Bitcoin Is The Only Asset That Survives What’s Coming

[0:00] I think it's impossible to say Bitcoin
[0:02] should do X Y or Z,
[0:04] >> right? I mean, the the reason I got
[0:06] interested in it in 2017 is it's its own
[0:08] thing and it's going to evolve as
[0:12] adoption changes. Now, what what has
[0:14] changed in the adoption story in the
[0:16] last two years? Nothing, right? Central
[0:18] banks haven't come on board,
[0:19] corporations haven't come on board. It's
[0:22] it's basically been some financial
[0:24] investors through the ETFs, but not many
[0:26] institutions. Slowly asset allocators
[0:29] have started to include it, but not not
[0:31] dramatic. So why would you expect some
[0:32] big change in the price of Bitcoin when
[0:34] nothing has happened? I mean the way I
[0:36] look at it is still the oldfashioned
[0:37] way. Very simplistic. I'm an over I like
[0:40] to oversimplify. What's going on guys?
[0:42] Today we've got a conversation with Yan
[0:43] Vanek. Jan is the CEO of Vanek. They're
[0:46] a $200 billion asset manager and one of
[0:48] the leading ETF companies. In this
[0:50] conversation, we talk about Bitcoin,
[0:52] gold, the rise of ETFs, why Jan has so
[0:55] much conviction in the country of India,
[0:57] how he thinks about making long-term
[0:58] strategic bets, and then we get into
[1:00] what is in his personal portfolio, where
[1:03] his convictions are, how he's navigating
[1:04] the macro environment, and what he
[1:06] thinks you should know as an investor
[1:08] and how you should change your capital
[1:10] allocation strategy based on what he's
[1:11] seeing in the world. Here's my latest
[1:13] conversation with Yan Vanek. All right,
[1:15] Yan. Uh, private credit has been a huge
[1:17] issue. People are very worried about it.
[1:18] Are you worried or what do you think's
[1:19] going on?
[1:20] >> Uh, you went right into my favorite
[1:22] topic. Uh, listen, first quarter, a lot
[1:26] of concern. Well, end of last year,
[1:29] Jamie Diamond says cockroaches.
[1:31] Remember, we had two frauds in the in
[1:32] the private lending markets. Cockroaches
[1:34] meaning there's an, you know, sort of
[1:36] systemic problem is is the risk. And JP
[1:39] Morgan should know they lend a lot into
[1:41] the private space, right? Whether it's
[1:43] private equity, private credit, BDC's,
[1:46] everything, they're all over it. So you
[1:47] think you'd be really informed. So there
[1:49] were a lot of fears about alternative
[1:50] credit and as as we said in the
[1:53] beginning of January, the selloff is
[1:54] going to happen in the BDC space because
[1:56] they're liquid. So every day every every
[1:58] day the market's open, you can sell your
[2:00] BDC um holdings and BDC's had a whole as
[2:04] a whole went to a 20% discount to NAV.
[2:06] So NAV is, you know, only calculated
[2:09] once a quarter. So it's a stale as soon
[2:11] as they print it kind of statistic. But
[2:14] 20% if these if these BDC is on average
[2:17] leveraged two times a 20% haircut means
[2:20] that you've got a 10% default rate.
[2:22] Right? High yield is defaulting at 2 and
[2:25] a.5%. So so the BDC's are pricing 10%
[2:29] default whereas the reality of high
[2:32] yield market now arguably is that's
[2:34] high-graded a little bit is a 2 and a
[2:35] half%. That's just a disconnect. And I
[2:37] layer on top listen the world economy
[2:40] sorry the US economy it's in good shape
[2:43] right? So, corporate America is in good
[2:45] shape. So, there's no reason to think
[2:47] we're going to get this huge spike in
[2:48] defaults. So, that's why I'm really
[2:50] excited. Now, even more exciting to me
[2:52] is some of the private credit issuers
[2:55] like the stocks of Blue in particular. I
[2:57] like way down, right? That it's it's
[3:01] come down, you know, I don't know, 20,
[3:02] 30, 40%.
[3:04] The stock itself, the dividend yield at
[3:07] whatever tennis a share, which is where
[3:09] it's at this morning, is like 9%. Mhm.
[3:12] >> So you get the upside of the business.
[3:14] They raised money in Q1. So despite all
[3:16] these concerns, they're a growing
[3:18] business. Slowed down but still growing.
[3:21] Yes. Some of their funds had
[3:22] redemptions. Anyway, so to me, that's a
[3:24] very exciting story.
[3:25] >> So when you when you look at let's take
[3:26] Blue Owl as just a hypothetical example
[3:28] here. So uh it has a very high yield on
[3:30] the stock itself. And then how do you
[3:32] underwrite the actual business prospects
[3:33] going forward? You just look at capital
[3:35] raised and then you try to underwrite as
[3:37] best you can in terms of the the
[3:38] solvency of the strategies. Yeah, I mean
[3:41] look, it's asset management is a
[3:42] generally growing business. These these
[3:45] companies remember a year or two ago had
[3:47] been trading at 30 to 40 times forward
[3:50] earnings. That's crazy, right? So of
[3:53] course way overpriced against the
[3:55] market. Now they're underpriced where
[3:58] they started life. You know, before
[3:59] anyone heard of Blackstone, right? These
[4:02] stocks were 10 times earnings because no
[4:03] one thought their performance fees were
[4:05] going to be recurring. So they didn't
[4:07] give them any value. So, uh, yeah, I
[4:10] think the I'm not even betting even if
[4:13] the business stays the same. I'm getting
[4:15] I'm clipping a 9% dividend yield and
[4:17] these are really bright guys. So much
[4:20] pain is in the stock already. They and
[4:22] they're growing. I mean, the business is
[4:24] growing, but it's stable. I'd still
[4:26] maybe put in your fixed income bucket.
[4:27] >> Now, when I look at uh the industry in
[4:29] general, you said asset management is
[4:31] going to continue to grow. But one of
[4:32] the stats that everyone has kind of held
[4:33] on to now and is yelling and screaming
[4:35] about is there's more ETFs than there
[4:37] are individual stocks. And I liked Eric
[4:39] Balchunis. He said, you know, yes, there
[4:40] are more words than there are letters.
[4:42] There's more songs than there are
[4:44] chords. But generally, do you see this
[4:46] as kind of a a 10 20 year run where
[4:49] you're going to continue to see all of
[4:50] these asset managers, whether it's Vanic
[4:52] in their private market or some of these
[4:53] public traded ones, just there's a
[4:55] massive tailwind that people doesn't
[4:57] understand.
[4:57] >> Yeah. The ETF business continues to
[4:59] explode, right? not explode but it's the
[5:01] it's the growth area of financial
[5:03] services
[5:04] >> and uh you know ETFs are like popcorn
[5:07] you and I have talked about some of the
[5:08] the the pop when the kernel you know
[5:10] goes off I mean suddenly you have a
[5:12] couple billion in aum in an ETF so but
[5:15] the vast majority of ETFs are below 100
[5:17] million right so uh you know that's is
[5:20] kind of a misleading statistic as far as
[5:22] I'm concerned you know I was talking
[5:23] about the ETF industry earlier today and
[5:25] I think where people don't appreciate is
[5:29] the accessibility to sort of underserved
[5:31] asset classes. I know Bitcoin is
[5:33] something you know we can talk about but
[5:35] fixed income is a huge area right so if
[5:38] you look at our fixed income ETFs only
[5:41] probably five or 10% of the bonds in any
[5:44] fixed income ETF forgetting governments
[5:46] trade on any given day so it's really
[5:49] become a very liquid vehicle now it's
[5:52] vulnerable when you have market
[5:54] dislocations so if you look at the
[5:56] industry as a whole I don't care about
[5:58] the growth I think it's great I don't
[5:59] care about the proliferation of ETFs
[6:01] competition is healthy. But the thing to
[6:04] remember is fixed income ETFs are kind
[6:07] of a different cat. Um,
[6:09] >> now when I look at your guys business, I
[6:10] think these numbers are as of 331.
[6:12] You've got about 200 billion in assets.
[6:14] 100 billion are in US and international
[6:16] equities. Uh, 45 billion is in gold and
[6:18] precious metals. 19 billion is in US and
[6:21] international fixed income. And then 20
[6:23] billion is in natural resources and
[6:25] commodities. My takeaway from that is
[6:27] you expect equities to be much bigger.
[6:28] But I think to your point having 20
[6:30] billion in fixed income and 20 billion
[6:32] in natural resources and then another 45
[6:34] billion in um gold and precious metals
[6:37] like you guys are pretty wellrounded
[6:39] here right you really do offer I think a
[6:41] full suite to an investor and it's kind
[6:43] of the DNA of the firm of how you guys
[6:45] started with the big bet on gold in the
[6:47] early days right
[6:48] >> when I when I joined Van we basically
[6:50] had one fund it was a gold mining fund
[6:52] it was a mutual fund that was the fund
[6:54] that my dad became famous for in 1968 he
[6:57] started the first gold fund
[6:59] Gold shares are so volatile. Um, you
[7:02] know, from 2011 to 2016, gold mining
[7:06] shares went GDX was down 90%.
[7:09] >> Wow.
[7:10] >> No one no one realizes what decimation
[7:13] happened in natural resource in the last
[7:14] decade. But to your point, I kind of
[7:17] historically come to work, I describe
[7:18] it, what do I do in the morning? I try
[7:20] to get away from gold and diversify
[7:22] because if you're, you know, that's your
[7:24] revenue stream as a business, right?
[7:26] There's no fall back. um then you want
[7:28] to diversify. So luckily VANC is uh has
[7:31] been successful in a number of different
[7:32] asset classes.
[7:33] >> Now when people think about gold, let's
[7:35] just start with that as as one single
[7:36] asset class. Um I think that there's a
[7:39] couple different ways that they can play
[7:40] this. They can obviously buy physical
[7:41] gold. They can allocate to an ETF and
[7:43] just get underlying gold exposure. There
[7:45] are the miners. There's these now gold
[7:48] streaming companies or kind of royalty
[7:50] type businesses. How do you think about
[7:52] gold exposure in someone's portfolio? Is
[7:54] there a kind of a hey start here and
[7:56] then expand over time? Do they want a
[7:57] bucket of these in and kind of a equal
[7:59] waiting? What what do you when you're
[8:01] talking to clients? How do you think
[8:02] about it?
[8:03] >> Our number one question when we talk to
[8:05] people about investing is do you want
[8:07] the asset class? Right? Your asset class
[8:09] decision is so important and gold is a
[8:12] very very powerful asset class in the
[8:15] right economic environment. I'm not like
[8:17] my dad. I'm not like an always gold guy.
[8:19] Uh I am very bullish over the next 10
[8:22] years because I think gold is reemerging
[8:24] as a global currency. But the number one
[8:26] question is do you want to own it or
[8:27] not? Why do you own it? So I own it
[8:31] because I'm really worried about
[8:33] government spending. Um our budget
[8:35] deficit has come down in the last couple
[8:37] of years from six and a half to maybe
[8:38] low fives in terms of a percent of GDP.
[8:42] If we're spending half a trillion more
[8:44] on this Iran war, which is what's been
[8:47] said, it's not showing through in the
[8:49] numbers at all right now, but if that
[8:51] happens, then absolutely I think people
[8:53] need a hedge in their portfolios because
[8:55] that will pull everything down. And
[8:56] actually, short-term it'll pull gold
[8:58] down as well, Anthony. So anyway, that's
[9:00] my thinking about that. And I'd love to
[9:03] get your views on, you know, if if there
[9:05] were, I'll call it a freakout because of
[9:08] government spending, you could have the
[9:10] 10-year jump 200 basis points. I don't
[9:12] think there's going to be anywhere to
[9:13] hide even even gold. But but medium
[9:16] long-term, I think gold is is something
[9:18] you want. Start with gold bullion. If
[9:21] you you know, if you don't have someone
[9:23] helping you with the allocation, that
[9:25] would be the biggest thing um in my
[9:27] portfolio because of its historical
[9:29] liquidity. Gold shares are kind of an
[9:32] add-on to that. Maybe 2/3 bullion,
[9:34] one-/3 gold shares if I was just to
[9:36] start somewhere. Yeah.
[9:38] >> But um you know, more of our business is
[9:40] now doing model allocation.
[9:42] >> Yeah. What was so fascinating to me is
[9:44] you know, if you go back to I don't know
[9:46] 10, 15, maybe 20 years ago and you said
[9:48] to someone, I'm going to buy gold
[9:49] instead of buy equities. Uh and I think
[9:51] gold may outperform. First of all, I
[9:52] don't think there's that many people
[9:53] saying they were buying gold because
[9:54] they thought it was going to outperform
[9:55] as much as they were basically buying it
[9:56] as protection, right? So equities was
[9:58] for growth. gold's for protection. Now,
[10:01] the argument was always that, hey, the
[10:02] equities are productive, right? You're
[10:04] going to get cash flow, you're going to
[10:04] get yield, you're going to be able to do
[10:05] all this stuff. There have been certain
[10:07] times over the last two years where if
[10:09] you look back 25 years, gold has
[10:10] actually outperformed equities. It's
[10:12] very fascinating to me because it
[10:14] suggests that maybe a lot of the equity
[10:16] growth has really just been the
[10:18] debasement of the dollar more so than
[10:19] the productivity of the underlying
[10:21] companies. Is that how you look at it?
[10:22] It's been a horrible time for the
[10:23] equities and that's what I was you know
[10:25] that's why I was pointing out that big
[10:26] draw down from 2011 to 2018 2016 if you
[10:30] take a big step back the big first big
[10:32] commodity cycle in the US was in recent
[10:34] history was the 1970s and the beauty of
[10:37] that cycle for the companies their cost
[10:39] of production didn't go up so the price
[10:41] of gold went from 35 to over $800 an
[10:45] ounce cost of producing gold didn't
[10:46] really change what's happened over the
[10:48] ensuing decades including the 2000s the
[10:51] China boom is that the cost of producing
[10:53] commodities has started to increase with
[10:56] the cost of inflation and it's basically
[10:58] we're running out.
[10:59] >> So it's you have to dig more tons of
[11:02] dirt for every little ounce of gold. Um
[11:05] and that that extends throughout the
[11:06] resources universe. So the equities, you
[11:09] know, we're punished for that. They're
[11:11] like great, you know, Anthony Yan, you
[11:13] know, I can, you know, gold's at 4500 or
[11:15] whatever it is an ounce, but you know,
[11:17] your costs keep going up. It's like the
[11:19] opposite of when you look at the tech
[11:21] companies like Nvidia or all the hypers
[11:23] scale, their margins are beautiful. They
[11:26] just sit there in the high 70s, right?
[11:28] Why would you want to own a company
[11:29] where the margins are shrinking every
[11:31] year? So that's been the overhang. And
[11:33] you're right, over the recent past, it's
[11:34] been been really bad. Now, in a bullish
[11:36] environment, you can overcome that.
[11:38] >> Yeah. What's fascinating about the
[11:39] commodities in particular is also uh
[11:42] most people don't think of AI and
[11:43] commodities being hyperlin together but
[11:46] obviously we have seen that this
[11:47] commodity bull market is being heavily
[11:49] driven by oh wait a second we need more
[11:51] power we need to build data centers we
[11:53] need to build out electrical
[11:54] infrastructure that is made up of
[11:56] commodities we have to go find this
[11:58] stuff and so there's almost this like
[12:00] global treasure hunt if you will trying
[12:02] to find uh enough supply to meet the
[12:05] demand and I don't see that changing
[12:07] anytime soon. What about you?
[12:08] >> Uh, no, I don't see it. You're right.
[12:10] It's the the new world needs the old
[12:12] world and you've got the reshoring
[12:14] dynamic, right? All the supply chains
[12:17] need to be independent of China. So,
[12:19] that's rare earth. That's not directly
[12:21] for AI compute, but u but indirectly it
[12:23] is. Uh, but yeah, copper and all the
[12:26] commodities uh all the processing. So,
[12:28] you've got the yeah, the double kick of
[12:31] we need more and we need it home.
[12:34] Now when you look at um gold and silver
[12:38] in particular, those two had exploded
[12:40] over the last, you know, two years or
[12:41] so, um in a weird way, Bitcoin has not
[12:45] kept up. And so some people say, hey,
[12:47] well, that means that Bitcoin's got to
[12:48] catch up. Other people would argue
[12:49] actually that means gold is going to
[12:51] kind of correct and you know, gold and
[12:53] Bitcoin will meet again. How do you look
[12:55] at the relationship between these two
[12:56] assets?
[12:57] >> I I I think it's impossible to say
[12:59] Bitcoin should do X, Y, or Z,
[13:02] >> right? I mean the the reason I got
[13:04] interested in it in 2017 is it's its own
[13:06] thing and it's going to evolve as
[13:10] adoption changes. Now what what has
[13:12] changed in the adoption story in the
[13:14] last two years? Nothing, right? Central
[13:16] banks haven't come on board,
[13:18] corporations haven't come on board. It's
[13:20] it's basically been some financial
[13:22] investors through the ETFs, but not many
[13:24] institutions,
[13:25] >> right? Uh so slowly asset allocators
[13:29] have started to include it, but not not
[13:31] dramatic. So why would you expect some
[13:33] big change in the price of Bitcoin when
[13:34] nothing has happened? I mean the way I
[13:36] look at it is still the oldfashioned
[13:37] way. Very simplistic. I'm an over I like
[13:40] to oversimplify. Limited supply like
[13:43] gold for your happening cycle or your
[13:46] happening cycle has driven because
[13:48] that's the amount of Bitcoin that miners
[13:50] get to run the network. That has caused
[13:52] a decline right in their profitability
[13:54] and a decline every four years in
[13:56] Bitcoin. Guess what? 2026 is the year of
[13:58] decline in Bitcoin. wh why you know why
[14:01] would it break the cycle this year given
[14:04] that nothing has changed on the adoption
[14:06] side. So, uh, I I'm still long-term
[14:08] bullish. Uh, and I just don't get the
[14:11] narrative of it should, you know, link.
[14:13] Well, actually, it's been a negative to
[14:15] me that Bitcoin has had this higher
[14:17] correlation to the NASDAQ since co,
[14:19] right? It's it used to have zero
[14:21] literally zero correlation and now it's
[14:23] had a 6 correlation, which is really
[14:25] high, right? A correlation of one is the
[14:27] identical performance.
[14:29] >> So, I you know, that's kind of where I'm
[14:31] at. I I don't like and and even Wait a
[14:34] minute wait, it's it's it's a longterm
[14:35] story. Yeah.
[14:36] >> Do you see sophisticated institutional
[14:38] investors actually walking away from or
[14:40] not investing in Bitcoin because the
[14:41] correlations have risen?
[14:43] >> I think allocators, right? So, if you
[14:46] think about a lot of America's wealth
[14:49] through financial advisors
[14:52] um is in these big model portfolios,
[14:54] right? They follow the chief investment
[14:56] officers of a Morgan Stanley or a Maril
[14:58] Lynch or something like that. And so
[15:00] your average advisor is doing less and
[15:02] less of the fund picking or the Bitcoin
[15:05] allocation.
[15:07] >> Those allocators are open to uh to
[15:10] Bitcoin. Um especially with the ETF kind
[15:13] of approval, implicit approval of the US
[15:15] government, but they absolutely do not
[15:17] like the correlation. It will right they
[15:20] they'll just say I'll have 1% as opposed
[15:22] to 2%. Or 2% as opposed to 4%.
[15:25] Absolutely. I think it's hurt adoption.
[15:28] >> Yeah. Now,
[15:28] >> I hope it changes. I don't know if you
[15:30] have a view on that.
[15:31] >> I think that it just takes time. I mean,
[15:33] I've been saying for years, people
[15:34] always ask, you know, what has to happen
[15:35] for Bitcoin to go higher and I would
[15:36] just say the expiration of time and I
[15:38] know people don't like that answer,
[15:39] right? But like there is an element of
[15:41] you need young people to become a little
[15:42] bit older. They need to make more money.
[15:44] They already are sympathetic to Bitcoin
[15:45] and so they're going to continue to put
[15:46] more money in. You need these young
[15:48] people who are analysts or um you know
[15:50] kind of associates at the financial
[15:52] firms to become the managing directors
[15:54] or the CIOS and get into positions of
[15:56] power and influence and control. Um you
[15:58] need to have the kind of Lindy effect of
[16:01] okay this thing has not only been around
[16:03] for 10 years, 12 years, 15 years now
[16:06] it's been around for 50 years, right?
[16:07] And so people just continue to allocate
[16:09] to it because they realize it's not
[16:11] going away. And so it's in a world of
[16:14] Bitcoin where people as like a
[16:17] population have been so instrumental in
[16:19] making it successful.
[16:21] >> The most important thing to happen to
[16:23] Bitcoin is the thing that none of us
[16:24] control. It's just time. You can't speed
[16:26] it up. And so you just got to kind of
[16:27] let it happen. And if you go back, you
[16:29] know, two and a half years ago, what?
[16:31] There's no ETF, right? A lot of these
[16:33] institutions aren't participating. Larry
[16:35] Frink is not on television acting as
[16:37] the, you know, CMO of Bitcoin, right?
[16:39] Like all this stuff. And so in a weird
[16:41] way u just the passage of time the
[16:44] normalization I think you get more
[16:46] capital more interest that the media
[16:48] actually
[16:48] >> now treats it much more like an asset
[16:51] that is not going away
[16:52] >> they will still claim it's dead or you
[16:54] know you guys are idiots for putting in
[16:55] your portfolio or you're too bullish or
[16:57] you know whatever their critique is
[16:58] >> but people forget I mean 5 years ago
[17:01] >> if you said that you thought Bitcoin was
[17:02] going to 100 grand these people were
[17:04] they'd crucify you right I mean they
[17:06] literally were like you guys are stupid
[17:07] this thing is complete zero
[17:09] >> and So, what I think is interesting is
[17:11] Bitcoin has passed into, you know, kind
[17:13] of the the major leagues is the way I
[17:15] think about it. I think stable coins
[17:17] have as well, but that long tale of
[17:19] crypto, I mean, it's not like you guys
[17:21] ran out and filed for, you know, 50
[17:23] crypto altcoin ETFs, right? And so, I
[17:26] just don't see interest in that stuff in
[17:29] what I consider like the major leagues
[17:30] of uh of finance. Yeah, I think there's
[17:33] an aspect of that level of patience
[17:36] which really rings loudly in my ears and
[17:39] it it the first time um this kind of
[17:42] concept was driven home to me I was
[17:44] listening to the all-in pod and they
[17:46] were talking about internet stocks like
[17:48] Amazon like the winners what was
[17:51] happening to their stocks after the you
[17:53] know the blowoff in in 2000 right as as
[17:56] in NASDAQ took what 15 years to break
[17:59] even whether and it's just the rotation
[18:02] in the ownership of those stocks, right?
[18:05] Where people who had lost money were
[18:07] selling for g, you know, tax reasons and
[18:10] then new buyers would come in, but then
[18:12] the price would go up and the people
[18:14] were like, "Oh, I'm even. I'm out." And
[18:16] there's just it was a multi-year
[18:18] process. I don't there's I don't know if
[18:20] there's a good word for it. If there is,
[18:21] I don't I don't know what it is, but I
[18:23] find that's very similar to like what's
[18:25] happened to Nvidia over the last nine
[18:27] months, right? fabulous stock over the
[18:29] last five years, right? But over the
[18:31] last last nine months, despite this huge
[18:33] compute shortage, it's been grinding,
[18:37] you know, and I just think I think it's
[18:39] it's just the replacement of ownership
[18:41] and I think that's happening in Bitcoin
[18:43] and it's almost foreseeable, right? We
[18:45] were we were talking if you remember at
[18:47] the end of last year and we were
[18:49] basically saying this was going to
[18:50] happen. It was going to be quiet. We
[18:52] we're both big Bitcoin owners, I
[18:54] believe, right? But we're like, it's
[18:55] just going to be boring. And I think
[18:58] part of it is that that churn churn is a
[19:01] negative word, but you know what I mean?
[19:02] It's like replacement. Maybe it's a
[19:04] re-energiz energizing or something of
[19:06] the of the ownership base.
[19:07] >> Jordi Bisser calls it like a silent IPO,
[19:10] right? As you basically have like in a
[19:11] normal IPO, you have all the private
[19:13] investors and they basically are handing
[19:14] it to the institutions of the public
[19:16] market and there's this like changing of
[19:17] the guard, right? And his his point is
[19:20] basically that is what Bitcoin has been
[19:21] going through over the last year or so
[19:23] is this replacement or the changing of
[19:25] hands from what are really the hardcore
[19:28] retail individual Bitcoiners.
[19:30] >> Yeah.
[19:31] >> Some portion of them, not all of them,
[19:32] but some portion of them have been
[19:34] selling. And you can see where the
[19:36] buying is coming from. And the question
[19:38] is just how long will it take for that
[19:41] changeover to happen. Now the nice thing
[19:43] I believe is that when the institutions
[19:45] hold Bitcoin, they don't really sell
[19:47] that much. Right. And so you're actually
[19:49] almost taking it from people who did
[19:51] have really strong kind of diamond hands
[19:53] and you're handing it to professional
[19:55] diamond hands.
[19:56] >> And so that should lay the groundwork.
[19:58] >> But I also think the volatility
[20:00] compressing a lot of Bitcoiners like
[20:02] Bitcoin because it was super volatile.
[20:03] Yeah.
[20:04] >> You know, the thing that scared away
[20:05] institutions attracted the individuals,
[20:06] >> right?
[20:07] >> Now I I think that we've reached a
[20:09] volatility point where the institutions
[20:10] are interested, which means that the
[20:12] like cowboys of finance, they're like,
[20:15] h, is it going to go up 30% a year?
[20:17] They're like, "Nah, where's the thing
[20:18] that's going to go up 200%."
[20:20] >> Stocks, let's go.
[20:21] >> Right. Yeah. So, I I do think that
[20:24] there's this very interesting dynamic of
[20:27] you have people who are early to a lot
[20:29] of these trends, what they're actually
[20:30] seeking is the asymmetry and the
[20:31] volatility.
[20:32] >> If Bitcoin's asymmetry is gone and now
[20:35] you basically have something that
[20:36] compounds at 30% a year for the next
[20:37] decade, any traditional investor would
[20:40] be a static.
[20:42] But the hardcore Bitcoiners that were
[20:44] there for the volatility and and the
[20:45] quoteunquote fun, they're like the stock
[20:49] market does that.
[20:49] >> They'd be ecstatic, but they'd be
[20:51] thrilled if that correlation came down.
[20:53] >> Correct. Cuz that's the that's the you
[20:56] know, who needs more cues, right? That's
[20:57] kind of the thing. I like I like the
[20:59] silent IPO concept. You know, when I was
[21:02] I've been watching Nvidia, obviously
[21:03] it's the biggest holding in SMH, so I
[21:05] watch it very closely. But uh SoftBank
[21:08] last year announced they were selling
[21:09] their early investor in Nvidia. They
[21:11] were selling all their Nvidia and that's
[21:12] kind of what your point is, right? It's
[21:14] like an IPO process like they were
[21:16] getting out. They probably have other
[21:18] things that they can make 10 jillion
[21:20] times their money at, right? But um
[21:22] yeah, interesting. I
[21:23] >> it's also like what is your game, right?
[21:25] If I think of you and Van, I think that
[21:27] you you have a very specific game that
[21:28] you guys play, right? Both in terms of
[21:30] as you and I have talked over the years
[21:31] about your personal portfolio or the
[21:32] firm's, you know, kind of allocation of
[21:34] capital, uh but also the products that
[21:36] you offer, right? I think it's a very
[21:37] unique approach and mentality compared
[21:40] to, you know, take the exact opposite
[21:42] extreme. The 25-year-old who's just
[21:44] started to make money and is, you know,
[21:46] basically saying, "My W2 is not going to
[21:47] get me any sort of financial security. I
[21:50] got to go and take max risk right now."
[21:52] Their allocation is going to look very
[21:54] different than what Van is doing, right?
[21:55] And I I think that that is part of this
[21:57] of Bitcoin was super attractive because
[22:00] it was also people buying it. They knew
[22:02] the world was betting against them
[22:03] >> and you were kind of get gonna get paid
[22:05] if you were right. If you think of
[22:06] prediction markets today, like that's
[22:08] kind of what people are doing, right?
[22:09] Like people are looking for what's the
[22:10] thing that is mispriced
[22:12] >> and maybe Bitcoin is getting better
[22:14] priced. Like the world understands it
[22:16] more and so if it's better priced,
[22:18] you're just not going to have as much
[22:19] asymmetry to it.
[22:20] >> Yeah, could be.
[22:21] >> All right. Um, let's talk about uh
[22:24] international equities in general. You
[22:25] guys have been, I think, very big
[22:26] proponents of this early in the VAC
[22:28] days. that that was a big focus, but I
[22:30] know that you're uh pretty excited about
[22:32] India and some of the stuff that's going
[22:33] on there. Talk us through what uh what
[22:35] you're seeing. Yeah, I mean nothing
[22:37] nothing really new, but I so take if you
[22:39] take my 10-year kind of investment
[22:40] philosophy and tw you know in 2036
[22:44] looking back what's going to be one of
[22:45] the obvious things that's happening
[22:47] today you know don't just focus on
[22:49] what's happening in the head in the
[22:51] headlines in the newspapers but a very
[22:53] powerful trend and you know looking back
[22:57] see if you look back at capitalism like
[22:59] 400 years like you want to invest in the
[23:02] countries that are just pro business
[23:05] right that the government has a clear
[23:07] set of rules and stays out of the way.
[23:10] India has really implemented a very
[23:13] strong set of pro business um you know
[23:16] kind of enablers over the last 5 years
[23:18] under Modi. One important thing as well
[23:21] is a technological basis, right? So
[23:24] effectively the cost of cell phones in
[23:27] India went down to you know something
[23:29] that 900 million Indians can afford and
[23:31] now they have digital IDs and can move
[23:34] all kinds of like paperwork and and and
[23:36] taxes and everything. It's more
[23:38] transparent but it's it's it's that is a
[23:42] very important part. And then they've
[23:43] restructured labor laws, you know,
[23:45] bankruptcy laws, everything to make it
[23:47] easier, taxes between provinces to make
[23:50] it easier to do business in India.
[23:51] Anyway, the result is you have the
[23:53] highest GDP growth and it's supposed to
[23:55] be as big as continental Europe in 10
[23:57] years. Of course, I started talking
[23:59] about this a year and a half ago and
[24:01] India has underperformed I think every
[24:03] market. But I don't care. I'm just
[24:05] saying in 10 years, do you want 1% of
[24:08] your portfolio in India or do you want
[24:10] 5% or something? you know given I think
[24:13] what I just said is a very high
[24:15] conviction in in my mind now there's a
[24:18] lot of negatives about the Indian market
[24:19] or the large cap companies they're being
[24:22] attacked by AI you know just like the
[24:24] consulting firms here like the emphasis
[24:26] so I mean we could spend an hour talking
[24:29] about the pros and cons of India but
[24:31] that's kind of my my general thesis
[24:33] there
[24:34] >> what do you do so you do the work you
[24:36] come up with this thesis that hey India
[24:38] is going to be a growth sector or a
[24:40] growth um uh geography I want to go and
[24:43] get uh both myself and also our clients
[24:45] access to the Indian market, right? You
[24:47] guys create some products there. Um it
[24:50] doesn't perform for the first year and a
[24:51] half.
[24:52] >> Yeah.
[24:52] >> Do you get more excited? Do you start to
[24:54] question the thesis? Do you go and redo
[24:56] the work? Like like just walk us through
[24:58] just using this as one example. There's
[25:00] I don't know over the years you've been
[25:02] running Van I don't know how many thesis
[25:04] you've had, right? Some of them will
[25:05] work, some of them won't.
[25:06] >> Yeah.
[25:06] >> At what point do you say to yourself,
[25:08] "Hey, maybe I got it wrong." Versus,
[25:10] "No, I'm right." and it's just early and
[25:12] so that patience that long-term thinking
[25:14] is really what will pay off here.
[25:16] >> That's a great question. So I started
[25:18] doing these like quarterly outlooks and
[25:20] they're on the internet so you can tell
[25:21] you can look at my track record and I
[25:24] wanted to start keeping score and one of
[25:26] the most important things I realized is
[25:28] to be clear about the time frame of what
[25:30] you're talking about. So as well if I
[25:33] say India usually I'm saying 10 years
[25:36] right but sometimes like like the
[25:38] opportunities in BDC's I think that's
[25:40] short term. So I think that's this
[25:41] quarter. Like I'm a strong buyer of
[25:44] BDC's Blue Alowl this quarter. I'm a
[25:46] buyer of Bitcoin this quarter. I was a
[25:48] seller in January. So that's shortterm.
[25:51] Um to answer your question, we run
[25:54] client portfolios and been doing it for
[25:57] about five years now. And uh the models,
[26:01] the quant screens will slap me down if
[26:04] I'm wrong, if I have a 10-year view and
[26:07] I'm wrong. Right. And and I think over
[26:09] that time period, I've gotten better at
[26:11] at least communicating what I have in
[26:13] mind.
[26:14] >> 10 years for me as a personal investor,
[26:17] which I think a lot of people have some
[26:19] of their portfolio they run themselves.
[26:21] Who cares? Who cares if India
[26:23] underperforms by 5% in a quarter against
[26:27] China? Like, you know, if you're if
[26:29] you're right over the 10-year period,
[26:30] that's like worrying about Nvidia, you
[26:32] know, when it had a its 80% draw down.
[26:35] You just buy more if you're in convicted
[26:37] in the trade. So uh but but that you're
[26:40] right our clients do care more about
[26:42] monthly and quarterly performance and we
[26:44] our risk screens will uh will affect
[26:46] that and and we don't really even try to
[26:50] go after like the quarterly um things in
[26:53] most of our models. They're longer term
[26:54] than that. So it's more the medium and
[26:57] longer term but under you know quant uh
[27:00] controls.
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[28:48] check them out today. Now, if you zoom
[28:50] out, one of the things I find
[28:51] interesting about investing right now is
[28:54] there's almost different stories or
[28:56] different narratives depending on which
[28:58] data points you want to look at. So, on
[29:00] a macro basis, if we go back to December
[29:02] of last year, I think that many people
[29:04] would have argued that we were entering
[29:05] into a lowinflation, high growth
[29:07] economy. And people were very bullish.
[29:11] And I think that they were saying, look,
[29:12] we're going into a midterm year. we have
[29:14] a president sitting in Washington DC who
[29:17] is going to juice the stock market and
[29:19] everyone was you know kind of uh uh
[29:21] really going risk on from that
[29:22] perspective. At the same time we then
[29:24] get into the war with Iran oil prices
[29:27] spike energy goes up right inflationary
[29:29] pressure start to come. CPI starts to
[29:30] creep back up after it had been falling.
[29:32] And so then people say well hold on a
[29:34] second here. If we're getting inflation
[29:37] then we should be getting higher
[29:38] interest rates. If higher interest rates
[29:39] are coming then maybe this is going to
[29:40] be a headwind for stocks. And then you
[29:42] go and you look at the private market
[29:44] and you see that there are, you know, at
[29:45] least three, if not more trillion
[29:47] dollars or larger companies that are
[29:49] supposed to be coming to market in the
[29:50] next 12 months or so. And so people
[29:52] start getting worried about supply
[29:53] coming in. Then you go and you look at
[29:55] the economic data which maybe is telling
[29:57] a a somewhat rosy picture, but then you
[29:59] hear people and they're like, I am
[30:02] underwater. This sucks, right? I gas is
[30:04] too high, groceries are too high, etc.
[30:07] >> My point is depending on where you look,
[30:10] there's a different story. So, it's very
[30:12] complex and it's very dynamic because I
[30:15] don't know 100 days ago versus now the
[30:17] story looks very different.
[30:19] >> How do you navigate that as an investor
[30:21] like like what what you've been doing
[30:22] this a long time like what do you do to
[30:25] make sure that you capitalize on
[30:26] opportunities but also not panic sell by
[30:29] you know and kind of uh have unforced
[30:31] errors. Uh well, you identified the big
[30:35] questions I ask myself when I think
[30:37] about the 10-year trends, right? What is
[30:39] macro? What is fiscal policy, government
[30:41] spending? What is monetary policy?
[30:44] What's the Fed going to do? What are
[30:45] interest rates going to do? Uh my thesis
[30:47] coming into this year is we are not
[30:49] going to learn anything. We're in a
[30:51] stable environment in 2026. And
[30:54] literally, we could just go to sleep and
[30:56] wake up on January 1st, 2027. Nothing
[30:59] will have happened on fiscal or
[31:01] monetary. And I'm sticking with that,
[31:03] >> right? That generally speaking, the the
[31:06] tax bill went through last year and even
[31:08] if the Democrats win the midterm,
[31:10] they're not going to be able to change
[31:11] much on that, right? Because the
[31:12] president will just veto it. So fiscal
[31:14] is kind of set. Worsh like Bessant did,
[31:17] I think, a fabulous job at kind of
[31:19] articulating a less activist Fed stance
[31:24] and they they they stuck the landing. I
[31:26] mean like that's what what I call it
[31:28] like wars getting in there you know
[31:30] everyone was worried about all this kind
[31:32] of stuff and what does Trump do the day
[31:33] he's you know he's he's put in office he
[31:36] says go do what you want remember how
[31:39] much time we wasted talking about anyway
[31:41] sorry so there was visibility on
[31:43] monetary policy I I don't think this I I
[31:46] just fundamentally look at this Iran
[31:48] conflict as temporary
[31:51] >> I just I I mean yes it'll be bad for
[31:54] government spending
[31:56] inflation up. I I don't think the Fed's
[31:58] going to react to that. Like I think
[31:59] that's their whole point is that the Fed
[32:01] doesn't like Do you think the central
[32:03] bank can affect gas prices? Like not not
[32:06] one person in a hundred in America
[32:08] thinks that.
[32:09] >> Well, you know, except for the a couple
[32:11] of people on CNBC.
[32:12] >> But here's here's what's crazy to me is
[32:15] the Fed, I think they're smart enough to
[32:17] know that they can't. But what I
[32:19] actually think is a little
[32:20] nerve-wracking is that I do think there
[32:22] are some politicians that think they can
[32:24] affect gas prices. And so if you go down
[32:27] to, you know, uh, take New York City. We
[32:29] both live in New York and World Cup
[32:32] tickets are expensive. The new mayor's
[32:34] like, "Well, I'm going to go and I'm
[32:35] going to figure out how to get $50 World
[32:36] Cup tickets." And when you realize what
[32:38] they did, you're like, I mean, this is
[32:40] crazy town, right? By the way, the
[32:42] people who get the $50 World Cup tickets
[32:44] are ecstatic. They're they're incredibly
[32:45] happy. But it's just not a sustainable
[32:47] thing that you can go and you can do,
[32:48] right? And so if all of a sudden the
[32:51] mayor of New York or a couple other
[32:53] politicians around the country, if you
[32:54] said to them, "Hey, we're going to give
[32:56] you any tool you want, get gas prices
[32:58] down,"
[32:58] >> they would come up with insane ideas on
[33:01] how to do that. So in a weird way, like
[33:03] I actually believe, and I'm not exactly
[33:05] the biggest fan of the Fed usually,
[33:06] right? But I do believe that they are
[33:08] intelligent and they understand kind of
[33:09] what levers they can pull and can't
[33:11] pull. It's the politicians that seem to
[33:15] not be that smart and say like, "Oh, I
[33:18] just need to claim victory in the
[33:19] headlines."
[33:20] >> Well, Trump waved the gas tax, right?
[33:21] That's three and a half billion dollars
[33:22] a month. That's more government spending
[33:25] to your point.
[33:26] >> But I mean, big picture, uh, if you just
[33:30] focus on on these macro trends, uh, I
[33:34] think it's I think it's easier and I
[33:35] think it's more transparent this year
[33:37] that there's no big monetary shocks, no
[33:39] big government spending shocks. And I
[33:41] think probably it'll extend into next
[33:42] year as well. Sure, it does mean, you
[33:45] know, short-term rates aren't going to
[33:47] fall a lot because I never really
[33:48] thought that was going to happen anyway.
[33:50] They could even rise a little bit. Who
[33:52] who like does that really change the
[33:54] world? I don't really think so. Um, you
[33:56] know, my biggest concern by far is
[33:59] government spending to your point. Don't
[34:01] trust politicians.
[34:03] >> But, you know, people don't when will
[34:06] that get priced into markets? Anthony, I
[34:08] do all these client meetings and surveys
[34:10] and I'm saying I ask, do you think the
[34:13] government will meet its obligations in
[34:15] the next 10 years? Will it default?
[34:17] >> What do you think?
[34:18] >> They all 80 90% absolutely. And then I'm
[34:22] say, okay, social security,
[34:25] unless they change the tax regime, will
[34:27] not have enough money to in in 2033 or
[34:30] 2034, right? So that's within my tenure.
[34:34] Do you think the government's going to
[34:35] somehow fix that problem? No one thinks
[34:37] they're going to fix the problem,
[34:40] but they don't, you know, they don't
[34:41] believe even afterwards they still say
[34:43] the government's going to meet all its
[34:45] obligations. I'm like, that is
[34:47] dissonance. Like in your mind, you're
[34:49] saying something, but it's not you're
[34:50] not conscious of that.
[34:53] >> And so I I it's all about the timing. I
[34:56] I I absolutely think it's going to be a
[34:58] problem. Every financial crisis in US
[35:01] history has always come out of the
[35:03] banking system because banks are
[35:05] unstable, right? government has always
[35:08] marched up and say, you know, bailed
[35:10] out, let's call it an industry or Wall
[35:12] Street.
[35:13] >> Who's going to bail out the Fed?
[35:16] >> When our 10-year rates go up to, you
[35:18] know, if if and when that happens, who's
[35:20] like it's it'll be a new thing for
[35:22] everybody. And I don't know about our
[35:24] portfolios.
[35:25] >> Do you think that
[35:26] >> when I don't know,
[35:27] >> do you think that the government's going
[35:28] to default in the next 10 years?
[35:30] >> They're not going to pay their social
[35:31] security. I want to write an op-ed
[35:33] saying, "I'm sorry."
[35:35] >> Mhm. you're not going to get your money.
[35:36] You're only going to get 80 cents on the
[35:38] dollar. And I'm sorry for the people
[35:39] that really need it.
[35:40] >> And then they're going to whack up, you
[35:42] know, the rest of society to try to make
[35:44] for a shortfall. But the, you know, uh,
[35:47] Freeberg, David Freeberg on the All Pod
[35:49] talks about this a lot. The states have
[35:50] a lot of obligations that they can't
[35:52] meet. I mean, if New York and California
[35:54] continue to drive business out of their
[35:56] states, their pension obligations are
[35:59] going to eat the economy alive.
[36:01] >> So, they're not going to meet those
[36:02] obligations either. I I call that a
[36:04] default. I mean, it's they will probably
[36:06] pay the interest in principle on their
[36:08] debt because otherwise they couldn't
[36:10] access the financial markets, but
[36:11] they're going to stop paying people what
[36:12] they owe and then what are the courts
[36:14] going to do? Force them.
[36:16] >> I've always wondered, should they just
[36:17] >> Sorry for that rant.
[36:18] >> No, no, but I I always wonder, should
[36:20] they stop promising things to young
[36:23] people? Right. So, like what what always
[36:25] strikes me as a little crazy is, okay,
[36:27] so let's all objectively agree that
[36:30] there is a timeline as to when they're
[36:32] going to run out of money. Some people
[36:34] may think it's a little earlier, a
[36:35] little bit later, but like they're going
[36:36] to run out of the money. Why would you
[36:39] keep making promises today knowing
[36:41] you're not going to have the money right
[36:42] now? They may argue cuz we need those
[36:44] people to pay in, right? It's kind of
[36:45] like a Ponzi scheme. So, like we need
[36:46] someone to give us fresh money so we can
[36:48] go and we can use it to pay out our our
[36:50] obligations, but it does feel like uh
[36:53] politicians are really good to just like
[36:54] keep kicking the can down the road. And
[36:56] so, what I always go to is like, what
[36:58] does the quote unquote reset look like?
[37:00] Is it just, hey, you get 80 cents on the
[37:02] dollar? Again, those people would be
[37:04] very upset. I understand why. I would be
[37:05] very empathetic towards them and and and
[37:07] feel like they would have a great
[37:09] argument, but for people outside of that
[37:12] cohort, it would not be as destructive
[37:14] if that was the only thing that was
[37:16] happen. I don't think that's the only
[37:17] thing that's going to happen. They are
[37:18] going to have to debase the dollar.
[37:20] They're going to have to do a bunch of
[37:21] these things all at once to be able to
[37:23] address this problem. And I think that's
[37:24] the part that people don't kind of see
[37:26] past is again this is like pretty
[37:29] complex stuff that they're going to have
[37:30] to do to be able to address this issue.
[37:32] >> I think the sad thing is that day
[37:35] arrives and who do you point the finger
[37:37] at? Do you point it at the Republicans?
[37:39] You point at the Democrats because
[37:40] they're both responsible and they're so
[37:42] then what are you going to do? Blame
[37:44] prior politicians? That doesn't really
[37:46] help the recipients. So I wonder if
[37:48] there's a role you know for us like
[37:51] people in the markets being a little bit
[37:52] louder on this topic you know anyway
[37:56] that's a separate because the trustees
[37:57] are very clear they'll write the annual
[37:59] report saying 80 cents on the dollar in
[38:01] 2033. Uh but so they'll have a clear
[38:05] conscience or whatever. I mean they've
[38:07] done that what they're supposed to be
[38:08] doing. It's it's the politicians that
[38:10] are really shortch changing the average
[38:12] person. One of the aspects of investing
[38:15] today that I think has really changed
[38:17] over the last five or six years and a
[38:18] lot of it I think is because of COVID
[38:20] and the spending etc. is um if I go and
[38:22] I look at a lot of the economic data,
[38:24] everything looks pretty good, right? I
[38:26] mean, there's some risk areas, but for
[38:28] the most part, it looks like the US
[38:29] economy is growing, stock market is up,
[38:31] inflation is not at 9% or, you know,
[38:33] whatever. If you go and you talk to
[38:36] people, it is a whole different story.
[38:39] And a lot of people point to like the
[38:41] Michigan consumer sentiment survey. I
[38:43] think that it's complete trash and
[38:44] there's a lot of like sampling issues,
[38:46] etc. But let's use it as a directional
[38:48] like the stock market is going up and
[38:50] sentiment is going down. People are
[38:52] saying I'm in financial pain. The data
[38:54] is not necessarily showing that as much.
[38:57] >> How do you balance these two? Do you
[38:59] look at the data? Do you listen to
[39:00] people? Do you have to kind of take them
[39:02] both together?
[39:03] >> I think it's a a great question. There's
[39:06] been a collapse in the kind of accuracy
[39:09] of sentiment uh and trust in polling.
[39:12] And it's not just financial markets. I
[39:14] can't recall it all off the top of my
[39:16] head, but it's it's consistent. And if
[39:18] you look at trust in institutions, for
[39:20] example, trust in Congress, trust in,
[39:23] you know, I think I don't know what
[39:24] what's retained it. I think small
[39:26] business and religion is about it, but
[39:28] uh you know, academia, right? Uh large
[39:31] businesses, everything. And and
[39:33] sentiment, you're right, is just wacky,
[39:36] out of touch. It it it's it doesn't even
[39:39] match like what they're like their own
[39:42] behavior doesn't match what they're
[39:43] saying about themselves. Right. So
[39:45] they're saying yes sentiment is horrible
[39:46] yet they're spending.
[39:48] >> Mhm.
[39:48] >> Right. And that's so I I don't know.
[39:51] >> I think there's been a politization a
[39:53] little bit of sentiment data, but that's
[39:57] >> Well, we 100% know that to be true,
[39:59] right? And again, I I kind of look at
[40:00] this as and and over the years I've
[40:01] gotten very jaded where I'm just like
[40:03] both political parties for the most are
[40:05] like full of right? And so like,
[40:06] okay, let's use it as a starting point.
[40:08] But if you go and you look at the
[40:10] Michigan Consumer Sentiment Survey in
[40:12] particular, yeah, they do a great job of
[40:14] publishing a lot of the source data. And
[40:17] so people smarter than me, aka Tom Lee,
[40:19] uh, has gone and actually done the
[40:20] analysis. And what he shows is it used
[40:23] to be they uh, would survey 50%
[40:25] Republicans, 50% Democrats. And the
[40:29] reason why that was important is
[40:30] because, you know, Democrats will tell
[40:32] you inflation's going to like 6% and
[40:33] Republicans will tell you it's going to
[40:34] one and a half%. Right. And so they're
[40:36] just wildly political. You know, their
[40:38] brains are broken by politics.
[40:39] >> They're talking their books.
[40:40] >> Yeah. Of course.
[40:42] Well, the sentiment was kind of middle
[40:45] of the road. And so you kind of had this
[40:46] healthy tension. Some people thought it
[40:47] was good, some people thought it was
[40:48] bad. And you know, here we go. In the
[40:51] last three years or so, they have
[40:52] shifted to a lot more online polling.
[40:55] When they did that, the construction of
[40:58] the survey sample has changed. So now
[41:01] they are actually surveying twothirds
[41:03] Democrats, one-thirds Republican.
[41:05] >> Now I I'm not going to claim because I
[41:07] actually don't think that they're doing
[41:08] it intentionally. I think it's probably
[41:10] where they advertising the survey, where
[41:11] they get the people. You know, there's
[41:12] all these like components that go into
[41:13] it.
[41:14] >> Yeah.
[41:14] >> But immediately by now having two times
[41:17] more Democrats than Republicans, and the
[41:19] Democrats tend to be more pessimistic on
[41:21] the economy going forward, etc.,
[41:23] sentiment starts to pull down. And so I
[41:25] look at that, I'm like, "Okay, there are
[41:26] probably a lot of issues with the the uh
[41:28] stuff." If I tweet though and I say,
[41:32] "The American economy is rocking." Oh my
[41:35] god. I mean, you you you just read the
[41:37] comments and you're like, "By the way,
[41:39] there's a lot of people who disagree
[41:40] with that." Right.
[41:41] >> Right. And so again, that's anecdotal,
[41:43] but I do wonder sometimes like is that
[41:46] actually a better signal for sentiment
[41:48] than the survey?
[41:49] >> Because there's a bunch of people who
[41:50] are like, "Look, man, gas is x dollars,
[41:53] you know, a gallon. Uh grocery bill,
[41:55] it's up 20%, 30%."
[41:58] >> And so I think that in finance, we look
[42:01] at inflation and that's the thing we
[42:03] worry about. But really a average
[42:06] American family is just looking at I
[42:08] don't care if the inflation happened in
[42:09] 21 22 or if it happened in 26. All I
[42:12] know is it used to cost me 60 bucks to
[42:14] go to the grocery store. Now it cost me
[42:16] 90.
[42:16] >> Correct.
[42:17] >> Somebody did this to me. Right. Right.
[42:19] You know and and they're and I don't
[42:21] even know if sometimes they even blame
[42:22] blame it on one political party the
[42:24] other. They just care about the
[42:25] aggregate increase in price and they
[42:28] don't understand inflation when it
[42:30] happened who did it. It's just it's too
[42:32] expensive. And that's driving a lot of
[42:34] the sentiment, right?
[42:35] >> It is too expensive. I mean, honestly,
[42:37] they're right. Right. We just had a huge
[42:40] increase cumulatively, and that's makes
[42:43] more sense, right, to your point. Right.
[42:45] Economic statistics can short-term
[42:48] economic statistics can be very
[42:50] misleading. Yeah. I I throw out all
[42:52] sentiment data really in my um the way I
[42:56] think about markets.
[42:57] >> And so, like in the spending example,
[42:59] you put more weight on the spending data
[43:00] than you would on what people are
[43:02] saying.
[43:02] >> Yeah. Yeah.
[43:03] >> Yeah.
[43:03] >> And why do you think people are still
[43:05] spending?
[43:05] >> And and I also don't try look I'm
[43:08] looking for these big trends. I don't
[43:11] really care that much about wiggles and
[43:13] data. I think look the biggest question
[43:16] I've asked myself statistically for this
[43:18] year by far by far employment
[43:22] >> right because the big concern is AI
[43:25] takes people's jobs and and is that
[43:27] happening and you you you know you can
[43:29] see some of these hyperscalers cutting
[43:32] back on their employment you're oh is
[43:33] this the beginning of something you know
[43:35] I published like some 20-year survey
[43:37] data from Morgan Stanley in in January
[43:39] or I borrowed it and you can see huge
[43:42] changes like secretary Aries, right? 75%
[43:46] fall in secretarial jobs over a 20-year
[43:49] period, but it's over 20 years.
[43:51] >> You know, you just don't see employment.
[43:54] This was my conclusion, but you never
[43:57] know. We'll see at year end, but you
[44:00] just don't see big moves in employment
[44:02] because our economy is so vibrant.
[44:04] Anthony, that's what's so cool about it.
[44:06] And and I was really persuaded by a
[44:08] futurist who said, "Listen, we threw 40
[44:11] million new people into the workforce
[44:14] and you could barely see the the blip in
[44:17] the employment trends." And that that 40
[44:19] million was women uh entering the
[44:21] workforce after World War II.
[44:23] >> Like you just can't see it. And once I
[44:25] saw that, I'm like, there's nothing
[44:26] happening from AI that's going to like
[44:28] dramatically, you know, throw half the
[44:31] workforce out of uh you know, out.
[44:33] >> What is AI doing to your guys business?
[44:36] like where are you guys seeing
[44:37] disruption and and obstacles versus
[44:39] where are you seeing efficiency gains or
[44:41] or advantages in using it?
[44:43] >> I mean it's empowering researchers right
[44:46] just generally and and what I laugh
[44:48] about a little bit is uh the knowledge
[44:51] flow within VANC from department to
[44:54] department has changed. It used to be
[44:56] you always went to legal for your first
[44:58] questions and now legal is kind of like
[45:01] only if they need to produce the
[45:02] document, right? Because you can do the
[45:04] research yourself. That's true for
[45:08] you know like we were checking some
[45:10] stuff on our website which you think
[45:11] would be marketing but it wasn't
[45:13] marketing someone another department
[45:15] like built a tool to kind of like check
[45:17] for stuff on our website um in in hours
[45:20] right so uh what we're seeing is a lot
[45:22] of productivity we spend about $750,000
[45:26] a year right now on on claude we're
[45:28] moving more from chat to claude and um
[45:32] you know you think of we have 550 people
[45:35] that's not at a lot of expense. I could
[45:36] see that going up. I I did that
[45:39] partially because I called 2026 the year
[45:41] of corporate AI, right? Because
[45:43] Anthropic on the on the LLM side and
[45:46] then, you know, Nvidia last week with
[45:48] its earnings broke out the hyperscaler
[45:50] demand for their for their their
[45:52] hardware from kind of the rest of the
[45:55] world including uh you know companies
[45:57] and so I really think we are providing
[46:00] this extra compute um demand. So um What
[46:05] I find interesting,
[46:05] >> sorry, I went a little back to the
[46:07] markets there, but was that helpful? We
[46:09] we published our use of tokens on our on
[46:11] our website.
[46:12] >> I know you guys did. I find it pretty
[46:14] cool. And one of the things I'm seeing
[46:15] across the we are seeing inside of our
[46:17] companies, like you take the CFO Sylvia
[46:18] product, right? Um it was like roll this
[46:20] out to everyone, get everyone using as
[46:22] many tokens as possible. Companies had
[46:24] token leaderboards, you know, all this
[46:25] kind of crazy stuff.
[46:27] >> And then all of a sudden everyone
[46:28] realized, wait a minute,
[46:28] >> publish it for Sylvia?
[46:29] >> Uh we do not. No, but um
[46:31] >> you should. No, it radical transparency
[46:34] >> uh the the token usage uh exploded and
[46:38] then we have been very successful in
[46:40] cutting it. And I think that this is
[46:42] >> that's the dynamic, right? Something
[46:43] costs money, you how you use it.
[46:45] >> Yeah. And industrywide. I talked to
[46:47] friends who run private companies,
[46:48] friends who run public companies,
[46:49] investment firms, etc. Everyone 12
[46:52] months ago, 18 months ago, told their
[46:54] teams, "Go use AI. You have to start
[46:58] using this stuff. Become, you know, AI
[46:59] native. Go and figure out how to use
[47:01] these tools." Sometimes they did
[47:02] trainings internally, they built tools
[47:04] like whatever they could do to enhance
[47:06] the productivity of their teams they
[47:08] did. Then they started to get the bill
[47:10] and they said, "Wait a minute. I like
[47:12] the productivity. I don't like the
[47:13] bill." And so over the last six months
[47:16] or so, what I see a lot of teams doing
[47:17] is they're saying, "How do we keep as
[47:19] much productivity gain as we can, but I
[47:22] want this bill to come down." And so
[47:23] what people started to realize, just
[47:24] like all new technologies, is like,
[47:26] "Hey, every time we refresh this page,
[47:28] it was hitting the model, right?
[47:29] >> We don't need to do that. Let's stop
[47:31] doing that." And you start to see these
[47:32] bills come down. And so it' be
[47:34] fascinating inside of uh like an
[47:36] anthropic
[47:37] >> the per query token usage my guess is
[47:42] probably coming down. Some of it's
[47:43] because things they're doing some of
[47:44] it's because of the way the users are
[47:45] are uh using their tools.
[47:47] >> Yeah.
[47:48] >> But the adoption of AI is exploding
[47:50] higher. So you get this net gain for a
[47:52] company like Anthropic. But actually the
[47:54] individual companies are trying to
[47:56] figure out okay how do I get this bill
[47:57] down but still get the efficiency gain.
[47:59] >> Yeah. And so that I think is maybe one
[48:02] of the most bullish components of AI is
[48:04] it's not just oh we have existing
[48:06] customers and they're using AI more.
[48:08] >> What they're doing is they're actually
[48:09] trying to cut back their bills yet your
[48:11] business is adding $10 billion of
[48:12] revenue a month.
[48:13] >> Right.
[48:14] >> Right. I mean that is there may not be a
[48:15] more bullish sign than that.
[48:17] >> Yeah. Yeah. I mean when we showed the
[48:19] data um an investment colleague said
[48:21] well what's vanex usage and I said let's
[48:24] share it. Uh I was surprised right our
[48:26] so couple things. Open AI is less
[48:30] transparent about their token usage for
[48:33] some reason than Claude and Claude is
[48:35] supposed to have the compute problem,
[48:36] right? But like we could only get
[48:38] estimated token usage uh from OpenAI
[48:41] whereas Claude would actually publish it
[48:44] was like order of magnitude higher. It's
[48:46] like millions and millions of tokens a
[48:48] day like you know anyway that we had to
[48:50] guess with Open AI. Uh but our overall
[48:53] token usage on cloud had only sort of
[48:55] doubled in a four-month period which
[48:57] didn't feel right but it's to your point
[49:00] people are using it more efficiency
[49:02] efficiently and the IT department that 9
[49:05] months was completely wor like literally
[49:07] I I heard that people worried about
[49:09] their jobs these people are are
[49:11] providing they're like enhancing well
[49:13] they're enhanc you having the IT
[49:16] background like makes you so much more
[49:19] productive right I mean vibe coding is
[49:21] fun, but you know having access to the
[49:24] underlying data and being able to
[49:26] optimize use of AI is way better.
[49:28] >> Mhm. Now, um what will it take for the
[49:31] AI to make the investment decisions?
[49:34] Right now, everyone is using it for
[49:35] research. They're using it for things
[49:37] around.
[49:38] >> Yeah.
[49:39] >> When will you feel comfortable giving
[49:41] your money to an AI or when will VANC
[49:43] offer some sort of product where the AI
[49:46] makes 100% of the investment decisions?
[49:48] >> So, I mean, we use AI already, right? If
[49:51] you think that all our actively managed
[49:53] funds uh and all the analysts are AI
[49:56] empowered, right? Uh so that's already
[49:59] happening. We have um we have an ETF
[50:02] that sorts huge amounts of data using
[50:05] AI. Um and I guess that's fully AI in in
[50:09] a sense. It's it's uh processing social
[50:11] media data uh like likes and dislikes
[50:14] and comments on your tweets and that
[50:16] kind of stuff if if you talk about
[50:18] stocks. Um, so but I don't I'll tell you
[50:22] what the difficulty is. Maybe AI is
[50:24] really good. The the it presumes a lot
[50:27] of trading that's better sitting within
[50:30] a Citadel or a Jane Street than within
[50:33] an ETF because it the cost of
[50:35] transacting if you're if you're not
[50:38] really good at it is is is exorbitant.
[50:40] Um, and then the last component,
[50:42] Anthony, that I think really delays it
[50:44] is do you really trust an AI not to go
[50:46] off the rails? M
[50:48] >> and I it it might we might be okay but
[50:51] if we to persuade a customer like this
[50:54] is a really smart AI as opposed to all
[50:56] the other ones.
[50:57] >> Mhm.
[50:58] >> That's a tough sales proposition.
[51:00] >> One of your big bets is India. One of my
[51:02] big thesis over the next 10 years is
[51:04] that the people actually trust the AI
[51:07] more than the humans and there will be
[51:10] some tipping point. I don't know when it
[51:11] will happen or what the thing will be,
[51:13] but um we have people who reach out to
[51:15] us from the CFO Sylvia user base and
[51:18] they ask us all the time, can I just
[51:19] give Sylvia my money?
[51:20] >> Now, we don't do that, right? For a
[51:22] whole bunch of different reasons. Um but
[51:24] what they're essentially saying is she's
[51:26] superhuman intelligence. She's smart. I
[51:28] already trust her to give me insights or
[51:29] information.
[51:30] >> Yeah.
[51:31] >> What really is happening is I query, she
[51:34] gives me information, I'm then the
[51:36] bottleneck, and I have to go into the
[51:38] portfolio and make a decision. But she's
[51:40] already telling me the thing that she
[51:42] thinks is a good idea, a bad idea, or
[51:43] you know, the pros, cons, whatever.
[51:45] >> Yeah.
[51:45] >> Why don't I just remove the human from
[51:47] the loop? Why don't I just let her do
[51:48] it? It's fascinating because when I've
[51:51] always thought of AI, I've thought of,
[51:52] you know, high frequency trading and,
[51:54] you know, those types of things where
[51:55] it's almost like humans can't do it.
[51:57] What these people seem to be saying is I
[51:59] actually just want to outsource the
[52:01] decisionmaking.
[52:03] And that to me is that's not
[52:04] rules-based. That is, you know, kind of
[52:06] this uh almost black box to a degree.
[52:09] I don't know if I'd be ready to do that
[52:11] yet right now.
[52:12] >> I I I'd love to ask you more questions.
[52:14] Like if I put my data into Sylvia,
[52:17] right, and I had two brokerage accounts,
[52:20] but 80% of my net worth was in
[52:24] apartments. I'm I rent apartments like
[52:26] whatever that was like my culturally. My
[52:29] parents said, "Put your money in real
[52:30] estate. I like to walk around and
[52:33] collect the rent from people and kick
[52:34] them out if they'll pay." I don't I
[52:36] don't know who likes to do that, but
[52:37] anyway, is Sylvia going to tell them
[52:40] that's a you're you know too much risk
[52:42] in New York real estate. Let's say
[52:43] you're doing it here and then what move
[52:46] >> well or or I mean reduce that part of
[52:48] your portfolio and you're saying people
[52:50] are like yeah that's right actually
[52:51] don't really care if I own any
[52:53] apartments. I don't really believe that.
[52:55] >> Yeah. So I think that there's two
[52:56] components. One is it will definitely
[52:57] say hey you've got heavy concentration
[52:59] here. You're very exposed to interest
[53:00] rates or you know whatever the thing is.
[53:02] Um, you can explain, you know, I'm not
[53:05] going to change it. Disregard this.
[53:07] Right. So, like there's a back and
[53:08] forth. No different than a financial
[53:09] adviser, right? Or uh maybe a CFO or an
[53:12] accountant.
[53:12] >> That's my point. They're not going to
[53:13] totally give or take.
[53:15] >> Correct. I don't think it's just like
[53:16] here's all of my money, all of my
[53:17] assets, like do whatever you want. What
[53:19] I think is more interesting is somebody
[53:21] may say, you know, actually what I want
[53:23] is I want to um give 100 grand. Yeah.
[53:28] >> To this. And no different than an
[53:30] actively managed ETF. I want maybe
[53:32] exposure to um the AI trade. Go find,
[53:37] you know, uh certain types of stocks
[53:39] that are very asymmetric that could
[53:41] double every year in the AI space or
[53:43] whatever.
[53:44] >> Yeah.
[53:44] >> That to me, it's almost like a
[53:46] self-contained, you know, uh AI driven
[53:49] type strategy.
[53:51] It's a blending, right? It's kind of
[53:52] rules-based. It's kind of not. It's got
[53:54] the LLM.
[53:55] >> Yeah. I call that mainly human because
[53:57] that the human is saying, "I've made the
[54:00] decision. You go execute. I'm totally
[54:02] with you. Like just get the agent to
[54:04] execute it, rebalance it, whatever, or
[54:06] remind you that maybe you want to
[54:08] rebalance,
[54:09] >> but that the gate of the kill switch is
[54:12] still with the human is how
[54:13] >> Yeah, I I do think that I do think the
[54:14] kill switch and the ability to shut it
[54:16] off obviously will always ring with the
[54:18] human. The other thing I think is really
[54:19] interesting is um uh you've probably
[54:22] seen these apps or these tools where uh
[54:25] people scroll a lot on the internet,
[54:26] right, you know, on social.
[54:26] >> Yeah. Yeah. and they track it
[54:27] >> and and so you basically though you can
[54:29] set like hey only let me do it for 1
[54:30] hour and then once you hit the 1 hour
[54:32] you literally can't log in to the
[54:33] services until the next day or you know
[54:35] maybe pay five bucks or something right
[54:38] uh I do think that there's something
[54:39] about investing where like uh Stanley
[54:42] Duck Miller always tells the famous
[54:43] story of like he knew in 2000 but he
[54:46] like couldn't sit on the sidelines and
[54:48] he bought at the top and lost like $2
[54:49] billion in you know six weeks or
[54:51] something and he's like you know
[54:52] somebody asked him what he learned he
[54:53] goes I didn't learn anything I knew I
[54:54] shouldn't have done that but I did it
[54:57] anyways, right? He's like, "I'm not an
[54:59] idiot. I knew not to do that and I still
[55:00] did it."
[55:01] >> And so, I do think that's where AI
[55:03] becomes really interesting of like uh
[55:05] you know, you go to do something and it
[55:06] says like, "Are you sure? Are you really
[55:08] sure? Are you 100% positive you want to
[55:10] do this? Are you not, you know,
[55:11] panicking and chasing momentum?" It's
[55:14] almost like a a you know, co-pilot is
[55:16] probably overused, but a coach or or
[55:17] some sort of, you know, sounding board
[55:19] that I could say.
[55:20] >> One of the coolest things I've learned
[55:22] is behavioral economics, right? or just
[55:24] how we are built built as humans our
[55:27] decision-making processes are biased to
[55:29] to kind of make the same kinds of
[55:31] mistakes and what you're talking about
[55:33] is I actually talked about this with my
[55:35] summer interns is like you need rules or
[55:37] tricks to kind of combat some of your
[55:41] you know kind of biases the the the bias
[55:44] that I care about the most is recency
[55:45] bias where everyone just thinks oh this
[55:47] is the trend and that's going to
[55:48] continue like no you know history and
[55:51] markets can be very discontinuous But um
[55:54] but but like when you think about it,
[55:56] the whole retirement savings system has
[55:59] been driven by the ability of people
[56:01] just to say, "I'm putting my money in a
[56:03] 401k and the default, right, is the
[56:06] target date fund." That is so good for
[56:08] people because they used to always put
[56:10] their money in cash.
[56:11] >> The amount of wealth that that trick or
[56:14] tool has generated is probably enormous,
[56:18] you know. So anyway, so I I I think
[56:20] you're right. AI can maybe be your buddy
[56:23] or your trick or tool and or and apply
[56:26] that in more places. Um, but that's also
[56:28] the role that financial advisors play.
[56:31] >> Yeah, I think that that uh that makes
[56:32] sense. We we've known each other now for
[56:34] a while. I never asked you this
[56:35] question, so I'm very interested uh in
[56:36] your answer, but there's a quote on your
[56:38] website. It says, "My father built this
[56:40] firm on the idea that the world is
[56:42] constantly changing and that by
[56:43] understanding those shifts early, you
[56:45] could create a real opportunity for
[56:46] clients. That belief still guides us
[56:48] today. And when you first started at
[56:51] VANC, he had pretty much made two major
[56:53] bets from my understanding. There was
[56:54] kind of the international equities and
[56:55] then there was gold. And I think that he
[56:58] probably a lot of people do not agree on
[57:00] the gold thing at first, but it
[57:01] obviously was a very smart thing for
[57:02] them to do. Um, what do you think your
[57:05] father would say now to you or or how
[57:07] would he look at the firm? I mean, you
[57:09] know, this thing's grown to 200 billion
[57:10] in assets. You've completely diversified
[57:12] away from gold, although you still got
[57:14] half a still a big gold business. Um,
[57:17] and this quote about, you know, just
[57:18] constantly staying on top of these
[57:21] shifts, you guys have done a pretty good
[57:22] job of.
[57:23] >> Yeah. I mean, look, these 10-year shifts
[57:25] are, I think, very profound. And you
[57:27] look how they can distort like the US
[57:29] equity market, the AI trade, but they're
[57:32] not, you know, it's not magic. And, you
[57:35] know, we we leaned into emerging markets
[57:36] as well. A lot of people did, right?
[57:38] They saw the rise of China. We're not
[57:40] alone in seeing the rise of India. Don't
[57:42] mean to be alone. like we're not looking
[57:44] to be the only people out there, right?
[57:46] Uh so my answer your question, my dad I
[57:49] think he'd totally be all in on India.
[57:51] Um he he was well no I mean he just was
[57:54] he was a globalist right his parents
[57:56] were were European so he always thought
[57:58] of the world as a globe and the
[58:01] command's bias too Anthony you know I
[58:03] realize has has affected me too because
[58:05] all those markets are always global
[58:07] right um so I think India definitely um
[58:10] AI I don't know we never really talk
[58:13] technology a lot and the way I look at
[58:16] the world now technology really is is an
[58:19] important trend for industries
[58:21] Uh, and he would definitely be worried
[58:23] about government spending. You know, he
[58:25] would definitely be worried about that.
[58:27] >> I feel like that is like seared into the
[58:28] family lineage is the government
[58:30] spending is a problem.
[58:31] >> Well, but it isn't all the time, right?
[58:33] It's not all the time. But, uh, we we
[58:36] went nuts relative to other countries
[58:38] during COVID. We went berserk
[58:40] >> and um and I think there were no
[58:42] consequences to our markets
[58:44] >> and that's why we have continued to be
[58:47] really irresponsible and we'll see um if
[58:50] we get there.
[58:51] >> All right. Working with some people to
[58:52] find out more about Vanek.
[58:54] >> Uh van.com, yanvan number three on
[58:57] Twitter and then LinkedIn. You know, try
[58:59] to share my favorite pods.
[59:00] >> You've been amping up the social media a
[59:02] little bit.
[59:03] >> A little bit.
[59:03] >> Yeah. You're doing a pretty good job.
[59:04] >> Tell the story.
[59:05] >> All right. We'll do it again in the
[59:06] future. Thanks.