My name is Chris Dunn. I'M. Your host and I am joined by my two awesome guests. We'Ve got Travis to vet hedge fund investor pro and we've also got Nicky was a certified financial planner and active investor. Crazy times, we're limiting guys today is what's today, Friday April 10th, it's hard to even know what, day or week it is it's all just kind of running together every day I'm. Like what day is it again? I'Ve no idea it's all running together, freaking weekday it's all the same yeah well let's just go and jump right into it: I'm gon na label. This episode, something like it's bitcoins time to shine because it really is, I mean we've, got a really weird global economic situation that is really kind of perfect for Bitcoin to show what it can do. So why don't we just go ahead and just jump right into the charts and the data and talk about what's happening where we are and why I'm putting forward that's that thesis. So let's start by just talking about the big elephant in the room and – and I know a lot of people have been paying close attention to this, but the coronavirus case is a few minutes ago. As of this website, we officially crossed over a hundred thousand deaths, which is extremely sad we're, coming up on nearly two million confirmed cases, the the reality is that's, probably a lot higher than that you can see the u.
s. is still leading the world in new cases. Anyway, guys let's just jump into the markets. Let'S talk about all the economic stuff, that's been happening recently. Yeah big stock market rally this week and it surprised a lot of people. I see a lot of interesting negative reactions to it, actually, which is a little bit surprising to me, but yeah. The the markets had a good week and that was really shocking to a lot of people who are still trying to grapple with a market. That'S doing well with you know, an economy that is really struggling to get off the mat. So yeah wait. So looking at a weekly candle here, we only had four days of real trading activity. I guess what the markets closed. Today, we were up about 12. Looking at the technical chart, I mean I have reasons why I think we we did and I actually in the trading room, was calling for basically a 50 Fibonacci retracement on the technical chart. But do you guys want to talk a little bit? I guess about fundamentals, or at least just what is the story? Why did the markets make it climb higher? Well, I think you know, I think, for one obviously, there's the impact of the fiscal and monetary stimulus is certainly helping, so that is clearly a benefit it's. Taking the worst case scenario off the table for a lot of companies, there's also, you know a lot of buying from people who are kind of faux mowing into the rally there's a lot of stocks that were very beaten up down.
You know anywhere from forty to eighty percent on some of the some of these stocks, and so they, you know we're in a in a period where you know they finally could get a bounce, and once that started like there was a lot of not only short Covering but FOMO buying and things like that, so that's obviously contributed. But but you know, it's it's really also important to understand that stocks don't just reflect the value of what's gon na happen or what they're gon na earn in the next six months or twelve months. You know stocks are long dated assets and you know they reflect the value of what a company is going to be able to generate in cash flow for its shareholders over 10 20 30 year time frames. So you know when stocks are down 40 percent, reflecting you know a lot of mere term pain, obviously an expectation that they're not going to earn as much money for the next few years. You know that that makes sense in some sense, but it also doesn't make sense that a stock would continue to go down. Because again we have to remember that the economy eventually likely will recover. Companies will see earnings increases again a few years from now. So we have to remember that that is an important thing to understand about companies and stocks yeah, and that leads us to our first question from Amanda, which is, since the coronavirus is causing so much unemployment and companies to lose money.
Why is the stock market going up and I think we kind of answered that which is you know? A combination of you know FOMO buying the stimulus package. Is there anything else, that's contributing to that that you think is important to point out. I think personally it's, like you, said, it's a it's, a mix of different things, but to add to that the fact that the market could just be extremely forward looking right now it could it be forgiving 2020 in a sense and looking towards 2021, and we also Have something I've seen before many times, we've got everybody on the same side of sentiment. I mean know everybody is bearish. I find me one person that's bullish right now, it's very hard. The optimist in the room it's a very unpopular opinion very but I've said this over the last few episodes, especially in the crypto community, it's, not a popular sentiment, but you know kind of jumping back to that. Talking about Bitcoin. I do think even though stocks are somewhat bullish and they could absolutely have more downside. I want to talk about bitcoins price, because I think that this is really it's time to shine. You know, with unemployment numbers, obviously going to insane record levels right like just a couple of weeks ago, we are floating around a couple hundred thousand claims, and then you know this chart is just absolutely ridiculous. We went from 3 million to 6 million and then another 6 million this week, so obviously the the ripple effect of the the virus and really the global economy shutting down is having an unprecedented reaction right and so it's.
I think it's, rightfully so that you know a lot of people are bearish it's, just how bearish for how long and in the short term, you know, bitcoins got a halving coming up in about a month and with the stimulus package and a lot of people. Just waking up to the fact that the Fed can print at its own discretion trillions of dollars. You know people are now in the mainstream starting to question. What is money and is fiat currency, real money, or is there a better option? What do you guys think yeah I've seen a lot of that this week? Obviously we had yeah trauma. Dh was on CNBC. He had a really. You know widely publicized interview that kind of went viral. You know talking about, you know a lot of the monetary stimulus and some of the negative. You know implications of that, and you know there was also some newsletters. I all over financed Twitter or fin twit. I was seeing negative takes on what was going on with the monetary and Federal Reserve, stimulus and so yeah. I think there's just there's a lot of angst over that and a lot of people that think that, with the flood of money going into the system, that that's gon na have repercussions for all kinds of natural markets from stocks to Bitcoin going forward. And I know one thing you've been working on today is a article for your newsletter that we can link up, but the title is please step away from the ledge.
You want to talk a little bit about what you talked about in this this article yeah. So it is kind of a counterforce reaction to a lot of the just emotional knee jerk reactions I'm, seeing an anger that I'm seeing in the market right now about the market going up, you know it's as if, like you said, Nicky that everyone's positioned bearishly, you Know people are losing their minds on Wall Street bets subreddit, for instance, like they're, all positioned, very bearish, Lee they've all seems like they've. A ton of people have lost money this week and now you've got these emotional posts about. You know how the American economy is just totally. You know screwed and companies aren't being responsible and all this stuff, and there may be a hint of truth to what they're saying but there's so much emotional misunderstanding of what's going on right. Now that I wanted to create the post to kind of walk through what's. Actually happening on the ground and have a more rational take on why this market rallied and what is gon na happen going forward so what's the general. I guess idea behind this. You know, obviously, there there's fear in the markets, which is understandable, but what is the the other side of the argument? You know again for anybody that's new to this show. One thing we really try to do is look at both sides objectively right to step outside ourselves, step outside our own biases and our own beliefs and ask like hey what is the reality of what's actually happening and what are the possible outcomes cuz.
You know when it comes to macroeconomic stuff, like we all have our beliefs and money in itself is a belief system and that belief system is getting challenged right now, on probably the biggest level that it has in human history. But what is the the counter argument here and and what would you I guess advice? Would you give people that are looking at this going, what the hell is happening and what do I do? Yeah I mean, I think the first big piece of advice like we've talked about on the show numerous times is that you know if you have a really severe like emotional bias on the market or on you know, different assets that can really hinder your ability to Grow your wealth it's, like you've, said many times. Chris you've got to be able to really understand the possibilities and the probabilities of different scenarios. If you take a really extreme view like we're, headed for depression and everything's, you know about to crash, then it's very possible. If you're positioned just for that scenario, then you're gon na be in trouble. If that doesn't happen and we're, seeing that now we're, seeing that with the Wall Street bets people who were bearishly, biased and thought the market would just keep going down forever, we saw it after the great financial crisis Inouye. Oh, nine people were calling for hyperinflation or depression, and you know it turned out that there was a middle path and actually you know things recovered over a period of time, and so I think you know it just makes sense to try to have a rational perspective.
Rather than a really singular emotionally driven perspective about what the world should be, you know we we, as investors, putting the investor hat on. We have to look at things with a rational, mind and understand what could happen. Not what should happen, or you know what we want to have happen or what our small friend group or our Twitter followers. You know kind of the circle jerk of like agreement, and you know I don't know. I I think one thing that would be really interesting is to take a look at the ESPY by market cap and also talk a little bit about the stimulus package. But one thing that I thought was really interesting and maybe why the stock market hasn't gone lower than it already has is just looking at the companies that have basically dominated a lion's share of the the total value of the stock market. If you look at these companies – Apple Amazon, you know, Google, Microsoft, Facebook. These are companies that what maybe aren't being completely demolished, or even hurt that bad der for during this coronavirus, yeah, absolutely it's a great point and that's. One of the reasons why too, when we look at headlines, if you don't, look deeper than the headlines, you might not understand why the markets rallying, like you, said, like companies like Amazon they're, actually seeing an increase in their e commerce business right now. You know Microsoft is seeing an increase in you'll work at home office 365 subscriptions in there and in their cloud as your business.
We could go on with some of these companies right, but they're actually holding up pretty well from a fundamental perspective and they make up a large percentage of large indexes like the sp500, the Nasdaq 100. And so when you see those outperforming or going up, you can understand that a lot of that may be driven by the way that the index indexes are constructed. So that's important understand, like you, have a chart here that I'm actually including this graphic in my newsletter post this week, which shows the performance of the Nasdaq 100, the SampP and the Russell 2000 since the start of the year. And you can see that, like the Russell 2000, which has a lot more smaller cap companies and it doesn't have that over weighting with the big tech. Companies is actually down a lot more than say the Nasdaq 100 yeah. And so we do see that everybody's. Listening on the podcast, so we're, looking at a chart, that's showing the the small cap, russell 2000 is down as of today about 25, where the Nasdaq 100 is only down about 5 in the Spy's down like 13. So the larger company is in essence our because they're more profitable, especially right now and they have more cash and their values are hit as bad. Those indices are not down as much as like the small cap index. Is that how you would say that exactly right? Yeah, so, even though we're seeing the market rally quite a bit this week, there are still stocks that are down 20 30 40 50 percent year to date.
It'S important to remember that it's not like every every company in the market is being bit up to like new all time highs, yeah good point, so let's talk a little bit about the stimulus package in the anger that's around that which again, I think, some of It is justified, but some of it might be overblown or just misunderstood. What do you guys want to say about that, and maybe we can talk a little bit about what you know Thomas said, and some of the cruise line, stuff yeah, so trauma chomped was very upset and vocal about the fact that you know he thinks that we Should be letting companies fail, and I've actually heard this a lot over the last couple of weeks that we should just allow companies that prepare for a scenario like this to go through bankruptcy process or restructuring. We shouldn't be, you know, giving them loans or grants or anything to try to help them survive, and he says, if we do, that, you know, then you know helping them. Survive is essentially just helping hedge funds and stuff like that. So I understand some of that sentiment, but he's he's wrong in some respects, like he actually mentioned that you know we shouldn't be bailing out Cruise Lines. Well, we're, not bailing out Cruise Lines. The government packages have not included any kind of aid for cruise lines and what you were just showing there a minute ago. We actually saw Carnival Cruise Lines this week, go out into the market and raise new equity and debt capital it's pretty expensive capital.
You know 11 and a half percent for booked for their bonds. They also raised new equity capital, which dilutes the current shareholders at you, know a much lower price and it was trading at a couple months ago, so they went out and got private capital to try to fill the gap, and so I think we should see more Companies do this, I think we will see more companies do this. Not every company is just getting free money from the government. So what does that mean? So, like a lot of people, think in terms of like okay, you have a private company, and then you have the government, and a lot of people thought this about the the great financial crisis. They thought that the government was just giving these companies free money. Is that true and and then the second question is, is what does that mean when a company goes to the public markets and tries to raise capital and equity or debt? So the term bailout I feel like it can be misconstrued and and kind of misunderstood by the public. You hear bailout and everyone's just angry over bailouts, but what actually happened in 2008? Is these companies these banks, they it was, it was banks, it was insurance companies and a few other industries and they were given loans from the government, so it wasn't free money and these industries had to pay the money back and most all of it was collected Back the auto industry lagged behind a bit, but not only did the government get back the money, but they also made money on the money that they lent out as well, and then they also did things like the government would buy preferred stock in the company.
In the companies that really needed that influx of cash, so it wasn't just free money that these corporations never had to pay back. I think that's the biggest misconception around the bailout process. Granted there are grants that we've been talking about that that that will be forgiven. You know essentially, but for the most part these companies are looking for loans that they're going to have to be pay back to the government. Awesome, so you've got loans. You'Ve got grants. Travis I'll, keep this to you about. You know specifically, like the the carnival capital raise like what what does that mean in like whose capital is at risk when they go and they rot. They raise equity in debt from the public yeah. So that's, you know private shareholders and debt holders that are providing capital to the company new capital, so that helps them raise new cash that they can use to. You know pay for the ongoing expenses of the business and again yeah. This is not like any kind of bailout related type of capital. This is, you know, investors, new investors coming in and providing capital the company, and now they have you know new bonds or new equity. That is just private private market driven. So this is what you want to see with a lot of companies and what you know Thomas would say: all companies need to do they either need to. You know, sell stock in the open market like Carnival did this week or they just need to go into the bankruptcy process.
The problem I have with this is you know. Most companies did not plan for a situation, a pandemic type situation where the physical economy was literally shut down for two months, and the level of cash burn that that creates for companies is higher than then they could ever anticipate like in a normal recession. So that's number one important to understand that most companies could not have or did not plan for this. The other thing, too, is that if we were to try to allow companies in mass to fail all at once and go into the bankruptcy process, that would create a deflationary depression. So if one or two companies goes through restructuring, it's fine, they can have their debt. Converted to equity, they can get what's called a dip loan to help provide capital during the bankruptcy process and they can come out the other side or restructured entity, and maybe the equity holders get wiped out, but the bondholders actually become the new equity holders that's. What we see in a normal restructuring, but to have like an entire industry, like the airline industry, fall into bankruptcy at the same exact time. Also, during a time when the economy's basically shut down, is just a catastrophic outcome that the system can't really handle all at. Once it's sort of like the hospital situation with coronavirus, if you have it all happen at once, the system can be overwhelmed and create second and third order effects that make the problem much much worse.
So that's, why we're we're, having an attempt at the federal level to have a stopgap to have bailout loans that can provide large amounts of capital that can help? You know these companies work through the crisis period and then come out. The other side still solvent and still employing hundreds of thousands of people yeah. So it sounds like it's. A balancing act on one hand it's like okay, do nothing give nothing to these companies offer no help, but the risk there is a depression. Why, like that's literally what happened in the thirties is the government did what the opposite? They were actually raising rates right. They did nothing to help and money supply yeah, they were tightening, went and then like. We saw no a okay. Well, they went the opposite direction, but then the risk with that and I think the problem that a lot of people have is they start to question okay? Well, how valuable really are these dollars and then what are like the short term implications are: okay, we put a stopgap, we help the economy in the short term, but what's. The longer term implications is that going to lead to higher velocity of money, which is gon na lead to high inflation or even hyperinflation. You guys how many opinions on that. This is essentially an mmt experiment. If you will, I mean, would you guys agree that this is kind of the start of us experiencing this firsthand? It would there's been arguments back and forth.
You know between the different monetary belief systems and how it should work and now we're. Finally, seeing the Fed just basically print money out of thin air and what is mmt before we go any further. Well, modern monetary monetary theory is kind of an economic theory around the idea that governments that control they're either you know sovereign governments that control their own currency are not at risk of defaulting on their debt and they can actually use that ability to create money. To you know, help stem declines in the economy, pay for social programs and, basically, you know, support the economy in ways that you know a lot of traditional economists, wouldn't typically understand under the you know like a gold standard type system or some other system or sound Money or hard money right so it's, it's, literally like the exact opposite of the belief system or the the value prop of Bitcoin right you've got governments that are saying like we actually, you know we can print an infinite amount of money and it really doesn't matter Because we're, the government is that the best way you guys could think of saying it in layman's terms, I would say so yeah and it's, going back to your argument about you know, is this bitcoins time to shine and that's a thing, people that are maybe afraid Of what mmt policies could do, hyperinflation, etc? I mean we don't even really know truly right. I mean everyone thought we were going to see inflation with quantitative, quantitative easing from 2008 and we didn't.
So everyone has theories, but I guess nobody really truly knows what it's gon na what's going to happen. But to your argument about Bitcoin is, I would imagine this would make people kind of want to flood to Bitcoin or it could make it potentially an irresponsible decision. Not to have some Bitcoin to kind of hedge against what we could see with new monetary policy yeah, because the more people that wake up and realize like hey these dollars, really are just created out of government's whim and there's. I guess there's some argument for that, but really, if you look at what money really should be, one of the key characteristics is its scarce and it's hard to get and it's hard to make and the more that you mess with that. The less hard money really is and the less valuable it becomes over time and that's. Why we've seen you know really just a massive devaluation over time through inflation, I don't know travel it what's, your what's, your opinion on that yeah. No, I think, that's right I mean we have to. We do have to look at the scale of the money creation of relativity to the economy, that's, why we didn't get hyperinflation after oh eight, oh nine, because the economy was in deflation as it is currently. You know right now in April 2020, and so the the money printing is it's being done to offset that to try to prevent the snowball into a deflationary depression and so that's.
Why we typically don't see hyperinflation when money is being printed in these types environments. Now, when you see countries that go crazy with the printing press and let's say they create, you know a 50 larger money supply like in a Zimbabwe type situation, then that's. Yes, when you can get hyperinflation and a runaway, you know increase in the monetary base which creates. You know a really perverse set of situations in the economy that can really screw things up, and so my whole thing is trying to understand. You know for when we look out two or three years. What is the monetary stimulus gon na look like, and what does that mean for the economy and it's hard to know it's hard to know exactly what this means, but I think that's, what you know like you said: Nicky gives you an opportunity to own assets like Bitcoin and gold as hedges and it doesn't have to be one or the other. You can own stocks and Bitcoin stocks and gold. You know that's widely yeah. We try to position ourselves to benefit from different types of environments. You don't have to take an extreme view and and that's why? I think you know we. I think we talked about this last week, but just thinking of your overall portfolio and knowing that we're looking at an uncertain future and realizing the risks of the Fiat system. But also knowing that, hopefully it's not going to completely fall apart, but if it does having Bitcoin and gold and other physical assets as a hedge, and you know again, just kind of looking back at the Bitcoin chart.
If we look at a weekly chart, we can see that the 8k price point has really been a magnet for the past three years. You can see for the first time in 2017, crossed above 10k and then we really used 8k as what I call an overunder magnet where every time we get below 8k, we find support and move back to it. Every time we get above, we move back back down to it, so it's really act as this magnet and right now, in about 30 days, we've got a halving where the supply is going to get cut in half and in theory that should drive prices higher, but It'S not exactly that simple right. The demand side still has to be there and so we'll see. I mean we're coming up very, very close, and we just today seem to be hovering around that 7 to 8 K price level. So the next few weeks will be very, very interesting to see how price reacts to this level on the other side of the proverbial coin. We'Ve got metals, and if we take a look at gold, just taking a look at a weekly chart of gold looks extremely bearish. You look down at a day, less you mean less. You mean yeah it's, a very, very bullish chart here on the daily and weekly chart. You can see this inverse head and shoulders almost like a cup and handle, and then we broke out to a new high and really the the price of gold.
The the only major currency that it hasn't hit a new all time high is the dollar. If you look at, you know, Canadian dollar, if you look at the pound, if you look at the Euro, like gold, is recently broken out to new all time highs, and I think this is because you know over the past few weeks, we've seen a flight to Quote: unquote: safety of the dollar, and if we, if we take a look at the dollar index, this has actually been been really one of the only fiat currencies that's remotely been holding on. So we took a look at a couple of markets here, let's jump into some QampA. The next question is from Ryan and he was asking so Travis. I think a couple weeks ago you said a stock. Buyback is really just like a dividend. By a different name said, please explain why isn't this BS, you know a stock buyback is a way for companies to artificially inflate the price of their stock. It'S. Also, a very large reason as to why this free fall in the market is so drastic when a company lays off employees with a lot of experience like Lowe's, who just wants to free up more cash for stock buybacks it's. Definitely not a different word for a dividend. Why don't? We explore that a little bit, because I know this has been a really hot topic in the in the the general conversation around the markets recently um so trav, do you want to expand on this yeah? So there's a technical explanation for this quote, which is you know, Modigliani or Modigliani and Miller, or two academics that actually proved through.
You know actually some mathematical models, that a stock buyback is really just a dividend by a different name and – and I can kind of quickly try to explain that you know company can return capital to its shareholders, two ways, basically through a buyback or a dividend, and So if you think about a company doing a normal dividend, normal cash dividend, they pay you as a shareholder let's say you get a thousand dollars and dip it in for the year now you can go. Take that cash and put it in some other asset or you can take that cash and actually buy more shares of that same company and end up owning a larger percentage of that company. So, in that sense, a dividend can be used to sort of look like a buyback. A buyback is just the company taking that cash and instead of paying it out as a dividend, they go back and they buy back stock from some holder who wants to sell to them, and the remaining holders then own a larger percentage of the remaining company. So again, from a technical perspective, a dividend really is just like a stock buyback with a couple of small differences. Now buybacks are an extremely misunderstood. You know subject, because people think that companies just do them to try to inflate their stock prices. That may be true in a couple of cases, but generally that's, not true. A company generally has a waterfall of how they think about capital allocation they're, always going to invest for growth in the business first, so you know up paying operating expenses.
Doing capital expenditures to you know, add new assets buying other companies through MampA paying debt down. Those are things they're, gon na do, but first and foremost after that, if they have cash flow left over that's, when they're gon na think about whether or not they should you know, do dividends or buybacks, typically and so to kind of break this down. For the layman it's, so you have a company that makes money, they have, they have expenses, and then they end up with profits right. They have cash flow after everything said and done so you're saying from the top to the bottom of this church. So priority number one is ad like like give raises: capex like buy stuff, basically grow the business yeah that's priority number one and and then priority number two is to pay down debt. Yeah typically you'll see most companies prioritize it in this waterfall and so the idea that companies would layoff employees to do stock stock, buybacks I've just never really seen that I've seen a couple scenarios with some private equity back companies where they actually did take out debt To try to buy back stock, and that was a really perverse scenario and I don't like leveraged buybacks, and I don't like when companies do that. Some companies have also used buybacks as a way to offset share dilution from the shares that they're giving to management for incentive compensation. Those are bad buybacks. I think we can have criticism over that, but criticizing buybacks.
More broadly, is you know, I think, a little bit erroneous because again, a lot of companies like look at Apple Apple. Has you know hundreds of billions of dollars sitting on its balance sheet? You know why shouldn't shareholders have either a dividend or buyback to give them back. Some of that excess capital Apple is already investing in lots of different areas: it's hiring it's trying to invest for growth, and it still has all this excess capital Apple by the way. Actually is a large share, buyback company, and so it you know, sometimes skews the actual total numbers of buybacks across the market, because it is so large, but you know, Apple stock was trading at a below average market multiple over the last few years. Prior to, like I think, 2019, and so it made sense to buy back stock at at a reasonable valuation. So those kind of scenarios, I think, makes sense for buybacks again. I think there is valid criticism against the way that some companies do buybacks but I've. Seen very few companies ever actually layoff employees to try to do buybacks I've, actually, never seen that and right now, in this current environment, we've seen a large increase in the number of companies that have been suspending dividends and share buybacks to retain that cash on their Balance sheet to try to get them through the crisis period, and that is absolutely the right decision. Companies should not be paying out dividends are doing, share buybacks right now they need to survive first yeah again.
I think this is another one of those nuanced topics that if you dig a little deeper, it won't be quite as dramatic as you Thea, so so there's definitely people that abuse it and those tend to get highlighted in the media, which gives kind of the whole Practice a bad name, but in general, if you understand why it's there, the the whole thing and what everybody is doing is not necessarily perverse awesome all right. So next question Ronnie asked I missed last week's rally because I was scared and stayed in cash now, I'm. Wondering if this was the bottom and if I should buy stocks here so that's kind of the key question that you get in a pullback right is okay, the markets going down – and this happens in Bitcoin right like we were buying the the latest dip when it Crashed from 8 K to 4 K and a lot of people are now looking at it. 7 k go know. Should I have bought the low it and we talked about this in Prior episodes – how it feels weird to buy when the market's crashing or when prices are going down, but that's really the best time to do it in a lot of cases? So what would you guys say to somebody who says you know look? I was scared, as prices were crashing as a lot of people probably were feeling rightfully so, but now it looks like bottom could be in you know we don't know, but you know what do you think about buying stocks at these levels long term? We will get out of this.
We will will recover from this. There are still a lot of stocks that there they're not recovering to the same degree as as the market has, so there could still be some opportunity to find in the market in other stocks that haven't matched the recovery we've seen in the SMP trap. Do you have anything to add to that yeah? I think you pretty much hit the nail on the head, but you know if you're thinking about, if you have a, if you're sitting on a large cash pot right now and you're thinking about deploying it part of that depends on whether you're trying to you know Get into something like a broad based market ETF or if you're, trying to like specifically pick some, you know, stocks that are undervalued. You know the market has a hole right now from this point forward depends on the timeframe right over a long term timeframe. I think we'll be well above this level in say 10 or 20 years, but if you're trying to predict the direction from here over the next three to six months I'm, not sure I do think. Maybe the market rallied a little bit too far too fast, possibly, but there are, like you said some really undervalued stocks still out there even today. That should do well over the next couple of years. So yeah kind of depends – and I think you can dollar cost average into etf's or into some of these stocks that are undervalued scale in overtime, so that you're not picking one moment in time to try to put all that capital to work yeah.
I think that what I'm noticing from a lot of people is they're just so one sided and biased with oh, that we we haven't seen the bottom like we're, definitely going lower we're, definitely gon na see more lows, and I think that that is that type of Mentality, it could be a little bit dangerous here. I think there there's a possibility that the low is in right and if that's the case, I would say, try to plan for both scenarios from here and maybe that that's just applying a little bit of capital and then, if it goes lower, we deploy a little Bit more, you know just trying to think of it in that way. Yeah add to that. You know. I see that also in the crypto space like with Bitcoin, I get the question every single day of my life, which is you know. Why should I buy Bitcoin here and like people are always trying to pick exact bottoms and the idea of scaling in and saying look, I don't know right like releasing that because that's something that's outside of your control. But if you look at in the stock example where you know fundamentally where valuations are at and where they could be and think out into the future and then the same thing with Bitcoin look at prior market cycles, look at things like stock to flow ratio. Look at the growth over time and look at accumulation ranges and add at those key moments instead of just saying, like trav, said I'm, all in or all out at these certain levels.
You know we're dealing with an uncertain future right, we're making bets with incomplete information, and so to do that when you break up your orders in your your capital base and you scale in and scale out, it removes that need to be perfect or to be right. That exact, ops and bottoms, and if you try to do that, you're opening yourself up to a lot of room for error. One thing that I say a lot is think about just getting the meat of the move right. Nobody can pick exact, tops and exact bottoms at all the right times I mean some people may be, but they're most likely just getting lucky, try to get the meat of the move and and try not to think about perfection. So you know to kind of wrap this up today. I know this is a very weird time for a lot of people. We'Ve got on what, on one hand, you know I put on my like philosophical hat thinking and and talking about like the concept of money right like that's. What really, what this show is at its core is talking about what money is, how it works in society. You know it's a it's, a social construct, it's, something that that human beings created right, that this isn't, like some law of the universe, that you know bitcoin is true. Money or gold is true money or dollars, or true money right, it's. Whatever we decide, it is – and I think it's just really important to have that conversation right now, because a lot of people are that have never really considered questioning the financial system before are doing that today.
Right so it's a pretty interesting time to be alive and on the other side, we've got our investor house right, which says working with the information that we have today and looking at the way that the financial markets work today, how do you invest in a way That can build wealth for you and your family right. So I don't know that's just something: I've been thinking a lot about, and obviously on the philosophical side, I think about wealth inequality, and you know things that the Fed are doing that might make that worse and also, you know just the concept of money that maybe People are waking up and realizing that fiat currencies, aren't gon na – be the money forever I don't know do you guys have any other thoughts or anything you want to add to that stuff, literally it's. What makes the world go round, and you know it's, probably the second most important thing next to your physical health and mental health it's interesting, and one of the reasons why I tend to be an optimist, as kind of my default sort of thinking about the world Is that, like no matter what that money is, I think humans want to transact with each other? They want to create goods and services, and so, like this economy, sort of exists, no matter what that source of your true money really is, and you know I think, when you're owning good, solid scarce assets, where that's, a company that you know produces really great products And services that can deliver value to its customers and shareholders over time or it's, something like Bitcoin, which is a scarce digital asset that can be transferred instantly across the world.
You know those are those are both things that from a more fundamental standpoint or worth owning because of those those things, regardless of whether what you think the Fed is doing or what you think the economy should look like or whatever like. If you focus on that for a longer term time perspective, I think that gives you some clarity over trying to predict market direction with all the news that's flying around. No, I mean, I think I think, that's, why I've mentioned earlier I'm wondering if, with all the changes and all the new things were seeing I'm wondering if it's it's gon na become one of those situations where everybody you know should have a little bit of Bitcoin. Just in case you know, it's definitely proven to be a very resilient asset. It makes me think I can only think kind of bright future in a way with the way that it's been so resilient and then, as this is unfolding with our our currency, fiat currency. So that's kind of what I'm thinking yeah I mean it really is the honey badger of money in hurry a couple of years we go through a cycle where the the mass media calls for the death of Bitcoin and you get all these obituary articles and then You know six to twelve months later, it's at new, all time highs and people are euphoric about it. I mean almost every asset. At this point I mean they've been saying that about the stock market.
They'Ve been saying about Bitcoin Real Estate's gon na crash again and like I mean it, yeah everybody's got something something like that to say about every asset. Lately it seems yeah and leaving the money. Managers are starting to come out with ideas like calling Bitcoin dummy and insurance and stuff like that right where, if the does hit the fan, are you gon na really want to own zero Bitcoin, like you should exactly you're a responsible money manager? You know a one percent allocation, just looking at the risk and reward profile, a Bitcoin makes sense right, that's been the arguments possible if you don't have it. I think exactly know that your career that's that's, what I've been seeing floating around the adviser space as well, that they're questioning that saying? Well, maybe we maybe we do need to have some did we just do an infomercial for Bitcoin. I think we did. Gold bitcoin is the real new gold, but this is. This is just showing that, like we, you don't have to be one sided. You can like all assets, you can like multiple assets, use a tribe and go all in on that. Tribe is wrong. Money is religion, and my religion is the right religion. What I think is is fascinating is what what the world is. Gon na look like. You know a year two, three years from now, I think we are at a big turning point, like you said in so many ways with not only what we're seeing with this unprecedented experiment in terms of fiscal and monetary stimulus across the world.
But you know also this that what we, what we're, seeing right now currently this week with a backlash against you, know corporate bailouts and you know the need, instead of paying people directly it's been. You know more of the programs aimed at helping companies and I get the incentives behind that but it's interesting to think about. You know what that may change. We may be seeing more of a shift to people that want to support people like Bernie Sanders or Elizabeth Warren people that want to see a shift from the way that we're structuring societies today to favor the corporation to maybe we're gon na be favoring the individual. You know, as we go forward, it's it's, interesting to think about and maybe redefining what, how corporations look right with decentralized organizations – and you know dows and stuff like that – maybe a few years from now will be actually redefining what a large fortune 500 company actually means And what that looks like at its core yeah, and I and I you know – we talked about the buyback thing earlier and it sounded like. I was kind of defending buybacks and at some level I was defending it against the the blanket attacks against them. But I do think we're gon na see a different, maybe set of regulations for how companies maintain cash on their balance sheets to prepare for pandemics or what other things could come out of left field. So I do think we will be in a new world of corporate capital allocation going it's gon na be interesting to see how that evolves for sure yeah.
Well, on that guys, I think we can go ahead and wrap it up. You know feel free to go. We talk money, com2, some, let submit your questions, hopefully everybody's, staying safe and healthy, and you know also feel free to check out the skill incubators wealth building community. If you want to invest with us and be in a community with us on a daily basis. Also I'll link up Travis's new article that he's getting ready to post today talking about stepping back from the ledge and maybe learning just how to think a little more pragmatically or at least view yourself as a casual observer rather than a tribe. Member of a specific belief system that's, in my opinion, the the smartest investors that I know and that we like to talk to kind of think like that and operate from that framework. So we just kind of encourage people to take that same approach.