Kevin O'Leary | For the First Time My Crypto Exposure Is Greater Than Gold
com. Today we have a very special guest back with us. Kevin oleary is a one of your favorite investors of all time, hes, also the star of abcs shark tank kevin. Welcome back to the show good to be with you great to be here. Thank you. Well, we have a lot of ground to cover with you. Since we last spoke. I know youve been involved in a lot of brand new ventures. We cant hear we cant wait to hear about, but first i want to just touch base with you on some current events. Of course, uh the news of the week here, uh treasury secretary, janet yellen, warning that the u.s government will run out of money by october 18th. If something isnt done, she says, failing to increase, the debt limit would have catastrophic economic consequences. Kevin. Are you buying this warning? Do you believe it? No. Neither is the market weve seen this movie before so many times you cant even sell tickets to it anymore. Nobody cares, they know theyre going to work it out. Everybody understands the huge debate going on. You know between the two different proposals, one the infrastructure, the 1.2 trillion and then, of course, the three and a half trillion dollar social programs. These are all happening in the sa. At the same time, so youve got a boiling cauldron of debate and the market is sort of jaundiced to this kind of thing. They know a compromise will be worked out in every situation, its its almost sad that you know, politicians have to waste so much time.
Dancing around like this, when everybody knows its complete, you know what i mean its just and thats why the market doesnt care it doesnt care its so often, but look. This is the nature of where we are today very divisive. Clearly, the parties dont agree on anything. Nothing gets done and in some ways the market likes that and i think, its its sort of healthy that they force each other to get realistic. Because almost you know this three and a half trillion dollar proposal is insane. It would make tax rates be so uncompetitive versus the global economy that it really cant happen and, and most rational politicians know that and kevin speaking about dancing around uh fed chair, jerome powell coming out this week saying that the inflation he spoke of perhaps is not Transitory now, why skirt around this issue? Why not just be straight up with the public theyre hedging their bets on one specific issue? They havent stamped out the virus, yet they dont know how the economy is going to react if, in november and december and january, the traditional flu season it spikes. Yet again, we are not yet at a you know: hurt immunity, theres, so many different cohorts in the us economy that have not decided have decided not to vaccinate and thats caused major problems and so hows hedging. His best i mean if we get a complete spike again and thousands of thousands of cases piling into hospitals its going to cause.
You know a grinding slowdown to the economy and he wants to have the tools available, so hes not ready yet to completely reverse tapering, and you know, or or have any option taken away from him. He wants optionality until we get through this next flu season. This is a critical time, and what about this talk of minting a one trillion dollar uh platinum coin um, basically would be deposited at the fed to pay off outstanding treasury bonds and not have to worry about the debt limit. Is that a possibility we could see or just makes a good headline? No, it makes a great headline chess that happening practically zero. All of these radical ideas, um generally make a lot of press and go online, and sometimes they reconsider fake news, but at the end of the day, thats not generally how he would react. I mean the economy itself right now, isnt doing too badly. Consumer demand is pretty good. People are managing around covert 19 and the delta. You know variant, so i think theres a lot of a lot of ways to play this out, but really its a 90 day window. So if youre, an investor get ready for more volatility, but you can watch these metrics come day by day and of course we have to get to the debt ceiling thing and then weve got to resolve. You know how were going to sign the bipartisan support for the infrastructure package should get signed, but you know the more progressive elements of the democratic party want to tie it to the social span and i dont think thats going to happen.
Everyones, alluding to you know, get get ready. You said volatility that we could possibly see a correction u.s equities. You know 10 20, whatever uh. Where do you stand on that people have been calling for the correction of 10 to 20 for three years now and theres tremendous amount of liquidity in the market. The economy is doing quite well theres a lot of stimulus in europe as well as we have here. Another 1.2 trillion coming into the market, its really hard to see that correction. With that much stimulus, i mean thats, really, why were at where were at weve, never ever in ever in in 200 years, seen this amount of basically free money coming into the market. So i im a little cautious about calling for a 20 correction. Anything can happen, of course, particularly if delta came back in a vicious form, but you youve got too much stimulus and you know trying to time the market and selling your equities, because you think were having a 20 correction is probably is as dangerous. You know as shorting it you just dont, know whats going to happen. Next lets talk the crypto space now because the last time youre on uh, you know you you had mentioned how you had you had to change your part when it came to bitcoin now youre fully in the crypto space im excited to talk about the projects youre Involved in but first uh chamac palapatia responding uh to critics, including ray dalio, saying that look uh regulators will stop bitcoin if it gets too big.
He responded, saying you cant stop bitcoin. Obviously, we saw the china news, uh whats, your take can can bitcoin be stopped or will governments win? You know its a great debate, however. The productivity enhancements that are available through crypto currencies and the entire infrastructure of decentralized finance are far too interesting for even governments. I dont think the us government wants to fall behind in the development of new payment systems and services online that are being brought forward by the development in all kinds of centralized and decentralized finance systems. And so i i dont see a a situation where cryptos ever going away. Now, as far as being an investor in crypto, i tell people this all the time that asked me ive, declared recently by the end of the year, im hoping to be at seven percent of our operating companys portfolio in in crypto currencies. In addition to level one and level, two um blockchains and so im investing in a wide range of different crypto products as a strategy, but the idea that um, you know the governments all around the world are going to synchronize and make bitcoin illegal. I think is far fetched and you you know the best way to look at it. If youre an investor is either you believe in decentralized finance and you believe in centralized finance and you believe in bitcoin and ethereum and blockchains or you dont. If you dont stay in gold as a hedge and if you do, you know tip tip into it, you know im suggesting uh, you know everybody has their own risk tolerance, and i must say that crypto space is very volatile, thats obvious, but im now going to Be at seven percent, hopefully by year end so im a believer in it im an investor in it.
I put many bets out with different companies now theyre developing products in these areas and im pretty comfortable with where i sit so im happy to listen to anybody but im. Sorry, i dont agree. If the answer is, you have zero exposure to crypto right, seven percent crypto. What is that? What percentage is in gold? You had some in gold before yeah. I have five percent in gold, so crypto for the first time is more than gold. For me, um and im going to keep my gold, i see no reason not to not to sell you to sell it, but crypto its not just betting on the price of bitcoin, anymore theres, so many other ways to invest, particularly in blockchain opportunities. Solana, ethereum. You know h, i mean theres, so many different level ones and then of course, level. Two is the derivatives that are put on top of ethereum and salon and all the others. So im ive really become a student of whats going on there. I think theres many markets where, for example, nfts are going to be growing very quickly. I just see a lot of investment opportunity and im going to be an investor in that space. Well, lets talk about that now because you have taken a big bet in d5 and nfts as well. Uh lets start with uh d5. I mean your colleague mark cuban has also said look. This is going to be the biggest disrupter to banks.
Uh, do you agree with that? I do i do. I see lots of use cases for decentralized and centralized finance and ill give you an example of one that i think is ripe for disrupting the currency markets and currency trading are the largest markets in the world. Trillions of dollars every week are exchanged between different currencies for many different reasons, and every time you do that you get clipped for two three four five six basis points. So if i want to buy a swiss stock trading on zurich, i and i have us dollars. I have got to convert my usd into swiss francs and then buy the position when i sell it. I got to do the thing in reverse and i pay a lot of fees and a lot of friction. If we had an agreement in a payment system between the two regulators in switzerland or euro or british pounds, or singapore or asia, we could pay in one single currency or payment system that could be provided by a very security, centralized finance or a stable coin. Like a usdc or a die, and i would avoid all those fees, it would cut the fees by 90 and i think the pressure to do that will continue to grow now that we have the technology in ledger based blockchains, where we can actually track these trades. In perpetuity – and so yes, i believe therell be disruption. Yes, i think a lot of currency traders are going to lose their jobs over the next few years and i think thats a good thing.
It makes the whole system better, faster, more transparent, more secure and, above all, much cheaper, lower cost. Okay kevin on that note lets talk about the wonderful app ticker wndr. Tell me about it. So wonderfuy is a classic case of decentralized finance, but what is specifically trying to do is democratize and commercialize and commoditize and make it easy for everybody to use decentralized, finance and heres a use case right now. If you have your money in the bank, us dollars youre, going to make 21 basis points or thereabouts in interest which is way less than inflation, which is north of two percent, so youre actually losing money every 12 months. If you convert your usd into a stable coin like usdc and stake it, which is a way of loaning it out on decentralized platforms, you can garner yields of 3.8 to 5.2 percent, so to be able to do that is really complicated, and so what thats? Just one use case that wonderful is trying to do and make it very easy for millennials or genders and even baby boomers to do with a mobile app, because one of the biggest problems is being compliant to the tax department. You have to report your interest. You have to report your gains and losses and wonder if i is trying to do all of that in very simplified manner. So what its trying to do is be the first to really make this easy for people to use.
If you understand how to do what i just said, youve been a kryptonian for a long time, its very hard i had spent it took me four months to set up the compliance infrastructure in my own operating company youd be able to loan. My first stake in usdc: you cant do that if youre 23 years old youre not going to be able to do that, wonderful is trying to solve that problem. I think its a wonderful opportunity in that sense, because theres so much demand for yield, and you know that and now i think, when the product comes out very shortly, people have an opportunity to do that in a compliant and reporting fashion. Uh youre also involved in the nft space now, obviously, a very hot sector with immutable holdings, uh ticker hold uh. Can you share some info here? Youre youve been very busy. Yes, i i got involved with jordan freed the ceo there when i started to develop and uh start working in the watch, space for nfts to authenticate high end watches, patek, philippes rolex et cetera and thats. When i was introduced to his company, you know mutable holdings, its really a portfolio of assets on the blockchain. So, if youre looking for something to give you exposure to the blockchain across a wide range of different assets, um its an interesting opportunity, they own nft.com, they own 1, 800 bitcoin, they own all kinds of different assets and have the ability to build up profiles.
So if youre, a company like lets, say sothebys – and you want to own nft.com forward – slash sothebys well immuno can do that for you, along with the other s, p, 500 companies and at the same time they can help you curate your nfts. They can build lockers for you onboard off door grants all of that. I think its going to be a really interesting place, because the biggest opportunity for that company is custodial uh services for those that are developing nft strategies. I dont care if youre nike or a watch company or even real estate company thats, what immunible holdings is attempting to do, and i i put it in the portfolio because i thought it was a good way to invest in the infrastructure of the blockchain. Very, very very cool uh lets end with this kevin because, as we know, all roads eventually lead to gold and bitcoin going back to shamath. Another point he brought up is that bitcoin has officially replaced gold. Of course, hes going to say that um do you agree? Has it officially replaced gold? No nothings going to replace gold golds been tried and proven for 2 000 years. The romans were hoarding it. I think what happens. Is gold will remain an asset class in in portfolios like mine and others? As a property, i mean you cant stake gold. You cant, lend gold. I mean its very difficult to do it. You have to pay for product services and storage uh.
At the same time, you know with with crypto you have the opportunity to stake it or lend it and get some kind of um appreciation of value through interest or whatever. So i think theyre two different asset classes uh, but i hold them both. You know its fun to see the press create. You know this controversy between gold and and uh bitcoin. If you want to use that one its irrelevant, because theyre completely different – and i think from my perspective, having exposure to both is a good idea. So ive got gold and ive got bitcoin. In fact, now cryptos bigger than my gold holdings, well im a culprit perhaps of that battle, but everyone likes a good fight kevin. You know it. You know it youre right, youre, absolutely right! Uh! Thank you for joining me. Come back anytime to stansberryinvestor.com, looking forward to it great to see you again take care me too, and thank you all for watching. Well, have much more for you! Dont forget to sign up for premiere content. You cant get anywhere else at daniela.com thats it. For me.