Stanley Druckenmiller on What Makes a Great Investor, Bitcoin & His Biggest Trades
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Uh-huh.
Yeah, I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off on the road. Let's travel, never looking back.
So today, Trong, who writes our daily email and is going viral on Twitter right now, is here with a special episode. Trung, what are people about to listen to?
All right, so I had the chance to interview Stanley Druckenmiller.
He's widely considered one of the greatest investors ever. Uh, just top-level notes, uh, one of the richest people in America, worth $5.6 billion. Um, he famously broke the Bank of England with, uh, while working at George Soros's fund, Quantum Fund. They made $1 billion on a trade shorting the British pound. And he has an incredible investing track record. Over 40 years, he's never had a down year. Um, 2008, he was up 11%, which a lot of people actually point to as the impressive thing. So even when the entire market's tanking, he's been able to be up. And the other thing that he's really known for in terms of his track record is 30 years of 30% returns or more. So 30 for 30. I don't know who else has that record. I know if you look at Buffett annualized over his entire career, it's like 20% a year, but 30% for 30 years straight is outrageous.
So that's amazing. I would like that. Um, but our audience is typically guys and folks building, uh, building companies, not necessarily investing. But we wanted to air this anyway because, A, you're blowing up and people want to hear from you. And if this works, uh, maybe you're gonna want to do your own podcast. But also, uh, how does this apply to our listeners and what should they look out for?
Absolutely. So the first thing I want to mention actually that I forgot to say was, uh, this entire meeting was set up by Toggle, uh, AI. Uh, you can find them at toggle.global, uh, T-O-G-G-L-E dot global. And the reason why they set it up is because Stan's actually an investor in their company. So he's invested in startups and they're a fintech company. So, um, they're able to set up the meeting, but the, if you were to answer your questions around the lessons of what people can apply, I'd say there are kind of 3 takeaways. From just his mindset as an investor that I think matter in the business building world is he said what makes a great investor is having small bets in concentrated positions but with super high conviction. And the example he brings up in the interview that you will hear coming up is he mentions Buffett and Carl Icahn. And he says, if you actually look at them, they're not doing the whole MBA playbook of diversifying. They're identifying crazy good opportunities and going all in on them. And he brings up his personal examples when he broke the pound or broke the Bank of England is he went into George Soros's office and said, hey, we put 100% of the fund into this short trade. And then the lesson that he drew from it is Soros goes to him and says, if you're so confident in this trade, why aren't we doing even more? Why isn't there 150% of the fund in it? Or 200% when using leverage, right? Which is exactly what they ended up doing. So the number one thing would be, you know, find something that you really, really have a high confidence in and kind of go all in on it. That's one thing I think could be a—
But you, I thought you said he takes a lot of small bets.
No, no, he makes, he said to take high conviction bets. When I said small bets, it's like, I think it was more just his track record over 30 years is what you're alluding to. Is he has a long career where he's been across many assets and a lot of different investments. But having said that, as an investor, where his biggest wins are is when he's gone all in and he's found these once-in-a-generation opportunities. The other thing that he does is, you know, the famous saying from Marc Andreessen is, you know, strong ideas but loosely held. Like being able to— strong beliefs held loosely held. Being able to take in information and having the conviction that I talk about, like he did with this pound trade. But then if information changes, being able to pivot. And he actually famously during the dot-com bubble was one of these people. He was shorting it from '98, '99. And he's like, this is insane. It's never going to play out and it's going to be really bad for a lot of people. But then he was losing hundreds of millions of dollars shorting the dot-com bubble. And to the quote there, he literally turned around. He didn't take his money off the shorts.
He went long.
So it's insane. He did a full 180 after fully convincing himself that, that it was a bubble. And he still believed it was a bubble, but he was looking at the information and he didn't believe that, that he could win. Or in trading terms, he didn't want to fight the tape anymore. So that was pretty amazing. But then that leads into my third lesson, which is it's all about emotion at the end of the day., and he was explaining that in, in 1999, after he went from a fully short position in the dot-com bubble, he went long and he made billions of dollars in '99. And in 2000, he's like, okay, I'm taking all my chips off the table. I think the bubble's finally going to burst. But this is where the emotion component comes in. He watched two younger portfolio managers on his team keep riding the dot-com bubble and he couldn't take it anymore. And this guy's like a 25-year vet, right? And with an impeccable track record. But he could not take the fact that there were two people underneath him outperforming him. So, he literally called his broker, put a $6 billion bet back on the market, and he says in the interview that he basically called the top of the dot-com by 10 minutes. He ended up losing $3 billion. And insane, right? And he goes, and he goes, people always ask me, what did you learn from losing $3 billion effectively in a couple of months? He's like, I learned nothing. Like, I already knew that lesson. I knew never to invest on my emotion, but I still couldn't help myself. And it's just, uh, I think that's just a forever battle, right? Doesn't matter how seasoned or good or amazing you are or amazing your past track record is, you always have to battle that demon, uh, of the emotions. I mean, you tweeted this morning, right? You tweeted something about, uh, something about psychology and emotion. You're reading a new book, and I think you said that, uh, what was the quote you put?
Is if you're comparing yourself to the best way to be miserable is to compare yourself to others, right?
So like It's like there's these little things about emotions and psychology that will always be with you no matter how successful you are. So I think those would be the 3 takeaways is concentrated bets and high conviction plays, the ability to change course if it's clear that it's not working. And then the 3rd thing is just like you're wrestling with emotion no matter who you are. You could be a nobody or one of the greatest investors ever. And those human elements never go away. And I just love what he said is like, I didn't learn anything. I already knew this lesson.
I still lost.
We'll start the interview now. If you guys listening like this, comment in the reviews. So go to iTunes and leave a review, or you can go to Twitter. What's your handle, Trung? Is it Trung P— what is it?
Trung T. Phan.
T. Phan. And then I'm @TheSamPark. So tweet at us. I prefer you leave something in the comments because it's easier to for us to see, but let us know what you think and we'll see Trung again soon.
Thank you.
Awesome. Thanks guys. Thanks for putting this on.
We're live. So, Yan, RJ, and myself had kind of put these kind of these questions together, which we think would be great for a bit of a younger audience. So the first question we wanted to dig into was, you're obviously there at 2000.com. Are you seeing any similarities with what's going on with the, especially the last couple days this week been kind of ugly for tech. And, uh, I, I know there's been a lot of talk about has growth run its path, was COVID. Are you seeing any similarities to the dot-com era, 2000? And if so, what are they? If not, what are the differences?
Okay, um, I'm seeing some similarities, I'm seeing some differences. Okay, um, number one valuations in both periods got to what I would call mania speculative levels.
Okay.
Monetary policy was part of the issue in '99 when Greenspan decided he wanted to run an experiment where he'd let unemployment go below levels where it had historically been. It's nothing like the crazy stuff we're doing now, but that helped set it up. But what was really going on back then, I mean, think about the fact that Netscape didn't really exist until '95. So other than some nerdy professors back in the early '80s, no one even had email, much less all the stuff we have now. So literally, the internet was just sort of being built. And the big winners in '99 were companies like Sun Micro and Cisco that were building the guts of the internet, constructing it. So what happened was the growth was so rapid as this went on, and valuations combined with some easy money got baked in, baked in those growth rates as far as the eye could see. But think of the internet infrastructure, like the railroads 150 years ago, and think of the tech stocks as a company selling railroad ties, building the guts of the internet. So once the railroad is built, while you're building the railroad, your sales are going up 50, 60, 70% a year. But once the railroad is built, your growth not only doesn't go up 70%, it goes down because on a rate of change basis, you don't need any more railroad ties. So what none of us saw, me included, in early 2000, were a lot of these companies with estimates of 50, 60, 70% for the next 2 or 3 years, their business was literally about to collapse. So the NASDAQ went down 95%. Not 30, '95, because you had this combination of inflated values, way overestimated earnings out there, and then earnings collapsed. So today, you have something similar and something different. So monetary policy is absolutely insane. We had No QE back then, our rates weren't zero. They were 4 or 5 when they probably should have been 6 or 7. No comparison. So we have an asset bubble now that's not just in tech stocks, it's in everything. SPACs, Dogecoin, although maybe some of the young viewers disagree. You name it, if you're an asset, you've been moving. But what we also have, back then you had this incredible wave from '95 to 2000 while the internet was being built. What you have now is this incredible wave of digital transformation, particularly moving on to the cloud. And I used to say 2 or 3 years ago in some interviews, well, we're in like the bottom of the first or the second inning and this is a 10-year runway. Well, COVID sort of jumped you from the bottom half of the first to the sixth inning. Well, not the ninth, but to the sixth.
Right.
I think the guy from Shopify said, "We went from 2019 to 2030 in one year because of COVID." I think it was him. I think the difference now is, If you don't— if you're a customer and you haven't moved to the cloud, you're dead, because who you're competing against, they can just beat you because the technology is so important. So now, full disclosure, I didn't see what was coming in 2000 coming, but I am really hard up to come up with a scenario while this that this digital transformation thing is going to collapse, and these SaaS companies are going to go away. And the biggest problem you have now is the overall bubble in asset prices, and where price got to these names in particular. The good news is, if we had had this conversation 2 months ago, this— the good ones were like 45 or 50 times sales, not earnings, sales. They're down to— there's a range, I'd say now 10 to 25 times sales for the good ones. So if the problem is price, and in my opinion, that is the problem, a lot of that has been wrung out. And I think if you hold these names for 3 or 4 years, they can easily grow into their valuations, where if you held the names in 2000, A lot of these companies, you still had losses of 85%, 90% of your value. So those are the similarities, and those are the differences.
Right. So to summarize, it sounds like kind of the key differences would be the monetary policy, completely different. And the names themselves are just, as a company, and I'm looking further out in the economy, it's just likelihood of those still existing is much higher.
Yeah, the other similarity is back then, I remember a lot of value managers were virtually going out of business, right, at the end of 2000. One of the greatest investors of all time, Julian Robertson, who was long value and short these crazy tech names, he basically threw in the towel and said he couldn't take it anymore. And stopped managing money in early 2000. But what happened in the next 3 to 5 years was incredible. Companies like Phelps Dodge Copper Company went up 6 to 8-fold, 6 to 8 times for the old industrial stuff. So everything Julian was long went up many-fold, and the tech stocks went down a lot. We do have some similarities there today because these COVID companies beneficiaries, so much demand was pulled forward that they got too high and too much ownership. And as we're reopening, there's also an ownership problem where there's probably more money that needs to rotate out of the secular growers into these, I'll call them reflation names. But I do want to say very differently, I think these things are secular growers, and they'll probably be fine long term. Amazon at $3,200 is not a bubble stock, not whatsoever. It's basically decent value. And I don't just mean Amazon, but a lot of the so-called FANGs names.
Yeah. Absolutely. Just as a curiosity that I see, I actually asked yesterday a bunch of my Twitter followers what they want to ask is, Do you have an opinion of any of the FAANG kind of names, including Microsoft, who will get the $5 trillion first?
What a great question. I've always answered that with Amazon and Microsoft. I've never really believed Apple had the innovation to take you to the next level, and it was mainly a hardware company. They obviously have morphed into the services app company, but as you know, it's funny, that's the one they haven't talked about being monopoly. But when you look at monopoly behavior, charging a 30% rent to all these, you know, little companies seems a little extreme, whereas Amazon and Microsoft, they basically don't raise price, so, My guess, my— first of all, I have no idea, but my number one, if you put a gun to my head or we're going to Vegas, would be Amazon, and number two would be Microsoft.
Okay.
Google could have a big pop, ironically, if the government breaks them up, because their core search business is literally the best business I've ever seen. But they keep trying all this experimental stuff that challenges shareholder value. But those guys are so rich, they're more interested in changing the world right now, and good for them.
Yeah, they get to do mushrooms, go to the desert, and just think about wild things they can do in their space with their moonshots, right?
Well said, well said.
I think the question here that Jan and RJ had put that we thought would be a great follow-up was, so what is the biggest risk risk to the equity market right now? I think you touched on some of them, has to do with, I guess, the valuations and just the—
Without a doubt, it's inflation strong enough that this Fed responds to it. No doubt about it. This bubble has gone long, long enough, and it's extended enough that the minute they start tightening, the equity market should go down a lot, particularly with so much of the cap weighted in growth stocks, which would be hit the worst. And our central case is that inflation occurs, but we're open-minded to something like '07, '08, where you never really got to the inflation because the bubble popped. So the inflation never got to the manifestation stage. That would be the second one. In terms of geopolitical stuff, it's become a popular view, but I'm worried about Taiwan. And I think it's probably not a worry until after the Beijing Olympics. I don't think Xi Jinping wants to deal with sanctions and boycotts and all that, but I can't imagine, um, he's not going to try something, right, post the Beijing Olympics. And I don't think— that's big stuff. That's not some little thing where Yemen is fighting Saudi Arabia. If he— if you were to get worried about the United States and China, that could be an exogenous event —could get quite nasty.
Absolutely. So to summarize then, the inflation concern and the Fed tightening is kind of a big risk. Longer term, though, is just Taiwan is actually a massive hotspot. And post-2022, the Winter Olympics, there's opportunity for something to happen.
That's our central case. As you know, I tend to change my mind. But right now, if you're asking me what the biggest risks are, it would be them.
Absolutely. All right, so the next one we had here is a more, more retail-oriented question, or actually not necessarily retail-oriented, but it does concern retail, is, uh, do you see anything from, uh, as an, as a long-term aftereffect of what happened earlier this year with WallStreetBets, with retail being able to congregate in one place and kind of direct money flows? I know in the past you've talked about the importance of liquidity, and do you see any long-term effects of having ability of millions and millions of retail investors to put their targets on a single name?
No, um, let me restart. The answer is yes. I don't know why I just said no. I guess I'm too old. Um, when I started in the business, retail dominated institutions. Okay. And you got most your information from your broker. The amazing thing about the current retail investor is they have access to things like Toggle. So they're actually much better informed than the retail investors were in the late '80s and early '90s. And with the internet, they have tools and the way you already mentioned they congregate. The big risk is they're all loaded up in this stuff, you know, don't confuse genius with a bull market, and something exogenous talks like we're talking about, and they all lose enough money that they're scarred. Yeah. I've always thought the Japanese investor would come back to the market in 5 or 10 years after the bubble burst. That was 1990, and they still haven't come back to the market. So I worry about scoring. But no, I think my guess is the aftereffect of WallStreetBets is here to stay. And they'll probably migrate away from some of the more radioactive names like GameStop. But— and I think it'll actually end up being some kind of healthy information sharing network. Right.
All right. Let's talk about one of the most important parts of any business, your CRM, right? This is where you see who are my prospects, who are my customers, who are my hardcore customers. And you want to have conversations, you want to have information about them that goes throughout all stages of the customer journey. So HubSpot's CRM platform, it's easy to align your team using the features that they have, like their messaging tools, live chat, email templates, and having a unified system of record. So how does it work? You can install live chat on your website and this will let sales and customer support talk to your prospects. You can send marketing emails on behalf of your sales reps to, to your customers. You can have prospects book meetings with your reps without wasting time. And all of this is stored in one unified system of record so that teams can get access to all of your contact history. Why is it so important to have live chat and a unified system of record, you ask? Great question. It's because when you're— all your systems are separate, You're just cobbling together data from one place and data from another. It's all disjointed. There's no single source of truth. What I like when I'm the CEO of a company is to be able to click one button and see who are our customers, where are they at in the journey, how do we quickly message them, how do we get them moving forward to success? So that's what it does. That's HubSpot CRM. And you want to learn about how you can scale your company without scaling complexity, go to HubSpot.com.
So you didn't mention Toggl as kind of a tool that can be used in these environments.— or just in general as an investor's toolkit. So how different would that have been back in the '80s to have a tool like that?
Oh my God. If you had Toggl and nobody else did, you would have absolutely murdered their results. Right. When I started in the business, Fed watching was considered unique. And I used Ned Davis and other technical services And I just felt I had a huge advantage over the general public. So any tool you have, like Togo, which is clearly predictive of price moves, but even more interesting in this case, because of the mathematical capability of it, can analyze thousands of thousands of securities. I only have 16 hours a day, and I'm not that fast of a reader. So if you had a tool like that back then, it would be like MyAdvantage's plus 5x. And the way I think about Toggle is, I don't know how much you know about me, but I've always said I like multidisciplines in managing money. So my first boss taught me technical analysis. So I use fundamental analysis and technical analysis. And if there's 1,000 securities out there, and my portfolio is only going to consist of 15 or 20, I'm never going to buy something that doesn't have a great chart and great fundamentals. Right. I do that. If you brought something like Toggl into that, it's just one more fantastic screening mechanism that gives me the discipline So now I've got a triple screen to hold or buy or sell securities. That would be invaluable. And again, to the public who doesn't have access to information I have as an institutional investor and paying tons and tons of money to consultants, something like this, the value added to them could be even more valuable than it is to me, and I find it value added.
Right, absolutely.
And, uh, so you did mention a lot about your trading back in the '80s. I don't want to say back in the day, it feels kind of wrong to say that, but, uh, you, uh, you've been described as someone that has a stomach of a riverboat gambler. I literally don't even know what that means, but what I will say is, what do you think, uh, are kind of the keys to a good investor, right?
So just from your own experience.
So when I've looked at all the investors of very large reputations— Warren Buffett, Carl Icahn, George Soros— they all only have one thing in common, and it's the exact opposite of what they teach in a business school. It's they make large concentrated bets where they have a lot of conviction. They're not buying 35 or 40 names and diversifying. I don't know whether you remember, uh, Icahn a few years ago put $5 billion into Apple, and I don't think he was worth more than $10 billion when he did that, right? Um, when I went in to tell Soros that I was going to short 100% of the fund in the British pound against the Deutsche mark, He looked at me with great disdain because he thought the story was good enough that I should be doing 200% because it was sort of a once in a, once in a generation opportunity. Right. So A, they concentrate their holdings. B, concentration, this is very counterintuitive. It really gets your attention. So it actually, in my in my thinking, decreases your overall risk. Because where you tend to be in trouble is if you have 35 or 40 names and you stop paying attention to one. If you have big, massive positions, it has your attention. Right. So the way— my favorite quote of all time, maybe, is Mark Twain: "Put all your eggs in one basket and watch the basket carefully." Right. I tend to think that's what great investors do. The other thing to me is you got to have to know how and when to take a loss. Right. I've been in business since 1976 as a money manager. I've never used a stop loss, not once. Dumbest concept I've ever heard. It goes down 15%, I'm automatically out. Right. I've also never hung on to a security if the reason I bought it has changed. And that's when you need to sell. If I buy X security for A, B, C, and D reasons, and those no longer are valid, whether I have a loss or a gain, that stock doesn't know whether you have a loss or a gain. You know, it is not important. Your ego is not what this is about. What this is about is you're making money. So, if I have a thesis, and it doesn't bear out, which happens often with me, I'm often wrong, just get out and move on. Because I said earlier, if you're using a multidisciplined approach, you can find something else. There's no reason to hang on to any security where you don't have great conviction in it.
Right. No, absolutely. So, along that metric where when you say what makes a great investor is the mindset and the approach, What about from kind of the emotional side, like managing the emotions and the psychology?
You just have to be disciplined, and you're constantly fighting your own emotions. Look, I'm not going to lie to you. My first boss had this saying, the higher they go, the cheaper they look. Um, there's something weird, and I know everybody watching this has experienced this, and it doesn't make any sense, but when a security goes up every bone in your body wants to buy more of it. And when it goes down, you're fighting making yourself not sell it. Right. It's just the nature of the beast. And you have to constantly remind yourself why you own that security. And just because it's going down doesn't necessarily mean you should sell it. If it's going down, it definitely means you should reevaluate your thesis. But it doesn't mean you should sell it. And you cannot get crazy when it's going up. One of the— probably the biggest mistake I ever made in the business, and I knew better. Somebody asked me what I learned from this, I said nothing, I already knew it. In January of 2000, after riding that tech boom to a T and making billions of dollars in '99, I sold everything out in January, and I had a couple of internal portfolio managers at Soros who didn't sell out, and they had these— it was a smaller portfolio, but they made 30% after I sold. And I just couldn't stand it anymore. And I'm like watching them make all this money every day. And like for 2 days, I'm like ready to pick up the phone and buy this stuff back. And you know, there's a little devil there, and then the angel, and she's saying, don't do it, and he's saying, buy it. And I pick up the phone and I buy them. I might have missed the top of the dot-com bubble by an hour. I ended up losing $3 billion on that trade alone. I had made more the year before, but you know, $3 billion is a lot of money. And it was all because I got emotional and dropped every tool of discipline I've ever had. And somebody says, well, what did you learn from it? And I just said, I learned nothing. I learned that 25 years ago. So, You can talk about not being emotional, but it takes incredible discipline to act on that. No, that's—
I mean, that's incredible. You said you started in '76, right? That's 24 years later.
You've been going through it for almost a quarter of a century and it still happened. Yep, yep, yep.
So, um, it's something I want to just add on to kind of what you just mentioned was the actual approach of investing for yourself. You've You famously talked about looking at what makes the stock go up and down.
What does that mean specifically for yourself when you say what makes stock go up and down? What does that mean in terms of fundamentals?
It varies from stock to stock. Right. Interesting thing about Cogill, they'll find things that I didn't even know moved the stock. Right. But if it happens over and over again, you figure it's not random. So, I'll never forget, I keep going back to my boss in Pittsburgh, but I was an analyst and I analyzed retail. And I'd come in with my earnings estimate on Kmart and my earnings estimate on this company and that, and he says, "Yeah, but what's going to make the stock go up?" And I said, "What do you mean?" And he says, "Everybody knows what you just told me. Keep looking, keep looking." Finally, I came back, I found out. At the time, by the way, this has changed since then. If you graph the change in food and energy prices over top the retail index, it was like clockwork. Retail and food prices— I'm sorry, food and energy prices go up, retail relative stocks go down. It's not rocket science here. If you, if you take discretionary spending and you increase the cost of it, she's got less money to buy a dress. And I watched that and it worked for 10 or 12 years and then for some reason it stopped working. But there's an analysis of fundamentals, which I completely endorse, where look at the balance sheet, try and figure out a couple years from now what people are going to think about this company, are the earnings going to be different than they think now, that kind of stuff. But then there's all the weird stuff like I just mentioned. The beauty of TOGGL is it comes up with stuff that sometimes I don't even quite understand. But frankly, I don't care. If the stuff works, I'm gonna go with it. I'm very open-minded. I don't need, I don't need to totally understand something if I've seen it work over and over again.
Right, absolutely.
But most of these things I understand. Yeah.
So it'd be the equivalent of Toggle finding that relationship you just mentioned, right? The food, energy, and discretionary spending.
Yeah, and the beauty of Toggle is I might get a notice one day that XYZ looks good, then I can do my fundamentals, then I can look at the chart. So it's not only a discipline in terms of buying and selling, It can also be an idea generator. Absolutely.
No, that makes a lot of sense. Now, I thought this was a good opportunity to hop into something. I kind of want to ask it first, but I figured it'd be better to kind of move it there.
I think I know what's coming. You're young. I can tell by the look on your face. It's crypto. You're 100% correct. See, I can predict the future.
The talk will probably give you the alert, right?
This guy's about to ask crypto. I, uh, I'm not gonna ask you to put a price target or anything, but the question, just, just to throw out there to get the conversation going, is, uh, does Bitcoin have the opportunity to— the thesis is it'll replace 9 trillion of gold, right? Or along those lines, or it'll match it. Do you— I mean, what is your opinion about that thesis?
So I've evolved on this. Okay. If you've done your homework about 5 or 6 years ago, I said more than once, um, crypto and Bitcoin are a solution in search of a problem, right? So what the hell are these people all looking for? We already have that. It's called the dollar, right? Okay, so for the first move in Bitcoin, I think it went from, what, $50 to $17,000. I just sat there aghast. And by the way, consistent with our earlier conversation, I wanted to buy it every day it was going up, even though I didn't think much of it. I just couldn't stand the fact that it was going up and I didn't own it. So fast forward, I never owned it from like $50 to $17,000, felt like a moron. Then it goes back down to 3,000 again. And then a couple things happened. And this, this is consistent with the fundamental, and then let's make something go up or down. So, solution in search of a problem. I found the problem when we did the CARES Act, and Chairman Powell started crossing all sorts of red lines in terms of what the Fed would do and wouldn't do. The problem was Jay Powell and the world central bankers going nuts and making fiat money even more questionable than it had already been when I used to own gold. Then the second thing that happened is I got a call from Paul Jones, and he says to me, uh, do you know that when Bitcoin went from $17,000 to $3,000 86% of the people that owned it at $17,000 never sold it. Well, this was huge in my mind. Here's something with a finite supply, 86% of the owners are religious zealots. I mean, who the hell holds something through $17,000 to $3,000? And it turns out none of them, you know, 86% of the people never sold it. And I had this new central bank craziness phenomenon. The other thing that happened, it had been, you know, it had a few more years under its belt. So it goes up to 6,000 in the middle of the last spring, and I go, well, I got to buy some of this, just because these kids on the West Coast that are already worth more than I am, and they're going to be making a lot more money than me in the future. For some reason, they're looking at this thing the way I've always looked at gold, which is store of value if I don't trust fiat currencies. Um, and then the thing that Paul told me, and then the fact that it had been around 13 years, it had become a brand, right? So it's funny, I tried to buy 100 million at $6,200. It took me 2 weeks to buy $20 million. I bought it all around $6,500, I think. And I said, this is ridiculous. You know, it takes me 2 weeks, I can buy that much gold in 2 seconds. So like an idiot, I stopped buying it. Next thing I knew, the thing's trading at $36,000. I took my costs and then some out of it. And I still own some of it. My heart's never been in it. I'm a 68-year-old dinosaur, but once it started moving and these institutions started adopting it, I could see the old elephant trying to get through the keyhole and they can't fit through in time. Um, I own this company called Palantir, and I see they announced with their earnings today they're going to start accepting Bitcoin and they may invest in— that's happening all over the place. And you know, this thing is never going to have more than 21 million. It's a fixed supply. So I think because it's a brand, it's been around for 14 years, because of the finite supply, it has sort of won this store of value game. Is it going to beat gold? I don't know. It sure as hell doing a good imitation of it the last year or two. But is it going to beat the other cryptos in terms of digital gold store value? I would say it's going to be very, very tough to unseat. Then you go to what I call the, uh, commerce facilitators, which obviously the lead in smart contracts and that kind of stuff would be Ethereum. There I'm a little more skeptical of whether they can hold their position. It reminds me a little of MySpace before Facebook came along, or maybe a better analogy, Yahoo before Google came along. Google wasn't that much faster than Yahoo, but it didn't need to be. All it needed to be was a little bit faster, and the rest is history. And I'm so impressed. One of the ways we've always invested in the private sector is to try and figure out where the engineering kids from Stanford and Brown and MIT, where those kids are going. And so many of them are in love with crypto, and that's where they're going. I, I'm worried about the talent that's like 23 to 28 years old, somebody we don't even know who they are yet, coming up with a payment system or whatever and unseating— so Again, I don't know, but my guess is the winner in the commerce facilitating, I'll call it, whether you want to call it payments or smart contract, whatever we're on, there's a good chance that company hasn't even been in, or that currency hasn't even been invented yet.
Absolutely. So Bitcoin as a store of value, probably safer in the crypto space, but as you mentioned, the computing aspect, there's a lot of potential here to be unseated.
High beta gold, that's a— never heard that before. That is a fantastic terminology.
Well, it's so fantastic, I'm wondering why the hell I didn't just own Bitcoin 2 years ago instead of Just gold and a little Bitcoin.
So just to put the cherry on top of the crypto combo, you mentioned it once earlier, Dogecoin, is it just to you ridiculous, and Elon's involvement in it?
Like, what is your reaction to all that?
It's just a— you know, it's like NFTs. It's just a manifestation of the craziest monetary policy in history. Right. And I think since there's no limit on supply, I don't really see the utility of this thing. Right now it's just this wave of money and the Greater Fool theory. Um, no, no, just enough. Now having said that, I, I'm, I wouldn't short it because I don't like putting campfires out with my face. Um, so I just try and pretend Dogecoin doesn't exist. I think so little of it, it doesn't even bother me when it goes up. When Bitcoin used to go up, I'd go crazy that I didn't own it. When Dogecoin goes up, I just start laughing. But to me, it's all about Jerome Powell. Right.
At the end of the day, it goes back just to the money printer. Yeah. Yeah. I like that, how you said about Doge, where it's a joke. I mean, it was literally created as a joke. So for you just to look at it as a joke, that's probably the best way for everyone to look at it, right? Hey, this is a joke. Don't even consider it. It's like irrelevant.
Yeah, don't go long and don't go short. You know, unless you like going to Vegas, then I guess it's okay because a lot of action.
Yeah, absolutely. So I think one of the last questions we had here, obviously, thank you so much for your time. The question we had here was, if you were 20 years old today, what would you be doing as you start your career?
Ah, the number one necessary condition would be something I was passionate about. Okay. Particularly in this business, the people that love it like me are so addicted to it and so intellectually stimulated by it. If you're not and you're in for the money, you have no chance competing with these people. They're going to outwork you, they're going to out-execute you. So, and I think it's probably true of a lot of professors, but let's not forget, if you're American, you're probably going to spend 60 to 70 hours a week minimum working. If you're in your job for the money, not because you love it, you just blew 70 hours a week on the happiness quotient. That's pretty rough. Right. So I would tell a 20-year-old, follow your passion. I was just lucky. I followed my passion. My mother-in-law says I'm an idiot savant, and I wouldn't be good at anything else. But I would do this for $50,000 a year. I really would. I just, I just love it. And I hate to see young people get trapped in something. And I would also say, keep an open mind. I started at Bowdoin as an English major. I took economics just so I could read the paper. Intelligently. I went to get a PhD in economics. And I went there, I said, these people are crazy. They're trying to shove the economy into a math formula. It doesn't make any sense. Then I went to— I worked construction for 6 months. I got kind of a weak upper body. So that didn't work for me. Then I went to the bank. And I found out what I was just in love with. And so Try stuff out. And if you're not really, really engaged during the day and you're not happy, uh, move on to something else because there's, there's something out there for everybody. But I would not let money be the driver of the equation. That can lead to a lot of not maximizing what I call the happiness quotient, right? It's the most important quotient in your life.
Well, you mentioned that you would be doing this job if you're making 50 grand a year. So the question is, will you hand over the family office? When do you expect that to happen, if ever? Until— Will I what? Will the handover of the family office to another manager and you just go hands-off happen in the near future? Or this is something you just want to be doing just for your own happiness quotient?
So as you probably know, a lot of people when they retire, they start messing around in stock market for fun. So if they're all retiring and doing this till they're 90, why am I supposed to stop doing it? What I will say is, my skill set, you know, I think a lot of my performance has been because I'm flexible in terms of instruments I use, in terms of assets. So I'm not afraid to just play in bonds or currencies or this or that. But my real passion is in macro. And I think history would say in macro, I'm probably an A+, and in equities, I'm probably a B-. Equities are much more labor-intensive, as you know. There's only one yen. There's only one euro. Treasuries— I guess my dream, to your excellent question, would be to find successor to run the entire equity part of my family office, right, but have me fiddling around in the macro and acting like the old talking head sage, uh, you know, coach to him, that, that'd be where I'd be. But I, I think I would die if I couldn't, if I couldn't do— have some connection with the investment market and the markets during the day. I just First of all, I'm not very good at golf. I like doing stuff I'm good at. And I think that's part of what we're talking about with passion. No one likes being a loser. So yeah, I think I'll probably go to my grave doing this stuff, but maybe not with the control I have right now.
Well, just the last comment on that point is, for the equity side, at least you have Toggle, right?
Absolutely. Absolutely. Takes a lot of the labor out, I'll tell you that. You can cover a lot more ground in an hour than you can trying to do normal reading.
No, that's perfect. I wrapped up on my end. Those are all the questions we had, and it was amazing, Stan. That was incredibly insightful, and I really appreciate your time. Thank you to Jan and Audrey for setting that up. Yeah, okay.
Hopefully this does some good for everybody. Uh-huh.
Yeah, I feel like I could rule the world. I know I could be what I want to. I put my all in it like no days off. On the road, let's travel, never looking back.