[00:03:01] Stig Brodersen: I want to say it was actually a lot easier in the beginning in some ways because in the beginning, it was just you and me, and then we started to interview guests, and then it became like a bit tricky because you were doing your day job. And you used to be Eastern, and now you’re Central. So if you had someone in California, but even if they were Eastern, you’re like, people don’t want to get out at like 6, 7:30 in the morning, whatever, to do interviews. And then, or it would be like super late for me and if we have someone in California. It was just all that big mess. Like Yes. Aligning schedules. Yeah.

[00:03:33] Preston Psyh: Yeah. The time zones back then were just, I mean, hey, it’s great now we’re having a ball, and there’s plenty to talk about, whether you’re talking about Bitcoin or regular markets or whatever, it don’t matter. There’s always something crazy happening, so yeah.

[00:03:49] Stig Brodersen: Yeah. And I should also say for the record, it’s not like we plan to do a lot of co-hosted episodes again. I think, you know, once in a while, it could be a lot of fun to do. Honestly, Preston, I don’t know the last time we did that. What is it? Is it like four years ago? Five years? I don’t really remember, to be honest.

[00:04:05] Preston Psyh: It seems like that, it seems like it’s been about that long. Yeah. It’s been a while.

[00:04:11] Stig Brodersen: The plan is not that we are going to start co-hosting again. It was just like an idea. You, like someone told you and you were like, yeah, let’s just jump on behind the mic and talk about the good old days.

[00:04:21] Stig Brodersen: And I wanted to use that to transition into one of the questions that I often get, which is the founding story of TIP. How we met like-

[00:04:30] Preston Psyh: Oh, I like this. Yeah.

[00:04:31] Stig Brodersen: The early days. I don’t. Do you even remember? I don’t know if you do. So we met about like 2013, something like that. So, so what was the deal back then, Preston?

[00:04:34] Preston Psyh: Yeah. I guess it was a decade ago. Well, we met on the, on the website, on the Buffett’s books website, on the forum, and Stig showed up. I built this forum this Buffett’s books site, which was just some videos of me, like talking people through like value investing. And this is really early. I think the site had only been up for a year, maybe two years at most.

[00:04:58] Preston Psyh: And Stig shows up and he’s just blasting out these like 10 page like summaries and investing analysis on random company X, Y, Z. I think I went to Berkshire. This, you didn’t go on this one. Stig. I went to Berkshire. I met Hari. Were you there for that? I don’t think you were there for that.

[00:05:18] Stig Brodersen: Yeah. I was there.

[00:05:19] Preston Psyh: ‘Cause we…oh yeah, you were.

[00:05:20] Stig Brodersen: Yeah.

[00:05:21] Preston Psyh: So we hung out. There was what, five of us? Five of us from the four, six?

[00:05:26] Stig Brodersen: Well, five. And then your dad. So we were six in total. Bill was there, right?

[00:05:30] Preston Psyh: Yeah, that’s right. He was there. So yeah, there was six of us. Wow. This is bringing back some memories.

[00:05:36] Preston Psyh: There was six of us from the forum that showed up to Berkshire and we’re, we still talked to, I think everybody that was there that time. And I was flying out and I met Hari. And you were on a different flight, different gate or whatever. And so I met Hari, he had the LinkedIn jacket and I just started up a conversation with him and he was like, Hey, have you ever listened to podcasts?

[00:06:00] Preston Psyh: And I was like, no, I’ve heard of it, but I’ve never listened to one and he says, oh, you got to listen to this guy. ’cause we were talking about the website and how we had you know, and it wasn’t, Hari didn’t know what it was, the Buffett’s books website. And so he was like, you need to listen to this guy.

[00:06:16] Preston Psyh: His name’s Pat Flynn. He does like passive investing. He has this podcast, it might be able to help you out with the website that you got that, that you guys are having fun with. And I was like, oh, okay, I’ll check that out. So literally on the flight I downloaded the show, this Pat Flynn show, and as soon as the flight took off, I’m there listening to this podcast and was like, oh my God.

[00:06:38] Preston Psyh: This would be incredible to do something like I wasn’t even like listening to what he was saying. It was just like, we could do a podcast about investing and it would be so much fun. And what I was really thinking, ’cause I just built like this whole video course, Stig, where the editing, the video editing is just painful, right?

[00:06:55] Preston Psyh: Yeah. You know the deal. It’s not just your audio, it’s now you have to create these graphics that make it all make sense. And it is just, it’s a lot of work. And I’m listening to the audio on this podcast. I’m thinking the whole time, all I was thinking was, this would be so easy to create this content versus making videos like I did for this Buffett’s Books course.

[00:07:14] Preston Psyh: Like this would be awesome just to sit down and have a conversation and not have to do all the editing afterwards. And I don’t think it was more than a day or two after that trip that I shot you a note and I was like, hey man would you be interested in just recording conversations about our financial picks or the investments that we’re looking at instead of writing up these big long posts on these forums, right?

[00:07:38] Preston Psyh: Hey, let’s just record our conversations and I don’t even know if anybody will listen to it, but, you know, what the heck? And I don’t know if you remember your response back to me, but I remember your response back. Do you remember it?

[00:07:51] Stig Brodersen: I think it was something like I was bit, you definitely didn’t owe a promise.

[00:07:54] Stig Brodersen: I remember because you said more than once I don’t know if wants to listen to it, but what’s was response like? Oh, I think I was pretty worried about I have to do it in another language, first of all, but also the whole technical aspect. Like I’m, I am and was terrified of all the, you know, equipment that you needed to have a podcast and this was.

[00:08:14] Stig Brodersen: This was, I know I’m going to sound like really old as this got to say, but this wasn’t like today where you could get everything’s just in a box. Then you just plug it in. This was like, it was very different back then and it required different equipment. You, and to, to your point before Preston, with the whole editing and that stuff, it wasn’t like today when you had like CanBan that everyone could do X, Y, Z.

[00:08:33] Stig Brodersen: It was like you had to learn really painful software to get started with whatever you want to get started with. Oh my God. It sounds you know, if your kids was, were listening to this, they would be like, they’d even have telephones back then or whatever.

[00:08:46] Stig Brodersen: I was like, what’s an r s feed? What the hell’s that?

[00:08:48] Stig Brodersen: There was so many things we just, we had no idea. We had no idea what we were doing. That’s for sure. But yeah, you responded back and you’re like, you know, Preston, like I have a foreign accent. Like I don’t even speak English for like my first language. I just don’t think anybody would want to listen to me.

[00:09:03] Stig Brodersen: And I was just like, I. I need somebody to do this with because I just can’t talk to myself and like I’ve read your posts on the forum and you can jive on this stuff. You actually understand it really well. And I just didn’t care. I was just like, well, I think my reply back to you trying to sell you on the idea.

[00:09:22] Stig Brodersen: I was like, well, half the world or plus more doesn’t, you know, English isn’t their first language, so maybe it would be the perfect fit that, you know, that English isn’t your first language. But yeah. You I got you to say yes and geez, man, I, what was our first, I think our first set of downloads was like, on a show.

[00:09:42] Stig Brodersen: It was like 150 downloads or three. Oh,

[00:09:45] Stig Brodersen: really? Yeah. I think it was, I don’t remember. I, it certainly wasn’t a lot. I remember like back in the day with the forum, it was like exciting if it was just one of us not posting. You know, but someone else, did you I remember I was really excited about that and I remember you shooting me a message about jumping on a Skype call.

[00:10:04] Stig Brodersen: Yes. There was. It was something called Skype. So Yeah if you are not, I don’t know, older than 30, you might be like, so what is that?

[00:10:13] Preston Psyh: Yeah that was early.

[00:10:14] Stig Brodersen: Yeah, it was early. Yeah. Video calling. Yeah. ’cause we were writing a book together at the time. Oh yeah.

[00:10:20] Stig Brodersen: The Warren Buffett accounting book. And I actually, so we did a few, you though it was way more you than me with the the intelligent ambassador and security analysis. Yeah. ’cause you already wrote, you already self-published I think it was called Warren Buffett’s, three favorite books or something.

[00:10:35] Stig Brodersen: Like it was built together with with Buffett’s books at the time. And you already started working on the summary books of. Intelligent investor and and think, ’cause I think you gave one of the books to me whenever we arrived at this somewhere in Council Bluffs outside of Omaha.

[00:10:49] Stig Brodersen: Yeah I remember that. And just to jump, it’s really tripped down memory lane because I remember one of the things we did was, it was in, ’cause you were based in Maryland at the time. ’cause my wife and I, we flew in, we were living in Sweden at the time. Sophie was doing a part of her degree there.

[00:11:05] Stig Brodersen: And so I think we were living in Sweden and then we flew, I don’t know, but we arrived in Maryland and then we did the final editing of Oh, of the building basement. You guys have not, yeah, I remember that now. Like four 30 in the morning. You always been like a morning person. But I probably had jet lags so I was probably up anyway, but it was like four 30 and Hey, let’s go.

[00:11:25] Preston Psyh: There had been many shows that I recorded at four or four 30 With you over when you were in? Yeah. Early days. Yes. Oh my god.

[00:11:35] Stig Brodersen: Thank God I don’t have to do that. No. Oh, good Lord. But it was, I just remember like thinking it was such a different world. Like you were talking about self-publishing. I didn’t know, I didn’t know anything about, I didn’t even know you could self-publish books.

[00:11:52] Preston Psyh: Yeah, you know what, it was the whole self-publishing thing was crazy. So I, this is a funny story. I’ve never told anybody this story. So I wrote this book about going to West Point and I’m thinking, oh, you know, I’ll just, you know, write the book and then I’ll go to a publisher and you know, I think I can just get it published.

[00:12:12] Preston Psyh: I’m sure somebody out there would want to publish this. Well, I find out, and this is probably, oh man, 2008 timeframe, I want to guess 2007 maybe. I. This is like totally outta order. I didn’t know this because I didn’t really do any research on like how to publish a book before writing the entire manuscript.

[00:12:33] Preston Psyh: I just was so naive, I had no clue. And so I went and started shopping around this to try to find a publisher and I realized this is really hard to get a book published and nobody wants to publish you if you don’t already have some type of marketing engine behind who you are or any of that stuff, which I had none of that.

[00:12:52] Preston Psyh: And so I floated it out to a couple publishers. It was a swift no. So then I was like, ah, I don’t want to go through an agent. ’cause they like take so much. And people don’t understand the numbers on books are just atrocious from like a profitability standpoint. Yeah. Like you go, just to give people kind of an idea, if you publish a book for $20 is the retail price.

[00:13:15] Preston Psyh: If you go through like a publishing house, what are the numbers that it’s like a couple percent? Yeah. Two or 3% off of retail that you’ll, that it’s like your take home.

[00:13:25] Stig Brodersen: Yeah, I think you probably get a, so it’s different, at least the book contract we see today is like 6, 7% on the fiscal book, and then probably 25 on the ebook. Yeah. So it’s pretty brutal. And so you might be thinking Dear Rolling, or I don’t know Stephen King? Yeah, I’m sure they make a killing, but, you know, but if you’re not them.

[00:13:48] Preston Psyh: Yeah. The book sales people don’t realize this too. The book sales are very, they’re not linear at all.

[00:13:54] Preston Psyh: So if you’re in the top 100 or I’d say the top 1000 on Amazon, like those books are pretty profitable. If you’re in the top 100 on Amazon, you’re very profitable. After a thousand to 10,000, and this is based off the Amazon ranking, the profitability goes down drastically. If you’re above 10,000, it’s like the thing practically makes no money at all.

[00:14:18] Preston Psyh: It makes some, but nothing that’s going to feed the family. So obviously I didn’t know any of that stuff right whatsoever. I just wrote this book, I, and all I was, I didn’t really write that book for profit. It was more for me just to capture these funny stories that happened to me when I went through the service Academy.

[00:14:36] Preston Psyh: So anyway, I go, I try to get this thing published and it gets out there and nothing back. So then I have to go through the agent, the agent’s oh yeah, I think I can get this through. And so he goes and he’s shopping it around. And after I don’t know, three or four months, he came back to me.

[00:14:51] Preston Psyh: He was like, we’re just going to, you know, rip up our contract because I can’t get this thing published. And I was like, this is crazy. This is, I’ve never seen anything so difficult to pull off. It was a big tangent, but it’s interesting. It’s business. It’s interesting.

[00:15:04] Stig Brodersen: It’s business. Yeah. It was just, it was just such a different time.

[00:15:07] Stig Brodersen: It was, and it’s fun to do the whole reminiscence of, you know, everything that, that happened back then. I remember whenever I met you and you introduced me to this new universe because I didn’t know anything about Warren Buffett before I coming on the forum and very little. So I come from like a traditional business degree and went through the whole academic route and whenever you do that, you are taught that the mugs are efficient.

[00:15:28] Stig Brodersen: And I remember we actually talked briefly about Warren Buffett in one of our books, and it was just about how he was the luckiest coin flavor because you know, if you continue to flip coin, someone has to win. And that’s why some people, you know, have better track records than others. And that was seen as, oh, that’s probably just how it is.

[00:15:45] Stig Brodersen: And so whenever I stumbled into Buffett and there was just a really quick story to that. It was actually because I was sitting there with some friends back home in Denmark and we were talking about replicating what successful people did. I didn’t know didn’t know Preston at the time at all. It was just like me and hang, I was hanging out with some friends, having a few beer or whatnot.

[00:16:00] Stig Brodersen: And so one of my friends had this idea that, you know, if we should just do what other successful people do, we probably would be as successful. It was like, oh, that sounds reasonable. And so the number one on that list at the time was Bill Gates. And, you know, I was, you remember what I said before?

[00:16:15] Stig Brodersen: I was terrified of just like setting up a microphone by myself. Yeah. So I was definitely not going to be the next Bill Gates, but number two on that list, that was Warren Buffett. And I remember hearing about Warren Buffett and I was like, oh, picking socks. It’s like sitting at home reading stuff. And I could I could jive with that.

[00:16:32] Stig Brodersen: It did it, it wasn’t like I had to come up with an operating system and learn how to code or anything like that. And so I just started Warren Buffett. I was just super interested. And that was whenever I saw the videos that you had on YouTube. And then through that I went into the website and we like connected and we talked about, you know, the whole Buffett thing.

[00:16:50] Stig Brodersen: Yeah, that was, for me at least, that was how it it all started and yeah, how we met. want to say probably back in 2013, something like that. Yeah.

[00:16:59] Preston Psyh: I, you know, think, looking back at the past decade, I think the reason that we have just been able to harmonize so well, even though like our communication with each other is so efficient I’ll call it efficient, right?

[00:17:15] Preston Psyh: Yeah. The reason I think that it worked so well, honestly, is because we read so many books together though. Yeah. Like we both conditioned our brains on all these top tier business books for years. Like we read them at the same time. We then talked about what we learned. It’s all documented in the feed here, right?

[00:17:37] Preston Psyh: Heck, all the executive summaries that are out there of these books. And I think it just, it’s so funny ’cause have a conversation. About whatever topic that might be a really, it could go really deep, but we’re both just yep, nope. This is how I see it. This is because I think we’re approaching it and we’re like seeing it from this like same lens.

[00:17:58] Preston Psyh: And I guess so what’s the takeaway for people listening to that? I would tell you, I think it’s really important for partnerships of business marriages, whatever it is. If you’re going to have this lasting long-term relationship with somebody, it’s really important to ground yourself in principles or like these books.

[00:18:21] Preston Psyh: For us, it was books that just allow us, it’s not that we’re thinking the same, but we’re, but we are thinking about things from somebody else’s past per experiences that we’ve harnessed and taken in. And I think it’s been just a massive advantage for us to grow the business and to just operate and to trust each other and.

[00:18:43] Preston Psyh: I don’t know. I really look back at that the first, what was it, the first five years, maybe more that we were reading a book once a month. Yeah. Twice a month, something like that. I don’t remember what our tempo was, but it was pretty aggressive.

[00:18:57] Stig Brodersen: Yeah. And I think you’re absolutely right that it meant a lot.

[00:19:00] Stig Brodersen: And especially if you’re into the whole Warren Buffett ecosystem, there’s so much of that where it’s just so much easier to work with people who have the same values. I want to say that whenever you go to different type of conferences and the more niche they are, the less you need to explain. And that is just such a huge advantage.

[00:19:22] Stig Brodersen: For example, one of the things that, that I also do here on t i p is that we have our own library. And one of the reasons, like there are many reasons why you have our own library, first of all, is because of the gift of reading. I think that’s the most important thing. But based on what you said before, ’cause I remember you, you were talking to me about that before Preston, about the whole idea about reading the same books and how advantageous it is.

[00:19:43] Stig Brodersen: You know, I experienced that the same way we sort, we have our own library here at the TIP where, you know, everyone who work on TIP can just there are a number of books and they can just like invoice that and all of that stuff. And it makes everything so much easier. ’cause you could say things like we are doing this because of this good to great principle about using tech as accelerating.

[00:20:02] Stig Brodersen: And that person would be like, yeah, I know exactly what you mean. That’s that chapter. Let’s go. And I think that it’s so true in all of your relationships that yes, we learn that obviously it’s attract and they probably do that to some extent, but life is generally so much easier if you do someone who have an equal perspective life, not because one is better than the other, because there’s just so much friction that you avoid if you do that.

[00:20:23] Stig Brodersen: And I remember one of the things you said to me as we were starting out, and we probably have known each other for a year or two at the time, and you’re talking about how it was like a marriage. I remember thinking that was a weird metaphor. It’s Hey, what’s going on? But I, you know, I see what you mean.

[00:20:39] Stig Brodersen: Like whenever you go into investment, the perspective should be you’re doing this forever and with relationships, it’s a recent season and a lifetime. But if you go into a relationship thinking, this is a relationship I really want to have forever. Yes. It’s probably not always going to happen that way.

[00:20:54] Stig Brodersen: Let’s have that as our perspective. You also start to think differently about which type of relationships you want to build on. And if you read the same a hundred books or the same just 10 books and you agree on these fundamental principles to life. Oh my God, so many things just become so much easier down the line that it’s it’s just incredible.

[00:21:14] Preston Psyh: Yeah, totally agree.

[00:21:17] Stig Brodersen: Yeah. So Preston and I think we went through the first two FAQs so far.

[00:21:21] Preston Psyh: Yeah, very interestingly.

[00:21:23] Stig Brodersen: I want to go to the third one that I’ve just get asked a gazillion times. One, is Stig investing in Bitcoin. I don’t think that’s too interesting. No, I’ll get to that later.

[00:21:33] Preston Psyh: I get that asked that all the time.

[00:21:36] Stig Brodersen: The other one is, whenever I go to different meetups or just like emails, I get so many asking about, so is Preston not investing equities anymore? Is he a hundred percent Bitcoin. What’s going on with with Preston? So let’s start there. What’s going on with Preston?

[00:21:52] Preston Psyh: Yeah. I think the answer will surprise people. The answer is yes. I’ll give you an example. I’ve my thesis has been so polarized by Bitcoin and I think everybody knows that. And if you don’t, if you don’t agree with Bitcoin, then you can just ignore everything I’m about to say. ’cause it might torque you or upset you.

[00:22:08] Preston Psyh: But my investment thesis has come down to the central planners have so aggressively manipulated markets at this point, that it’s difficult for me to look at anything through a lens other than using Bitcoin as my unit of account. And so it’s really a war between the US dollar and Bitcoin that’s taking place.

[00:22:30] Preston Psyh: And depending on what central bankers are doing, you’re going to want to own one or the other. 2022. I was pretty vocal that I felt like the dollar was going to outperform everything. Although I continued to talk about Bitcoin the whole year, my, and I’ve, I have this all publicly posted and timestamped on my Twitter feed, and I’ve done numerous interviews that, that talked to this thesis where I thought 2022 the dollar was going to, to outperform and do well, and any free cashflow that I was making was being retained in dollars.

[00:23:03] Preston Psyh: My entire Bitcoin position up to that point was continued to be retained. I didn’t sell it, I just kept it, but any new free cash flows that I was making in dollars were retained as dollars. And then whenever I felt like the dollars bull run was over, then I was just going to convert it into Bitcoin, which I did in November of 2022, and continue to just buy Bitcoin now with the free cash flows that I have coming in each month.

[00:23:30] Preston Psyh: So what’s driving this and there’s no better representation of this thesis for me that people like, if you’re hearing this and you’re like, that just sounds nuts. That sounds going from like a Warren Buffett investing, like valuing equities and doing all this stuff. That person who’s hearing me say that is this guy’s off his rocker.

[00:23:49] Preston Psyh: He’s lost his mind. What I would encourage that person to do is go to this website, Michael Saylor built this incredible one over the world view that I would tell you completely captures how I view the investing from a global standpoint landscape and it’s strategy com. And if you go to strategy.com, he has everything denominated in Bitcoin for the performance of the s and p 500.

[00:24:19] Preston Psyh: All the major currencies, bonds you can literally go to. He has all 500 companies for the s and p 500 listed all on this one page that you can go to at strategy.com and so I can look at the top 10 companies on the s and p 500 and I can hover my mouse over each one of these companies and I can look at it.

[00:24:40] Preston Psyh: And what he’s doing is he is showing the return of that company in dollar terms and then he is showing it in Bitcoin terms and he’s showing it for the last year, the last one month, the last three months, and then the last five years. And he’s also showing the sharp ratio and the volatility as a comparison as well because people want to know how volatile and violent the moves are going to be.

[00:25:02] Preston Psyh: And when a person goes and looks there and they look on anything that’s a long tail, five years, what you’re going to find is there’s literally nothing. On any of these investments that are outperforming Bitcoin. And so I get it, it has tons of volatility. I think the volatility scares the bejesus out of people, but for me it’s a very long play.

[00:25:23] Preston Psyh: And it’s a long play based on central banks continuing to get more and more aggressive with their debasement. And that’s the thesis. And you know, there, there was a point, and I think I might have talked about this, I don’t know if I talked about this or not. Stig, in 2020 when I like really broke off and just started covering Bitcoin completely.

[00:25:43] Preston Psyh: There was a point where I went and it was a real aha moment for me. I think I took Apple and I looked at their revenue and I looked at their net income over the past five years. And it was just, you know, it’s just going straight up in dollar terms. And I was like, what if I went back and redden denominated the top line revenue and the bottom line net income.

[00:26:03] Preston Psyh: For the price of Bitcoin at each one of those discrete points in time. And I looked at the revenue in do in Bitcoin terms instead of dollar terms. And I did this and I plotted it and the revenue was just going down for over a five year, 10 year trend. Like the revenue was just going down, the net income was just going down.

[00:26:22] Preston Psyh: And I’m thinking to myself, so this is like my new hurdle rate, this is the rate that I’m trying to outperform. And it was just this really aha moment for me. It was like, if I do this for any company, and so I’ll tell you, looking at strategy.com right now, I’m looking at it, Tesla, for example. Unbelievable. If you’ve owned Tesla for the last five years, you’ve crushed it. It’s been really bad for the last year. But if you owned it over the last five it’s really performed right. So when I’m looking at that in Bitcoin terms, it’s down 5% over the last five years. The sharp ratio is a negative 0.49 in dollar terms, but in Bitcoin terms it’s a 1.12 right?

[00:27:07] Preston Psyh: Bitcoin’s performance relative to Tesla. So not only did it outperform it slightly over the last five years, but it’s also outperformed it in a sharp ratio kind of way as well, where the volatility that was associated with that absurd return that you’ve got on Tesla over the last five years is worse in, in risk adjusted return return kind of way.

[00:27:30] Preston Psyh: And that was the best. So like Apple, Microsoft, Amazon, alphabet, Facebook, visa, Walmart, Johnson and Johnson, pro, Proctor and Gamble, every single one of ’em have underperformed Bitcoin, which are the top 10 holdings in the s and p and people should know. Those are the companies that are driving the s and p index.

[00:27:47] Preston Psyh: Like you can just erase everything else. And if you own those top 10 companies, you crushed it. You outperformed everything. Except for Bitcoin.

[00:27:54] Stig Brodersen: And here we are.

[00:27:55] Preston Psyh: So here we are. Now I have to emphasize, I’m sorry, Stig I have to emphasize, ’cause a person hearing all that is saying, Hey Preston, past results aren’t a predictor of what’s going to happen in the future.

[00:28:07] Preston Psyh: And you’re exactly right. And I’m not saying that it is, but what I am saying is you can’t ignore something that has outperformed in such an aggressive way without going fun. Going into the fundamental thesis of why is that happening, what’s causing that? And whatever caused it over the last five years, is it going to cause it to continue to occur in the coming five years?

[00:28:30] Preston Psyh: My opinion is yes. And I could get into, well, heck, I got over a hundred episodes on why I think that’s the case. I don’t have to get into it here, but yeah, that.

[00:28:39] Stig Brodersen: So to answer the question is Preston invested in stocks now? Did I hear it correctly? It’s more or less just Bitcoin. Bitcoin right now. Yes.

[00:28:48] Preston Psyh: Yeah. And I know that sounds crazy, but that’s, I have to be truthful with you. That’s it.

[00:28:52] Stig Brodersen: You know, and I love that you say that, not that you’re crazy but I love that you say that you have to be truthful. ’cause one of the things that we talked about all through, you know, ever since we started TIP together, was we had to be authentic in everything we do.

[00:29:06] Stig Brodersen: Which was also why, and I don’t know exactly whenever this occurred, ’cause the year started to blend together at some point in time. I want to say it was around 2020, I could be completely wrong, but around that time we started talking about setting up a Bitcoin feed or Bitcoin episodes running in the We Study Billionaires’ feed.

[00:29:22] Stig Brodersen: And we weren’t really sure about how to best go about it, but it seemed timely that I just, I, I remember, I think we had the, you know, we’re doing the mastermind meeting, which is with Toby and Hari, which is very timely. ’cause we wouldn’t have, you know, TIP without Hari in the first place, which is wonderful to think of.

[00:29:39] Stig Brodersen: And so he’s part of the, a mastermind meeting and so we were having those, I don’t know, once a quarter. And I remember we probably had three times consecutive times where we were talking about Bitcoin and we’re both thinking huh how the next 10 miles is going to be like, and you know, it’s just very important because I think people can smell that.

[00:29:59] Stig Brodersen: You know, one thing that I took away from the book Powers is Force which is one book that’s highly praised in the value investing community. I personally don’t like it, but I do like the main point about people can like smell if you’re not authentic they can’t-

[00:30:11] Preston Psyh: Oh, no doubt. Yeah.

[00:30:12] Stig Brodersen: They can’t necessarily tell why you are not being authentic, but there’s just something there that’s ah, this just doesn’t sit right. You know, those people where you just want to run away from them and you’re not really sure why. And so we have to be authentic to what we do. And we were in a situation where, you know, I was stuck in my ways still looking at equities and you are looking at Bitcoin and it just made so much sense that we would split up the feed and have a Bitcoin show.

[00:30:38] Preston Psyh: Yeah. And just because, you know, I have this enormous amount of conviction behind it, like absurd amounts of conviction behind it. I get that. Doesn’t mean that’s what I’m recommending to other people. I don’t think that for most people that’s appropriate at all because I don’t think that they have, I don’t think that they can match the conviction behind the position size.

[00:31:01] Preston Psyh: And I think that if there’s one thing we’ve talked about through the years is if you’re going to own something, Like a, you have to actually understand it and B, you got to make sure that you, that the position size doesn’t exceed your understanding or what you think your understanding of it is.

[00:31:19] Preston Psyh: And for people that hear me say that they would look at my Bitcoin position and be like, well, you’re not doing what you’re saying. There’s no way you can have that much conviction behind it. Yeah. But you don’t also understand the other things that I own beyond Bitcoin, private equity and things like that scope the position size, like we’re talking about free cash flows that I generate and what I do with them.

[00:31:42] Preston Psyh: Which is completely different than if you actually cracked open like my net worth and looked at what it is I own. Yeah. There’s a big difference there. And people don’t understand. People only hear me talking about it and talking about what I’m doing with my free cash flows that come in each month.

[00:32:00] Preston Psyh: It’s something that’s very different. It’s very different.

[00:32:01] Stig Brodersen: You’re not saying if you are 30 years old and you are a dentist and you want to retire at age 67 you’re going to put all your money into Bitcoin. That’s not what you’re saying at all.

[00:32:12] Preston Psyh: That’s right. Yeah. That’s right. I think it’s important for people, because here’s the thing, people will listen to the show and be like, I love this all makes sense.

[00:32:20] Preston Psyh: And then they take 10% of their net worth and they drop it in the Bitcoin, they never really understood it. They were just, they heard a couple talking points. It has 70% annual volatility and it goes down by half, in three months. And they’re like, what did I do putting 10% of my net worth into this thing?

[00:32:42] Preston Psyh: And then they sell it and then it probably rips a hundred percent up from there or more. Like I just as like an example, like November of this past year, it was like at 16,000. Now it’s at 30. And it’s not even a year later. Like it’s up 80% on the year right now. Which in traditional markets, those moves are mind blowing insane moves.

[00:33:05] Preston Psyh: If you’re doing 20% in your portfolio on an annualized basis, you’re murdering it in traditional markets. So for like these moves are insanely volatile. You don’t need a big position for it to work in your portfolio and you don’t have to even have a position that’s totally up to you if you even buy into the thesis to begin with.

[00:33:25] Preston Psyh: I’m not promoting people to people need to do their own research. People need to come up with their own investment thesis. They need to make sure that they’re not taking positions that exceed their competence or their understanding of the position, because that’s a surefire way to lose money.

[00:33:42] Preston Psyh: So yeah I’m very passionate about it, but I’m also, I like to think I’m very realistic about how other people should be employing it, if at all, based on their understanding and their competence of it.

[00:33:54] Stig Brodersen: Preston, whenever people ask you, so is Stig investing in Bitcoin? What are you then saying?

[00:34:01] Preston Psyh: I’ve been saying, yeah. He’s owned it since 2017 and hasn’t sold a single, yeah.

[00:34:08] Stig Brodersen: No, I never sold a single or even send a single set my entire life. I got forced into Bitcoin by my good friend, Preston Pysh. No, I, you know, it was it was a lot of fun. We read the book. I don’t even know what it’s called.

[00:34:21] Preston Psyh: Oh the Age of Cryptocurrency.

[00:34:23] Stig Brodersen: Yeah. Yeah. Sounds about right.

[00:34:24] Preston Psyh: 15, I think early 2015, maybe even late 2014 was when we [Crosstalk]

[00:34:29] Stig Brodersen: It was pretty early and I [Crosstalk]

[00:34:31] Preston Psyh: Hold on, I’ll look it up [Crosstalk]

[00:34:32] Stig Brodersen: And you sent it to me or sent me a link and I was like, I don’t know what to say, but let’s, because it just it’s [ Crosstalk]

[00:34:38] Preston Psyh: Neither did I.

[00:34:39] Stig Brodersen: No, it was like you always thought the world was flat and then someone tells you, no it’s round. And you’re like, huh, I really need to think about that. So anyways, it took me some time to buy into it. I think I tried buying it and ’cause I, I bought in 2017, I want to say I tried buying it before. I just, I have no technical skills, so I don’t think I’ve managed to do it. I think that was actually one of the reasons why was today.

[00:35:01] Stig Brodersen: I obviously I would’ve lost a significant gain for not being able to do that. But I would say that I own a decent amount of Bitcoin. It’s 16% of my portfolio, not including. Generally not including private equity, some private equity but not all of it. So I want to say it’s around one six.

[00:35:18] Stig Brodersen: That’s not my cost price. I was lucky enough to have my good friend the classic Bitcoin problem. Yeah. And I remember having a conversation with a friend of mine, ’cause like he was really like, it wasn’t you Kristen, but he was like, this is so volatile, what do you do? And I said, you know, my, my thesis is pretty simple.

[00:35:36] Stig Brodersen: I can see why it would replace gold as a store of value, perhaps even more. And at the time it would be equivalent to half a million dollars at coin. It’s more now. ’cause gold has a price has increased. But so I, I said to him, and I still hold to that, that I’m not going to sell anything, not even consider it before he hits half a million dollars a coin and perhaps not even then.

[00:36:00] Stig Brodersen: And so I sleep really well owning Bitcoin as I’m sure you do. You know, people go into Bitcoin for a number of different reasons, and we are not, I just want to say for the records we talked about this for quite some time. That was actually not so much the intention of this episode, but now we’re talking about it always seems like to be a rabbit hole to fall into.

[00:36:17] Stig Brodersen: And then we probably got to talk about something else afterwards. I don’t hold Bitcoin because I think it’s going to change the world. I don’t own it because I think it’s going to be the new reserve currency, not any of that. I bought Bitcoin and I’m holding onto Bitcoin because to me it’s a highly asymmetric bet.

[00:36:36] Stig Brodersen: So I put a part of our portfolio into it. I feel I have a very limited downside. Part of that just comes from Bitcoin and sell. Part of that also comes from my sizing and I know some people would probably say that 16% is crazy and, but to me, I don’t feel it. It’s such a lot. Let your winners run.

[00:36:52] Stig Brodersen: Let the winner winners run. And it’s just very asymmetric bad to me. So it makes a lot of sense why I’m holding on. There are different tax reasons for it too. I don’t have to pay taxes on it before I potentially would sell it. And another reason why, and you also influenced me here, Preston, ’cause you introduced me to Red Dalio I remember some time ago, and I think probably Red would find it ironic that I would say that he’s one of the reasons why I own Bitcoin, but he’s also one of the reasons why I don’t own more Bitcoin.

[00:37:20] Stig Brodersen: ’cause he’s such a, he read so much about financial history. And the irony is that whenever you read enough, let’s say a hundred plus books, if at that if not more, you become really humble about your ability to be able to predict things. At least I do. And you just see how everything is just ever changing.

[00:37:40] Stig Brodersen: And there’s this wonderful quote from Milton Friedman. I just wanted to mention nothing is as permanent as a temporary government policy. So I love that quote because it reminds me of the current monetary system that we have. And we had this system since August 15th, 1971, when Nixon took the world off the gold standard temporarily.

[00:38:00] Stig Brodersen: I should mention, and I think it would be crazy to think that we are going to stay on the current system forever. Why would we, you know, we had a major shift, 1944 with red and woods and you know, you can just see if you’re a student of history, you know, in the 20th century how countries went on and off the gold standard also at different peck prices.

[00:38:21] Stig Brodersen: We had the world wars, everything that happened there. And so to me that makes, it, makes it very, makes me very humble about that. I don’t really know what’s going to happen, but I can see why in this monetary system, why it makes sense to hold Bitcoin. I’m quite sure then in the next monetary system, and I don’t know, I have no idea if the next monetary system is tomorrow or 10 years or 50 years, but there’s going to be a new monetary system.

[00:38:46] Stig Brodersen: And if you don’t believe that you haven’t studied history well enough I think Bitcoin would do really well too. Not because the world reserve currency would be Bitcoin, but it would do well in the new system. Give me a call whenever Bitcoin hits 500,000, then we can have a discussion. Again.

[00:39:00] Stig Brodersen: That’s my that’s going to be my teaser here, but Preston, I’m going to throw it back over to you.

[00:39:04] Preston Psyh: Well, two things. I would argue when Bitcoin hits 500,000, that’s the time to definitely not sell it. And I think that’s going to be the ultimate, that’s the thing that’s going to mess with people’s heads the most is when it gets to those levels, 500,000 or a million, that is going to be the moment in time when you, that is the last thing you want to sell because it’s demonstrating a total takeover of settlement and.

[00:39:30] Preston Psyh: Unit of account status on a global scale, which potentially comes next, is that it really takes off, right? Because everything’s going to be denominated in that instead of the old currency system that people are accustomed to. But that’s a whole, that’s a whole nother conversation. The other point that I wanted to talk about Stig was your comment, I’m not investing in it for this, I’m investing at it as a hedge or an asymmetric position that has demonstrated tremendous value by holding it over the last decade.

[00:40:02] Preston Psyh: And I think that’s exactly the thing that Wall Street is just on the tip of the iceberg of adopting as their own way of thinking with this BlackRock, E T F, that’s going through the process right now, a lot of people are suggesting that they’re going to have the approval by the end of the year. And I think if something like that happens, You’re going to have all these bond investors, you’re going to have people that are holding 1% or whatever to offset.

[00:40:32] Preston Psyh: Just look at the selling that’s happened in fixed income over the last year and a half. Like it has been the bloodbath of bloodbaths. And there needs to be something that offsets those losses for these people that are holding these types of positions. And if you have a S E C approved BlackRock, iShares Bitcoin type vehicle, that’s a spot.

[00:40:56] Preston Psyh: It’s not, this is not a future, this is a spot E T F. I think it just, I think it changes the dynamic massively for people to hold this on their balance sheet in a way that is an asymmetric position to just guard against just moves that, that people have not seen in traditional markets in their lifetime.

[00:41:15] Preston Psyh: This move that we’re seeing in fixed income over the last year and a half is a move that nobody has ever seen in their lifetime that are participating in markets right now.

[00:41:24] Stig Brodersen: Let’s say the Bitcoin would hit 500,000 acquiring, that’s the time when not to sell. And ’cause I would argue that could be potentially time for me to sell.

[00:41:32] Stig Brodersen: And I think the important thing to understand there, and I, this is a quite an arbitrary number. I’m saying it for a number of other reasons, but it’s one, one of the things I want to say that we learned, having TIP for what was started in 2014 has been achieving your financial goals and how should we achieve, like how should we define that?

[00:41:51] Stig Brodersen: And I’ve come up with some kind of vague, do whatever you want to do for how long you want to do with whoever you want to do that with, you know, freedom. That’s one of the reasons why we do t a p. That’s one of the things we learned from t a p and from speaking with guests, from reading books. So whenever I relate back to say the price of Bitcoin going to 500,000 a coin.

[00:42:11] Stig Brodersen: I think you’re absolutely right that at that point in time, that has, that really has proved the thesis right about bitcoin. Then I’m still going to say, but then I would consider selling it. You might saying that’s super counterintuitive. Why are you saying that Stig? Well, it really goes back to what I said before about financial goals.

[00:42:27] Stig Brodersen: I don’t need to be financial independent 10 times over or a hundred times over. I need to be financial independent once and make sure that I stay financial independent. Because whenever Bitcoin hits that kind of a price level, there’s going to be huge pushbacks from a lot of authorities around the world who want this, in my humble opinion, wants to constrain that and I think that’s going to be a real issue.

[00:42:50] Stig Brodersen: And so I’m just going to take some of the tips off the table because no matter then that case, what happens, I’m still all set and I can understand if you are optimizing for dollars, if you are optimizing for expected value, that you would say that’s not the right way to do it. But I would also say that whenever you talk about financial goals.

[00:43:07] Stig Brodersen: To some extent they were correlated with the dollar value, but, or Bitcoin value if you want, but they’re not symmetric over again threshold. What you get extra is not as important as what you could potentially lose considering the obligations that you might have. So that’s where it’s coming from.

[00:43:23] Preston Psyh: I think the battle you’re talking about is actually taking place this past year, the question that I would have for you Stig at 500,000, what do you buy after you sell it? ’cause you’re not going to hold it in fiat. That’s for dang sure. Which only leaves equities, right? Yeah. And then you have to ask yourself, because this is a, this is one of my favorite things to actually talk about is.

[00:43:44] Preston Psyh: At what point, if we’re moving to a Bitcoin standard, at what point do the multiples make sense in equities? Because I can tell you, for me, a multiple of 30 on equity in Bitcoin terms, especially if the company’s not denominating, their retained earnings in Bitcoin type savings or some type of, you know, other equity that’s growing at a breakneck pace.

[00:44:06] Preston Psyh: If it’s not giving me like a 20% yield, I’m not giving up my Bitcoin for it. So that means that the PE needs to be like around a five in Bitcoin terms, right? For me to start buying equity. So if 500,000 have equity premiums been compressed that they’re throwing off PEs of five or 10 in Bitcoin terms. Because if they’re not, like I, I have nowhere to go to even at that price other than continuing to hold it.

[00:44:34] Stig Brodersen: Yeah. So to your question, some of that problem, we’re going to equities, but not a, not public equities necessarily.

[00:44:41] Preston Psyh: Okay. So that makes sense. Yeah.

[00:44:42] Stig Brodersen: Yeah, like real assets. So my question to you, I got asked this a few times in Omaha here not too long ago. Will Preston, is he here in Omaha? The answer that was no, he was not. And then the follow up question, would Preston go to the shareholders meeting in Omaha again?

[00:45:02] Preston Psyh: So I have to be quite honest like Buffett and Munger’s comments on Bitcoin in particular have like totally turned me off. Like big time turned me off because here I have guys that have quotes that if you can’t make the argument, the counter argument better than the person who’s making the argument, well then you don’t understand it and you shouldn’t be voicing an opinion.

[00:45:22] Preston Psyh: But yet Charlie Munger’s out there saying it’s rat poison and all these other things. So like for me it’s a huge turnoff. There are all of their China comments with respect to some of the things that are happening in China should be happening here in the US and this should be banned and like it’s just been…

[00:45:39] Preston Psyh: You know, the saying like,”Kill Your Heroes” is pretty pretty real for me with respect to those two. I am deeply indebted for what I have learned from both of them. I really am, but it’s also hard for me to sit down and listen to them pontificate on something that, in my humble opinion, they’re clueless on.

[00:45:59] Preston Psyh: If I go to a Bitcoin meetup, it’s going to be because of the people that are there and to interact with fellow members of the TIP community and just good friends that I know from that community, guy Spear. Just plenty, plenty of people that I am, that I just love deeply. They’re great people and that’s why I would go.

[00:46:21] Preston Psyh: It wouldn’t be to go listen to, I’ve heard Warren talk about Sees Candy enough times that like, I get it right. I know how that all. I feel like I have a pretty good understanding of what their approach is and how they don’t go outside their circle of competence and all, like, all that, the whole bit. Yeah.

[00:46:35] Stig Brodersen: It’s interesting that you say that Preston and that you mentioned Guy had a conversation with Guy off the record and [Crosstalk]

[00:46:42] Preston Psyh: Oh, it’s about to come on the record.

[00:46:44] Stig Brodersen: Sorry. No. Yeah, I made it sound like it was some sort of investigation I think that was probably me misusing what that meant, whereas it was yeah.

[00:46:52] Stig Brodersen: Before we typically talk with a guest or before we hit record, we typically just like small talk and with some of the guests that we have on multiple times, sometimes those conversation can be pretty long. And one of the time I, it I don’t remember when it was probably last year or the year before I had a conversation with a guy and, you know, so it was just like, yeah what’s going on?

[00:47:12] Stig Brodersen: Yada yada. And. He asked about you, Preston, I don’t know if I even mentioned this to you. But he asked about you and how everything was and ’cause he was very excited to hear about, we had a discussion about Bitcoin and how coming from a traditional value investing community and how that blend in together, ’cause he’s doing, you know, the value acts and what he’s having clusters Switzerland once a year.

[00:47:33] Stig Brodersen: And he talked about how there were quite a few of the old school value investors who went into crypto, not just Bitcoin, but different areas of crypto and how they didn’t see it at all as military exclusive to be into crypto, but at the same time being an old school value investor. And he asked about you and like how that experience has had been for you.

[00:47:55] Stig Brodersen: And so I feel that’s interesting. And I, you know, there was, there’s almost something about it where, you know, I feel that if Buffett and Munger has said something nice about Bitcoin, there would be so many people in the value investing community would just buy Bitcoin because of that.

[00:48:10] Stig Brodersen: Because they’ve taken the very opposite stance. Instead of perhaps just saying, I just don’t understand this, so don’t invest it. But they really have taken the like very opposite. I think it would be very, ’cause they’re almost like, you know, it seemed like people are almost ashamed if they’re all like if they value invest to same, they invest in Bitcoin.

[00:48:26] Stig Brodersen: But then there was also, I can, it can just sense there a movement of people in the space where like to them it’s not an issue. And I think some of it is probably, I think there are some front runners there who’ve just been in the space for a long time and just very independent thinkers and some of them have, I don’t really care about the crowd and therefore have turned to Bitcoin. ’cause if they think it’s an as metric bet, you know, people like Bill Miller.

[00:48:48] Preston Psyh: Perfect example by the way.

[00:48:50] Stig Brodersen: Yes but then I think there’s an age gap too. Whereas if you’re 28 today and you’re building your portfolio, you’re not really into the whole Buffett Munger ecosystem and you’re like, yeah, you know, I learned from them about picking stocks.

[00:49:02] Stig Brodersen: But then I also learned from. Other people, the Michael Save of the world about why I should invest in Bitcoin. So I’m going to take some in stocks or some in Bitcoin and some in real, whatever. So to them it’s completely natural. There’s nothing weird about it. My transition into asking you, so I come from this value investing background and see what happens to people who invest in Bitcoin.

[00:49:24] Stig Brodersen: Coming into that now I want to ask you the other question. How has it been with someone who made a name for himself in value investing? Writing books about Buffett, having a podcast about Buffett, then coming into the Bitcoin community. How has that been, Preston?

[00:49:39] Preston Psyh: Well, they’ve been very accepting and open to me being there, I don’t think a lot of ’em really, I think a lot of ’em look at the whole Buffett thing as waring and like way like over the top obsessive compulsive of talking about Warren Buffett and his picks and things like that.

[00:49:56] Preston Psyh: The people in the Bitcoin space, they just don’t really get the whole. Obsession with Buffett, you know, having been a little bit like away from the community more because I’m talking about Bitcoin all the time. I have to say, when I look at the Buffett Munger approach if you’re going to call it that, I think it’s just really quite simple.

[00:50:19] Preston Psyh: It’s just figuring out the value of a company through an internal rate of return calculation, an I R calculation, and making sure that you’re buying, I think Buffett’s big thing beyond Gram, ’cause that’s really Gram right, is just calculate the value of the business based off the free cash flows.

[00:50:34] Preston Psyh: Which you could argue there’s people way before Gram, gram just maybe popularized that more by talking about intrinsic value and Buffett also talking about intrinsic value. But Buffett’s thing and humongous thing was that they find quality businesses. They’re not sucking off the cigar butt.

[00:50:49] Preston Psyh: That’s it. Like you can buy any business book. Any type of, you know, m b A student is going to go do I r calculations. They teach that in every single M B A class. They talk about finding businesses that have a competitive advantage. They talk about business, like you’re going to learn all of that in an M B A program where I think Buffett and Munger are distinctly different than what you learn in an M B A program is they don’t believe in the efficient market hypothesis.

[00:51:20] Preston Psyh: Which I totally agree with. And what’s the calculation that they use to oh my gosh. I’m having a you know what I’m talking about? Where you’re looking at the beta, the yeah, it’s so useless. [Crosstalk]

[00:51:30] Stig Brodersen: The whole CAPM they don’t believe in any of that [Crosstalk]

[00:51:32] Preston Psyh: CAPM models, right? Yeah. And like you’re going to learn about CAPM models in business school, and Buffett and Munger would tell you those are the most useless calculations a person could ever do.

[00:51:42] Preston Psyh: I completely agree. That’s the difference, that’s all there is to their approach. So really they’re saying CAPM is worthless. You should do IRRs. And you should actually calculate what a business is worth. You should look at the assets. It should make sure that they have a competitive mode, should be buying quality.

[00:51:58] Preston Psyh: I don’t want to understate what they’ve done because they’ve, what they’ve done is tremendous. But it’s not like there’s this really like obscure like thing that isn’t accessible to anybody that goes out and buys a business book. Like you can, a lot of this stuff is pretty basic for the most part.

[00:52:16] Preston Psyh: And going to answer your question, I just want to put that out there. I think that all that stuff’s important. I think it’s great information, but I think that there is a little bit of over the top worshiping of these guys with respect to what makes them so different. And there’s plenty of people, plenty of brilliant investors that do these same things.

[00:52:37] Preston Psyh: They probably would’ve done these same things, whether Buffett and Munger talked about them or not. Bill Miller’s, in my opinion, is a fantastic investor. Just look at his Amazon call, which was so opposite of the Buffett Munger approach for years, and Bill was beyond, right? Like probably one of the best positions he’s ever held because he didn’t do what they were saying, which is we don’t understand technology, therefore we stay away from it.

[00:53:11] Preston Psyh: Like that whole mantra, which I like calling it a mantra because if you tell yourself something long enough, you’re going to realize it. And if you tell yourself you’re terrible at tech and you’re terrible at understanding these things, well congratulations. You just realized it. Right?

[00:53:26] Preston Psyh: That’s why you were out of Amazon. That’s why, in my opinion, you were out of Bitcoin for the last 10 years is because you told yourself you didn’t understand tech. You know, I, I really admire people like Bill Miller because they do the Buffett things, but they also have the courage to not just buy into this mantra and repeat things like, I don’t understand technology, therefore I’m going to continue to buy candy companies.

[00:53:50] Preston Psyh: And I think that’s really important for an investor, for somebody that’s listening to this is Hey, Buffett’s right about a whole lot and Munger’s right about a whole lot, but they’re not right about everything. And you have to have the courage to maybe go against the grain a little bit, think for yourself.

[00:54:06] Preston Psyh: That’s one of their things. They talk about all the think for yourself, right? You don’t have to, just because I’m doing it doesn’t mean that it’s right. It goes back to the Geico thing, right? Buffett went in there, sat down with the c e O of Geico and was like, I want to buy this stock. And the guy was like, well, why?

[00:54:22] Preston Psyh: And he’s I don’t know how old, he’s 18 in this story, right? Or really young. Buffett’s response was, well, because you’re buying it. And the guy looked at him and said, that’s the worst reason that you could ever give for buying something is because somebody else is doing it. And I’ll never forget the story.

[00:54:39] Preston Psyh: It’s a very profound story, and I would highly encourage value investors to dust that story off and think about it, because it applies to Buffett and Munger too. They don’t know everything.

[00:54:50] Stig Brodersen: Yeah. It was, I think the story was that Benjamin Graham at the time had invested in Geico, which meant that Buffett also invested in Geico.

[00:55:00] Preston Psyh: Yeah. That’s right.

[00:55:01] Stig Brodersen: Yeah. And and he got asked about that and he said, well, you know, Graham also invested in it. It was like so this was I don’t know how old Buffett was at the time. He wasn’t that old. He was probably still a steward right after graduation, but that was probably not one of his, Proudest moments, but I think you’re, I think you’re right that, you know, with success comes a certain obsession.

[00:55:21] Stig Brodersen: I’m not necessarily talking about Buffer and Munger. I think you can go into the Forbes top 10 list or top 20 whatever, pick one and say that because they’ve been materialistic successful. You have an a tendency to see, to say that what they say is probably correct. And they’re probably correct on some things, and they’re probably others where they’re less.

[00:55:39] Stig Brodersen: So I want to say that I’ve learned a lot from Buffett and Munger also about life. And I also think that to what, to your point before about some of the things are very basic. I think that there’s an element of we tend to get accustomed to things. So what do we mean by that? Back in 2013, I didn’t know anything about Buffett and I or close to very little.

[00:56:01] Stig Brodersen: And I watched your videos and I think someone who’s a value investor today might go back to your videos and be like why are President’s video having a million views each? It’s so basic. It’s like a stock is a company, you have to discount Teslas. But you know, for me at the time, and keep in mind, I come with the worst background.

[00:56:20] Stig Brodersen: I come with a traditional finance background from a university. So like I’m com like I’m trained to think one way and all of a sudden I’m watching Preston’s videos about what you could argue on, like the simplest things in the world. But it was still like, oh, but you know what? The earth is round.

[00:56:36] Stig Brodersen: It’s not flat. And it’s oh, you can think about it like that. So I think you’re right that some of the concepts are like very basic. But I also think that if you’re not used to think like that, it’s just a brand, like something new just opens up. I was speaking with a candidate for a position the other day and he talked to me how he started doing long-term investing.

[00:56:57] Stig Brodersen: No, he start, he’s talked to me about, How he wanted to do long-term investing, which he hasn’t done in the past. So he now, he wanted to hold onto stocks for perhaps two quarters, perhaps even three. And I know you might be laughing but that’s not long-term investing. But if you’re used to like, go on Robin Hood and do do calls on your end of day, it’s long-term.

[00:57:15] Stig Brodersen: So it’s just like seeing the world through a different lens, you know? And I remember the first time I heard about Buffer among some of that click, but also some of that was like, but that’s not the efficient market hypothesis. That doesn’t make any sense. Or the first time someone said to me, well, instead of using C P I why don’t you just use M two, you know, and then discount with M two.

[00:57:35] Stig Brodersen: And it’s huh, I remember M two because you’re trained that in business, but you use M two very differently in business. But that’s also if you want to talk about it, you could also say that concept is pretty simple, use the money supply and discount with that. But if you never heard of before, it is actually quite profound.

[00:57:51] Stig Brodersen: And there was this tendency lemme see if I can tie a bow around the this long ran here. But if someone who’s like really successful tells you about one thing, all of a sudden you might lose some of your own criticism to whether or not that’s correct. Whether you then listen to this and you’re like, yeah, but stake referring to Buffett talking about Bitcoin.

[00:58:11] Stig Brodersen: Or is it Saylor talking? Michael Saylor talking about using M two to discount, pick a poison. But there is more my way of thinking about different problems and how ironically after interviewing hundreds of really smart people for the podcast reading books written by the smartest people in the world, it makes me more and more humble about not knowing what’s going on, which is quite a running.

[00:58:31] Preston Psyh: Yeah. I would agree with all of that. Stig. The other thing that I think is important to highlight too, I think we read this book together. Who was the individual? He had a 40% annual return. He was a mathematician. And his like average holding time was like one day or two days. Oh my god, I can’t remember his name.

[00:58:49] Stig Brodersen: Was it the Simmons?

[00:58:50] Preston Psyh: Yes. Yeah. That for me, even though like none of it was applicable, like I couldn’t take what I learned from that book and apply any of it. But what I did take away from that book is here’s a guy, what was his net worth? Like $40 billion or something absurd. It was absurdly high and his annual return was 40%.

[00:59:14] Preston Psyh: Are you looking up the numbers Stig? It was so high. It was double Buffett’s. Double Buffett’s return. And it wasn’t like he did it for a couple years. He did this for decades. And my takeaway from that is there are so many different ways that people can outperform markets that to just try to replicate one of ’em.

[00:59:36] Preston Psyh: I think it’s really important to focus, hey, this is my wheelhouse. This is my technical competence. This is what I’m good at, and I’m going to marry that up with this style of investor. It took me a while, years to really have an appreciation for, Hey Preston. Like you are not completely geared the same way as this type of investor.

[00:59:56] Preston Psyh: You’re geared more in, in these areas. And so to pick and choose the types of investors that, that I feel work with my personal style. That’s something that like, you just have to be in the markets for a while. You have to stay alive in the markets for a while. You have to you have to be open to not one person or one specific investor that you are just modeling everything after.

[01:00:24] Preston Psyh: I think that’s a, I think it’s possible, but I just, I think everyone is just slightly different and they need to be open to learning about other ways to go about things. I’m not Yeah. Of this genius mathematical mind like Simmons was. I don’t, I would argue, I don’t know. Anybody could maybe do what he had pulled off ever again.

[01:00:45] Preston Psyh: So like you have to really you have to be open to, to learn from multiple different types of investing styles.

[01:00:53] Stig Brodersen: And that was also why I thought it was so good that you mentioned Bill Miller before, who came from the old school value investing. You know, I was watching the you know, I’m still stuck my way.

[01:01:02] Stig Brodersen: So I still watch the q and a with with Munger, with the Daily Journal, which is always a lot of fun. He’s a bit more unbuttoned there then I guess. He is an Omaha, believe it or not. And he talked about how, I want to say, so this was the time where Becky Quakes, he was just reading the question, so it wasn’t like traditional q and a, it was probably ’cause of Covid, whatever.

[01:01:20] Stig Brodersen: But she talked about, as she asked him about what had surprised him the most, being in the markets for so long, and he said it was how everything goes to die. Just not actually, not just market, but just general, how everything just dies. And he said that he had a conversation with Bill Gates about how Gates found it ironic that the disruptors become disrupted.

[01:01:45] Stig Brodersen: ’cause it’s so difficult mentally to keep on learning and keep on doing new things whenever found a framework that really works for you. And the listener out there can read into that, what they want with the different personalities that we talked about here today. But I want to highlight that for someone like Bill Miller who continues to learn and how he’s continuing to keep up with his time and how a lot of this also is not just tied to what any Duke call resulting.

[01:02:16] Stig Brodersen: So not necessarily the actual result, but also what is your thought process of going into a. Something and let me, lemme try to paint a bit more color around. I remember we read this book, outliers and Who Gladwell wrote, and I absolutely love that book and he’s such a brilliant writer. One of the key takeaways, ’cause he, he actually tells a story about Bill Gates and how he was of course very skilled, but he was also very lucky with that timing.

[01:02:43] Stig Brodersen: And Malcolm Gladwell highlight that there were a number of people like Steve Jobs, I want to say Steve Case and a few others or quite a few others who were born around the same few years and who all made a ton of money with the rise of personal computers because they were just, they had the right skillset at the right time.

[01:03:02] Stig Brodersen: And I’m not, please don’t listen to this and be like, oh, well Stig just saying that Bill Gates isn’t a smart dude. He’s just been like, no, he’s a smart dude. That’s not what I’m saying. My point is of saying this, is that you need to have the process, right? There are so many things you cannot control your process, the way you learn, the way you’ve been critical, the way you perhaps kill your heroes or don’t kill your heroes, like your process have to be right.

[01:03:25] Stig Brodersen: And then, you know, the universe will reward you in terms of good results, but also depending on the timing, it might be 10 x or 50 x or whatever that skillset will be rewarded. But in any case, you will be more than financial independent if you acquire that skillset and you get the process, right?

[01:03:44] Preston Psyh: Yeah, I, and we’re just talking about the statistics, right? Like one in 6 billion for somebody to, to be of, you know, Bill Gates’ net worth. So yeah, there you have to have multiple things that line up to provide that four standard deviation event beyond just skill and intense competence. There’s luck that also aligns with such a rare number.

[01:04:12] Stig Brodersen: Yeah, we actually had an outline but I feel that and we, it really hadn’t gotten to, and I feel that we probably touched on a few of the things, and we also went for a long time. Is there, do you have anything you want to talk about?

[01:04:23] Preston Psyh: I’ll be honest with you, Stig. I’ve obviously taken some slack from people especially early on when I started covering Bitcoin but for the most part, people have just been really nice, respectful. Like they know that, oh, Preston’s over there doing his Bitcoin thing and that’s all he ever talks about anymore. I wish he would talk about value investing or whatever, but it’s really actually been a testament to the community and the space that even though they might not really see it or want to understand it or whatever, they’ve been very respectful of me and nice and just, you know, there’s onesies and twosies, but for the most part, like I’ve, it, it’s been really fun to cover it and to do something so different, especially the tech.

[01:05:06] Preston Psyh: So like the engineering person in me, like my undergrad was in aerospace engineering. So like for me it’s really fun to dig into the tech behind Bitcoin and all the encryption and the hardware infrastructure and things like that, that I’ve been able to go very deep on that when I’m covering traditional financial markets, you really don’t have enough time to, ’cause there’s so many companies that cover an opportunity cost to cover that.

[01:05:31] Preston Psyh: This has really allowed me to go deep into something and I guess I just want to thank everybody for just being so respectful of this adventure that I’m, I don’t know what to really call it, but while I’m covering Bitcoin, and I’m very bull, by the way. I’m extremely bullish in the coming year. I’ve been bullish since the beginning, but I’m like-

[01:05:49] Stig Brodersen: I’m shocked that you’re seeing [Crosstalk]

[01:05:52] Preston Psyh: After 2022 and what we’re seeing, like it’s up, like I said earlier, it’s up 80% on the year to date and like I am very bullish on where this is going to go through the end of this, of 2023. I think it’s going to be gangbusters.

[01:06:06] Stig Brodersen: What do you think the future holds for TIP and you can read into that whatever you want to is, if it’s for you for the company, for whatever, like what do you think the future holds?

[01:06:17] Preston Psyh: You know, Stig. We have never been trying to grow for the sake of growing and I think that’s really important.

[01:06:25] Preston Psyh: If we think that we have a host that can actually bring a lot of value to this media of talking about finance. Well, then we bring ’em on board. And if that person’s not there, well then we just continue to do the show that we’ve been doing. There’s always going to be a ton of things to talk about no matter what, happens financially in a business and whatnot.

[01:06:48] Preston Psyh: So maybe our lack of ambition has been an asset. I don’t know how to say it, other than that, it’s just like you and I have been hyper-focused on quality. Now whether the listener believes that they’re getting quality from the two of us or not that’s yet to be, you know, seen. But we just, you know, I think as long as we continue to focus on quality and think about the listener instead of ourselves and try to deliver on top quality interviews and cut out all the garbage, like side chats and things like that I think that’s just really important.

[01:07:25] Preston Psyh: And that’s what the mission has always been, is just to deliver. Real conversations that are really getting to the heart of things and not some ten second C N B C segment. So as long as we continue to focus on that, I just, I don’t know where it’s going to lead us, but I suspect that it’ll continue to benefit not only us, but also the community at large.

[01:07:48] Preston Psyh: Like it’s always been about the community with us, and I think we just need to continue to be hyper-focused on that. So wherever that leads us, I don’t know, but I know that’s your point of view as well, is focus on the community and the listener and everything else should fall into place I guess.

[01:08:05] Stig Brodersen: One of the things that I remember we talked about in the beginning was how important it was to have fun.

[01:08:11] Stig Brodersen: I actually think it, it sat there at the very top of the website, and I’m pretty sure that you wrote it because everything was programmed in H T M L and I have no clue how to program it, and I still don’t. Neither did I and neither did I. I’m pretty sure that you wrote it. And I think that’s very important.

[01:08:27] Stig Brodersen: You know, whenever you have a platform like TIP, it’s very easy to be caught up on New Shine items for sure. And there’ve been quite a few, and I often think back at the early days and think back at not in the sense that, oh, everything was like better in the good old days. Preston had to get up at 4:30 in the morning. So I don’t know if Preston think, thinks that there was the good old days.

[01:08:51] Preston Psyh: A true test of love, right? If that doesn’t show you that I love this stuff, then I don’t know what does.

[01:08:56] Stig Brodersen: But we sure did a lot of silly things in the very beginning and we continue to do a lot of silly things and one of the books that really made a big impact on me was the book Delivering Happiness, which I want to say was a book that, that you recommended. ’cause. I remember thinking, so there’s something with a seus or something. I was like what’s going on? But I always felt it was really interesting with the books you’re reading, and we read that book, and I absolutely loved that book in so many ways.

[01:09:25] Stig Brodersen: And I ask so many members of the team to, to read that book because they talk about optimizing for happiness. And it’s such a weird concept to talk about in corporate life. You mean you optimize for happiness? Like how do you do that? It doesn’t make any sense. And so in the appendix, the author, the, he got asked about, or anyways, I don’t know if you got asked, but he said that if you keep on saying why to people, first of all, they’re probably going to be offended because people tend to be, feel like they need to justify things if you ask them a why question.

[01:09:55] Stig Brodersen: But he said, if you ask them why five times at some point in time, even perhaps before the fifth, why they would say, because it makes me happy and perhaps that happiness is misguided. Perhaps it won’t make them happy. But PE no one’s crazy. People tend to do what they think makes them happy. And I know that probably sounds like a terrible business strategy and it probably is a terrible business strategy, but whenever I think about what the future holds for TIP?

[01:10:24] Stig Brodersen: I got asked quite a few times, so what’s the five-year plan for TIP? And I’m, I don’t know. I have a pretty good idea of the next five days I do want but you know, I don’t know about the next five, five years, but I do know that we want to optimize for happiness. And I’ll remember, and this is probably going come across as super spoiled, but I, it comes from a good place and it probably also, people probably still going to shake their head and said, stake is the worst capitalist in the world and it probably would be.

[01:10:46] Stig Brodersen: And I was speaking to someone who asked about whether or not their company could acquire TIP and it wasn’t because I was like super excited about selling TIP but I was really curious and I remember I was giving you a call and you were like I don’t know. And so anyways, so I jumped on this call and I spoke with him and.

[01:11:02] Stig Brodersen: So he talked about like different, he generally they wanted to have founders on board and like all that how that would work. And I was like just asking him just because I was generally curious so how would that work if I were to report to board? He said, well, you have to do that like once a week, like for an hour.

[01:11:20] Stig Brodersen: And I always remembering things like, I’m out. Yeah I just don’t want to do that. And then he start talking about it was only an hour and he talked about, you know, the amount of money. I said, I don’t want to talk with someone for an hour unless I’m a hundred percent sure I know I like that person.

[01:11:33] Stig Brodersen: Even if I like that person. Aside from my wife, I don’t think I speak with anyone consistently for an hour, like every week. And I feel like that whole notion about optimizing for happiness. That’s like the main strength, but also the main weakness of t i p. That’s probably why we made it thus far, but probably also why we would never be a huge company.

[01:11:54] Stig Brodersen: ’cause you can’t run a company like that. Yeah. You can run a company saying, let’s just optimize for happiness and make sales financial decisions, but make sure everyone is okay. But as soon as you also want to make sure that all your stakeholders, so your listeners your team, everyone you work with are happy, wonderful things just are happening.

[01:12:11] Stig Brodersen: ’cause I remember we were talking, I think it was, this was probably like in 2017 or 2018 and we made like close to no money. You could even make the argument that we paid to go to work. And which isn’t like a great feeling if anyone has tried that many years, three years. We paid to go to work.

[01:12:27] Stig Brodersen: And I remember, ’cause I was at definitely at times a bit frustrated ’cause I think I just at that time started going full-time, not going full-time, as in we were making money, but going full-time as I wasn’t making any money on my regular job because my wife and I was relocated that part in time and I was following her and what she was doing with that, with her career.

[01:12:45] Stig Brodersen: And so I went full-time ’cause I couldn’t do my teaching job because, well, I was, you know, I wasn’t there. And so I remember you, you were telling me that we just need to do good things in the world and then the universe would come back and help us. And I don’t know if you remember that conversation.

[01:13:01] Stig Brodersen: I really loved it. In a way it’s also frustrating whenever you appear to go to work. But I also think it’s a very healthy attitude to have to life within reason. I don’t think you can do that after 50 years. That’s not what I’m saying. I think you can make, I think that there’s an element of having faith in the universe that if you help enough people and if you’re kind, you don’t optimize for short-term profits and perhaps not even long-term profits, wonderful things will happen to you. So I just wanted to-

[01:13:26] Preston Psyh: I think it has to be, so yeah, we did have this conversation. I remember where it was at, and I believe this to my core, but I would caveat it with, you have to be adding value to other participants, to other people in order for the universe to find a way to, to bring it back to you, right?

[01:13:48] Preston Psyh: You can go out and dig a ditch in the middle of nowhere, and it doesn’t benefit anybody. Like the universe isn’t going to find a way to re return that value or that work or energy that you expended back to you because the energy you put into the system was worthless energy. You know, if you’re out there and you are providing your energy to the system and you’re doing it in a way that’s actually making other people more efficient or more productive, or more happy through entertainment’s a source of business, right?

[01:14:18] Preston Psyh: That is going to be returned to you in some form or some way. It might be monetary, it might be some other way that you need in the future, but I’ve, I believe that to my core. And so really it, it comes down to is like, how can you provide that efficiency to other people in the most replicable, abundant way with your time?

[01:14:40] Preston Psyh: Like I tell people all the time, it’s you know, I use this example, and I’m not using this example to diminish the efforts in the work of a professor or like a teacher, but like you can go into a classroom and. You could teach a class for 30 years, and let’s say you have, if you’re at the university, you might have a hundred students and you might have two or three classes a semester.

[01:15:01] Preston Psyh: And if you added all those students up through the 30 years, like I’m pretty sure we could, I don’t know that the quality of the contents is good. That’s for the listener to decide, but I think we could knock that out in a couple minutes with this platform. A couple minutes. And that’s not any testament to you or me.

[01:15:21] Preston Psyh: That’s just a testament to the abundance that technology brings by harnessing technology. And so if you’re adding value through that technology to other people’s lives to make them more efficient and productive, I just think that, I think the universe has to find a way to, to bring that back. You know, that’s the, they get into a lot of theory. I’m sure there’s people listening that just roll their eyes, but I don’t know. I believe it. I’ve, I guess I’ve, I feel like I’ve seen it in my own life and I’m going to continue to believe it until I have reasons to, to not believe it.

[01:15:51] Stig Brodersen: Well, just before when, whenever we started TIP, I was a teacher at the local college and having 30 students or whatever at the time.

[01:15:58] Stig Brodersen: So on that note, I can say I completely agree with you. There’s only so much value you can bring whenever that you have those constraints. I remember that conversation because it was a very fancy hotel and I want to say he picked it. I’m not completely sure, but I remember thinking Preston still has a full-time job and I had it via lasagna and it was like 20 bucks or 25 bucks. And I remember thinking it must be nice to have a full-time job. Hey what can I say?

[01:16:28] Preston Psyh: There’s been a lot of these moments that we’ve never talked about. I, we need to record them and capture them. This is great. This is hilarious.

[01:16:36] Stig Brodersen: Preston, this has been absolutely wonderful to have a chance to take a trip down memory lane. Any concluding remarks here before we, we round up the episode?

[01:16:45] Preston Psyh: Watch oil into the end of the year. It’s the one thing that I haven’t quite figured out, and I’ve got a sneaking suspicion it may bid, and if it does, things are going to get spicy into the close of the year. So yeah, that’s what, I know we talked all this other stuff and we didn’t even talk about finance, but that’d be the one finance thing and if I’m wrong I don’t know what’s going to happen, but when Luke Gromen’s telling me, I have a couple other people that are saying Watch the energy markets. ’cause it’s very counterintuitive to what I think people are looking at in the energy space. I think they’re expecting the traditional recession and the traditional wipe out and energy because of the loss of demand and all of that.

[01:17:22] Preston Psyh: And I have a couple of smart people, you know, suggesting to me that it’s going to move in a direction that a lot aren’t expecting. And if it does, there’s treasury ramifications that would pop out of that ’cause you’d have higher inflation prints if it would run and all these other things that are dependent on that really critical variable. So the thing I’m watching very closely into the rest of this year is the oil market and the energy prices.

[01:17:48] Stig Brodersen: That’s why I miss these conversations Preston. I can say lasagna and then you transition into what’s the price of oil? You really have to pay attention to that. Anyway, so perhaps we should let that be the final words of this this episode here. Preston, thanks for jumping on the traditional We Study Billionaires episode here. It was a lot of fun. And let’s do it again here. Let’s, I was about to say soon, let’s, in any case, not wait four years, five years, whatever, before we do the episode like this again.

[01:18:15] Preston Psyh: Yeah that’s too long. It’s been a blast, Stig.

[01:18:18] Stig Brodersen: It’s been a blast. Alright, I’m going to end the episode here. Okay, everyone take care.

[01:18:23] Outro: Thanks for listening to TIP. To access the show notes, courses or forums, go to theinvestorspodcast.com. To get your questions played on the show, go to asktheinvestors.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP Network. Written permission must be granted before syndication or rebroadcasting.