05:51.800 --> 00:05:54.160 the US economy has never a bit bigger, We're still growing. 95 00:05:54.160 --> 00:05:57.399 We haven't had a recession since briefly during COVID. Unemployment 96 00:05:57.439 --> 00:05:59.639 at four point one four point two percent is pretty 97 00:06:00.120 --> 00:06:04.920 low ish. You know, we've rained back inflation from that, 98 00:06:04.959 --> 00:06:07.079 you know, horrific nine point two percent print in the 99 00:06:07.120 --> 00:06:10.160 summer of twenty twenty two, you know, two point six 100 00:06:10.240 --> 00:06:12.279 two point seventy two point eight. You know, maybe not 101 00:06:12.399 --> 00:06:16.079 the official FED target of two of two, but it 102 00:06:16.079 --> 00:06:19.560 doesn't feel like they're really wedded to that two target anymore. 103 00:06:19.600 --> 00:06:24.240 So you know, maybe inflational level you can live with ain, know, 104 00:06:24.360 --> 00:06:26.519 and then and then there's the market having had this 105 00:06:26.560 --> 00:06:29.839 heart attack in the first three days of April after 106 00:06:30.199 --> 00:06:32.879 the tariffs, you know, back at an all time high. 107 00:06:33.360 --> 00:06:35.360 You know, vole price is pretty low, so you go, well, 108 00:06:35.680 --> 00:06:39.600 this is a pretty benign environment, isn't it. But behind 109 00:06:39.639 --> 00:06:42.759 that there are things that should make us know concerned. 110 00:06:42.800 --> 00:06:45.160 One is the US. The returns on the sm P 111 00:06:45.199 --> 00:06:47.040 of the last ten years are about you know, two 112 00:06:47.160 --> 00:06:51.000 hundred and sixty percent, incredibly imbversive, but you know, you know, 113 00:06:51.079 --> 00:06:53.560 profits are only up one to eighty percent, so the 114 00:06:53.680 --> 00:06:57.439 multiples expanded, you know, twenty five times. The S and 115 00:06:57.439 --> 00:07:01.519 P is definitely not cheap. And in a four four 116 00:07:01.639 --> 00:07:04.360 four and a quarter percent interest radi environment, it really 117 00:07:04.399 --> 00:07:08.000 leaves the equity risk premium back at pretty much zero. 118 00:07:08.600 --> 00:07:10.519 And there's only one time in my career that it 119 00:07:10.600 --> 00:07:12.279 was back at zero, and that was ninety nine two 120 00:07:12.360 --> 00:07:16.519 thousand and after that the S and P halved, So 121 00:07:17.079 --> 00:07:21.079 you know, there's a warning sign right there, you know. 122 00:07:22.040 --> 00:07:26.680 And behind it, all you know is this ticking time bomb, 123 00:07:26.680 --> 00:07:30.199 which is what it is of the US deficit. Now 124 00:07:30.279 --> 00:07:32.920 a lot of people talk about it. It doesn't feel 125 00:07:33.000 --> 00:07:38.040 like a problem because so far the US has managed 126 00:07:38.120 --> 00:07:43.360 to increase that deficit very steadily and very and always, 127 00:07:43.399 --> 00:07:45.519 you know, pretty much well, with a very brief exception 128 00:07:45.600 --> 00:07:48.439 during the Clinton years, it's always been one direction. And 129 00:07:48.480 --> 00:07:50.759 we're up to one hundred and twenty five percent of 130 00:07:50.879 --> 00:07:56.240 GDP now at a time of peace and prosperity, literally 131 00:07:56.279 --> 00:07:59.120 higher than it was in nineteen forty five, and pretty 132 00:07:59.160 --> 00:08:01.560 much with no inten shouldn't by either party of bringing 133 00:08:01.560 --> 00:08:07.319 that number down at some point that's gonna matter to 134 00:08:07.360 --> 00:08:13.720 the bond market. Not yet, but you know, you just 135 00:08:13.839 --> 00:08:16.800 can't be the reserve currency of the world and to 136 00:08:16.839 --> 00:08:18.920 have your bond market being you know, sort of the 137 00:08:19.000 --> 00:08:23.240 subsupposedly safe even asset of the world and continue to 138 00:08:24.199 --> 00:08:27.839 you know, print money and extend your deficits without expecting 139 00:08:28.319 --> 00:08:31.480 at some point there's going to be some consequences. And 140 00:08:31.920 --> 00:08:36.240 what those consequences are going to be is difficult to predict. 141 00:08:36.559 --> 00:08:39.200 But the US is already spending about a trillion dollars 142 00:08:39.240 --> 00:08:43.159 a year service in that debt. Any sort of revolt 143 00:08:43.200 --> 00:08:45.600 in the bond market is going to rapidly blow out 144 00:08:46.120 --> 00:08:50.320 the budget and blow out that that that trillion dollar 145 00:08:50.399 --> 00:08:53.000 number into any you know, anever bigger number. So that's 146 00:08:53.039 --> 00:08:57.799 the kind of the background that is just ticking away 147 00:08:57.840 --> 00:09:00.879 there and at some point it's go it will. I 148 00:09:00.919 --> 00:09:08.600 think it will unleash some very significant unexpected consequences on markets. 149 00:09:08.639 --> 00:09:11.679 They're unlikely to be good. And you can see that 150 00:09:11.759 --> 00:09:13.799 in the dollar. You know this year that it does 151 00:09:13.919 --> 00:09:17.159 as it's been widely observed that the dollars have this 152 00:09:17.360 --> 00:09:20.279 worst start to a year since nineteen seventy three, at 153 00:09:20.240 --> 00:09:24.559 stand ten eleven percent against most currencies. Hard to fathom 154 00:09:24.559 --> 00:09:27.159 why given the things that look look they're going pretty 155 00:09:27.200 --> 00:09:29.720 pretty well. It's that US stock market and all time high. 156 00:09:30.000 --> 00:09:35.000 I think it's concerns about a this deficit which keeps 157 00:09:35.000 --> 00:09:40.559 on going up. And secondly, there is definitely some concern 158 00:09:40.840 --> 00:09:44.399 about the way in which the US A, as the 159 00:09:44.399 --> 00:09:49.120 global Hegemen, is conducting itself on the global stage. You know, 160 00:09:49.159 --> 00:09:53.840 the administration, this new administration has come in with an 161 00:09:53.879 --> 00:09:58.320 explicit agenda that's going to shake up the world order, 162 00:09:59.000 --> 00:10:01.200 and I think we should do it. Believe them. I 163 00:10:01.240 --> 00:10:02.279 think I should believe them. 164 00:10:02.360 --> 00:10:02.480 Now. 165 00:10:02.480 --> 00:10:04.519 I don't want to get I'm not political. I'm a 166 00:10:04.639 --> 00:10:07.279 I'm a market's guide. I don't have an ax to grind. 167 00:10:07.600 --> 00:10:10.600 I'm either a Democrat nor a Republican. But you know, 168 00:10:10.720 --> 00:10:13.600 I see an administration that's got a great deal of power, 169 00:10:13.720 --> 00:10:15.759 not a lot of checks going on right now upon 170 00:10:15.879 --> 00:10:19.360 what Trump wants to do, and with an explicit intention 171 00:10:19.559 --> 00:10:22.080 of changing, you know, shacking things up. And as we 172 00:10:22.120 --> 00:10:24.559 saw in three days, you know, in April, when the 173 00:10:24.600 --> 00:10:27.879 market fell nineteen percent and the bond market started to 174 00:10:27.879 --> 00:10:29.840 go in a little dou lally, and then you know, 175 00:10:30.200 --> 00:10:33.759 the dollar wasn't behaving well. The capacity of this administration 176 00:10:33.960 --> 00:10:37.559 to surprise people, not always in a positive way, I think, 177 00:10:37.679 --> 00:10:40.120 is there. And you know, there's this idea now that 178 00:10:40.200 --> 00:10:42.519 you know, coined by by one of these journalists, the 179 00:10:42.600 --> 00:10:45.399 taco trade as Trump always tied chickens out, and so 180 00:10:45.440 --> 00:10:47.679 no matter what he says, you just have to ignore 181 00:10:47.720 --> 00:10:50.240 it and just carry on buying. I think that's a 182 00:10:50.320 --> 00:10:54.679 really dangerous assumption. These are you know, these are these 183 00:10:54.679 --> 00:10:58.480 are people who are quite determined to get what they 184 00:10:58.519 --> 00:11:03.080 see as a necessary a deal for America. And I 185 00:11:03.120 --> 00:11:06.320 can't blame them for that, but I think anyone who's 186 00:11:06.399 --> 00:11:09.799 playing in this marketplace, particularly in a releveraged position, who 187 00:11:09.840 --> 00:11:12.399 thinks that it's safe to play out there, you know, 188 00:11:12.639 --> 00:11:17.159 is being reckless. Because this administration is going to be 189 00:11:17.200 --> 00:11:20.799 a catalyst for volatility. If you're a strong believer in 190 00:11:20.840 --> 00:11:23.279 what they're doing, you may believe that eventually, you know, 191 00:11:23.320 --> 00:11:25.320 that's going to be a very positive outcome for the US. 192 00:11:25.440 --> 00:11:29.000 Maybe not for everyone else, but in the short term 193 00:11:29.440 --> 00:11:32.879 we should expect the unexpected, and market prices are not 194 00:11:32.960 --> 00:11:37.039 doing that right. Credit defaultse WAPs are very benign, you know, 195 00:11:37.200 --> 00:11:40.399 very low prices, you know, to bet against credit and volatility. 196 00:11:40.440 --> 00:11:44.480 Germany is very cheap. So got some inquiry question. 197 00:11:44.559 --> 00:11:50.799 Yeah, uh, what you're feeling is about cryptocurrency, bitcoin in particular. 198 00:11:51.440 --> 00:11:55.840 A all right, you know, it's we were the first, 199 00:11:56.879 --> 00:12:00.799 we were the first fund manager in single poor to 200 00:12:00.919 --> 00:12:04.480 have a crypto fund, you know, as a as A 201 00:12:04.480 --> 00:12:06.960 as A as A, as a guy who's always loved arbitrage, 202 00:12:07.080 --> 00:12:08.879 I loved the fact that you had all this differential 203 00:12:08.919 --> 00:12:11.559 price in out there. So we ran a moderately successful, 204 00:12:11.639 --> 00:12:16.679 very unambitious crypto fund in Singapore during you know, the 205 00:12:17.159 --> 00:12:19.360 a while ago. Now we did all right, you know, 206 00:12:19.639 --> 00:12:23.440 because there was these very wild arbor charge opportunities, but 207 00:12:23.480 --> 00:12:29.279 I got increasingly uncomfortable about settlement risk that we were 208 00:12:29.320 --> 00:12:33.200 taking because you know, people talk about these places as exchanges, 209 00:12:33.480 --> 00:12:35.879 but it was quite clear that they certainly worked. They 210 00:12:35.919 --> 00:12:38.399 were more like they were more like those those curb 211 00:12:38.480 --> 00:12:40.919 brokers in the nineteen twenties, I mean a lot of 212 00:12:40.960 --> 00:12:43.120 them well, and then FTX obviously proved it a lot. 213 00:12:43.159 --> 00:12:46.679 Even some of the bigger ones were very unsafe places. 214 00:12:46.759 --> 00:12:52.480 So you know, ah, money is whatever people think it is, right. 215 00:12:52.559 --> 00:12:55.360 Money's been weird things in history, right for several hundred years, 216 00:12:55.799 --> 00:12:59.240 you know, comp shells were considered a safe form of money, 217 00:12:59.279 --> 00:13:02.360 and in life arge parts of you know, Africa. You know, 218 00:13:02.480 --> 00:13:05.039 gold has no value, yet it's been accepted as money 219 00:13:05.039 --> 00:13:08.799 for four thousand years. Money is whatever people want it 220 00:13:08.840 --> 00:13:12.440 to be, and as long as people believe it's money, 221 00:13:12.559 --> 00:13:17.919 then yeah. But when people tell me they're investing in crypto, 222 00:13:18.440 --> 00:13:20.600 you know, I get a little pedantic, and I'm like, no, 223 00:13:20.720 --> 00:13:23.399 you're not. You may have, you may have bought crypto, 224 00:13:23.720 --> 00:13:26.120 you may be speculating it or playing it, but you're 225 00:13:26.120 --> 00:13:29.039 not investing in it because it has no yield, it 226 00:13:29.080 --> 00:13:31.679 has no fundamental value and it has no residual value. 227 00:13:31.799 --> 00:13:34.159 Now you may make money, and of course anyone's bought 228 00:13:34.159 --> 00:13:37.960 it has made money, so they're smart. I'm done. But 229 00:13:38.759 --> 00:13:41.759 you know, all money, all money is a Ponzi ski right. 230 00:13:41.799 --> 00:13:43.480 I mean, ultimately, you know that that thing in your 231 00:13:43.480 --> 00:13:45.799 back pocket that says it's worth a dollar isn't worth 232 00:13:45.799 --> 00:13:48.320 a dollar. It's just a piece of linen. You know, 233 00:13:48.360 --> 00:13:51.240 that shiny that shiny piece of metal you have in 234 00:13:51.279 --> 00:13:54.039 your pocket is not worth three thousand, two hundred dollars. 235 00:13:54.720 --> 00:13:56.600 It's just a shiny piece of bec And it's only 236 00:13:56.600 --> 00:13:59.480 worth three thousand hundred dollars because someone's going to give 237 00:13:59.480 --> 00:14:02.840 you that for it, you know, saying with It's the 238 00:14:02.879 --> 00:14:06.440 same with crypto. I think that because the volatility has 239 00:14:06.480 --> 00:14:09.080 gone down or the performance has been so strong. You know, 240 00:14:09.120 --> 00:14:10.559 people who said, oh no, it's going to be an 241 00:14:10.559 --> 00:14:14.480 investable asset class, I think they're just that's just wishful thinking. 242 00:14:14.840 --> 00:14:19.000 You know, we've never really had a proper test of crypto. Yeah, 243 00:14:19.039 --> 00:14:20.879 I know, there have been several instances where it's lost 244 00:14:20.919 --> 00:14:23.120 seventy eighty percent of its value and all his bats back, 245 00:14:23.399 --> 00:14:25.919 But we've never really been an environment where we've had 246 00:14:25.960 --> 00:14:29.399 to test you know, is this thing actually reliable as money? 247 00:14:29.679 --> 00:14:32.600 You know, argue it needs quite a bit of technology 248 00:14:32.600 --> 00:14:35.159 to make it run. You know, if someone said I'd 249 00:14:35.240 --> 00:14:37.360 like to buy your house and I'll give you crypto 250 00:14:37.440 --> 00:14:39.519 for it, I'd say I'd rather have dollars. 251 00:14:41.399 --> 00:14:49.840 So here's a question for you, though, institutional adoption ETFs. Yeah, basically, 252 00:14:50.440 --> 00:14:54.200 the number of coins out there, only seven percent of 253 00:14:54.240 --> 00:14:57.879 the total number of coins that have ever been produced 254 00:14:58.399 --> 00:15:02.799 actually trade and and more. It's getting gobbled up by 255 00:15:03.000 --> 00:15:05.120 by entities. 256 00:15:04.720 --> 00:15:09.000 That aren't going to sell it unless oh and and 257 00:15:09.840 --> 00:15:12.679 so and so in the short Yeah, in the short term. 258 00:15:12.759 --> 00:15:15.440 You know, that makes a great dynamic for a bit 259 00:15:15.480 --> 00:15:20.159 of a squeeze. But scarcity alone carry doesn't guarantee value. Right, 260 00:15:20.480 --> 00:15:23.320 My toenails are pretty scarce. I've only got ten of them, 261 00:15:23.360 --> 00:15:26.320 but you know what, they're not worth much. And you 262 00:15:26.320 --> 00:15:29.120 know what, I'm ony chain. You might have something there. 263 00:15:29.759 --> 00:15:32.639 You know that they're they're very limited in supply. There 264 00:15:32.679 --> 00:15:35.759 ain't gonna be made any more of them, and they 265 00:15:35.799 --> 00:15:39.960 grow pretty slowly. But you know, scarcity alone doesn't guarantee value. 266 00:15:39.960 --> 00:15:43.600 You need a bunch of other things. And look, I've 267 00:15:43.600 --> 00:15:47.440 always been fascinated by the blockchain, but you know, I 268 00:15:47.440 --> 00:15:51.200 think it's as a solution to things like real estate, 269 00:15:51.240 --> 00:15:56.559 for example, or or fractional ownership of of hard to 270 00:15:56.639 --> 00:16:00.639 verify assets like like fine art or or fine, why 271 00:16:01.080 --> 00:16:04.679 I think the blockchain could have immense value and impact. 272 00:16:05.000 --> 00:16:09.919 I think has money. You know, I don't have any 273 00:16:09.919 --> 00:16:12.399 problems moving money around the world, whether it's in yen 274 00:16:12.559 --> 00:16:16.679 or dollars or or pounds. You know, it settles pretty easily. Yes, 275 00:16:16.720 --> 00:16:18.600 it's Could it be more efficient, for sure it could. 276 00:16:18.799 --> 00:16:20.799 Does the bank take more than it should? Yeah, for sure? 277 00:16:20.840 --> 00:16:24.440 But you know it works okay, So so what you know, 278 00:16:24.559 --> 00:16:27.360 I don't see. I'm not against crypto in any way, 279 00:16:28.000 --> 00:16:29.840 but I'm not a believer because I don't see the 280 00:16:29.919 --> 00:16:33.720 problem that it's solved. Now. I understand a great you know, 281 00:16:33.759 --> 00:16:35.600 a great number of people have made a great deal 282 00:16:35.600 --> 00:16:38.720 of money out of it, and you know, well done then, 283 00:16:39.320 --> 00:16:43.360 But you know, I don't see. I don't have a 284 00:16:43.480 --> 00:16:46.080 use for it, as in, you know, in the business 285 00:16:46.080 --> 00:16:50.720 we run. You know, I can't really use it when 286 00:16:50.759 --> 00:16:54.120 we when we traded it, we only traded it in 287 00:16:54.159 --> 00:16:56.639 an arbitrageable way. In other words, you know, if someone 288 00:16:56.720 --> 00:16:58.360 was prepared to painting it, you know, at the time 289 00:16:58.519 --> 00:17:01.000 like eight thousand, you know, one hundred bucks for a 290 00:17:01.039 --> 00:17:03.759 coin in Korea, and I can sell it for you know, 291 00:17:03.799 --> 00:17:07.720 eighty two hundred bucks simultaneously in the US. I like that. 292 00:17:08.200 --> 00:17:09.880 I didn't like the settlement risk I was taken, but 293 00:17:09.920 --> 00:17:13.240 I love the arbitrage. But you know, is you know, 294 00:17:13.880 --> 00:17:16.319 is it an important or a significant part of my 295 00:17:16.480 --> 00:17:20.119 asset base? No? Not because I you know, I'm against it, 296 00:17:20.240 --> 00:17:22.200 or I think it's worthless or I'm not. You know, 297 00:17:22.240 --> 00:17:24.920 I believe it's a it's a scheme, but it doesn't 298 00:17:24.960 --> 00:17:27.960 really solve any of the problems that I that I'm 299 00:17:27.960 --> 00:17:32.200 looking to that I'm looking to, you know, solve. And 300 00:17:32.559 --> 00:17:34.720 you know, do I see it as a potential cause 301 00:17:34.720 --> 00:17:37.200 of volatility? Oh? Boy? Do I? I mean, what's what's 302 00:17:37.240 --> 00:17:39.400 the value of it now? Is like thirteen fourteen trillion 303 00:17:39.440 --> 00:17:42.160 dollars out there in terms of all cryptos. I mean, 304 00:17:42.200 --> 00:17:45.359 it's a huge amount of value. Right, that's that's appeared, 305 00:17:45.400 --> 00:17:48.400 you know, just like a mushroom. Right. And you know, 306 00:17:48.480 --> 00:17:51.559 if people are really thinking, I've got, you know, I've got, 307 00:17:51.759 --> 00:17:54.039 if they've really counted that as part of their permanent 308 00:17:54.039 --> 00:17:56.440 asset base, I don't know what happens if there was 309 00:17:56.480 --> 00:17:59.920 to be a severe challenge to it. The other thing is, 310 00:18:00.000 --> 00:18:02.759 you know, at some point, and I'm surprised it hasn't 311 00:18:02.759 --> 00:18:06.839 happened in more places than China. You know, given its 312 00:18:07.279 --> 00:18:11.559 it's potential threat to the monopoly of money that central 313 00:18:11.599 --> 00:18:15.359 banks have, that it hasn't experienced more legal challenges, and 314 00:18:15.400 --> 00:18:17.480 I think, you know that's that's something that could at 315 00:18:17.480 --> 00:18:19.640 some point come back to buy it. But you know, say, 316 00:18:19.839 --> 00:18:22.680 I haven't really been involved for a long time. We 317 00:18:22.799 --> 00:18:27.000 watch it, I think as a potential source of volatility, 318 00:18:27.039 --> 00:18:30.599 both upside and downside, because as you point out, given 319 00:18:30.640 --> 00:18:33.079 the size of the asset, of the of the asset 320 00:18:33.119 --> 00:18:36.079 class now and the amount of liquidity in it, its 321 00:18:36.119 --> 00:18:39.880 potential to move a lot is huge. Uh, the actual 322 00:18:39.920 --> 00:18:43.920 experience volatility has been pretty low, but its potential volatility 323 00:18:43.960 --> 00:18:47.759 is enormous. So you know, as a catalyst for volatility, 324 00:18:47.839 --> 00:18:50.359 say both on the up and downside, I'd be very much. 325 00:18:50.440 --> 00:18:52.799 I'd always want to be long the wings of a 326 00:18:52.920 --> 00:18:57.039 bitcoin out there, and that there's a pretty decent option 327 00:18:57.200 --> 00:19:01.440 market out there for it. But are we using it? 328 00:19:01.920 --> 00:19:04.240 You know, no, we're not evangelists for it. We say 329 00:19:04.240 --> 00:19:05.920 we've had a we did have a fun. We closed 330 00:19:05.920 --> 00:19:08.240 it for various reasons, personnel being one of them. They 331 00:19:08.240 --> 00:19:09.960 want to go off and do other things. I'm sure 332 00:19:09.960 --> 00:19:13.799 they've done really well if they they stayed long. We 333 00:19:13.839 --> 00:19:17.359 don't run crypto anymore. And you know, Singapore's Singapore where 334 00:19:17.359 --> 00:19:20.279 we were running it. They've become a little more, a 335 00:19:20.279 --> 00:19:22.759 little less welcoming about it. There's been a few scandals 336 00:19:22.759 --> 00:19:24.319 there as ever to be there. We're being a new 337 00:19:24.359 --> 00:19:29.799 asset class. And yeah, so you know, I see it 338 00:19:30.119 --> 00:19:35.440 as an area where people have been very richly rewarded 339 00:19:35.480 --> 00:19:38.440 for having faith, as an area where there's an awful 340 00:19:38.480 --> 00:19:40.920 lot of speculation, and I see it as a catalyst 341 00:19:40.920 --> 00:19:42.960 for volatility. But we don't use it. But I say 342 00:19:43.000 --> 00:19:45.480 it's not because we're against it. We just don't really 343 00:19:45.519 --> 00:19:46.480 have a use for it. 344 00:19:46.720 --> 00:19:49.960 Okay, all right, I'll buy that. So you're bullish on 345 00:19:50.079 --> 00:19:51.480 gold and silver there. 346 00:19:51.400 --> 00:19:53.880 I'd certainly bullish on the volatility in gold and silver, 347 00:19:54.000 --> 00:19:57.240 you know. I mean it's you know, it's fascinating to 348 00:19:57.279 --> 00:19:59.839 me at a time when Nasdaq's at an all time high, 349 00:20:00.440 --> 00:20:03.599 the SMPS of an all time high, the gold is up, 350 00:20:03.839 --> 00:20:06.359 you know what, twenty five twenty seven percent this year. 351 00:20:06.759 --> 00:20:09.839 I got a very strong suspicion that people chasing this 352 00:20:09.960 --> 00:20:12.759 rally in the S and P and NASDAK are not 353 00:20:12.960 --> 00:20:16.240 the same people chasing this rally in gold. I mean 354 00:20:16.279 --> 00:20:18.160 maybe some of the algos, because you know, they're just 355 00:20:18.240 --> 00:20:21.519 bet non momentum, but I think they're fundamentally the people 356 00:20:21.519 --> 00:20:23.960 who feel that they need more gold are probably not 357 00:20:24.000 --> 00:20:26.200 the people who think that nasdak's a bargain that you 358 00:20:26.200 --> 00:20:28.799 know year up here, I think you so maybe maybe 359 00:20:28.880 --> 00:20:34.720 indicative of a big bifurcation in in investor sentiment, and 360 00:20:34.799 --> 00:20:38.880 this leads to a potentially very interesting trade. It's a 361 00:20:38.880 --> 00:20:42.119 little nerdy, but you know, as an auction's nerd. Indulged 362 00:20:42.160 --> 00:20:45.279 me for a second, which is that the correlation between 363 00:20:45.359 --> 00:20:50.759 gold and the US stock market is very very low. Indeed, 364 00:20:51.559 --> 00:20:55.640 in fact, Kate's chaotic. Sometimes it's correlated, sometimes it's negatively correlated, 365 00:20:55.960 --> 00:20:59.359 very often has no correlation. Both the S and P 366 00:20:59.799 --> 00:21:07.119 and gold are showing relatively low option pricing relative to 367 00:21:07.160 --> 00:21:10.599 historic volatility, so particularly the US up depending on the 368 00:21:10.599 --> 00:21:12.279 period you measure, because if as long as you include 369 00:21:12.279 --> 00:21:15.119 the April period, you know, volatility is very cheap relative 370 00:21:15.119 --> 00:21:18.759 to historic. So if you put those two together, if 371 00:21:18.759 --> 00:21:21.559 you're long, let's say you're long out of the money, 372 00:21:21.559 --> 00:21:23.240 put some calls on the S and P and out 373 00:21:23.240 --> 00:21:26.640 of the money puts some calls on gold, you get 374 00:21:26.680 --> 00:21:34.119 a very interesting payoff because you've bought things that are 375 00:21:34.119 --> 00:21:38.440 pretty close to the historic volatility, and anything could could 376 00:21:38.640 --> 00:21:41.759 happen that could dislocate those And in a sense, you've 377 00:21:41.759 --> 00:21:44.519 got four ways to win and only one way to lose, 378 00:21:44.519 --> 00:21:46.559 which is that everything kind of stucks around where it is. 379 00:21:47.279 --> 00:21:50.519 So between the two of them, they represent a very 380 00:21:50.559 --> 00:21:55.720 interesting way to be exposed to current markets shocks on 381 00:21:55.759 --> 00:22:00.400 both sides. So you know, when the dollars we gold 382 00:22:00.440 --> 00:22:04.200 is strong, okay, So that explains part of the part 383 00:22:04.240 --> 00:22:07.200 of the problem. And just as you refer to the 384 00:22:07.480 --> 00:22:12.720 very limited amount of liquidity in in cryptocurrencies relative to 385 00:22:12.720 --> 00:22:15.799 the outstanding numbers, so it is with gold, right a 386 00:22:15.839 --> 00:22:19.720 tiny amount of gold trades, tiny amount of gold trades 387 00:22:19.759 --> 00:22:23.240 relative to the outstanding amount. So it's ability to move, 388 00:22:23.400 --> 00:22:27.640 you know, very rapidly with relatively small changes and appetite, 389 00:22:28.039 --> 00:22:31.680 you know, leads it to be a place that just 390 00:22:32.039 --> 00:22:36.160 being long volatility alone is a great is a very 391 00:22:36.160 --> 00:22:38.839 interesting trade, but the fact that from time to time 392 00:22:38.880 --> 00:22:41.400 it has a big impact because other things are going 393 00:22:41.440 --> 00:22:46.920 on geopolitically, also makes it a great place to play. However, 394 00:22:47.000 --> 00:22:51.920 one thing to always remember about gold is that, like 395 00:22:52.079 --> 00:22:56.680 everything else, you need a marginal buyer. And you know, 396 00:22:56.880 --> 00:22:59.000 let's not forget that in two thousand and eight, when 397 00:22:59.000 --> 00:23:02.480 everything was for their part, even gold went down. Now 398 00:23:02.599 --> 00:23:06.000 it baounts back, but you know, gold is the ultimate 399 00:23:06.039 --> 00:23:10.240 hedge against the market. Dislocation doesn't always work. It didn't 400 00:23:10.240 --> 00:23:14.440 work in two thousand and eight, and if liquidity were 401 00:23:14.480 --> 00:23:17.480