Ep231: The Sickest Value Out There Right Now

This is the Ten Minute Concertion Podcast, this is VP. We are Solutions-based podcast diving into the world of contrarian investing and alternative finance. You can find us hosted on the No Nonsense 4X YouTube channel, No Nonsense 4X.com and podcast players everywhere. And we have a new sponsor today, episode 231, is brought to us by my new substack. It's called the Contrarian Investor Blog. So creative. There will be a link down below in the show notes. I suggest you click on it and get yourself subscribed. This is where I will be blogging from now on. I plan on putting out one a week, minimum. And with substack, you will get notified via email when that blog post comes out. Unlike my old blog. And I will be dropping additional alpha there that I may not end up dropping here on the show, or it might be much, much later. So you don't want to get it when it comes out, so click that link if you're not subscribed already subscribed. There is so much going on in the financial world right now. I can't possibly talk about all of it here. The link I give you will take you to my very first blog post, my introductory post. If you already know me, you don't have to read it, but that is post number one. And either way, I hope to see you all there. Don't miss out. It is the Contrarian podcast and the price of Bitcoin had dropped from its peak by one third in as little as one month. And people are still scratching their heads as to why and rightfully so, we didn't have a big collapse of anything. There's more liquidity in Bitcoin now than there has ever been. So how is something like this even possible? This whole decline seemed to happen on air. Well reports are coming out now and you can debate the validity of this idea or conspiracy all day. In 2025, you should not be looking at the word conspiracy the same way you did even five years ago. Some conspiracies are wrong, but as Charlie Munger said, "Show me the incentive. I will show you the outcome." And it looks like the big banks were behind this the entire time. And Contrarians allow me to be the first one to say it was done for very, very good reason if you are the big banks. Allow me to explain. So the attack was done on strategy ink, formerly known as micro strategy, ticker symbol MSTR. But just really think of strategy ink as a company that just holds a ton of Bitcoin. Now what are they planning on doing with that? We'll talk about that in a moment. But it really is and has always been more of a leveraged play on Bitcoin itself. And since there are no 2X leveraged Bitcoin ETFs, at least in the states that I know of, this is the only leveraged play in the game. But as it stands, if that's all they ever did, they were really no major threat, or at least not a direct threat, to the large banking and financial institutions in the United States. Until July of 2025, that is, in July, JPMorgan raised the margin requirements for its customers to buy MSTR, and has been funding it ever since. Now why would they do such a thing? They're finally on board with Bitcoin. Now this doesn't make a whole lot of sense. It almost seems counterintuitive at the stage of the game. Well allow me to explain why. Because also in July, big coincidence, micro strategy, I keep calling it micro strategy, strategy ink came out with four preferred stock funds. And one of them in particular, the only one of the four, I think there's five now. Which we'll talk about today, is ticker symbol STRC. Now what this fund currently does is give out a 10.5% annual yield, which they reserve the right to raise at any time, but by rule, cannot lower any more than 25 basis points beyond any decline in the overall sofa rate. And when you hear sofa rate, just really think because it's so correlated, think of the actual interest rate on the USD. Now why is this significant? Oh, buddy, is this tremendously significant? Really, if I'm not even being hyperbolic here, poised to change the financial game completely long term. So please understand how worldwide, how coveted instruments are that provide good yield and don't move a lot are. If you can give me something close to 10% with very little risk, there's just not products out there that really do that. So you might be thinking of some examples in your head right now. Let me explain a bit further. So when it comes to yield bearing ETFs, for example, there are some that just don't move at all. They might move a little bit up or a little bit down or a little bit in both ways, but they stay very close to one price. So think about instruments like SGV or JAAA, which has a little more risk, but still does a good job of staying in a very, very narrow range. SGV currently gives you about a 4% yield and JEEA gives you a bit over 5 right now. Now beyond this, there are funds that move in a bit wider of a range, but still manage to do a really good job staying there. When I say a wider, it's not even that much wider, it's like $1 or $2. One of the ETFs I can think of here is oddly enough, JP Morgan's ticker symbol JPE. And that one gives you right around 5 and 3/4% yield, excellent return for something that barely moves. But once you start getting up into the 10% range, and if you guys remember the rule of 72 that we had a whole dedicated episode, too, on this show, once you start climbing percentage points, they start to really, really make a huge difference in your overall compounded return. So when you get to 10, certain sacrifices absolutely have to be made here. For anything to squeeze out that type of return. So like I said, these things do exist. I went over to, you know, if you remember the closed-end fund episode, one of the most important episodes I think we've ever done here. There are closed-end funds out there that can give you over 10%, I just ran a search on CEF Connect. There are currently over 120 of them. But is anybody who understands the CEFs and has tracked them in the past knows the price of most of them do go down over time. You have to be really sharp with your entries and especially your exits when it comes to these, which can be done. But remember, your average investor for sure, and most of your average firms out there aren't able to do what we do when it comes to entries and exits. Most people who are in this thing just ride out the drops, which is crazy to me considering you don't actually have to do that. But we're not, again, we're looking at your average investor here. The reason why CEFs aren't as popular as they could be is because of these drops that your average investor just doesn't want to absorb. So where else can you get yield? Well BlackRock has a very popular fund, ticker symbol, HYT, but the HY stands for high yield. So you're dealing with bonds here that have a BB rating or lower. Which again, is fine. I think the risks on a lot of these bonds are generally overrated. But still, you have to really go up the risk curve to get something like this. Because once you start dancing in that 10% range, it's just not possible to have something that moves in a small range that just always gives you this type of yield. Or at least there wasn't. Until STRC. STRC's goal is to stay within a range of 95 to 100 United States dollars, while still giving you close to a 10% yield or more. Now I said before, it will drop when the overall interest rates in the United States drop. So it may dip below 10%. But here's the thing. So will everything else. So relatively speaking, it's always going to be able to give you more than literally everything else is. And that is a very, very big deal, especially because there's just no way for these banks and institutions like, okay, we're talking, I remember we're talking JP Morgan, we're talking BlackRock, we're talking Vanguard like a behemoths who are instantly threatened by the possibility of what's something like this can become. And remember, at the same time, Michael Saylor released three other preferred stock funds with STRC that give you a very comparable yield to what STRC already gives you. Now these things move a lot more. So we're not going to really focus on them today. But if something like this were to stick and STRC can stay in that range and give investors the yield they promise to give literally everything else out there in the fixed income world, which is the biggest world in the world, becomes a lot less appealing. So if you are the big banks, you better get ahead of this now and you better find some way to eliminate your competition. And so this is why they have gone on the offensive ever since July when these products were released. It began with the margin requirements going up on JP Morgan's side and it really accelerated lately with a lot of the online fud that's been happening against Strategy Inc. Now if you can tell me a better reason why the price of Bitcoin has dropped by a third in his little as a month, I am willing to listen, but I doubt you could. You could come up with some reasons, but not any type of reason that could hit with this type of magnitude on the price of something that should not be dropping like this at all anymore. It would take a coordinated attack by the world's behemoth financial institutions to make something like this happen and to me that is exactly what's going on right now. And if I'm looking at it from their perspective, the big banks, it's for very good reason. This is a legitimate threat. Now the problem is people have tried to liquidate Michael Sailor before and they just can't. He holds too much Bitcoin. He got way too far ahead of this and he knows what he's doing. And I tweeted this out a couple of weeks ago too, I mean you have to understand what's better, long term, Bitcoin or Fiat currency. You might feel a little poopy about Bitcoin right now because of the drop, but don't lose the plot here, Contrarians. It's Bitcoin. Now when it comes to the denominator of what all of the funds in the United States have had to or chosen to use this entire time, what is it? It's the United States dollar, it is a failing Fiat currency. And the denominator with Michael Sailor's products is Bitcoin, far, far superior. And the big banks will never be able to catch up because of the limited supply of Bitcoin that Sailor has already locked down the majority of in the financial world like they're fucked. Your only recourse here is to completely annihilate the entire idea of Bitcoin Treasury companies. And because it's such a new space and so many of them have tried to enter the game and failed, this is the perfect time to point and laugh and say see these things were a stupid idea. Look how volatile Bitcoin is. You don't want to be in these. You want to be with us. You want stability, especially in the fixed income world. Yeah, you want stability and all the subpar yields that we give you. Yeah, I know those yields barely outpace inflation, but at least they're consistent, right? You peons. You get what we give you. You are not entitled to anything more than that. Contrarians, I don't think you still understand what a threat something like this is. You have a product that moves in a small range that can give superior yield without the risk of bonds, which have a higher risk of failing with a denominator that is superior to everybody else's denominator. This is a real serious threat to the big banks and they are aware of it. And you saw during the entire Biden administration just how far they are willing to go to shut down anything that is a threat to them in the United States. I mean, they pretty much are Elizabeth Warren. They were Gary Gensler. Those two people were nothing more than mouthpieces for the big banks. This will be a fight. And these fights will be bloody. But you simply cannot stop superior technology. You've never been able to do this in recorded history. You can delay it, but it will take over at some point. And just like Bitcoin has completely upended the entire financial system. And given us something we have never seen before in human history, why would they not change the game when it comes to fixed income? That's obvious. It's just a matter of time before it does. And nobody is even close to being in the position to do something like this and really become the next BlackRock. Like you think sailors stopping here just with these fund ETFs that's absurd. But nobody is better positioned than Michael Saler is to do something like this and that's why he is targeted so heavily. But again, at the end of the day, there's nothing they can do about it. They can try liquidating sailor, but history has shown no matter what type of argument you try to piece together with glue and construction paper. Like it just, you can't do it. Even in the past, when Bitcoin dropped all the way down to 16,500, I don't think he was that close to being liquidated. There's a bunch of rumors, but he didn't seem phased because he knows what he has. And this is a real, real problem for banks going forward. Now what do we do about this? Well, we are not to the solutions part of the episode yet. I want to talk about one other Bitcoin Treasury company out there because it operates in a different space, but is also very much poised to do a lot of, I don't know if you say damage, but you know, some very positive things for the people it serves. They also have a lot of Bitcoin on their books. And they are partly managed by somebody who has been nothing but successful since day 1 in the financial space. And this company I'm referring to is MetaPlanet in the United States. This is ticker MTPLF. And the person I'm referring to, he is an independent director at MetaPlanet, is Mark Yusko, who I have given a lot of love to over the last couple months, at least, he's a stabilizing voice in the space. And this guy just, everything this guy touches has turned to gold. And he does what we do. He makes a very long term approach. He's extremely patient and he understands when things are inevitable, sometimes they just take time to blossom. He used to have a podcast with Mike Ipollito on the block works network that I still listen to every week. You know, the guy's just got it. And the whole idea behind MetaPlanet is tremendous. So MetaPlanet is based in Japan. Forex traders, you should all know this, but when you talk about fixed income, if you want to invest in the Japanese yen, there's just not much there for you. Interest rates are absolute dog shit. And they have been for a very, very long time. And Japan is a very closed financial ecosystem. There's not many places to go. So you're getting 1% at best. Japan does have higher yielding products, but a lot of those have JGBs behind them. And if you know anything about those, that is absolutely not where you want to be. So this entire society has just been screwed when it comes to any type of fixed income product. And I don't know how much you know about Japan and their demographics, but most people in Japan are old. And while most people on fixed income in the United States have the opportunity to have products which can yield anywhere from 2% all the way up to 5, pretty safely. Japan can't. The best they can do is 1% or lower. That's horrible, well until now. So MetaPlanet has a product which gives 4.9% fixed income. Now you're saying, well, that's not the 10% microstrategy gives you. Guys, relative to what's out there, this is a multiple on what microstrategy can give your average investor in the United States. With microstrategy, you're looking at about a 2X, which is extraordinary. Don't get me wrong. But you're looking at more of a 5X here with a product that is not poised to move very much in price. MetaPlanet has also talked about higher yielding products anywhere from 7% to 12%, but I would imagine that's certainly not going to be fixed in any way. And again, when most of your country is old, they might not be as interested in that. But the younger generations certainly might. And now at least, they have the opportunity to do so. We're talking about the fourth largest economy in the world here. We're talking about the largest financial market in the world here, by that I mean fixed income. And again, when it comes to competition, remember this, we're talking about a finite supply of Bitcoin. If you already have a lot of it, it's going to be really tough for any competitors in the future to come in and catch up to you. And we here at the 10 minute contrarian podcast really like banking on best of breed companies. And strategy ink and MetaPlanet might be so best of breed, there's not even a competitor on the radar and may not ever be. So with the potential future of fixed income and high yielding products, which the big banks will never be able to catch up to with any competition being light years behind you would think that in this stock environment that these companies would be quite expensive given their potential. But no, they are not. They have obviously moved down a lot with this coordinated attack from the big banks. Both companies I've mentioned have all digital asset treasuries right now are going at very depressed prices. What's interesting too, if you want to pull up a chart of MSTR or of MetaPlanet, you will see a little phenomenon that is very near and dear to the hearts and minds of everybody here at the 10 minute contrarian podcast. What do you see, pause, go look at the charts, tell me what you see on, you can go the monthly or the weekly, it makes no difference, you can see it pretty well on both. You will see a very clear and very apparent boom bust echo scenario lining up right now. Welcome to the solutions portion of episode 231. Now we are currently still in the bust phases of both. If you remember what we spoke about in last week's episode, the price of Bitcoin on the monthly chart is likely giving you a bear signal right now or something very close to it. So I don't know what all this is going to look like in the months ahead. Now part of the FUD with MSTR is that it's going to be delisted from the NASDAQ which cannot happen, but if you're familiar with MSCI, you probably see this in a lot of ETFs, MSCI is the company United States that decides what goes where and as far as being listed anywhere else in the future, they plan on disqualifying MSTR from being listed anywhere else and they just made this decision recently and why do you think they would have made a decision like that? Do you think they might have been influenced a little bit by their buddies at the large banks and BlackRock and Vanguard? Oh, I would say there's a pretty good chance of that. So this is all going to take really kind of hit home in January. So I'm interested to see what happens there first. We may get even better prices on this. But you know how crypto goes at this point. I don't be super surprised if the echo period does not last very long. So if you are interested in any of this, I don't recommend sitting on your hands. You know, once the echo phase really takes place, downside potential is still there, but it becomes fairly limited because in the echo phase, if that's what does happen here, we'll generally form a basing pattern. So I certainly can't tell you when to pull the trigger on these. But if you understand the potential, these things have to possibly come a superior version of BlackRock, then you know, dismiss them, fall for the fud that's being thrown out there right now, even though you fully know where it's coming from, and sit on your hands and just let price pass you by. But what I'm doing, not financial advice, is I am absolutely putting these two in particular on my radar. Being very conscious of what else is coming up into the space, hopefully I will be able to put something like STRC in my dividend portfolio. What a joy that would be to get a virtually fixed 10% or something close to it all day. It would be a dream come true for retirement version VP, but I really wanted to illustrate the potential of companies like this, especially now when prices are depressed and sentiment is low. And people are LOLing at the entire idea of something like this. And my response to those people is the same as it's always been with everything we talk about here on the show. Do you think the future of the world is more analog or more digital? I stole that from Mark Yusko, by the way, but it's a perfect question. If you think it's more analog somehow, then okay, I don't know why you're here, but you can crawl back under your little doomsday bunker and crank up your ham radio and have a good time. But the answer is obviously digital. And then from there is the future of anything, if the future of technology is it more web 2 or is it more web 3? You're going to have a hard time convincing me it's more web 2. And then is the future of money fiat, like fiat currencies, or is it more hard assets and things like Bitcoin, things you can't print and devalue, based on what we know now about fiat currencies. Guys, you would have to be out of your minds to not answer B on all three of those questions. And we are fortunate enough to live through this digital renaissance. So while the world is sitting there pointing and laughing at these companies, just because the price is going down a lot. And oh, I should mention this as well, MSTR is already three times off of their highs that they achieved this year and met a planet, my god, what are they? More than seven times off the high, they achieved back in May, most people even in the financial world, especially in the financial world, think that you buying these companies at severely depressed out of nowhere prices is somehow crazy when we get to sit here and realize the gift, the potential gift, at least sitting right in front of us, which will soon be entering the echo phase of their existence. And we actually have the opportunity to be early.