Trey Lockerbie (06:25):
Well, that’s what I admire about you, because obviously, you’re highly educated, but you seem to have this sort of school of hard knocks for lack of a better term, this almost like common sense approach to most things, most topics. It’s like you jumped party lines a couple of times, you’ve changed careers, going from law school to finance industry. Were you sort of like a strong opinions, loosely held kind of guy, and if so, where did that come from?

Anthony Scaramucci (06:49):
Yeah, look, I probably am that, but I mean, I never really got myself heavily invested in any specific political party or ideology. I would be somebody … I used to tell people, it’s not really about left or right. It’s sort of about right or wrong. My oldest son just graduated from Stanford Business School. He’s probably your age. He’s like, “Dad, you’re killing me because you were with Trump and the Democrats hated your guts, and now you left Trump, so now the Republicans hate your guts, and the Democrats will never accept you because you were with Trump. You’re killing my networking opportunities.” This kid said to me.
I’m like, all right, well, maybe I’m getting closer to the truth. There are elements of what Trump was saying that people do need to listen to. They will hate me for saying that, but they do. And there are obviously elements of what he was saying that was absolutely borderline criminal and traitorous, but there’s a struggle going on in society today. The family I grew up in, that you’ve referenced, was an aspirational blue-collar family.
My dad was making enough money, where Trey, I didn’t grow up poor. I grew up decidedly in the middle class. I would never dishonor my pops by telling you I grew up poor. Did not grow up poor. We had plenty of macaroni. We had air conditioning. We used to put the air conditioners in the windows on Memorial Day. We had to take them out of the windows on Labor Day. That was my father’s orders. We cut and landscaped our own lawn. And we shared a bicycle. I shared a room with my brother, but we were not poor by any means. That very same family today though, would be poor, because my dad’s job, if it was still available, then probably eliminated by the forces of automation, globalization, and the way we do things differently 40 years later.
But that very same job, if available, would be down about 26%, 27% in real wages. So, he would be on the poverty line or close to it. He would probably need an EBT card to help out his family. You can hate Trump, but let me tell you, those families that were aspirational blue-collar families that have transformed into economically desperational ones over 40 years, that’s something that elites should wake up to. That’s something our public servers should wake up to. We have to fix that. Otherwise, there’ll be more anxiety, more anger, more angst than wicked politicians will take advantage of.

Trey Lockerbie (09:08):
Well, touching ongoing from law school into finance, that decision, I’m sure you didn’t take lightly. And it’s kind of reminding me of Joel Greenblatt and his story. He was recently on our show, and you even similarly to have a book called The Little Book of Hedge Funds, he’s obviously got The Little Book That Beats the Market. I’m just curious if there’s a relationship there, and more importantly, how you might compare your investing style with someone like Joel.

Anthony Scaramucci (09:30):
Well, first of all, I love Joel. He lives in my hometown. He lives on the water in my hometown. He’s a brilliant investor, and his book started the little book series. So, John Wiley asked Joel to write the book, the little book, I think, on value investing, I think it’s called. It’s a brilliant book. I think it’s in five or six different additions now, and a result of which it sparked the little book series. I’m very proud to be a part of that series, but Joel is the patriarch of that series and the best seller in that series.
But I would say that, similar to Joel, although I probably made a step further along what people call GARP investing, which has growth at a reasonable price to growth investing. That’s not to say growth at any price, but just understanding macroeconomic trends and growth or stocks that sort of track the arc of Metcalfe’s law. Robert Metcalfe, about 40 years ago, 1981, said, you can measure intrinsically the value of something if it has exponential growth. It could be a phone system. It could be a network switching capability where you’re selling network switches like Cisco did.
It could be a retail network like Amazon. It could be an information and search network like Google, and that you may not actually see it in the earnings or the operating statement, but you will eventually see it if you’ve got the growth trajectory right. Of course, that was the case in Amazon as an example. Yes, I would say that I’m a disciple of the Greenblatt-Buffett school of investing, but I think I’ve evolved to recognize that the world is moving so quickly that we have to take an exponential mindset if we want to keep pace with the world.
And that augers things like Bitcoin, which I believe is a robust growing monetary network. It’s Facebook, those stocks, people say, oh, they’re too expensive, but you know what? If they’re growing like that, you will eventually be able to justify the price that you pay.

Trey Lockerbie (11:37):
Speaking of The Little Book of Hedge Funds, I’m curious how hedge funds look today to you. The book came out about a decade ago. I’m wondering if you’ve seen any changes with them, and if so, what you would update the book with if you rewrote it today.

Anthony Scaramucci (11:52):
Well, what happened, and I said this in the book, I wrote it in 2012, nine years ago, is the monetary policy distorted the gestalt in the hedge fund community. How can I say this? If I’m going to lower rates, rates are interest rates or the financial gravity of assets. If you lower the rates, the prices are going to go up. If you raise the rates because of the way a dividend discount model works, the prices are going to go down.
They were experimenting with quantitative easing back then, and we lowered the rates, and I said, this is going to be a problem for the hedge fund industry because they’re in price discovery, they’re doing Joel Greenblatt like work, where they’re analyzing a specific company, they’re saying, okay, that company’s going to grow faster than the street thinks. It’s going to be worth more. That company is growing slower or it has inferior fundamentals, it’s going to be worthless. So, you would get long that one, short the other one, and you’d hope that pairing would lead to a great result.
Then yeah, the monetary policy. Monetary policy, it’s the rising tide, it’s lifting all boats. So, your long, so you could be a great long picker. Let’s say the market’s up 10, you’re up 16, but now you’ve got shorts on the market’s up 10, but your shorts are going up. Maybe they only went up six. If you marry the two, you’re up 10. You’re in line with the market, or in some cases, you’re below the market, and that’s more or less what happened to the hedge fund industry.
If I added a chapter to the book, I would say what I’m saying to myself, what I’m saying to my hedge fund managers that we have in our portfolio, we have to adapt, we have to be a Swiss army knife. Maybe you came into the game with a machete and you were doing a great job. You may need a pen knife now. You may need a corkscrew. You may need something different or what’s going on in the world today. I will say this to you, which I absolutely believe the 60/40 portfolio for the individual is over.
You’ve had 41 years of ridiculous interest rate activity in the bond market, which has forced the bonds through these exponential prices. And they may continue. You may get negative rates, but if you’re getting negative raise, it’s also telling you that there’s something sluggish about the overall growth in a society, so I hope that doesn’t happen. But to me, I think you got to be in a combination of things, but growth would be the most important of those things as it relates to what’s going on right now.

Trey Lockerbie (14:21):
I’m glad you touched on the hedge fund managers that you work with because I’m curious what you look for in someone like that when you’re seeding those managers. Are there certain attributes that you look for most?

Anthony Scaramucci (14:32):
Well, we’re no longer in the seeding business because we’ve gotten to be such scale that I’ve got to be able to put $100, $200, $300 million to work. You really can’t do that at hedge fund seeds. Because one of the things you have to be careful of is you don’t want to be too much of the assets of the fund manager. But when I was seeding, there was something that I was looking for always, that Simon Cowell would call the X factor. Simon Cowell would tell you, it’s not enough to be a singer or a great songwriter. Are you going to chew through this? I’m talking to you from a Macintosh hard top computer.
Am I willing to chew through this computer and eat the glass of this computer to be successful? That’s rare. I mean, that’s rare in every industry. So, yes, good analytics, reasonably common. Good judgment on stocks, reasonably common, but the person has to run a business, the person has to understand the regulatory environment they’re in. The person has to hire and train and motivate people and set an ethos for the culture of the organization. Those are all those X factor things, but I can tell, and I think it could be related to my upbringing, I can tell right away when I’m in the presence of somebody that’s not taking no, and it’s a low entitlement person.
A person that I’m listening to who may have a really good pedigree. They could’ve come from a wealthy family. Doesn’t matter, but they are like, hey, you know what? I’m not taking no for an answer and I’m going to figure this out. The Melvin Capital Guys are like that. If you look at the Melvin Capital Guys, they got their asses handed to them in the first half of 2021. I’m a long-term believer in those guys. I think those guys are going to come back and revert mean reversion, and they’re going to do phenomenally well because they are hell-bent on success.
I believe you can have setbacks. I think that you also want to be with people that are comfortable with setbacks. I’ve had more than my share of setbacks. I got miserably fired from the White House. I was fired once and then rehired into Goldman Sachs. I got crushed in the 1998 long-term Long-Term Capital Management ruble crisis. I got my face blown off in 2008. March of 2020, during the pandemic, I was in a price shock on my fixed income portfolio. I’ve had my share of disappointment and I’ve had my share of losses.
But as long as I’m breathing, I don’t think it’s a good idea to bet against me, because I’m coming back at you with all guns a blazing. Also, if I’m dead, you’re probably going to want to cremate somebody like me, because if I’m dead, I’m going to still try to figure out a way to crawl my way out of the goddamn casket. That’s the thing I’m looking for in these people. And it’s something that, I don’t necessarily know if you can train somebody for that, but you can see it in them if they have it.

Trey Lockerbie (17:28):
One thing I really admire about SkyBridge is really the basic underlying concept of the company, which is to sort of democratize access to these hedge funds. There’s a low entry point hurdle rate to get over. Talk to us a little bit about the fund, or funds, that you run. How many funds are there? What does the vetting process typically look like for that?

Anthony Scaramucci (17:49):
There are 34 managers in that fund. We’re tracking 1200 managers here with our research team. We have a proprietary database that we built, which has a lot of qualitative and quantitative analytics to it. We call it HFAN, which is Hedge Fund Access Network. I would say there are a hundred managers that we’ve written reports on, which we’re doing full due diligence onsite meetings, going over their portfolio rigorously. Of the 34 that are in our fund, we require full transparency into the portfolio with confidentiality.
But if you’re a fund manager, we want a direct feed from your prime broker. I hate to say this, but I will say it, everybody’s guilty until we prove them innocent. That’s how you avoid the Madoffs of the world, or you avoid people who are nefarious. By the way, I’m not saying that I have a perfect record on that, but we’re pretty close to perfect. We got caught in one guy’s fund, where he was misallocating resources and was … Ultimately, he went to jail. Now, we got almost all of our money back from it, thank God, because we have very good systems in place to protect ourselves.
But I will say this to you, you have to be that way in our industry. The American court system should be innocent until proven guilty, but at SkyBridge, to get our money, you’re guilty until we prove you innocent. So, those are background checks. That’s a rigorous analysis of what you’re doing, and is there any mission creep or discipline creep? Don’t tell me that you’re buying and selling natural gas, and then I look in the portfolio, you’ve got navel oranges in the portfolio. I can’t stomach stuff like that. We’re pretty ruthless about firing people who we think are off message or are doing something that we think is not consistent with what their original strategy was.
Now, having said that, we’re also very long-term in orientation. If you’ve had a tumble, we’re probably adding capital to you if we think that you’ve been consistent with what you’re doing and how you’re doing it because we know that, that’s a short-term, likely a technical dislocation than anything that you’re doing fundamentally.

Trey Lockerbie (19:56):
Going back to your point about the traditional 60/40 stocks bond portfolio being dead, where do we go from here? How should investors think about building a portfolio in today’s environment?

Anthony Scaramucci (20:07):
I think it’s almost like a barbell. I think they have to have growth stocks and dividend-yielding stocks as a bigger proportion of what used to be a 60/40 portfolio less than bonds. If you came to me and you said, here’s a hundred cents, Anthony, what would I do with a hundred cents? I would tell you, well, you got to have 5 cents in venture and probably three to 5 cents in privates. You’ve got to have 5 cents in digital currencies. That’s 15. You probably have to have 20 in the bond market somewhere, but mostly safe stuff, liquid stuff. And then the rest of it, I would put in the stock market.
But a component of that would be in higher-yielding, sort of blue-chip defensive names, and then I would leave a good portion of the portfolio, 30% or 40% of that portfolio, tilted towards growth because, in this type of interest rate environment, I think that’s actually ironically the most protective. If we were talking in the 1990s, remember when the hard to believe we’re a 6%, 7%, 8%, 9%, you would want to have a different portfolio architected, but today, and where rates are likely going to be over the next two years because of the COVID-19 pandemic, the deficit spending, you have full negative rates now on the yield curve in Germany.
The sovereign bonds of the German government are in a negative yield position. The US is in a negative position in real terms. So, if you have a 120, 10-year bond, if you factor in the current inflation, and we can debate whether the inflation is transitory or not, but if you’re buying that bond with a 120 basis point annual yield, and you’ve got even two or 3% inflation, you’re in a negative territory from a real perspective. To me, I would be very cautious in the bond market right now.

Trey Lockerbie (21:57):
Well, it’s interesting to hear you even bring up that 20% towards bonds over, maybe of 20% something like cash, right? Either one, it seems like you’re guaranteed to lose for the time being, or at least a short term, but I didn’t hear cash in there, which I was just kind of curious about.

Anthony Scaramucci (22:12):
Yeah. Well, to me, again, the space reserved for digital currencies and cash, that’s sort of like, I said 5%. You could have a little bit in cash, but I don’t ever really keep a lot of cash, frankly. I’m usually fully invested. The stock market is liquid enough where if I’ve got to get access to it, I’ll take it there. I’m not a big believer in cash by the way, because we’re printing a lot of it, man. We’re making … cash is not like real estate. You know how they say, oh, buy real estate. They don’t make it anymore. Well, let me tell you something, they’re making cash every day. You’ve got a 31% increase in M two year over year $469 billion of new money was printed in the first five months of 2021. You’re in a situation now where, whether you like it or not, you’ve been taxed.
If you own dollar-denominated assets, they have stolen or taken some of that away from you. Just think of it in terms of purchasing power. If I’ve got 8% transitory inflation, that means that the hundred dollars that I had last year are only buying me $92 worth of goods and services this year. That’s a theft, that’s taxed. Your central bank has ironically taxed you, and they’ve done it in that silent sort of away. I would rather put that stuff into assets. Well, let me really put it into perspective for you because we’re about to celebrate the 50th anniversary of the unpegging of the US dollar from gold.
Oh, that’s August 15th, 1971, Richard Nixon said, “We’re no longer living up to the Bretton Woods agreement and we’re going to let our currency float. It’s Fiat currency. In that period of time, you had an ounce of gold, you could purchase it for $35. Today, that ounce of gold is $1,600 or $1,700. Some of that’s down as a result of Bitcoin, I’m happy to talk about that. But at $1,600, you crushed the dollar 97.5%. $2.50 in 1971 has a hundred dollars of purchasing power in 2021.
Now, I can repeat that for dramatic effect, but you get the point that I’m making. I think I’m well versed to speak about this because I grew up in a blue-collar family, and I can tell you, if you’re a wage earner and that’s happening, you get destroyed. The wages have never caught up over the last 50 years. But if you’re an asset holder, you’re actually okay because that Hampton’s piece of real estate that Calvin Klein bought in 1987 on the ocean for $3.6 million is worth 85 million today.
You see what’s happening? Somebody said to me, if your used cars are going for prices that are higher than when they were new, my cousin has a pickup truck that he purchased four years ago for $32,000. He has 39,000 miles on it. He can sell that truck today for $32,000. Some of that is a shortage related to the delivery of these trucks and some of that is related to inflation.

Trey Lockerbie (25:14):
Well, I’m glad you brought up gold, and I think we should touch on the crypto element a little bit. You’ve been a pretty outspoken advocate for Bitcoin, especially, and you’ve even set up a Bitcoin fund. What is your take on this recent crypto tax reporting provision that was in the sentence infrastructure bill, and how do you think that’s going to impact Bitcoin, perhaps in the short term at least?

Anthony Scaramucci (25:36):
It’s a very good question. I don’t honestly know. I would like to tell you that I’m a Washington guru. I think the only thing I learned in Washington was stay out of Washington. I think that’s the only thing I got out of my experience there. It’s a very difficult group of people. I tell my Wall Street friends, you guys think you’re killers and attack dogs, you guys are a bunch of babies compared to these people in Washington.
I want you to imagine the worst possible person on Wall Street, that’s like the Eagle Scout or the vicar of Washington. To me, I’m not a big believer in these people. I think they’re very disingenuous, and I think that they are very self-serving. they’re not into protecting or serving the American people. They are more into the preservation of their own power. What I would say is that it seems like the document is going to be okay from a crypto perspective because of the lobbying.
And that’s the great irony. There’s a very powerful decentralized army of Bitcoiners. There are over 46 million of them in the US, and they are responding to what they see as something negative or bad for crypto by inundating Washington with legions, tens of thousands of calls. I think we’re going to be okay.

Trey Lockerbie (26:53):
Given that you’ve been a big Bitcoin advocate and you are on Wall Street and have a lot of institutional connections, I’m just kind of curious if you can give us an idea of the whisperings of the institutional world with Bitcoin. Is there interest? Is it growing? Is there a timeline in your mind where they could potentially participate in a bigger way, and how far out is that?

Anthony Scaramucci (27:15):
Really good question. If you’d had asked me that question at the beginning of the year, I would have said this, 2021, was going to be the year of institutional adoption of Bitcoin. I got that wrong, frankly. There’s been no institutional adoption of Bitcoin. I heard Larry Fink speaking on CNBC Squawk Box a few months ago. He said, “No, we have no very little interest in Bitcoin.” They may be own a small piece of it, but he’s like, we have no interest. I was like, well, he is 100% right. I do not see institutions own it.
Are there a few smart people? Yes. Ray Dalio, a skeptic on Bitcoin, learned about Bitcoin, bought Bitcoin. Dan Lowe bought Bitcoin. Steve Cohen bought Bitcoin. Paul Tudor Jones, Stanley Druckenmiller, all bought Bitcoin. These are some of the smartest investors in the world are in the Bitcoin space. So, we’re in it obviously. I made that decision with my team back in October, November of last year, which was reasonably well-timed, at least at current prices. Anything can happen in the Bitcoin world, so I’m not sitting here patting myself on the back as much as I am just analyzing things.
But it may not be for a couple of years, frankly. I think that Bitcoin, with 125 million users, I thought it would be institutionally acceptable, but maybe Bitcoin needs 350 million users, which is a couple of years out. But if Cathie Wood is right, I believe she will be by 2025, if there are a billion users of Bitcoin, I think the institutions will have absolutely no choice, but to be in the space. It’s one of these weird things people will say to me, well, it’s not worth anything. I laugh, I said, well, this money in my pocket, that’s worth anything? No, come on. You know it’s not worth anything.
But I can hand it to somebody for pizza. I can hand it to somebody for a good or service. The reason why it’s worth something is they trust that they can hand it to somebody else. Once you get that, you recognize, wow, we’ve got a network, a very robust network of people that are transacting. So, the perception of value becomes real, and the reality of that value grows exponentially, and before you know it, Bitcoin, it actually can’t be corrupted. We can make these. We’re making them all day in this country.
All-day, we’re printing these Italian singles, but you can’t make any more Bitcoin. You’re sort of stuck with the 21 million of them. We probably have 3-ish million of them that have disappeared. I’m a big believer in looking at the future the way it is and the way it’s going to be, as opposed to it should’ve, or it shouldn’t be this way, and blah, blah. When Charlie Munger, who’s one of my intellectual mentors, is saying, it’s the worst thing that’s happened to civilization. He’s the guy that tells you to learn the other guy’s argument better than your own. How could he say that? He’s got to do more homework.

Trey Lockerbie (29:58):
Anything can happen in Bitcoin. I agree with you there, especially these 50% declines that we have every so often, but it reminds me of companies like Amazon, who I’ve heard you referenced before with their 50% plus declines. I think they’ve had six or seven of them.

Anthony Scaramucci (30:13):
I know they had one really big warper, went down 90%, and Barron said Amazon.bomb, and they said that the company was no longer going to exist.

Trey Lockerbie (30:22):
But you’ve held onto these kinds of companies. I think Microsoft was another one that you’ve held for a very long time. Did you see the network effect early on or is this something that you’ve kind of grown to accept? And if so, where do you see that burgeoning in other industries? Is it always tech or are there other industries?

Anthony Scaramucci (30:40):
I think it’s an interesting question. What I would say to you is, what’s going to have a billion-plus dollars of revenue and impact a billion people? Let’s take a look, take a step back. Something like Uber would do that. Something like an ESG company that’s environmentally sound, that’s helping to convert carbon into other atmospheric properties would do something like that. There could be a meteor mining company at some point that launches itself into space and captures one of these meteors and brings back a quadrillion dollars worth of resources.
It’s not just going to be a technology company. It could be a healthcare company. What Moderna has done, and if you look at their earnings recently, they had done something that we would have said was a miracle a hundred years ago. They had figured out, through CRISPR technology, that there is literally a software sequencing of the chemistry of your body. So, they can use the technology known as CRISPR to splice and dice and create memory, MRNA, that your cells can actually learn from, which can change the landscape of how your cells protect themselves.
Unfortunately, because this stuff is so startling, there’s a lot of misinformation out there and there’s a lot of foreign powers like Russia, etc, really trying to divide the country and spew all this vaccine misinformation and falsehoods, but that’s an amazing technology. That’s a company and there are advances being made in that thread, that biotechnological thread, which will be life-extending, but also unicorn-like, an exponential pursuant to Metcalfe’s law. They’re making whey-based protein out of plants now.
There’s a company called a Perfect Day, that could be another unicorn, because if we’re moving away from the animal kingdom, but we’re going to have the same texture and flavor, it’s going to be better for the environment, better for mankind, better for your heart and your circulatory system to eat less animal fat, but yet you’re going to experience the same sort of taste profile and the same nutrient benefits without the downside, well, I think there are exponential options for a company like that.

Trey Lockerbie (32:51):
What about Newton’s second law about cause and effect. I mean, these big tech companies are now worth trillions of dollars. What is the long-term impact of that in your mind? And is there a downside to these companies achieving such great success?

Anthony Scaramucci (33:05):
Society has to manage that. We’ve had monopoly restrictions and monopoly power restrictions for 1,500 years. You could go back to the Holy Roman Empire, where someone got a monopoly and they started taking advantage of the customer as a result of a monopoly through monopoly practices, predatory pricing, exclusion of technology, all of that stuff. You’ve been in a situation we have to break up the monopolies, but what I’ve said consistently is I don’t want to see these companies broken up, but the elements that make these companies negative on the economy, or drag on the economy, I would like to see them shaken.
There’s a difference between breaking a company up and splintering into the different pieces, but shaking the company, from a regulatory perspective, to force it to share patents, to force it to not sit on ideas or names. Apple, unbelievable company. If you’re coming through the app store, and they have sort of a predatory pricing schedule, or take it or leave it pricing schedule, at some point, I think that’s going to cause problems, and it’s going to be a disincentive mechanism, a market mechanism for growth and innovation.
When AT&T was broken up in 1984, I was 20 years old. Judge Harold Greene basically said that this would unleash the forces of greater technological advancement, this global telecommunications company that controlled all of the United States. Think about that. That was only 37 years ago. You had a global phone monopoly located here in the United States, but what the judge said, by breaking it up, you unleashed all of those patents. You unleashed, ironically, the technology that we’re using today for these great internet companies.
The internet companies today and these big tech companies are sitting on patents and are sitting on things that could unleash another wave of growth. So, I would like them to share those things so that they don’t get broken up. I like to say shaken and stirred as opposed to breaking, but I’ve got to tell you something. If they don’t play that game, they will get broken up, and they don’t have to be broken up, but I would tell you from a public policy perspective, they’ll end up in a situation where they’re going to get broken, and I don’t think they need to, because frankly, I would prefer them to compete in the global marketplace at their scale.
I’d hate to see our company’s broken and then Chinese and European companies or other international companies, or monolithic, and they’re growing at the … And ours have been imperiled by the lack of scale. So, we’ll have to see what happens, but there is an intersection. There’s a healthy political and economic intersection that I hope that these CEOs and they’re, whoever is there, their court of advisors, if you will, will give them the right advice on this stuff.

Trey Lockerbie (35:56):
That’s a great point. Yeah, we definitely don’t want to shoot ourselves in the foot by stifling younger entrepreneurs, giving them access to some of these tools, would be good. Speaking of these younger entrepreneurs, I wanted to ask you about fundraising because you’ve spent a long career doing a lot of that. Attracting funds can be pretty difficult when you’re just starting out with your own business. I’m curious what your top takeaway might be for raising capital.

Anthony Scaramucci (36:23):
I would say this. I’m a bird, a woodpecker got married to a parakeet and created me. Let me explain to you what I mean by that. I am able to repeat myself with great enthusiasm over three decades. The same cadence, the same level of passion and enthusiasm. So, there’s the parakeet side of my personality, but I’m also a woodpecker. I will peck at your skull until your skull cracks open and you give into me. I had one guy 20 years ago, he’s still a client here, he said to me, after repeatedly calling him with the woodpecker, parakeet routine, he called me into his office. He said, “Listen, what is it going to take for you to stop calling?”
I said, “You got to give me some money from my fund.” He goes, “What’s the amount? What’s the dollar amount?” I said 5 million. And then he said, “Oh, I’m getting off easy. I thought you were going to say 10.” And I screwed up. I should’ve said 10. In any event, he gave me the 5 million, but he said, “You got to shut up. You got to never call me again. I don’t ever want to hear from you again.” He gave me the $5 million, and then two years later, he called me, he said, “What the hell is going on? Why have you never called me?” “You told me never to call you again.”
But the point being, his money has been with me for 20 years. It’s done very well, but I’m one part woodpecker, one part parakeet. My point is, is that you’re not going to have every performance every day. There’s been periods of my life where I’ve had really bad performance, but I will tell you why. You stay in touch with your clients, you handle them with a level of enthusiasm and passion, and they know that your money is in that fund alongside of their money, you’re going to keep them for a very long period of time.

Trey Lockerbie (37:59):
I think that’s great advice. How do you see Wall Street evolving, maybe over the next 20 years?

Anthony Scaramucci (38:05):
It’s an excellent question. I do think that Wall Street is coming into the DeFi space. For the life of me, I can’t understand why someone like Goldman Sachs or JPMorgan wouldn’t go outright buy Coinbase. For the life of me, I don’t get it. They’re not going to be able to build it on their own, so why not go out and buy it and get into the game? The world of decentralized finance and peer-to-peer permissionless transactional activity is upon us.
Whether they like it or not, they want to block it, they want to go to their friends in the Senate to try to legislate it away, it’s happening with or without them. I want you to think of the innovation for a second, without talking about Bitcoin or any of these individual cryptocurrencies, I just want you to think about the innovation, where through a decentralized networking software protocol, we can create trust among individuals that are typically non-trusting, or in some cases, have incentives or motivation to hurt each other in a system or to distrust each other.
You’ve created this playing field where computationally, we trust each other. This shit’s based on math. That is going to have an exponential effect on society, and it’s also going to surprise people because what we’re learning about our society is decentralization means more freedom, more opportunity, more innovation. Centralization means more control, less freedom, and I think a more boring life for that matter.
You’re learning something about our behavior and our mechanisms through the blockchain that I think is fascinating. We’re better off together. We’re better off webbed in a decentralized way, as opposed to having ourselves subordinated to some type of control freak.

Trey Lockerbie (40:02):
Very interesting. How does that tie into SkyBridge? I know you guys have a fund also focused on definance to a degree. Do you see that becoming a bigger portion of the company portfolio over time?

Anthony Scaramucci (40:14):
Yes. I mean, there’s no question, it has to be. So, we have a five or $600 million positions in Bitcoin, probably a $50 million position in Ethereum. We have participated in private rounds of secondary, sort of in the DeFi space, including Chime and Plaid, [inaudible 00:40:31]. I believe that this is going to be part of the future. If you interview me next year at this time, and we have a DeFi fund, which is dedicated and dedicating resources to this exponentially growing opportunity set that’s taking place right now, don’t be surprised by that.
I tell people, listen, I don’t want to be the dinosaur. I want to be a person that adapts, and Darwin said it better, it’s not necessarily the strongest or the smartest, but it’s the one that can adapt the most quickly and embrace the change that has the highest level of survival. I’m not going to sit here with 46 million wallets in the US, 125 million wallets globally. It’s growing to a billion wallets by 2025 and miss that. I’m not going to get talked out of it by a journalist or a fuddy-duddy. We talk about fud, Trey, but we have these old fuddy-duddies.

Trey Lockerbie (41:27):
Or a client. I mean, one thing I really admire about you is, you’ve mentioned $400 or $500 million of money in Bitcoin, and that deterred supply, it’s-

Anthony Scaramucci (41:37):
Clients have fired me. I’ve actually done the calculation of the number of people who are going to fire me and what the price of Bitcoin is going to be, and I’m totally okay with it. So, you’re going to fire me and we’re going to replace you with appreciation, and you’re going to sit there scratching your head saying, well, why the hell did I get out of that? Well, you got out of it because everyone’s a long-term investor, though they have short-term losses. That’s how it works.
You get shaken out, the best investors. You have this, we study billionaires. Well, I know a lot of billionaires by virtue of being in a hedge fund industry and trafficking in American commerce. I know a lot of billionaires. One of the observations that I’ve made in my study of billionaires, they don’t sell. Does Buffet sell? He does not. Does Elon Musk, is he blowing out SpaceX? He’s not. Maybe Jeff Bezos is blowing out a small fraction of Amazon today to fund his Blue Origin, which is a whole nother big, gigantic exponentially growing company.
But he’s not really selling. He’s chipped away a small piece. One of my mentors, Ken Langone, and the founder of Home Depot, he’s 86 years young. I don’t think he’s sold one stock. You got to stay in there. Whatever Bitcoin exposure I have now, I expect to increase it. Not just through appreciation. I expect to add to the positions, but I don’t see myself selling. I see myself holding or huddling for multiple decades. That’s the observation that I think I wish I had told the younger version of myself.

Trey Lockerbie (43:03):
I love that. It also begs the question around like position sizing and rebalancing, because obviously as it grows, that 5% might become 20%, 25%, and without selling, do you think about calling different positions when they get over-indexed?

Anthony Scaramucci (43:20):
A good question. Unfortunately, the answer to that is yes. Unfortunately, because we’re an institution and we’re dealing with other institutions and individuals, frankly, that is scaled to the size of institutions. I think that’s one of the requirements of the job. I would say that’s like landscaping your front yard. Sometimes you have to prune the rose bushes and cut the grass and pull some weeds, and so if you want to stay in the good graces of these people, remember you’re in the client-facing, I am, I’m in the client-facing client servicing business. So, I have to listen carefully to what the clients want.
But I do have a portfolio that’s my personal portfolio, that’s managed by friends of mine, that they buy stuff and they sit on those things and they don’t sell them.

Trey Lockerbie (44:09):
That was one of my questions actually was, how does Anthony Scaramucci manage his own portfolio?

Anthony Scaramucci (44:15):
I would say 85% of it is in my own funds, and I would say 15% of it is in a family trust that’s managed by good friends of mine, where they have discretion over it, because I don’t want to be in the personal trading business, or have a personal account. I don’t think that’s fair to my clients. Having said that, 15% of my money is managed away from me because I have a responsibility to my children, and even though I am very passionate about what I’m doing, and I’ve got, as I tell my clients, I’m eating my own cookie, 85% of my net worth is in there right alongside of you, I think the 15% that’s away, it’s just prudent for my kids and my wife.

Trey Lockerbie (44:59):
Interesting. Let’s end on a fun one. Given that you did have a brief stint in Washington, we don’t talk politics on this show, but I’m just curious, given you stepped foot in that Oval Office, what would Anthony Scaramucci do in his first a hundred days if he were president?

Anthony Scaramucci (45:15):
Oh my God. That’s some question. I haven’t thought of that because I have no plans to be a politician, but there’s a couple of things that society needs, and from a resource allocation perspective, and if it’s doable even. Because what I did learn in Washington, and I’ll tell this story really quickly, and there’s a great interview, John Kennedy, a year after he’s in the Oval Office, his first year in the presidency, he’s interviewed by Huntley and Brinkley.
These are two old journalists from back in the day, NBC News, and Kennedy is sitting there with them, and they ask him a question. He looks over at them and he says, “Well, when I was in the House of Representatives, I said, okay, there’s no power here, all the powers in the Senate. So, I’m going to quit this job, I’m going to go run for the Senate and I’m going to do this. Then I become a Senator, and I realized, man, there’s absolutely no power here in the Senate. The power must be down Pennsylvania avenue in that Oval Office. Forget this, I’m going to go run for president. Now, after a year of being president, I can look at you guys and say there’s not a lot of power here either.”
This is the decentralized nature of our government. Remember I said, decentralization is good. The point I’m making is I can give you the list. I don’t know if the list is executable because of the way the thing is set up. Just look at what’s going on with the infrastructure bill and the food fight there. But I think, if I were president, I would list three initiatives that the country sorely needs. And the first one would be the educational system. We would have to figure out how to even up the K-12 public educational system, and my charter school friends, and the hedge fund community, my message to them is, yeah, I’m fine with those, but we really have to fix the public educational system, and we have to even it out.
And we have to figure out ways to do that. And we’re smart enough. We have the right technology to do that. And we have to do that irrespective of the special interests out there that are preventing that from happening. Again, is that possible? I don’t know. Number two, we need an industrial and manufacturing policy that has a 25-year horizon. I would say to you rhetorically, what politician do you know has a 25-year plan for America? The answer is none of them. Because they’re too short-term in their orientation, but we need … Chinese have it. They have a plan. We need a plan, and we need a plan that would be bipartisan and would be about right or wrong as opposed to left or right so that we can rebuild the nation and foster a much better experience, aspirational experience for our lower-middle-class people.
Then the third thing, which I think is as important as the other two, is that we have to get back in the sales business, and that’s about civic virtue and national purpose. Again, I would impose two things that nobody would like, which would probably get me thrown out of the office quickly. The first one would be civic participation. Just like they do in Israel, I say, look, you don’t have to go into the army, but you got to spend one or two years of your life serving your country. It could be in Yellowstone Park picking up garbage, but we need to regrow the country as we did after the war.
That glue came from people from disparate parts of the country serving together, where they realized that they had way more in common than anything that separated them. I guess we’ve become too tribal. Then the last thing is, this would really be of the Republicans, okay? I’d have mandatory voting. I’d have mandatory voting in Australia, and what happens is, when you have mandatory voting, you liquidate the extremes. You’re forced into the middle. You’re forced to have more moderate views because you’re having tons more people vote.
When we get 50% voter turnout, Trey, we’re causing a celebration. How about 90%, 95% voter turnout? Now, all of a sudden, the government would really reflect the interest of the people. Anyway, you asked me the question, I’m answering it, but I’m also recognizing that it’s super hard to do anything in Washington.

Trey Lockerbie (49:04):
Well, I really appreciate the candidness and the intellectual insight there. With that, where can our audience learn more about you and follow along, also look into SkyBridge and any other endeavors you want to share?

Anthony Scaramucci (49:16):
Well, you can find me at @Scaramucci on Twitter, you can find me at Mooch Fm. My podcast is a weekly podcast like yours. I got to get you now home and away, you got to come on my podcast, where I get to ask the questions. You can go to salt.org\talks. We do a whole series of talks with people there. And then the last thing I would say to you is, if you find me on social media, you’ll find that I’m very shy and unopinionated, so I don’t know how much you’re going to get out of it. If you believe that, I have a bridge I could sell you too, Trey.

Trey Lockerbie (49:50):
Awesome. Well, thank you so much, Anthony. This was a lot of fun. I really hope we get to do it again soon.

Anthony Scaramucci (49:54):
All the best to you, Trey. Thank you.

Trey Lockerbie (49:56):
All right, everybody. That’s all we had for you today. If you’re loving the show, definitely remember to follow us on your favorite podcast app, and also be sure to follow me on Twitter @TreyLockerbie, and if you haven’t already done so, definitely go to the investors podcast.com, or just simply Google, TIP Finance, and check out all the wonderful resources we have for you there. With that, we’ll see you again next time.

Outro (50:18):
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