Grizzle’s Post

Transcript

Or feeling that music. Alright, welcome back to the Commodity. one-on-one. How are you? I'm fine, I'm fine, you guys. How are you guys? We're doing great. As you can see, we're having too much fun. I got it. You know, we've talked, you've really defined since we first interviewed you the world of scarce assets and you know what that means. And it's been a heck of a year with respect to your strategy and how those, you know, those pieces that performed almost like, you know, it really is almost like the thesis for why the Blachman Smart Multi Asset Fund was created right for a year like 2024. Maybe I I gotta give you kind of the floor to give us a recap. On just a talk about the strategy, but bigger just you know how this year's transpired. It's it's been a great one and Congrats. Yeah, Yeah. OK. Well, thank you very much. I'm also very happy you have to be a little bit lucky, even though I can also say it was a perfect philosophy and timing of launching different, of course. No, no, no. The whole idea of the fund is to infest in scarce assets, and the philosophy is very simple in a world full of debt, which happens to be the second biggest. Masterclass on the Planet Bons Invest in die exact op een set which is scarcity and this case cars. So in my case that is quality stocks because these are special. Physical gold en bitcoin en of course, we have had. Tremendous year so far return wise, but also volatility wise. Yeah. So I'm I'm very much in favour of looking at volatility because that I can manage and and returns. I don't have a crystal ball, but going deeper into your question, what we have seen, so just a couple of examples, central banks continuously buying gold to add to their reserves, China for example, Poland we have seen of course this is now. Ook bij die Old News, wat die spot bitcoin ETF 's. Breaking all of the records, we know the Bloomberg guys that give you all the data every day we have the biggest economy and the new president of the biggest economy in the world talking about a strategic Bitcoin reserve. We we now have we have state pension funds investing we have of course Michael Saylor basically selling what he will call bet capital to increase good capital or one that can weather. A time so yeah, you see my my I used the the phrase the great rebalancing every now and then and that's people start to rethink their strategic asset allocation and what their true diversification and then add some what is fundamentally happening in the world now. Now we are seeing France again The the the the the government will be out I think could be soon as today. So a lot of the the boxes. Of de filosofie wordt tik this year, and of course some of these. Things actually went much faster than I would have anticipated that. So that is a bonus. But if you if you are, a question would be do you feel comfortable with your philosophy? Philosophy totally. Yeah. So that is that. That feels a very nice and also for my clients, of course. So yeah, yeah, very happy standing here and great for us here. Fantastic. Yeah. Congrats. Congrats. Your own you, Scott. Go ahead. Maybe I'll. I'll kick in. There's a charter you posted recently on Twitter. I wanted to dig into it a little bit. You said the US is the first aging nation that at least tries to slow the unprecedented pace of debt accumulation to create artificial GDP growth. This will be the key experiment for the coming four years. What do you mean by this? Can you take us through your thought process? Yeah. Yeah, sure. So all major economies suffer from the same problem. I think The only exception. Among these major economies is India, but we have a lack of growth or GDP growth so. All of these major economies are aging. The labor force growth is either slowing or turning negative. So for example, in China, the labor force is actually declining already. And that means that we add more and more depth to keep growing. And most of that debt is now added to the governments who are, who have grown very large. And you also see that they have all kinds of spending issues and the, the, the, the balance between. Income and outlays is is totally aware. So given all the butcher deficits and what you see now, So Trump has won the presidency, but also the House and the Senate. Zo for two years at least. He SA very big mandate to implement the policies he wants to. He also created is Department of government efficiency run by Elon musk so. Um. You you should assume that at least it has some power to try to get that budget deficit down at the same time. And that is also what the charts showed the mandatory costs outlays and these are not called mandatory for a reason of course are going sky high and you talk about Social Security, Medicare, Medicaid, insurance, everything. So in an aging society, in an aging economy these. If you have a welfare state, these costs will continue to rise. So even if Elon Musk and Trump get rid of what they will call all these woke ISM related things and they will put it on that tab because that that's policy, I think it will be very, very hard to get that budget deficit structurally below the 3% of GDP threshold, which is seen as a magical barrier. And from that example. So first there's a clear. So take for example France. It's totally opposite, but in the United States there's a clear mandate. Voor de in this case, the men hoe is in power en. Also, they are trying to do something. About it, we're thinking a little bit outside the box. En Dit is waar i cord and experience, what i do think that it will be very. Parts to make the experiment succeed. Interesting, that was a great review of that. Now I wanted to expand on the Trump presidency. How do you believe a Trump presidency will most benefit the crypto industry? Is it's simply expanding access to different coins with ETF's or could it be more than that where we actually get use cases for Bitcoin or something like that? Uh, I think I find it's just an interesting question, but also difficult one because I'm not an expert in what is called the. Crypto industrie ja indo Little bit about bitcoin, daar kapla things that is interesting to see. Is likely to be a positive for the sector in general had that there has been a tendency again in all these major economies to make the life of crypto as miserable as possible because it's very hard to control and and and politicians love control. So you see now that Gary Garry's already gone. Yeah, he already resigned. And so Pennsylvania, that's Pennsylvania has sued the SEC for all the crypto rules. These are going to be abolished. I guess, um, so, um. Beschikking about the level playing field, he did this field more fair, that thing the one. I think I would add from a macro perspective is we should not forget that Trump is about America, is about U.S. dollar and is about Trump. So once it becomes clear that Bitcoin for example is not helping his goals and that could be is very easy to make such a case because it's decentralized by definition, then I'm interested to see what will happen then. And also if you then consider let's say if this is in the last two years. Were last year of his presidency. I, I don't know what will happen there. So I think for now it's positive. I see it as a positive, the markets it as a positive. Wat Indian dont forget wat Trump. Stands for and I don't know if that is intrinsically crypto or Bitcoin. I think that is more America and if Bitcoin can help. Make America that bitcoin superpower, Great, but what if that is not the case? Excellent. Now there was an interesting something else you talked about that was interesting. I haven't really heard this mentioned too much, but you posted a chart showing that US investors have 35% of the portfolios allocated to private equity. You don't seem to like private equity very much, or at least you think that's way too high. So what are the underpriced risks of that asset class? And I'm curious if you think private equity and private debt could be sowing the seeds of the next financial crisis, because that's something that's like a pet project for me. So I I try to watch that closely as well. Yeah. OK, please do that. I find it astonishing that so-called smart or professional investors. Balt this hall marketing ski��n Het is een marketing its very clear that way you des move the returns. Private equities, because these are the volatility is artificially low because of pricing schemes and even in a simple Excel, you can disprove equities, private equity returns, I can do it, everybody can do it. And then you will see that the realized volatility is actually higher. So they're all voltage on this world. This has superior risk return characteristics. Let's put it into our asset mix. And then they lifted it until 35%, which is actually 7 percentage points higher than traditional equities. OK, so you have this very easy to debunk a risk return characteristics and now an even more simple idea. You don't have to know anything about private equity. I'm not an expert as well, but now suppose you have one. 100 billion facing private equity project wij I have to find the bigger, biggest. Highest return on investment, A project or companies or whatever. Suppose that. A couple. Company zou do in that, but now the total een maand standing at the. Skylines grows from 100 billion to one trillion, so thousand billion and all of these private equity funds have to find all of these greatest projects. But the number of great projects is by definition scars. So to put all that money at work, they have to buy second tier lower quality projects or companies or whatever by definition, because the the bigger it gets, the more you go down in quality. So a lot of so private equity house number 755. Veel bij ****** les qua private equity. It's, it's by definite, you don't have to know anything, understand everything. It's, it's. So my guess is they will either all of these private family offices will be disappointed by the amount of diversification in their portfolio. En als ze bij de Quality Hands Returns on Those Investments. Now on your second question, could that be the the origin over next financial crisis well? Ga ik doen het goed wel take a lot of Things now because thirty 5. Percent off your asset allocation into private equity is huge, way too large. But my thinking is more like. Every time they get their capital back. So ad was done with with with bad returns. Then the bosses of those family offices will say but didn't we buy this because. The superior diversification benefits of this asset class. Nou, go back out there and find me some asset classes that offer two diversification. And you know where I am going then gold, Bitcoin, other scarce asset classes. My guess is they will not put a private equity allocation of 35% back to equities, but they will try to find something else. Now the weight of art is 1%, infrastructure is 1%, commodities 1%, gold is 0.4%, and Bitcoin of course is 0%. So I'm happy to see that even half of that number goes into these asset classes and actually they will find true. Diversification you because there is no smothered returns there from Bitcoin price. Looking at Bitcoin prison, everybody know there's no smoothing at all.