Ric's Final Podcast: The Most Important Personal Finance Message, Part 3

After 35 years, a single word is all Ric needs to give you the one actionable idea to secure your future financial future

Ric Edelman: It's Friday, December 27th, and here we are, my final podcast. For some of you, it'll be a big relief. For others, I'm not sure if there are any others. But anyway, this is my last one. After 1,500 radio broadcasts over the last 35 years, 500 daily podcasts over the last three years, I guess they say “all good things have to come to an end”.

I'm not sure if this is a good thing, but it's coming to an end. And what I've been trying to do with the final three podcasts is to share with you a summary of the three most important topics that I could leave you with.

On Monday, I shared with you aging and longevity. The fact you're going to live to age 100 or beyond. Then yesterday, I shared with you the investment strategy that you need to be paying attention to and the fact that investing is what is going to secure your financial future.

If you missed either of those two podcasts, the links are in today's show notes. And my final topic, the last subject that I want to offer to you, the most important takeaway, if you only do one thing, what might it be I would tell you to pay attention to? I'll tell you that after I answer this question from Jim in Miami:

Jim: “Ric, I assume you are flattered by all the copycats. Have you seen even the Wall Street Journal is now promoting blogs on money and investing? What's your reaction, Mr. Pacesetter?”

Ric Edelman: Yeah, Jim, there is a saying, isn't there something along the lines of, that imitation is the best form of flattery. So yeah, when I look back over my career of the past 35 years, I was the first financial advisor, the first financial planner to host a radio show. I created the genre thanks to WMAL Radio in Washington, DC. Tom Bresnahan, the president & general manager; Jim Gallant, the programming director of the station; Janice Ockershausen, Amy Rosen, of course, Rick Fowler, who was not only an on-air host at the station, but also my entree to WMAL, John Lyon, who gave me my very first radio interview on the station, and the mentoring I got from Bill Trumbull & Chris Core, and the wonderful team of Harden & Weaver, and that set the stage.

And as WMAL Radio was owned by the ABC Radio network, they agreed to take my show national. And I became the longest running national personal finance program in the country. I ultimately was named by Talkers magazine as one of the 100 most important radio talk show hosts in the nation. The only financial planner on that list. And it resulted in copycats all across the country. Financial advisors saw what I was doing and wanted to replicate what I was doing.

And pretty much every city in America now has at least one, often several. radio shows hosted by financial planners, stockbrokers, insurance agents, accountants, lawyers, you name it. Travel agents, gardeners, you know, anybody in the advice-type arena. And I'm the guy who pretty much started it way back when in the early 1990s.

And it's been an exciting journey that led to me doing a variety of television shows. I hosted several series over the years, ended up on Oprah five times. I have been on pretty much every major news network and have met pretty much every major news anchor, over the decades, from CNN and Fox to NPR, The View, Fox Business, Bloomberg, CNBC, you name it, I've gotten to know an awful lot of these folks over the years.

And it's been very gratifying to be able to share with the American consumer and investor the information that they need to help them improve their personal finances. And it's been gratifying to see so many others following in my footsteps now. I was a rare breed who not only did radio and television and seminars, but then wrote books. I've now written 13 books. I'm probably the best-selling author in the personal finance space as the number one New York Times author of 13 books that have been published in what I think eight or nine languages around the world, over 1,200,000 copies in print globally.

So, I love to see the copycats because the need is so much bigger than any one person can produce. The perspectives are so much broader than any one person can have. And it's really important that others continue this legacy and continue to provide the content, information, education, and advice that is so sorely needed in a country where financial literacy remains so low.

So, am I Mr. Pacesetter? I don't know, Jim. I'll let others decide that. But it's been a fun journey and although this part of the journey is coming to an end with today's final podcast, there are going to be other avenues I pursue, other roads I take, and I invite you to join me on that journey.

Make sure you sign up on my distribution list so you and I can stay in touch as I present additional content through blogs and webinars and live conferences and television, and podcast appearances. I want to stay in touch with you and I hope you'll stay in touch with me by joining my distribution list. The link to that is in the show notes as well.

 

Okay. Final topic. This one is the most important, the most impactful. This is the one topic that I am convinced can benefit you more than any other single money decision: crypto. Now that's going to come as a shock to an awful lot of people that are still the vast majority of Americans who don't know anything about it, who aren't engaging with it, a great many who don't like it, who express skepticism about it.  

And that is why I'm leaving it for you as the final conversation in this podcast series, The Truth About Your Future with Ric Edelman. Because you've heard all the rest. You're familiar with everything else. You probably have engaged with all that other stuff. But you haven't engaged in crypto. You still don't know anything about it. You're still not sure why it matters. And this is why I'm imploring you to pay attention.

Don't be upset about the fact that you haven't engaged to date. The most common thing people are saying to me now with bitcoin north of $100,000 is “it’s too late. I missed it”. It's not too late. You haven't missed anything. The fact that you didn't buy bitcoin last year or ten years ago, wasn't because you were foolish, it wasn't because you made a mistake, it wasn't because you were wrong, it's because you were a prudent individual.

And for the first dozen years of bitcoin's life, it was a speculative, questionable asset. In fact, was it even an asset? Was there any staying power to this? Is it being used for anything other than fraud? Is there anybody other than criminals involved? You've heard about the scandals. You've seen the headlines. You are aware of the astonishingly high price volatility. This is why you didn't do it.

That's not a criticism. That's something you should be proud of. The point, though, is twofold. Number one, bitcoin has not reached its ultimate all-time high. It's reached a high to date in the neighborhood of $100,000. But that's not where the story is going to end. And second, the level of risk going forward in bitcoin is substantially less than the level of risk people have had to take to get to here with bitcoin.

I've been engaged in bitcoin since 2012 and I've never sold any. The very first investment that I ever made way back then when bitcoin was $400, I still own and I continue to still own and believe that the price has a long way to go. The fact that we are at this inflection point is what you really need to be paying attention to.

Donald Trump has demonstrated he is a very strong advocate for crypto, to the exact opposite position of President Joe Biden. Biden did everything possible to crush crypto, to delay it, to reduce it, to interfere with it, to prevent it from becoming a thing. All he could do was slow it down, but he couldn't stop it. And he tried really hard. He imposed regulations that prevented banks from engaging. He installed people into leadership positions in his administration who did everything they could to thwart it.

All that did was slow it down, it didn't stop it in the least and no government can, for the simple reason that this is a global asset. No one government can kill it. And now that you have an incoming administration that fully recognizes the power of this technology, its usefulness in global commerce on a broad scale. They're going to unleash the potential by getting the government out of the way.

We're going to see new regulation. We've got more than 275 members of Congress supporting crypto right now. A majority of both parties. They're going to bring forth legislation that's going to allow the financial services industry, the banking industry, the insurance industry, the credit card industry to engage fully with this new technology.

And as those rules become clear, and we understand how crypto is going to be taxed and regulated and governed and managed, not only is the financial services sector going to get engaged, so will the investor community. We're going to find institutional investors, endowment funds and pension funds. We're going to see sovereign wealth funds, family offices, engaged billionaires and such.

These folks already are, and they're already beginning to change their tune. Larry Fink, the CEO of BlackRock, who in 2017 said the only thing it's good for is criminal activity, now operates the largest spot bitcoin ETF in the country and has launched a number of investments in the crypto space including money market funds that operate on blockchains.  Rick Wurster, who is the new CEO of Schwab, has said “I feel rather silly that I didn’t bitcoin in the past” and he's gonna make sure that the infrastructure he's leading at Schwab, one of the largest financial services companies in the country, is going to be in the leadership position dealing with crypto.

What does it all come down to? Real simple. Get off zero. It's inappropriate for someone who holds a long-term diversified portfolio to exclude the newest and fastest growing asset class. It's as simple as that. So, what should your allocation be? Should it be 1% of the portfolio, 10% of the portfolio? That's for you to figure out with your financial advisor. The only number that's wrong is zero. And what is still bothering me a whole lot is that the vast majority of financial advisors are still not engaging with crypto. Even among those who personally own it routinely tell me they aren't actively encouraging their clients to invest.

Quite frankly, if your advisor isn't talking to you about crypto, if your advisor isn't explaining to you why your negative view of crypto is out of date, if your advisor isn't accommodating your request to add crypto to your portfolio, it's time for you to find a new financial advisor.

 

So, as I end my podcast series and finish with the most important subject of all, I thought it would be best for you to hear not from me on this subject, but from one of the most important leaders in the crypto space. One of the earliest adopters in the world of crypto, Mike Novogratz. He's the Founder and CEO of Galaxy Digital, And I've invited Mike to join me here on the podcast today.

My very final podcast and Mike Novogratz is my very final guest.  Mike, great to have you on the podcast

Mike Novogratz: Well, I am unbelievably and humbly flattered to be the cleanup hitter and congratulations. That's just a staggering amount of financial knowledge you've pumped out there over the years

Ric Edelman: I appreciate that very much. Mike, of course for the one or two of you who don't know Mike, is the founder and CEO of Galaxy Digital, one of the oldest and largest crypto asset managers. But really Mike's claim to fame goes way before that in the world of trad-fi, traditional finance.

He was the president of Fortress Financial, one of the largest investment banking and lenders on Wall Street. Prior to that, he was 11 years at Goldman Sachs. He was on the New York Fed's investment advisory committee on financial markets. Mike was the top of the food chain in the world of Wall Street financial services.

And yet Mike, you walked away from that career, the pinnacle of your success up to that point, one of the most prominent people on Wall Street way back in 2013. You walked away from it and jumped into bitcoin. Why, how? What caused you to do that?

Mike Novogratz: You know, I had hair back then and now I'm bald.

Ric Edelman: We both had hair back then. I mean my journey into jumping down the rabbit hole is similar to yours back in 2012. I mean everybody knows my story there, but tell yours, what led you to go from running Fortress and being a titan on Wall Street to walking away from it and entering bitcoin.

Mike Novogratz: You know, I wish it was more binary. It wasn't as binary. I actually got a call from one of my partners and he had moved to the west coast. And he ran an amazing big credit business. And in New York, he was kind of a big deal. And out west, if you weren't in the tech world, you were less of a big deal. And he heard about this thing from a friend, bitcoin, and he called me and said, “hey, go figure what this is.”

And I literally Googled it and it was trading about $95. And I read about it. I was thinking, I was a macro investor and bitcoins a macro asset. When I say that, you know, macro assets are inflation and growth and politics and psychology and all mixed together. And I was like, we're in 2013. So 2012, you had the great European financial crisis coming on the heels of the global, great financial crisis. The whole world was worried about inflation, or at least half the world.

I'll never forget. I met Paul Singer. Paul Singer, Elliot Management, might be a top five investor of all time in the world. Like his track record, his Sharpe ratio is staggering. And he was so convinced that Ben Bernanke was making a horrific, horrific decision to do quantitative easing. He took a full-page ad in both the New York Times and the Wall Street Journal, broadly saying Bernanke should go to jail. And I was like, Paul, it's kind of crazy. So, there was this belief that all that money printing was going to create hyperinflation.

And so I was like, here's this really cool asset that was really embraced by the cypherpunks, libertarians are going to love it because it's a hard money. There's a bunch of people worried about inflation blowing up. And the Chinese were starting to buy it. I looked at it, I was like, I don't know if this is going to last, but it's going to a thousand. So I called Pete back, I said, hey, this thing's going to a thousand, we should buy some. And we started thinking about it for a few more days. We're like, well, maybe we should make this a bigger part of our business. And then we're like, Fortress has at that point, $40 billion in assets, all real assets. And we were like, it's just too confusing to have a message.

And so we literally called a guy named Dan Moorhead, a classmate of mine at Princeton, who had a hedge fund, a macro hedge fund that had shut down that I had funded. I was his seed capital. And he's a dear friend and we said, “Dan, take a look at this”. And two weeks later, he called back and he was like, “Whoa, this is gonna change the world”. And in a lot of ways it was Pete's introduction, my instinct, but Dan's research, and we all three put in a sizable amount of money and I laugh at the story. I would not be as rich if Dan didn't put in so much. Pete and I, we had a lot more wealth in our life than Dan at that point. And so we had to at least put as much as Dan did. And so we got into bitcoin.  

And so we were always, this whole idea, the infrastructure or the coins themselves. And if you remember, 2013 was great up to $1,000-$1,200 and then kind of way back all the way to $200. And I left Fortress in between. And when I was in my family office, the first thing you do is you look at your balance sheet that you hadn't paid attention to. And I was like, “God, I got this crypto stuff and I got these companies and was trying to figure out what to do with it”.

I had another college roommate, Joe Lubin, the great Princeton class of ’87 which has a lot of crypto people in it. He was a co-founder of Ethereum. And the project had just launched, and I went to visit him in Brooklyn, and I was very impressed with the energy. And I saw the chart of bitcoin picking back up and I tried to buy a big chunk of his company, but it was so decentralized, he couldn't figure out what to sell. So, I bought a bunch of Ethereum as well when it was one. And lo and behold, three months later, it's eight, it's 10.

And when you start making money and you have time, that's when I really dug in. I had already been a little bit on the speaking circuit for bitcoin, which was scary because I'm not a computer science guy. So, if someone asked you to speak at the Oxford Union or on TV, you don't want to look like an idiot. So that forced me to really dive in and try to understand.

And my only, I think, great insight early on was, this was the first private property on the internet. You couldn't control copy and paste. And everything before Satoshi, was duplicatable. You couldn't prove it was unique. So, it was the first signature you couldn’t counterfeit in lots of ways. And that was the breakthrough. And then with Ethereum, oh, my goodness, you could do this with smart contracts, you can do it with everything. And that's when I started thinking about NFTs and tickets and decentralized finance.

And so, you know, it was a combination really of all three friends from school.

Ric Edelman: And this is still 2015, 2016.

Mike Novogratz: Yeah, you know, I was wealthy. I had a family office. It's a great way to spend time, right? People come. They pitch you ideas. You work when you want to work. I used to always say, they shine your shoes.

And so for me to go back, I wanted three things. I wanted to work with young people, and crypto is all young people. I wanted to learn something new, and for me it was venture. Like I had never been a venture investor, it was fascinating to me. These unbelievable entrepreneurs who have this idea and you put a little bit of money and you coach them some.

But third, I thought I had something to add to the community. Well, I have no gray hair. I have no hair, I thought I could bring the metaphoric gray hair to all these young energetic crypto people and also be a bridge to explain this kind of weirdo world to traditional finance. And so I set up Galaxy really to do that, kind of to be the bridge.

And I didn't realize, how hard it was going to be. We started in 2017. And in 2018, two crashes, an assault from the regulators. And especially because we set up as an institutional business. With hindsight, I was a fool not to do a retail business. I mean, at the core of crypto really is community.  But I come from institutional, and I wasn't thinking clearly enough that these exchanges aren't exchanges. They were called exchanges. They're broker dealers. And what's unique about the crypto customer, and I noticed it and I probably should have still chased it, is that because the wealth comes from -- I joke around, I call it magic internet money -- it comes from this new way of thinking and investing. People are much more willing to take risk with it.

And so there's a story a friend of mine was working at Gemini and he said, Oh, they were going to launch a credit card.

Ric Edelman: Gemini, by the way, for those that don't know, is another major crypto exchange similar to Coinbase and Binance, founded by the Winklevoss twins.

Mike Novogratz: Yes. So, when they launched their credit card, the credit card companies say, if you can get 4% to 5% to sign up, it's a home run. And they got 65% of their clients. The crypto clients did what their mentors told them to do. And you can see the way they gamble. I mean, people take leverage on a 60 ball asset.  It's like a looseness with the money that you don't see in traditional finance. And so that part has been fun. Now we have 500 people. We have four businesses. It's becoming a much more serious clientele, less fun, more serious.

Ric Edelman: Well, that's always the case, isn't it? As it grows and matures, you start to add managers, you start to add compliance and legal, you start to add what we call adults in the room, to take care of and protect this enterprise and the customers of it. You mentioned your regret, Mike, over going in the institutional market, rather than the retail market, when we know over the first 10, 12, even you could argue 15 years of bitcoin's life, it's been a retail world. I'm not sure that’s losing the war. You may have lost the battle. You know Coinbase is huge because it focuses on retail. But eventually long-term, we're already beginning to see this are we not? That of the institutional engagement in crypto and ultimately as institutions engage, they're going to dwarf the retail sector. Are they not? Just like they do everywhere else?

Mike Novogratz: And that is starting to happen and I think the big unlock in 2025, 2026. So Trump says, I'm going to be the crypto president. You cannot underestimate how important that is. I was just in Abu Dhabi. They're turning on crypto because if the U.S. is doing it, we're doing it. It's just that simple. I mean, those are the words out of one of the guys that run one of the sovereign wealth funds. And I think you're going to see that all over the world. What will happen is we will get new regulations passed by Congress, both on the market structure of crypto and stable coins. We will get an SEC, CFTC, OCC, head that is very, very friendly to crypto.

Ric Edelman: Which means banks will be permitted to engage for the first time.

Mike Novogratz: Yes. And the moment that happens, I'm sure the headhunters are going to start calling on my employees. But the amount of capital that comes into the space is going to be massive.

Ric Edelman: I mean, just imagine that Goldman Sachs, Bank of America, Citigroup, Wells Fargo are suddenly able to custody and trade bitcoin.

Mike Novogratz: Yes. That's going to happen and it's not just bitcoin. It’s that we're going to trade currencies over crypto payment rails and there'll be links between decentralized systems and centralized systems.

And so we think all the time about what's our mode. Our mode is we know we're smart, but we need to, keep innovating. We need to be more DeFi, so we can at least make that link because you know how Goldman Sachs is going to start playing vanilla and then branch out, but they're a very formidable opponent in anything they do.

And so the classic option business is going to get more competitive. Like more competitive is tough for me, but it's great for me because volumes go up and price goes up. And, so I'm willing to fight the hard fight, I just know it's going to get tougher.

Ric Edelman: In other words, you've had, it's unfair to say it this way, but you'll get my point that you've had the market all to yourself, but it's been a relatively small market.

Mike Novogratz: Yes.

Ric Edelman: The market's going to go grow massively, exponentially. You'll become a very small player, but in a far bigger pond, you know, instead of the big fish in the little pond, you'll be the small fish in the big ocean. And you'll have a massive market share. And I don't think you're going to be all that small anyway, because I think a lot of these financial services firms, these Trad Fi companies, rather than build it, they're going to partner with it and they're going to buy it. And you're going to be sitting in the sweet spot. And to help people understand this about Galaxy, explain a little further for folks exactly what you do. What Galaxy does. And the services that you're providing.

Mike Novogratz: Yeah, so we're an intricate company because we're now, I would break us into two pieces.

We have a data center business, that used to be a bitcoin mining business and quickly is pivoting to a very large AI data center business. Publicly on our last call, we told that we had signed a non-binding term sheet  with one of the big hyperscalers. There's a lot of focus there. We've got a great site in West Texas. We're working on expansion plans. And so that is going to be, I think a huge growth story for us. And hopefully, it's real estate in the long run, a big stable cashflow machine.

And then we have the crypto business, which you can break into asset management where we manage other people's money. We've got about $6 billion in a variety of funds and then another $5 billion that we stake. Staking is how people get yield on their Solana or Ethereum or other proof-of-stake coins. That's a very profitable business and it's growing. And so, that asset management piece.

And then we have what you would call the investment bank. Sales, trading, advisory, derivatives, credit, online trading. Collectively it's about 500 people. Those businesses will do over $400 million in revenue this year. And so it's not small. And then the third piece is we have a balance sheet. We have bitcoin and Solana and venture bets. And it's about a two point, I think at the last filing, $2.4 billion-ish of assets that when crypto goes up, our balance sheet goes up. And so, investors are buying into kind of the three-part story. It's a wonderful way to get a broad access to crypto and AI.

We have been punished by being stuck in the Canadian market. Coinbase went public under Jay Clayton. We were right behind them. Gary Gensler showed up and the wall went up. And so for three and a half years, we've been back and forth with the SEC trying to get public. In all likelihood, we will get public very early into the first chunk of the Trump presidency.

Ric Edelman: Meaning you'll leave your stock trades in the Canadian market, you're going to leave there and start trading in the US.

Mike Novogratz: Well, at least dual-listed and the US market is literally a great lesson as a founder. There's really only one capital market in the world and it's the US. I mean it sounds arrogant. I appreciate the Canadian market because that's where we're at. And they, let us go public there early, but companies a third our size trade a hundred times more volume.

I mean, the numbers are staggering how liquid and how much liquidity you get in the US. And that allows you access to capital. You know, if I had had access to capital the last four years, there's a ton I would have bought. And so we've kind of self-funded ourselves through profits. We've done a couple of converts, but mostly through retained earnings we've paid for this business. And so, I think really excited to get public in the U.S. and I think that's going to really accelerate the flywheel.

Ric Edelman: So, you have described all of this in the way that people in the crypto community refer to as orange-pilled, which is a reference to the movie, The Matrix, where, you were invited to either swallow the blue pill or the red pill. If you want to go jump down that rabbit hole, we refer to it in crypto as orange pilling. Orange seems to be the color that people have adopted for bitcoin.

So you, like me and a relatively small number of other TradFi folks, have swallowed that orange pill. But the vast majority of Wall Streeters have not. The vast majority of American investors and consumers have not swallowed that orange pill and are really oblivious to it. They have no idea what's going on in this crypto community, or they don't know anything about bitcoin. Although they've heard of it, they can't describe what it is. And they don't get it.

So what's the first message you give to financial advisors who have been on the sidelines, they've been oblivious, they've been in denial, some in outright hostility. What's your first message to that?

Mike Novogratz: It's hard for people when something has just gone up so much to say, “I gotta to buy it now”. So I always tell people is you just gotta start. Start small. Put 1% of your assets in. What's the worst that can happen? It goes down 50%, you lost 50 basis points. It's not going to kill you. Bitcoin has outperformed any asset, no matter what time period you want to look at. One-year, four-year, five-year, eight-year. And it has been a diversifier, right? It's alpha.

And so start with bitcoin because it's the simplest. It's just digital gold. And we're about to enter the greatest wealth transfer in the history of planet Earth. In the next 15 years, more wealth will shift from old people to young people than any time in the history of the Earth. Like that's a staggering statistic, right?

Baby boomers own $40 trillion of net worth. They're all going to die. Charlie Munger, rest his soul, one of the great investors, hated bitcoin, passed away. That money goes to his grandkids at some point who are going to like digital assets. Who don't want gold. Bitcoin is digital gold. It is a place where people around the world, over 300 million, have decided to store some of their hard earned savings.

And they store it in a community that they feel they trust and is safe. That's what it is. In some ways, it's hard to get your mind around because it's just a ledger. And what gives it its value isn't its technology. As wild as Satoshi's breakthroughs were in computer science that allowed this, me and you could fork it and call it the Edelman coin, same technology, and it wouldn't be worth that much.

What gives it its value is the brand. It's the social construct. You think it's valuable, I think it's valuable, and therefore it's valuable. And so, why orange-pilling was so important is that people don't buy bitcoin, they are sold bitcoin. They have to understand that story. So, as to Larry Fink, my friends got together and over two years, orange-pilled him. They convinced them how it worked and why it worked and why it was going to continue to work.

Bitcoin would not have been possible if we didn't have populism. If we didn't have the '08 crises, where the fix was money, money, money, money, money. So ironically, when I said, all those guys were so worried about inflation in 2012, but then it never came. Well, it finally came after COVID when we printed even more money. And if you look at the amount of dollars printed since 2009, when Satoshi wrote this paper, we're debasing a dollar. It's the only way you get out of a debt trap.

And so this is a hard asset. Around the world, you have populism. Populism, I mean, is governments that spend more than they tax because they want to make people happy,

Ric Edelman: And that pretty well describes Congress, doesn't it?

Mike Novogratz: Yeah. And so listen, there's some weird chance right now. that between Elon Musk and Scott Besson, who I think is wonderful, they can try to help bring our deficit down. We're running a 6.5%, 7% deficit at full employment. It's the theater of the insane. And if they do, that would be bad for gold and silver. It would be not as great for bitcoin.

But, and it's a big but, that's why I'm still bullish, the adoption cycle of Trump saying, ‘I'm the crypto president” and four years of being beat down is just starting. And so in some weird way, if you knew Besson and Elon were going to be successful in cutting government spending, you'd be long bitcoin and short gold. Because bitcoin moves for two things. It moves on macro. If governments are really irresponsible, it should go higher. And it moves on adoption. And I'm convinced we're about enter a monster adoption cycle.

Ric Edelman: So you mentioned that for people who are brand new to this, don't know much, need to get their toe in the water, do 1% of an allocation. I said the same thing in my book, The Truth About Crypto, back in 2017, on the same basis that you just argued. It's a a safe, or it's an innocuous way to get started because as you pointed out if you put 1% of your portfolio into bitcoin and it becomes worthless, so what? You've got 99% of your money left. It's not going to be financially devastating.

Mike Novogratz: And it could be what happens often if someone puts 1% in and they start understanding it and they go real quickly from 1% to 3%.

Ric Edelman: And that's my question for you. For somebody who isn't simply putting their toe in the water. If you were to say to someone who is a sophisticated investor of means, what is the percentage allocation you would really rather see somebody have? It's north of 1%, how far north?

Mike Novogratz: 10% to 15%. And I say that because when I vol adjust that, we're still going to be three to four times more volatile than equities. Listen, I have a lot more of my net worth in it, but I'm in it every single day. And so I think 10% to 15% is a pretty reasonable number for, a wealthy family who's living in, Lake Minnetonka, who's reading the paper and talking to their broker. But if crypto goes down 26% in two days, they're not going to throw up.

Ric Edelman: And let's keep in mind that if somebody has $5 billion and loses 80% in a bitcoin collapse, you still have a billion left.

Mike Novogratz: Oh, I've been rich a few times…on paper. (laughter)

Ric Edelman: So, you are obviously very bullish, very excited about this asset class. You are optimistic that the Trump administration is going to be very supportive now that the Republicans are going to be controlling both chambers of Congress. We're going to see the log jam that has been imposed over the past four years disappear, resulting in new legislation, new regulation, new clarity.

And by extension, governments around the world are paying attention to the leadership role that the Americans are beginning to display. And for all these reasons, you're very optimistic about the future. There are others in the crypto community who are actually putting numbers on that bullishness. They are offering predictions of where they think the future price of bitcoin is going to be. Do you play that game?

Mike Novogratz: Yeah, I have from the very start. There's a video, “Bitcoin, please go to moon, stop going sideways now”, where I predict $40,000, and that was the video from 2016. “Tony Vays say we're going down to one K, but Mr. Novogratz say we have bottomed out". It's very funny. It's a very catchy tune. Once you start listening, you can't stop.

I think gold is a $16 trillion asset, which makes bitcoin $800,000 sometime in the next 5 to 7 years. I think we take out gold. Now, I used to think gold was going way higher. I want to give this new administration the benefit of the doubt. I still think gold probably goes higher. So if gold goes higher, my bitcoin price could go higher. But again, not next year. If we could get to $180,000, I'd be pretty happy next year.

Ric Edelman: Which by the way, is roughly an 80% increase.

Mike Novogratz: Yes.

Ric Edelman: Roughly.

Mike Novogratz: Yeah. But we just took out a hundred, the chart looks like, I think we could finish the year at $120,000. And you're getting this crazy momentum. Michael Saylor alone has bought about $8 billion, $9 billion in the last month. Someone was selling into it. It feels like we ate through the supply wall. Trees don't grow to the sky. They come back down. You retest. But $180,000 seems like a fun prediction for next year.

I'm more confident over the five-to-seven year prediction that we get to $700,000, $800,000 because I really, I can't find a 30-year-old that says I wanna buy gold. Not one. And I own gold. And I own silver. Like I was a bitcoin, silver, gold, much smaller amounts, because I'm in a crypto business. But it was like intellectually, it made sense to me.  We're spending too much buy hard assets. The Chinese continue to buy gold.

Ric Edelman: And one final question along the lines of the portfolio management. There are now -- there weren't, this wasn't true years ago -- but now it is true. There are a lot of different ways that you can buy. You can buy the ETFs. You can buy individual stocks. You can buy professionally managed funds. You can, of course, buy the coin directly. What do you say is the approach investors ought to consider for how they acquire crypto?

Mike Novogratz: Some real crypto purists are going to shoot me for this because they would say you got to own your own keys and custody it in your basement. I think for 98%, 99% of people out there, you can put it in a bitcoin fund. We have some, you can buy the ETF.

If you want to take more risk, we've launched a bunch of hedge funds, lower volatility, long, short. Or you can buy it yourself. You can get a Coinbase wallet or a Gemini wallet and buy it that way. The one thing that's interesting about buying it yourself is you start understanding how simple it is.And so at one point I was a big advocate. I talked a lot about it. And I realized I'd never spent any.

And so, I got my office to put a hundred thousand dollars of bitcoin on a wallet. I had my own, it was called a Bread Wallet. It was just another company that did wallets. And I gave away a hundred bitcoins when it was $1,000. “Yeah bitcoin. Give me a bitcoin”. Ski guide, nice tour, give you a bitcoin. I remember John Rockefeller gave away dimes. And I was thinking today, I was like, that's worth almost $11,000,000 I gave away. And I wish I could track down those hundred people and figure out who kept them. How quick they sold them. Because they weren't wealthy people I was giving them to. They were service workers in general.  

And so, hundreds of sales guys like yourself and Michael Saylor and Dan Moorhead and myself selling this idea, convincing orange-pilling people, but also people in every single village around the world, right? In 204 countries, people talk bitcoin. It is probably the greatest brand created in the shortest amount of time ever. The only brand that comes close is Apple. But Apple took 30 years. Bitcoin is 15 and it's a two trillion-dollar brand. It is recognizable everywhere.

Ric Edelman: And this is why I think the only incorrect approach to portfolio management is to be at zero with bitcoin.  The key is to be north of zero, whether you want it to be 1% or 15 % is up to you.

Mike Novogratz: It was always interesting. Elizabeth Warren went on TV and said like, “Oh, this is like the pet rock. I don't see value in it”. And Jamie Dimon even always stubborn. “I don't see value”. And I'd always try to turn the question. I was like, Elizabeth, the richest woman in your state, Abby Johnson, who runs Fidelity, saw value in this thing in 2015. So do you think she's stupid?

The richest man in Pennsylvania, Jeff Yass, right? He runs Susquehanna and saw value in this thing years ago. Do you think he's stupid? Or Stan Druckenmiller or Pete Briger? Like I can name hundreds of both world class investors and everyday people that saw value in it. And so the arrogance, the sheer arrogance to say there's no value. It's just bizarre. It's just arrogance.

Ric Edelman: And today the array of choices available for how you access has never been greater. I've been an investor in a variety of Galaxy products, Mike, for many, many years back when there were relatively few choices. And now with the ETFs that exist that Galaxy has partnered with both State Street and with Invesco, two of the biggest ETF providers in the country, the array of options has never been bigger.

The costs have never been lower. The optimism has never been higher. There's really not a lot of excuse other than inertia and laziness for people to remain on the sidelines at this point. That's why I wanted, you all to have an opportunity to hear from Mike Novogratz, the Founder and CEO of Galaxy.

Just a couple of weeks ago, we had Steve Kurz here on the podcast talking about the new partnership with State Street, and the new ETFs that you've launched there. If you missed that show, the link to it is in the show notes. And Mike, if people want to learn more about Galaxy and the opportunities that you offer to investors, the website is:

Mike Novogratz: Galaxy.Com

Ric Edelman: That's Mike Novogratz of Galaxy. Mike, pleasure to have you here and a fitting end to this podcast series. Thank you so much.

Mike Novogratz: Ric, congratulations. If I was there, I'd buy you a beer and a champagne and give you a hug. That's really a great accomplishment. And so, congrats.

 

Ric Edelman: Well, there you have it. Crypto is the final word that I offer for you as we conclude this podcast series. I want to thank my team who has done so much hard work in producing this podcast series over the years. My longtime producer of 30+ years, Rick Fowler, along with MK and Sam and Mary Beth and the entire team at The Truth About Your Future with Ric Edelman.

Thank you so much for all your hard work and making this happen. I'm very, very grateful, and I am particularly grateful to you, my listeners who have been with me on this journey. It's been so much fun to be with you. It's been a genuine honor. I'm thrilled to have been able to spend the time with you, and I hope we'll be able to spend a lot of time together as I enter my next chapter.

And in the words of the famous broadcaster, Edward Murrow. Good night, and good luck.

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Links from today’s show:  

12/26 Podcast - The Most Important Personal Finance Message, Part 2: Investing https://www.thetayf.com/blogs/this-weeks-stories/the-most-important-personal-finance-message-part-2-investing

12/23 Podcast - The Most Important Personal Finance Message, Part 1: Longevity: https://www.thetayf.com/blogs/this-weeks-stories/the-most-important-personal-finance-message-part-1-longevity

Galaxy https://www.galaxy.com/

Galaxy Investor's Guide - The Investable Universe of Digital Assets: https://www.galaxy.com/investable-universe/?utm_campaign=The%20Investable%20Universe%20of%20Digital%20Assets&utm_source=TAYF%20Email&utm_medium=Banner%20Ad

Invesco Galaxy Bitcoin ETF (BTCO): https://www.invesco.com/us/financial-products/etfs/product-detail?ticker=BTCO

Invesco Galaxy Ethereum ETF (QETH): https://www.invesco.com/us/financial-products/etfs/product-detail?ticker=QETH

State Street Galaxy SPDR Galaxy Digital Asset Ecosystem ETF (DECO): https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-digital-asset-ecosystem-etf-deco

State Street Galaxy SPDR Galaxy Hedged Digital Asset Ecosystem ETF (HECO): https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-hedged-digital-asset-ecosystem-etf-heco

State Street Galaxy SPDR Galaxy Transformative Tech Accelerators ETF (TEKX): https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-transformative-tech-accelerators-etf-tekx

1/15 Webinar - Your Crypto Questions Answered: https://dacfp.com/events/your-crypto-questions-answered

12/10 Webinar Replay - The Retirement Revolution: ETF Solutions for Modern Retirement Planning: https://www.thetayf.com/pages/the-retirement-revolution-etf-solutions-for-modern-retirement-planning

12/9 Webinar Replay - What the Election Results Mean for Crypto:  https://dacfp.com/events/what-the-election-results-mean-for-crypto

2/24-2/26 Wealth Management Convergence-2025: https://www.thetayf.com/pages/convergence

11/13 Webinar Replay - An Innovative Way to Generate Income in a World of Declining Rates: https://www.thetayf.com/pages/november-13-2024-an-innovative-way-to-generate-income

10/9 Webinar Replay - Crypto for RIAs: Yield, Staking, Lending and Custody. What’s beyond the ETFs? https://dacfp.com/events/crypto-for-rias-yield-staking-lending-and-custody-whats-beyond-the-etfs/

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Brought to you by:  

Invesco QQQ: https://www.invesco.com/qqq-etf/en/home.html

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