By coinnews 
0:05 spk_0
Welcome to Stocks and Translation Broadcasting from the New York Stock Exchange. I’m Jared Flickery, your host, and with me as always is the voice of the people, Sydney Freed. Please like, subscribe, and comment on Stocks and Translation on Spotify, Apple Music, Amazon, or YouTube, and today we are welcoming John Harr. He is a managing director at Swan Private Wealth. Back in the day, he was a fixed income portfolio manager for Goldman Sachs, so we will definitely.Talk about bonds today and also some crypto. Our phrase of the day relates negative real yields. No, that doesn’t sound good, and we’re going to tell you why this hurts the average American consumer. And this episode is brought to you by the number 553,555. That’s how many Bitcoins Michael Saler’s micro strategy has accumulated so far, what the corporate imitators say about crypto adoption.So John, why don’t you just give us right now your big picture view of what you see going on in the markets, and I should say we have Bitcoin testing its record high around 108,000 as we speak, as we’re taping right here and then a lot going on in the bond market for
1:07 spk_1
sure. Great to be here with you guys in person. So big picture view of the markets, I think post COVID.Uh, 2022 and on, I know we’re three years removed from that, but that point in time is very important to highlight because I think we entered a new market regime, a new investing regime, and I really think we’re just in the early days of that. So this, this is keeping it super big picture, but I think roughly 1980 to 2020 was a particular investment regime characterized by trends that continued on for quite a long period of time.And importantly that 40 year period was when the 60/40 portfolio was the hottest thing. It’s just set it and forget it. uh, equities and bonds are inversely correlated over most periods bonds soften the blow from equity downturns, etc. etc. um, but a lot of why that happened.There were factors such as globalization, offshoring, China coming into global trade and production markets interest rates started that period very high and were gradually falling. All of those things generally changed to some extent or are outright reversing, uh, post COVID.So that is like the 30,000 ft view I would share with investors because I think any strategy, investment strategy that worked well for that 40 year period 1980 to 2020, uh, you need to beware because it’s probably not gonna work the same way going forward.
2:37 spk_0
I love that you, uh, we’re gonna pick apart 60/40 for sure and that, that, that regime that we had from the 80s until very recently, that just got destroyed in the 22 bear market and we’ll talk about that. 60/40 did horrendously for a couple of years and that surprised a lot of investors. One of the things we’ve been talking about here is the new playbook that investors have to realize. So this fits in perfectly, but I want to get to our phrase of the day here.Which is negative real yields. Now negative real yields occur when bond interest rates, they fall below inflation. This means investors lose purchasing power, effectively earning less than 0% after inflation is accounted for. And this is kind of a new reality as we’re seeing higher interest rates, but also higher inflation pick up. So how does this affect investors? How should they be thinking about this?
3:25 spk_1
Yeah, so if you’re gonna get negative real yields from bonds, that’s another way of saying the 60/40 portfolio is not gonna be your friend. Um, a lot of investors, I have seen some trillion dollars dollar asset managers, CIOs at those shops. Uh, my former employer is a $1 trillion dollar asset manager. After that 2022 bond bear market, uh, 2023 was not a particularly good year for bonds either. A lot of them were calling for things to reverse in 2020.and that is a common strategy. You just say, hey, look, reversion mean everybody loves it. Everyone loves mean reversion. It works well sometimes. It did not work well in 2024. 2024 was not a good year for bonds, and I think that underscores my thesis, which is this is not a mean reversion trade. This is a new investing regime. Um, in terms of, uh, your description of, of negative real yields, that, that’s spot on. I would just like to underscore something which is when you’re subtracting out inflation.That can be a tricky exercise becauseThe technically speaking, there’s no such thing as the inflation rate, just like there’s no such thing as the cost of living. America is a big place too. America’s a big place. Everyone has a different personal inflation rate, personal cost of living. Even the same person from one year to another has a very different inflation rate cost of living. If someone has a family, if they’re looking to buy a house, if they already have a house, all these factors. So I just say that because when most of the time when people subtract out is CPI.That’s a consumer goods basket. That does not do a good job of tracking home prices of uh desirable goods such as college tuition, private college tuition.Even, uh, equity prices to a certain extent, if you miss out on a big equity rally, that’s not really captured in CPI and all the people who got in before a run up, you know, they benefited a ton at the expense of those who didn’t. So I would just use that to say, um, the real yields story might be even worse than what you see published because, uh, just as a data point from like roughly 2000 to 2020, that’s generally thought of as a period of low inflation, but that’s CPI.If you look at home prices, college tuition, quality healthcare, it, it, uh, increased at a rate of more like 5% per year, whereas CPI was more like 2% per year. So putting all that together, I would say I think we’re gonna be in a period where CPI will probably be above 2% for an extended period of time.And I personally believe all those other desirable scarce goods, private college tuition, home prices, healthcare, those are gonna appreciate at something north of CPI, and I don’t think the bond yields are gonna be there to compensate people for a sustainable positive real yield.
6:13 spk_2
So if 2024 was not a good year for bonds, uh, and you say 60/40 might not work right now, what would work? What’s the portfolio allocation you’d be for? Does it have
6:24 spk_0
anything to do with crypto?
6:26 spk_2
How much bonds should someone own right now? Yeah,
6:30 spk_1
so my personal recommendation on bonds would be 0 as a long term strategic investment allocation.Where I do think someone could own bonds is if they’re using it as a cash substitute because you have to remember what, what are bonds at the end of the day, it’s basically you’re assuming it’s cash because you’re assuming you’re gonna get paid back your principal plus an interest payment. So that is what a bond really is at the end of the day. Yes, if you have longer term bonds, there’s duration risk and these other things. If you’re using bonds as a cash substitute, I think that is reasonable. Um.But for anyone who is not uh constrained by investment mandates, so for example, my prior career I managed fixed income portfolios, but it was for institutions and insurance companies. They cannot just decide to own zero bonds. Uh, there’s regulatory reasons, they’re matched with their liabilities, so they don’t have that kind of flexibility. But for an individual, for a much less constrained investor and endowment, something like that.I would if I was the CIO of of the family or the endowment, I would own near zero in bonds. I’ll forget about
7:38 spk_2
it. I, I’ll forget
7:39 spk_0
about bonds. Well, you’re not in bonds. I would, I mean.I love your who knows. Um, OK, but, and we’re gonna talk plenty about crypto. Maybe we can just get into some of the market action that we’ve seen. Um, how dangerous is it with the 30 year yield above 5%? Because I’ve noticed tech teams, tech specifically, XLK, you know, if you’re watching the, the large cap sectors that ETF was down substantially, leading the way down Monday morning when yields first popped above 5%. It was, uh, leading the way.This morning when yields were back above 5%, there seems to be an inverse correlation there. Multiples seem to be contracting as yield yields advance. So lay it out. What’s the bad news for stocks here with yields above, or is there some other dynamic we should be paying attention to? So
8:23 spk_1
I think this speaks to what developed markets are going to experience what some are calling it developed markets start to look like emerging markets. DM starts to look like EM.Uh, relatively scarce, harder assets, things like gold, Bitcoin, and now those stocks in there to a certain extent will perform better than things like cash and bonds. That doesn’t mean that you can just own any stocks and close your eyes and they’ll go up. I mean, same is true for gold or Bitcoin, but, um, what I think the era we’re entering into is one of continued inflation.Uh, continued currency debasement as we would call it in the Bitcoin world. And in that type of world, I think stocks generally do well, but the cautionary advice for stocks is that you have to consider your starting point. And for a lot of these US tech stocks, I would call them price to perfection.They have PE ratios that are at all-time highs or near all-time highs, so a little bit of a negative headline whether it’s 30 year yields are rising rapidly, whether it’s US economic data is softening, whether it’s oh no, we’re entering a trade war again, all of these things can set off a selloff in equities.We just saw that, you know, pretty clearly in April. They did rebound
9:40 spk_0
a lot. So you would buy the dip maybe, but not, not the rebound, not by the rebound at all-time highs.
9:45 spk_1
Yeah, I mean, for, for equities, excuse me, the way I would say it is personally I feel a lot more comfortable owning Bitcoin over a 1 to 2 year time horizon.Than I would owning equities. I’m not telling people to own zero equities like I just said for bonds, but, um, personally, I just think the returns you’re going to see, even risk adjusted returns for Bitcoin over the next 1 to 2 years are going to significantly outpace US stocks.
10:13 spk_2
How do you recommend people invest in Bitcoin? Is it actual Bitcoin? Is it ETFs?
10:19 spk_1
Yeah, that’s, that’s a huge, once someone says, OK, you’ve got my interest on this Bitcoin thing, how should I potentially do it?Most people are going to either start with an ETF because it’s accessible in their traditional brokerage account, or they’re gonna open up a brokerage account at a Bitcoin native company like a Swan, for example, and they will just own either the ETF in their brokerage account or they’ll own Bitcoin, but they’ll keep it in their Swan account. But then you have to remember Bitcoin is like gold. It is, it has the potential to be a bearer asset, so you can take self custody of it. That’s not something you’re going to learn in 15 minutes’ time.And there are risks associated with that, but there are partners such as our company Swan who help clients understand that. But typically the starting point is going to be either an ETF or spot Bitcoin that you have someone else hold for you. And as you develop conviction, as your education ramps up, um, you can do other things whether it’s owning Bitcoin in self custody, whether it’s owning Bitcoin in an IRA, um, or these other Bitcoin treasury companies like uh MicroStrategy.
11:24 spk_0
You know, I think we’re gonna stay right there and we do, we do need to take a short break. Coming up, we’re gonna be talking about those corporate treasurers amassing Bitcoin like micro strategy and a battle of civilization on today’s runway showdown. Stay tuned.This episode is brought to you by the number of 553,555. That is 5 5s and 3 if you’re counting, and that’s how many Bitcoin’s micro strategy has amassed as of the beginning of May at a total cost of nearly $38 billion or $68,500 per Bitcoin. And by the way, year to date 2025, about 61,000.5 Bitcoin have been added, and we’ve seen other other corporations try to follow suit here, butWhat do you think of the, what do you think of this gold rush into digital gold?
12:19 spk_1
I think this is the biggest story in Bitcoin right now. Michael Saylor, CEO, founder of MicroStrategy, is undeniably the, the trailblazer here. I don’t think anyone’s gonna catch them given the, the head start that they have. Big numbers there, big numbers there, you know, you’re talking north of, uh, of 2% of the Bitcoin supply, you know, um, so that that’s just a huge head start. Their first buys were in August of 2020.And there are tons of copycats popping up. I, I will share a quote from Michael Saylor that really made it click for me, and he said in August of 2020 we bought there’s something like $300 million worth of Bitcoin roughly, and that took them a long time as a company to accumulate cash to convert into Bitcoin years if not decades, and then he goes over the next 4 years we bought $10 billion worth of Bitcoin.And the way they did that was not by running an enterprise software business, their legacy business. It was by tapping the debt and equity capital markets to borrow and issue fiat to buy Bitcoin. But then he goes over the next 4 weeks we bought another $15 billion worth of Bitcoin.And, and with that same strategy. So those numbers really put it into perspective for me because if you believe in the Bitcoin thesis that it’s this emerging, appreciating monetary asset, then you have to ask yourself what is the fastest, most effective way that I or my company can accumulate Bitcoin.And it’s not by running your enterprise software business for another 30 years. They would have to run it for centuries to accumulate $15 billion worth of Bitcoin, or you can borrow Bitcoin, issue convertible bonds, regular bonds, issue stock, preferred stock, etc.So micro strategy is pioneering this and you’re seeing tons of corporate copycats for lack of a better term, pop up, and I think this will be the story to watch in Bitcoin for the next 12 months or more. Wait,
14:14 spk_2
dumb it down for me. Why does it matter that all of these businesses want to buy a Bitcoin?And it’s just because they think it’ll appreciate a ton over time and they’ll have more money. Like, why is this so
14:26 spk_0
practical uses too, but I’ll let you answer.
14:28 spk_1
Yeah, it’s, it’s definitely not rocket science, but um it’s this idea, you know, you call it a digital gold rush. I think there’s something to be said there.It’s borrowing or issuing a fiat denominated asset. Fiat is this asset that is inflated or debased over time at a rate of at least 2%. That’s what the central banks. That’s what they’re targeting. So it’s at least 2% that things are getting more expensive every year. Uh, Bitcoin is a fixed supply. It is more scarce, but it doesn’t even.To be Bitcoin to to use an analogy to explain it, you could think about what real estate investors do. What, what do they generally do? They borrow dollars or issue equity denominated in dollars to accumulate real estate. Real estate is not fixed in supply like Bitcoin, but it is relatively scarce. You can’t print it, you know, a lot of work has to go into it. And being a real estate investor using that strategy has been.Successful for decades on end, there are of course periods where it’s not 2008 financial crisis. There’s bubbles and things like that, but I would say Michael Sayler is really using it gets referred to as a speculative attack, um, borrowing a fiat depreciating asset and using it to acquire an appreciating asset.
15:45 spk_0
Let me ask youthen, is micro my, my big question is, is micro strategy a good buy for an average investor? What holding period does that, would that entail?Then I’m just wondering because micro strategy itself is a levered play on Bitcoin. I’ve seen it lead Bitcoin breakouts by up to a few days. So for me it’s on my radar because it’s an indicator for Bitcoin, but it also means it could lead on the way down and it just seems like the beta is so high that you can end up losing a lot of money if you catch it at the wrong time. So that kind of gets to the holding period of my question.
16:16 spk_1
Yeah, so I would say to relate it to Bitcoin, I, I really think Bitcoin is an asset that you can buy and hold really close your eyes for the next 10 years and you’ll be very happy with the results. I don’t think micro strategy is quite the same thing. I don’t want to call it a short term trade because it’s definitely more than that, but you have to pay attention more. You remember, you still own an individual company, so there’s key man risk, there’s litigation risk, etc. um, also, you have to be aware of valuation.So to your point about micro strategy, leading Bitcoin, and it moves slightly differently, generally in the same direction, but slightly differently. There’s this metric known as MNA, which stands for multiple to Nav, and that you can kind of think of it as the PE ratio for these Bitcoin treasury companies. And the MNA currently it’s around 2X right now. What does that mean? The market cap of the company is 2X, the market cap of the Bitcoin that they hold.And you might be saying to yourself, why would anyone in their right mind buy micro strategy at a 2x premium to the Bitcoin that they hold, because they can sell it higher, they can sell it higher, and an additional answer would be that micro strategy can acquire Bitcoin.On terms and at a pace that you as an individual never could. So the key metric is Bitcoin per share is they will increase their Bitcoin per share over time. So think of it as micro strategy literally acquiring Bitcoin on your behalf as a shareholder.
17:43 spk_2
I know Jared probably has more on micro strategy, but I just want to ask one on behalf of the individual investor, how much of your portfolio should be Bitcoin or crypto? We’ve talked a lot about the rise in gold recently as a safe haven, and I think there was, it’s safe for me to say there was kind of a consensus with some of the experts, about 5 to 15% gold somewhere in there for a conservative portfolio. Obviously it’ll depend who you ask. What is your stance on how much crypto should be in your portfolio.
18:11 spk_1
Yeah, I think, you know, good to offer a number as a starting point, but I think different people’s, uh, financial situations, personal risk tolerance, age, all these things will play in their, their education, their conviction in Bitcoin, but I would say 5% is a very reasonable starting point. Take it from that bond allocation if you still have one, and, and I would say the same for Bitcoin or gold. I, I think Bitcoin and gold will outperform bonds over the next 5 to 10, maybe 20 years.Uh, just start with a single digit allocation. Once you build your conviction in the asset, uh, once you’re comfortable with whatever custody approach you’ve taken, then you can increase it from there.
18:53 spk_0
Iwant to come back to that and maybe we’ll have time for Ethereum at the end and Salon and some of the other stuff, but I do want to get to today’s runway showdown.Which is going to transport us back in time, back in time to ancient civilizations where finance and empires first collided. So on the one side we have the Roman Empire all about expansion and leveraged wealth, but inevitably vulnerable to inflationary collapse. Opposite them stands ancient Egypt. Conservative.Asset rich and built for stability, keeping its wealth in gold and hard assets. So John Harr, student of monetary history, which civilization has lessons most relevant to today’s investors? Is it Rome’s bold but risky expansionism, or is it Egypt’s prudent asset-backed stability?
19:36 spk_1
This is amazing. I love that you guys worked this in. I would say off the cuff Rome probably because Roman currency debasement was a major contributing factor to the collapse of the Roman Empire. I think that’s a consensus view.Um, you know, I don’t, I don’t think there’s any like debate over, you know, scholars would agree
19:55 spk_0
that the lesson is don’t do Rome. Don’t be inflationary.
19:58 spk_1
You know, inflation is, is a big problem for society. You could have a whole episode about the problems of inflation, and we’re not just talking a 2% inflation target that the hypothetical Roman central bankers had, you know, these are things that the term debasement is literally them using another metal to.You base the original metal in a coin, so going from silver to something that was much more prevalent or copper or something like that or coin clipping, things like that, and they did it they they went into hyperdrive and you know cause hyperinflation at some points in Roman society and it really just degrades society in terms of economic calculation, in terms of people’s ability to save, in terms of people believing there’s a fairness in society.So relating Rome to monetary history, I would say beware of inflation. I’m not predicting hyperinflation in the United States. Neither would I. Yeah, I actually, you know, I, I think people should be aware of anyone who is predicting hyperinflation because that, that basically means an all out currency.
20:57 spk_0
That is a different animal, yeah,
20:59 spk_2
yeah. Going back to some other cryptocurrencies, what are you thinking about Ethereum and Solana?
21:05 spk_1
So at at Swan, we are a Bitcoin only company. We’re pretty passionate about it.I would say Bitcoin is a decentralized fixed supply digital peer to peer monetary asset. And when I look at Ethereum, Solana, really any other token out there, Do you cannot call them what I just described Bitcoin at. They’re, they’re not credibly decentralized, not credibly fixed supply.Uh, they usually have some sort of centralized body or foundation that’s running them. Uh, they, they sometimes literally go down and you can’t use them, whereas Bitcoin has had near 100% up time in 16 years. Um, also, government recognition of these assets has been very different in the last 6 to 7 months. There is a Bitcoin strategic reserve that has been formed in the US in the US, and they are talking about doing budget neutral purchases of Bitcoin.They’re not talking about doing that for other assets. So maybe there are narratives that these other tokens can latch onto and potentially get a, a nice, you know, pump up in price or get investors excited, butI would caution people to treat Bitcoin very differently than any other digital asset.
22:13 spk_0
All right, and we got to leave it right there because we have wound things down here at Stocks and Translation, but be sure to check out other episodes of the show on the Yahoo Finance site and mobile app. We’re also on all of your favorite podcast platforms, so be sure to like, leave a comment, and subscribe wherever you get your podcast. We will see you next time on Stocks in Translation.