WBD402 Audio Transcription
Credit Risk & The Bitcoin Hedge with Greg Foss & Andy Edstrom
Interview date: Sunday 26th September
Note: the following is a transcription of my interview with Greg Foss & Andy Edstrom. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this interview, I talk to the Head of Institutional Investment at Swan Bitcoin and Bitcoin Strategist Greg Foss. We discuss the Evergrande insolvency, whether a debt crisis is looming, and why Bitcoin is the perfect hedge.
“Over time bitcoin will be the benchmark for proper capital allocation and everything else is going to pay the pauper, and Western Union? Uh, I’m sorry guys, but your business is going the way of the horse and buggy.”
— Greg Foss
Interview Transcription
Peter McCormack: Right, Andy, good to see you. It's been a while.
Andy Edstrom: Great to see you, Pete.
Peter McCormack: Well, been a while in Bitcoin terms. It's probably only been a few months.
Andy Edstrom: Yeah, feels like a while. I think it maybe has been six months, but a lot of water under the bridge.
Peter McCormack: Yeah, lot of water. Bitcoin years are pretty quick. Greg, I've seen you a few times recently. How are you doing, buddy?
Greg Foss: Yeah, I'm doing well. We had a great time in Boston, didn't we, and that Peter Schiff debate was painful, but I appreciate everything you did. You know what, I think that no harm, no foul, and just get the idea across that you can never be 100% certain about anything. You've got to hedge those risks, as I'm sure Andy would agree to. And, the only thing we are certain about is the fiat debasement; that's just pure maths.
Peter McCormack: Well, I think we moved Schiff a little bit closer. It was interesting seeing the comments, because a lot of people were like, "Why are you wasting your time with him?" but I feel like it helps me sharpen my tools. But he admitted in that interview that we did that he sees a need for a cryptocurrency. Obviously, he wants it backed by gold, which is stupid, because that brings back centralised risk; but I think we moved the needle forward with him just a little big. So, I'm glad we did it.
Greg Foss: At this point, he's an afterthought now for us, I think he should be, because at the end of the day, he's so close. If he's going to fumble the ball on the one-yard line each time, that's his prerogative, because he knows everything about it. He knows the reasons he needs to own hard assets, and he just is what he is, so let's move on.
Peter McCormack: That, "Fumble the ball on the one-yard line", we'd call that, "Missing an open goal"! Anyway, we've got another big topic to talk about; it's been massively in the news recently. We're going to talk about Evergrande, something that we need to cover, because we need to think about if there's any kind of systemic risk within the system, although every time there appears to be jitters within the traditional markets, Bitcoin also jitters, which is not really the narrative we keep telling ourselves. But anyway, let's cover this, lots to talk about.
Okay, so I'm going to start with you, Andy. Evergrande; I'm just going to kick it off with, what do we know? For anyone listening who might have heard it in the news or seen something on Twitter, what do we know about this situation?
Andy Edstrom: Yeah, well first disclaimer, which is take it all with a grain of salt, because as you know, Chinese company reporting can be less than perfect. But yeah, let's start with the basics. We think we know that it's a big property development company, which means they literally acquire land, build buildings and then sell them to their customers, although much of the selling happens before the building, which complicates things and will be important to our discussion later. They've got over 100,000 employees, thousands of housing projects in the works; and when I say housing projects, I'm not talking about individual homes, I'm talking about big apartment buildings, all over China, every province they have something going on, including lots of the midsize and smaller cities, not just the big ones.
They've got roughly $300 billion of liabilities. Now, only about a quarter of those liabilities are actual interest-bearing instruments that we might call bonds or bank debt, but nevertheless $300 billion is a pretty big number. The Lehman Brothers bankruptcy, that balance sheet was about $600 billion, so twice the size back then, plus inflation, but still a big number, very big number. And, I'm sure Greg can get into the details on the bonds, but the price chart is pretty scary. Bonds have gone from 90 cents to 25 cents in pretty short order, stock's down 90%. They're facing an interest payment tomorrow. We're recording on Wednesday. That's over $80 million. And so, that's the very quick situation.
The company is 25 years old, it's one of the three largest property developers in China. The Founder and Chairman owns the majority of the stock, which actually made him the richest man in China a few years ago before the stock tanked, and it looks like it's insolvent. Maybe the most interest stat is it seems over 1 million people, that's Chinese people, have money exposed to it, because they prepaid for apartments and those apartments aren't finished yet, and a lot of these people have poured a large portion of their life savings -- as you know in China, property's basically the number one investment, as it is the US, probably even more so.
So, there are a lot of individual actual Chinese people who are exposed to this thing, which makes the politics likely to be very interesting. So, I'll leave it there on the basic stats, although I bet I missed a few that maybe Greg wants to jump in on.
Greg Foss: So, I love your stat about Lehman Brothers, the size of Lehman Brothers, and $600 billion Lehman Brothers. One other event that I think's even post the Great Financial Crisis, Greece, their restructuring was $200 billion in 2012, okay. So, put those in perspective and, as Andy mentioned, the liabilities, only about a quarter are interest bearing and the rest are prepayments by house purchasers.
What I want to focus on is a $25 bond trading price and what that means in perspective of a capital structure priority of claim of the debt over equity, assuming North American court, etc. So, when I traded high-yield bonds, we had to always call the 60/40 rule. The 60/40 rule is basically, bonds don't stay in the 60s for long. They either recover and go back into the 70 cent on the dollar range, which indicates it could be a stress situation, but certainly not a distress situation; but the 60/40 rule means, when the bonds go into the 60s, they tend to recover a bit, or they gap down in the 40s. That's what you saw with Evergrande.
Then, they didn't spot going at the 40s, they went down to 25 cents on the dollar, as Andy mentioned, and why is that? Well, any new buyer coming into that capital structure is looking at the bonds as being the future equity. The equity right now that still trades on the stock exchange is purely an out-of-the-money option; it's stupid money that's in that, it's putting more money into that stock is the wrong part of the capital structure to put your risk into. If you were to do it, you would go into the bonds. They're trading at 25 cents.
Let's say typical restructurings happen on average around 40 cents. That means, if you're buying them at 25 cents, historically you think you can get 40 cents on the dollar return, which is still a restructure product; but you make, depending on the period of time, you make a nice little return. 15 cents on a 25-cent investment, you guys can do the maths. That's why bonds trading at 25 cents have no yield calculation that makes sense, it's purely a recovery; it's an investment to the recovery of that claim in the capital structure.
More importantly, some of the dynamics of the high-yield market in China, I think is important to understand. The United States high-yield market, the most developed high-yield market in the world by far, has an asset class below, if you will call it, it's a higher risk asset class, it's called "distressed investing". Howard Marks at Oaktree is a very famous distressed debt investor, very successful, understands courts, understands you need to be at home in the courts as well as at home on investing distressed money. But it's an important buffer for high yield that falls out of the high-yield asset class, if you will, into the distressed space, and I don't believe that exists in China, to a large extent.
So, you saw this gap down that would have been, in my opinion, more buffered in the United States. The point is this though, guys. At 25 cents on the dollar, it's absolutely over for that company from a debt perspective. The restructuring is going to be necessary, if that's imposed by the CCP, in terms of extend and pretend; we don't know. But clearly, the market is saying there is zero equity value, that's an option; there is restructuring value, those are the bonds; and they may have fallen further than otherwise would have been the case, because there's no natural distressed debt buyer in China.
Then the flipside, Andy, that I want to mention, US dollar-based high-yield bonds in China high-yield market now yield over 14%. Okay, now they're mostly property developers, but that compares to the US high-yield market that's 4%. So, there's a 10% delta between the US high-yield market and the Chinese high-yield market. That's unhealthy, it's unsustainable, it's structural to an extent, and this is what we need to dive into. How much of that structural leaks into other markets, whether it's domestic Chinese markets and potentially overseas, and I think that's what this conversation should be about.
Peter McCormack: Great, okay. So, one of the things we care about as bitcoiners, because some people may be asking, "Why do we care about Evergrande?" is the wider macro environment, the systemic risks that exist from something like an Evergrande. There's been a lot of comparisons to Lehman Brothers. Andy, you brought it up as well. From my research, there is a significant difference between this and Lehman Brothers and you may want to explain some of this, Greg. But the majority of the risk in Lehman Brothers was in financial assets, in credit default swaps and collateralised debt obligations; whereas, a slight different with Evergrande is, well there are two that seem to stand out.
They own a lot of land, so they actually own an asset, which itself will tend to hold value; and secondly, that the CCP has a lot of policy space to try and support this. So, my understanding is we're not really seeing the Big Short 2 in China. It's comparable, but it's not exactly the same situation.
Andy Edstrom: Yeah, so I'll jump in there, and I agree with you, Peter, that the liability side of the balance sheet for Evergrande is not as toxic as was Lehman Brothers. So, when you think about total debt and total equity, you've got your total assets and then against those assets, you've got debt; those liabilities, you've got equity.
In the case of Evergrande, it looks like the debt-to-equity is about 80% to 20%, or said differently, debt is about 80% of the balance sheet. Now, in Lehman Brothers, as you may recall, debt-to-equity was 40 or 50 to 1. Basically, there was no equity, even at the marks that were on Lehman's books, which themselves were overmarked. So, Lehman was clearly insolvent, so that's one.
Two, as you said, those toxic financial liabilities; Lehman and all the investment banks had tons of credit default swaps, CDS exposure, something Greg is very familiar with, and that is a hugely levered instrument. And so, my recollection is that at the time, the total CDS contracts, outstanding either in the US or globally, was in the order of $50 trillion or so of notional value, back in the day, back in the Lehman days, which is just an enormous number. We're talking right now about liabilities in the hundreds of billions. I don't remember what Lehman's CDS book was, but I'm sure it was much bigger than Evergrande. So, that's all true.
Now, if I were to take the other side of the argument, what I would say with China is that China is kind of this black box, similar to how the US financial system was before the Global Financial Crisis, and many would argue that it's kind of been unravelling for a long time. I mean, I remember I didn't really start paying attention to what was going on in China until about 2015, when they devalued their currency basically in one fell swoop. They had been managing the rough peg to the dollar pretty closely and then, I guess as an experiment, they decided, "Hey, let's see what happens if we let it go by 3%". So, that move actually did bleed into global financial markets; it did not cause a disaster, but it did move stocks across the globe.
I think, what's also really interesting here is that, it reminds me of a personal anecdote which was, I have a friend, I went to college with him, and he brilliantly managed to get himself into an early investment in Alibaba. So, he made a ton on that, he made a killing, and I spoke with him about it, probably five or six years ago, right after the IPO. And I asked him, I said, "Look, you've made whatever multiple of your money, some crazy number, you might want to diversify now that the company's public. It's your only asset". I know bitcoiners don't disagree with this concept, and I don't either, given what I know about Bitcoin, and this is the view he took. But I said, "Look, just ask yourself what you own. Ask yourself, as an American investor, what your claim against Alibaba really is".
I didn't really understand at the time, but there's this whole structure called VIEs, Variable Interest Entities, which are the way that foreigners invest in Chinese companies. They're not direct claims to Chinese company stock; no. They set up an entity in the Cayman Islands, the investor buys shares in the Cayman entity, the Cayman entity doesn't even outright own shares in the Chinese entity, it contracts to have certain rights and responsibilities with respect to governance and cashflows. But it's really just a contract between an offshore entity and the onshore Chinese entity. There have been doubts about this structure for a long time, but those are coming to the fore now.
Meanwhile, the Chinese Government's doing all this stuff to crack down on companies in general, whether it's Didi, whether it's the gaming companies; basically, China's making a lot of moves, so there's a lot more doubt, let's say, in the minds of investors about what's coming out of China. And I think, when you layer on all these various factors that are all hitting us at the same time right now, that's what gives me a little more concern for the situation.
Greg Foss: I think that was really well said, Andy. I want to build on a couple of things you pointed out. Absolutely, the CDS book at Lehman. You have on-balance sheet reporting and then off-balance sheet reporting, and as you know in the financial system, the off-balance sheet reporting is perhaps where all the risks lie. As you know in the CDS market, most contracts are netted out; for the buyer, there is a seller.
But then you had the cross-default concerns in the Great Financial Crisis. Rumour was that if AIG was going to fail, Goldman Sachs would have failed, because they bought so much insurance from AIG that if that counterparty failed, Goldman would be on the hook for the other side of the trade that they thought they'd laid off the risk. So, on-balance sheet versus off-balance sheet reporting in the financial system is distinctly different than it is with a property developer, no question.
The other thing I'd want to point out is the psychological contagion that you are perhaps inferring with all the other things that are happening in the market. So, before we get to the psychological contagion, I want to talk about again what's happening in the debt markets in China as I see it, not as a trader, and I don't have all these guys covering me from Wall Street whispering in my ear, "This is what's going on", but this is what I can, based on my flyover.
Investment grade credit in China is still hanging in quite nicely. So, while high yield blew out, investment grade spreads are holding in nicely. That means that at this moment, the credit contagion is not even spreading to the investment grade market in China; that's a good thing. It's also, potentially don't forget about the Olympics that are coming and everything that Xi wants to accomplish with that. So, financial contagion, yes, it's big, $89 billion to $100 billion of interest-bearing obligations.
The bigger hit is going to be to the Chinese confidence, if you will, in all these people that are going to lose their down payments for their homes, and that will have trickledown effects with real GDP in China, no question. I've seen that the investment banks, the Wall Street investment banks, are cutting their growth projections for China again. So it's probably, at this point, not the financial contagion event, and I can say that there are reasons that it's not. You never know for sure, but the financial markets are indicating to me that they are keeping this within the property development sector in China.
There will be some knock-on effects to Asian banks and Euro banks, like HSBC and Standard Chartered that have big exposure to the Chinese property land; that's not surprising. But will it bleed into other financial markets? At this point, it seems contained, but so did everybody say that the subprime housing crisis was contained as well. Jeff Booth's line, "You never know which snowflake causes the avalanche"; let's just understand that at this point, the high-yield market is in disarray, Evergrande is a large component of that high-yield market. I think over 15% of that market is one issuer, which is sort of silly in its own right, but it's yielding 14%.
But yields don't make any sense when 14% of the market is trading at a $25 price on the bonds, indicating a yield on those bonds that's, depending on that maturity of the bonds, over 25% or 30% annualised; in some cases, it's over 100%. This just doesn't make mathematical sense. Again, it's trading on a recovery; a 25-cent investment today to earn 45 cents in a restructuring, ex whatever the CCP imposes, I'm talking from a North American restructuring perspective.
So, I agree with everything Andy said and I think this is where we need to move it to the psychological contagion, because China's extremely important in the global macro scene. If they start changing their psychology from an investment basis in line to a consumption, consuming basis, which I think Xi wants as well, you will see impacts on labour, you'll see impacts on inflation, you'll see less demand in steel for construction, but it would bleed into other areas if the consumer, the Chinese consumer, changes psychologically, and that's important.
Andy Edstrom: Greg makes a bunch of great points there. Can I just jump in real quick, Peter, because I want to get to your question which is, "So what for Bitcoin?", right? So, Greg makes a really good point about, okay, it seems to be contained in the high-yield market in the junk bond market. In true financial panics, it bleeds through everything. Even just going back to the COVID Crisis 18 months ago, not only did the high-grade credit, the high-quality corporate bond market fall out of bed, but even the treasury market fell out of bed. That was the real, "Oh, shit!" moment; so, we're nowhere near that yet.
Now, that said, if you just look at the chart; okay, let's look at Bitcoin price recently. Obviously, we dipped a bit over the weekend as the news was percolating, people were starting to focus on it; and then, we had a bigger dip earlier this week. So, was that random? No. I think that probably, Evergrande was the catalyst for the recent move down in price, let's be honest with ourselves; so, that's one thing. Two is reminder: is Bitcoin still a risk asset? Yes, Bitcoin is still a risk asset, as all the hodlers listening know very well. Well, maybe the newbies don't know, so it's a good reminder that when financial markets go down in general, when risk assets go down in price, chances are very good that your Bitcoin's going to go down in price.
That correlation, when you run the data going back years for Bitcoin price, and we've got, call it a decade of data, because it didn't trade in the early couple of years; and even in the early years that it was trading, the price was so low and so undependable that you just can't really use the numbers. But let's say we've got a bunch of years of data. Well, if you look average at monthly data, you say, "Oh, Bitcoin's very low correlation to stocks, very low correlation to bonds, very low correlation to gold. Basically, it's not correlated to anything". But, when you look at the moments of stress overall in the financial markets, then yeah, basically it's correlated, and especially in recent years.
It's not surprising, right. It's probably now the world's most liquid market, because it trades 24/7 all over the place and we're still early in Bitcoin's life cycle. I mean, if it reaches its potential, it's going to be much, much bigger; and by then, yes, it will be this giant, massive asset with ballast that's hard to push around, but we're nowhere near that. I mean, I would love for Bitcoin to be the safe-haven asset now, but we're probably a decade away from that, is my guess. So, yeah, it all affects Bitcoin.
Then, of course, how could it specifically affect Bitcoin with respect to this credit? Well, we know about Tether, I'm getting sick of talking about it, but it does exist, and we know they own a bunch of commercial paper; and they claim that they don't own Evergrande paper. I don't really believe much of what Tether says, so it's interesting that they say that, but it's deny, deny, deny. That's what governments always do before the wheels really fall off the train, or the train goes off the tracks; you have to deny. I can't remember, it's one of the German central bankers that the quote was something like, "When things get bad enough, you just have to lie"!
So, I'm not worried about Tether. The other thing about Tether that I always think about is, okay, let's say something in the portfolio loses a bunch of value, what actually happens? Well, you could get a "run on the Tether bank", but they could just suspend redemptions. Are you going to get your money out of Tether if you go and try and redeem half of the $65 billion, or whatever, that they've got outstanding? No, they'll just say, "We're going to need a little bit of time, guys. Come and talk to us in a month or two", and you could have a sort of, I would say, an orderly unwind over months and years. That's the other thing too; if Tether unwinds, it's not like it's going to all go away in a month or two. That kind of an unwind is probably going to take years.
So, anyway, I'm not that worried about Tether with respect to this credit, but you have to acknowledge that it's a factor that could be involved.
Peter McCormack: So, the Tether thing's interesting. Firstly, I've never once used Tether, just out of interest, never once.
Andy Edstrom: Me neither, never.
Peter McCormack: And, I've always felt like a run on Tether would actually see probably a flight to Bitcoin, just because of the way the trading pair works and where people would look to exit, and perhaps they would even flip to other stablecoins, or maybe even other assets like Ethereum. But for me, if I was holding Tether, the first thing I would flip to is Bitcoin. The other thing is, Bitcoin being a safe-haven asset. Funnily enough, it has become a safe-haven asset for certain individuals; it is for me over a long enough timeframe. So, it's a long-term safe-haven asset, rather than a market reaction safe-haven asset.
But the question I really wanted to ask is, when you put the question to me, "What's the question people want to ask?" "What does this mean for Bitcoin?" I just want to flip that slightly and say what it means for bitcoiners, because obviously people listen to my show for a range of reasons and I make this show for them. And, whilst we have bitcoiners who really care about the technical side of things and the human rights opportunities that Bitcoin brings, when I make a show like this, when I get Greg Foss and Andy Edstrom on and talk about something with a macro environment, it's going to be one of the bigger shows, it always is. Any show that relates to Bitcoin price, market price, market actions, they absolutely crush it.
So, I think the wider question is, for me, what I want to ask you both is that there is this issue right now with Evergrande. It might not lead to systemic risk within the market, but it does exist and it's another issue based around debt. We also have the US debt ceiling, which Janet Yellen said we will be hitting in October, the mythical debt ceiling, which always moves. We've seen just various other issues. We've also got the recovery from stopping the economy around the world and in the UK at the moment, we have the government stepping in with gas prices; a number of companies have gone to the wall, because wholesale prices are up 250%. I think two have gone bust today. The government have stepped in to fund an American company who produces CO2, because if we don't have enough CO2, we will have food shortages on the shelves.
So, look, there are so many issues within the markets now: energy prices, debt issues, inflation. We have now Evergrande in China, we have the US debt ceiling. The signals themselves aren't great and it feels like every opportunity to kick the can down the road is being used by governments, which is leading to more debt. And so, my question to you really is, how fucked are we?!
Andy Edstrom: Greg, you start!
Greg Foss: Okay, so great question, and so let's -- we are, and we are fucked --
Peter McCormack: And I'm laughing!
Greg Foss: -- because that's only pure mathematics. But let's hit a couple of the things that you brought out. Financial markets can generally deal with two risk factors at a time, but when you get more than two, ie, I can list five right now of which Evergrande is one, debt ceiling is another, you brought it up; but you have this fiscal cliff coming up, you have inflation, no question, you have FedEx that just crapped the bed on their quarterly report, because labour costs are increasing so quickly, their earnings are being compressed. These are stresses in the system that are adding up.
So, you can deal with two of them. I think it was David Tepper, famous hedge fund manager in the US who said, "It's when you have more than two of these that you've really got to pay attention", all right. So, you correctly point out, we have more than two risk factors. Let's bring it back to Bitcoin. Bitcoin will become, and I love Andy, he said, "In ten years, it will become --", and he didn't use the word "insurance asset", but that's what I like to use. It is actually long volatility in my opinion, Bitcoin, but that's my opinion and Foss doesn't matter, because the market will trade it however they want. In the short term, it definitely is acting as a risk-off, or a leading indicator. It's neat that it hung in there last week, but then over the weekend, it definitely precursored a fall in risk assets and a cascading effect.
The human mentality is, sell your winners, right. I mean, that's just how people trade; it's not the right way to trade, but it is the way people trade. And then, if you're being redeemed, then you have to raise money for your unit holders. You talked about the situation with Tether, but if you're managing a hedge fund, you generally don't want to gate your hedge fund and stop unit holder redemptions, because you'll never raise money again. I mean, that basically admits that you're a horrible risk manager and you're in all sorts of stuff that you can't unwind.
So, there are those technicalities that apply to Bitcoin in the short term; but, Andy, you said ten years. I couldn't agree more. I think in ten years, Bitcoin will be the asset that people understand is your insurance. I think of it as credit default swap insurance on sovereign nations, or on crumbling fiat credit quality, but that takes a long time to educate the market as to how that will happen. And you need bigger institutions in there that will be happy to buffer the price decline and actually say, "Hey, I need more insurance and Bitcoin is my ultimate insurance, so will there be a decoupling?
When risk-off happens, if traditional financial markets, you actually see Bitcoin increase in value, I truly believe that will be the case. I could be wrong and I don't know the time period at which it will happen, but ten years seems like a good timeframe for me. The world is going to change so much in ten years anyway. Jeff Booth again, I'll quote him a second time, "A hundred years' worth of change in the next ten years", so let's not get too fancy about what we think is going to happen.
Then, the final thing on Tether, just circling back to this, look, high-yield issuers in North America have no access to the commercial paper market, zero. It doesn't happen, because you don't lend to a company that's susceptible to a sudden event, like a default, with 90-day commercial paper. That commercial paper could in fact be the thing that pushes them into default, because if they can't roll that commercial paper, that means they have a credit event. So, high-yield borrowers, of which Evergrande are one, in North America do not have access to the commercial paper market.
Secondly though, people who do have access, or issuers that do have access to the commercial paper market, generally need backup lines of credit from the commercial banks. If you're an investment grade issuer and you issue commercial paper, you still need backup lines of credit from the commercial banks in the event that the commercial paper market seizes up, or something happens to your credit that you can't roll that 90-day paper. At a rating agency, a credit rating agency, if you believe they do their job at anywhere close to being professional, you have to ask, "Where are your backup lines of credit?" That's a BIS consideration but, "Are they greater than 365-day commitments to roll your commercial paper?"
I don't think Tether would have ticked those boxes on either situation, and therefore I'm not certain that they would have that much commercial paper outstanding. But as Andy says, it's China; you just never know for certain. They're reporting in the different financial standards over there. I do believe, as you said, Peter, a credit event at Tether would be positive for Bitcoin; not just for me from an insurance perspective, but also from the funds flow perspective. So, that's a Bitcoin narrative coming into this playpen. Over to you, Andy.
Andy Edstrom: Yeah, God, please can Tether blow up? Can we get past this? I mean, what a positive, not only short-term event, as you have both said, "What are people going to flip into from Tether? It's probably going to be Bitcoin"; and then secondly, can we just get the overhang of that behind us, because you know that there is some percentage of investors, especially the institutional ones, who are like, "Yeah, what about the Tether thing? I don't want to touch that". It's one of their risk factors.
Peter McCormack: Andy, five emails a week I reckon I get, asking me to go and investigate the Tether situation, at least five a week. And they send me articles and they send me tweets. And always, my starting point is, "I need three months to investigate this, and I still don't know if I will find everything out".
Andy Edstrom: Yeah, I think it's maybe the most overblown risk factor for Bitcoin, as an investment, that's out there. Oh, and by the way, you talked about, Peter, it being a safe haven. I mean, look, you're talking to a couple of legacy finance guys; we've got out investor hats on. I agree with you completely. I mean, having the ability to cold-store your keys and bug out if you need to, even with a brain wall, if you've got to cross a border, that gives me tremendous psychic benefit, and it should to all the listeners. If you haven't got your cold storage set up, you should do it. And always be raising your game, be experimenting, be playing around with multisig. Don't risk your stack; be careful. But that's the long-term path to personal sovereignty.
Maybe the last thing I'll say is, okay, two more things. One is to add to the risk factors. Greg gave a good list there. I would just add the Fed. I do have to admit that I'm getting a little bit flashbacks to late-2018. In late-2018, the Fed basically was starting to tighten. They'd actually started, I think already, maybe midyear, to cut back the quantitative easing, to cut the tapering, and I think they were moving rates a bit. And the market kind of didn't believe them. Investors were saying, "Look, they're going to back off", and Powell said, "No, we're serious, we're going to normalise rates". And we got a bear market in stocks.
For a split second in late-2018, the S&P 500 was down 20%. It lasted a few months, I think it was from September; it was from right about now, in terms of the calendar, until the end of the year; and of course, it was after a relatively long and large bull run like we've had since the pandemic in the last 18 months, basically uninterrupted. So, yeah, I have to allow for the possibility that we're going to get a correction.
Now, am I selling any of my Bitcoin? Hell, no. I always DCA, as you know, with Swan. I don't stop buying, I'm always buying; and I don't trade, and I don't leverage. Just a reminder, sorry Grandpa Andy here reminding people, if you want to lose your stack, use leverage. But none of this really worries me. I just live with the risk and I live with the vol and I'm extremely bullish on Bitcoin in the long run. And the reality is, we don't know what's going to happen in the short term, which is why we hodl.
Peter McCormack: Well, Andy, that's a really great point first on leverage; I always say the same. Look, some of the best traders I know, they trade with leverage and usually it's max 1X to 1.5X and in very rare scenarios, 3X leverage. I don't trade, I buy, I send it straight to cold storage. But I'll tell you one change I've made to my strategy recently. So, for most of the last year, I've held eight weeks' cashflow, personal and business in cash, and then the rest of it goes into Bitcoin. And, as I get towards the end of that eight weeks, sometimes I get close to the line. I've gone over the line once and had to sell a small amount of Bitcoin, because I just cut it too fine, but I was always running that strategy, and it's worked well for me.
I'm not doing that now. I'm actually just holding slightly more cash now. So, I'm actually holding more cash now as a protection, just against Bitcoin, a sudden event and there being a risk-off, I want to make sure I've got enough cash. So, I've actually extended my runway from 8 weeks now to 16 weeks, and I'm still stacking every month. I still live by this rule that every month, I want to end up with more Bitcoin than the previous month, but I'm not buying it hammer and guns like before, because I don't really know where we're going.
I'm not entirely confident we're going to see an end of the year like 2017 where we see a run up. Look, maybe the whales are in full control and that's what they want people like me to believe and they're going to move the market, but I am definitely holding more cash now, I am conserving cash, and I am considering, and shoot me for this, Foss, I am also considering holding a little bit of gold; just a small amount, but a little bit of gold.
Greg Foss: I own gold; I own gold, guys. I own silver. I was at Bretton Woods, where a famous gold investor first -- another shoutout. I did shoutout to Laurence Leopard on your Peter Schiff debate; I'll shout out Larry again, but I actually have a bet with a Tether bear, George Noble out of Boston, a famous money manager in Boston. George and I have a handshake bet on a price target for Bitcoin, which makes no difference to me. I just want to go out for dinner with him somewhere around Christmas time in Boston.
The guy is pretty smart. He is absolutely laser-focussed on Tether, and I think as a gold investor, which he is, he wants Tether to be a bigger issue, and I'm not putting words in his mouth; he wants Tether to be a big issue so Bitcoin blows up, and then he can actually get in on a down trade. I don't talk markets. What I do do though, and I need to be clear about this, I have a core position in Bitcoin. I trade it every single day, okay. I trade it, because it's in my nature. I'm not telling people to do that, but someone who's spent 30 years trading, it's hard to get that out of my system, right.
I will tell you, I always traded core holdings in my investment portfolio, because that allows you to take advantage of market irrationalities in either direction. I will go on record as saying again, I don't care whether it's $40,000, $30,000 or $60,000 right now, it's a rounding error. We're overthinking this if we're trying to trade it as a, you know, put it in your investment portfolio only on a downtick to get you up to your core holding position. That's the wrong way to do this. You just get a core holding position, and then you can manage that however you want. There are opportunities in the market on a daily basis for me, including things like GBTC, where you can buy Bitcoin exposure at a 15% discount to net asset value.
Now, I'm hoping for the day where Interactive Brokers allows you to write covered call options on GBTC, because that would be such a perfect money maker. Taking vol out of the options market by selling and then using a 15% discount asset on the covered call basis, my God, this should be the simplest money-printing exercise in the history of Bitcoin, but it's not available to -- it would be available to me if I still managed institutional money, because I just have an instant setup with a guy that says, "Okay, we'll do a swap on implied volatility on GBTC".
I don't want to get too technical here, but the point is there's value in the markets on a daily basis to someone like me. And yes, I always have a stack that's a core stack. I have it in cold storage, but I also trade it on exchanges, generally on stock exchanges, so Bitcoin ETFs in Canada. All of this is really early and all I can tell you is, when the big boys get involved, and they're starting to get involved, but they're not really involved in any size, a lot of these market movements are going to be ironed out, and then the narrative will change to where Bitcoin is a long vol position, meaning you own it because the rest of your portfolio is essentially short vol. And, Bitcoin is the perfect hedge, because it's long vol.
When volatility explodes to over 25% on an annualised basis, which it did hit this week, generally markets shut down. New issuance, high yield does not occur when equity vol is over 25%. That's a hard and fast rule that may have changed a little bit since the Fed got involved in trying to dampen volatility by buying at credit; but I'll just tell you this, guys. In a normal functioning market, when equity vol exceeds 25%, new issuance, high yield shuts down, you need insurance against that. Someday, Bitcoin will be valued as the perfect long vol insurance by big money; that's my prediction.
Andy Edstrom: I like that prediction, I like that prediction a lot. I mean, Foss, you're dead on. The reality in asset markets, and I'm now speaking with my wealth manager head on, is just about everything we own is long vol, as Greg said. I mean, stocks obviously are --
Greg Foss: They're short vol, right, stocks are short vol.
Andy Edstrom: Oh, I'm sorry, yes, yes.
Greg Foss: Credit is short vol, stocks are short vol, and you need the -- well, it doesn't matter. Credit 100% is short vol and as credit manager, I always needed long-vol positions to balance my short-vol exposure.
Peter McCormack: Sorry, Andy, just for the listeners; and when I say the listeners, I also mean me; what do you exactly mean by long vol/short vol?
Andy Edstrom: Yeah, so volatility is how fast the dollar price or the fiat price -- I should say, how fast and how far really; it's really how far, given the unit time, the price of something is moving. So, if the price is bouncing all over the place, then the vol, the volatility is high. And, it just so happens that generally, when volatility is high, it's high to the downside, right. By the way, we know this in Bitcoin! When Bitcoin moves high, when you get a multi-thousand-dollar candle, which direction is it; is it up or down? If I tell you there's a multi-thousand-dollar candle, a $5,000 candle, chances are very good that it's down not up.
Yeah, and that's because when stuff's bouncing around prices rapidly, or in large magnitude, it means people are nervous. And when people are nervous, they're selling risk assets, so generally asset prices are going down. So, yeah, when vol is high, stocks go down, credit-sensitive bonds, junk bonds, high-yield bonds, bank loans go down; even the weaker high-quality credit goes down. The only thing that goes up in general is treasuries, you know, high-quality government bonds. Even that wasn't always true. It has been true for several decades now, but it wasn't always so. It's not true when you get liquidations, right.
That's again what really spooks the Fed. What really spooks the central bankers is when the treasuries market starts to go down with high volatility, because the amount of leverage that is tagged onto treasuries, especially in the repurchase market, the repo market, is so enormous that it cannot fail. I mean, really the financial system will come apart, the banks will blow up, if the treasury market blows up; which is, by the way, why we always do this song and dance which we're about to face, about the debt ceiling, because people say, "Oh, God, what if there's a default?" and a default really would be very bad.
I personally love the debt ceiling, because it's a reminder of how mad, how crazy this whole situation is. It's just another reminder, "Oh, yes, we are printing yet another record amount of government debt that will never get paid back". I appreciate that reminder, although unfortunately it doesn't seem to change the policy, but anyway; that's the story on vol. Actually, having hedges to volatility, there aren't that many of them, to be honest. You can use options; that's the most common way to do it. Generally, options bleed value over time, so you have to kind of be clever and pick your spots. You want to be buying the protection when it's cheap, when the volatility is low, and you don't really want to be buying the protection, if you can avoid it, when the volatility is high, because that's when that protection is expensive.
Greg Foss: Hence the analogy that Bitcoin, if it's going -- my intrinsic value for Bitcoin, based on credit default swaps of sovereign nations, is over $150,000 today. That intrinsic value will increase as things like volatility increase and things like sovereign debt defaults happen more and more often. We've already had over ten countries default in the last ten years, so sovereign defaults happen all the time.
My price target for Bitcoin is over $2 million a Bitcoin, but right today, my intrinsic value for Bitcoin is over $150,000, and it's trading, wherever, $40,000-ish. First of all, I buy it because it's one-third of the value of my intrinsic value of the insurance. I buy it with my eyes closed. And then, I doubly buy it with my eyes closed when my price target is $2 million, and I don't care, I shouldn't care about $5,000 here and there for my core holding. Do I care about $5,000 for my trading portfolio? Yeah, I mean that's how I make my living.
I trade price movements; that's what I do for a living. I just do it for my personal account now; I used to do it professionally. Doing it professionally really blows, because when you do well for your clients, they were so smart because they put money with you; they were really smart. And then, when you crap the bed, you're an idiot, they had nothing to do with putting their money with you; you're just the idiot. So, you never get any glory, you just get all the crap.
Managing your own money, it's a lot more fun, a lot less emotional. And what I would say to anybody out there, if you own zero Bitcoin right now, firstly you're a horrible risk manager; secondly, and more importantly, you are taking an extreme amount of risk, again, because the world is set up as a short-vol trade. Compressing volatility generally corresponds with increasing stock prices and credit spreads that narrow. As soon as vol increases, credit spreads blow up, stock prices generally fall, and you need insurance against that event.
So, just to make it simple, Peter, long volatility is your insurance policy. Lots of people will go to the options market for insurance, but you pay through the nose. Options are very tough to trade properly and generally, you know, you make money on nine out of ten of your options trades. And then, on the tenth one that you lose money on, you lose everything you made on your last nine trades, and more, because that's how markets are set up. Markets will always move in the direction that causes the most pain to the most people; that is a trading philosophy.
If you are buying insurance when insurance is expensive, you're the fool, right, Andy? You're supposed to buy insurance when it's cheap and right now, Bitcoin is extremely cheap. You close your eyes, you buy some, you get to your core holding level, then you sleep at night. You don't even look at the price in fiat, you worry about the other 90% of your portfolio that's not Bitcoin. Bitcoin is your insurance.
Andy Edstrom: Amen. That's how I pitch it to my clients. It's sort of a hybrid. It's like, yeah, it's a long-run insurance, but also probably it's going to go up a lot in price in the interim. Even if you don't need that insurance in the next few years, is Bitcoin price going to be higher a few years from now? Yeah, probably it is. And your size is the position. I suspect that all of us on this pod here are irresponsibly long; but for those who aren't irresponsibly long and just want a smaller position, and they lose their minds about the volatility, "Oh my God, the price is up 10% today", or it's down 20% tomorrow, you say, "Fine, just put a few percent in". The result for your portfolio will be miniscule in terms of losses". Even if it goes to zero, which it won't, it's still not going to ruin you, so just size it appropriately. And as Greg says, sleep at night.
Peter McCormack: Greg, do you think that companies are starting to wake up to this now? And, what do you think is the problem with -- because, you've talked to me a lot about bonds, and it feels to me like bonds, if you compare it to inflation, you're going to be losing money anyway, right? So, why do you think people are still averse to Bitcoin? Do you still think they're missing the picture, they've not gone down the rabbit hole, they've been sold on the narrative the mainstream media is spreading?
Greg Foss: Intellectual laziness, 100%; certainly, some conflicts. I mean, if you're Warren Buffet and Charlie Munger and you own so many financial services stocks, do you want Bitcoin to disintermediate the rest of your portfolio? No. So then, you go out and you say, "Well, that's got to be rat poison squared, because I'm 94 years old and I know technology so darn well". I mean, the conflicts are so obvious with some of these money managers, but the more important one, Peter, and this is what you're nailing; the traditional 60/40 equity bond weighting is absolutely dead, if you have a prescribed rate of return of let's say CalPERS at 8% annualised.
Running through some quick maths, if your fixed income portfolio at 40% yields even 3%, which is high, because US ten-year treasuries at 1.33% and high yields at 4%, but let's just assume that that 3% is your fixed income targeted return, after defaults, your 3% on 40% of your portfolio equals 1.2 percentage points towards your 8% blended target, which means that the 60% of your portfolio that's in equities needs to earn 6.8% of the 8% target. That means equities needs to return over 11% or 12% annualised for the rest of time just for pension funds to get to their 8% prescribed yield target.
There's so much accounting gimmickry that goes on, actuarial accounting gimmickry that goes on with the pension funds, whether they're funded or unfunded in the assumptions, let me just tell you. If you could get these guys to put 2% or 3% of their allocation into Bitcoin, with the asymmetric return opportunities of Bitcoin, the way I see it, you'll change pension accounting for the better; you will change returns to pensioners and the people that are counting on these pension funds to truly be funded. My God, you have to make this trade, it is just pure mathematics, and it's coming.
I talked to an actuarial accountant who wants to get out of the business actually in the US, he's in Philadelphia; he goes, "I'm sick of this, I'm absolutely sick of this smoke and mirrors that we pretend that these pension funds are actually truly funded. It is impossible to earn an 8% targeted return, when yields on the US ten-year are at 1.3%". Why is this so difficult for people to understand, the most simple, elementary mathematics. Bonds are just a contract, they do not change. That is all you're going to get from a bond. An equity at least has growth opportunities, but most equities actually fail as well; that's just what equities do.
Andy Edstrom: This is the advantage that we have in Bitcoin. So, I agree completely. Is 60/40 going to work? No, it's not going to work going forward, so why don't wealth managers change; why don't pension funds change; why don't retirement plans change? It's amazingly slow moving. I mean, I don't know about you guys, but when I really got Bitcoin, the conclusion I reached was, okay, make a big bet and hyperbitcoinisation's going to happen next year! You think you figure it out and now it's happening, it's happening in front of your eyes. Yet, it takes years to play out.
The same factors, the same sloth, the same slow-moving speeds of these giant pools of capital, it's just breathtaking. And part of it is the, what has worked in the past. This is the real purse of success which is, it's been a one-way trade, all dips must be bought, just buy equities. This is over decades now, right. The last time it didn't work to just buy equities was back in the 1970s. That's a long time ago. Nobody managing money, almost nobody managing money today was alive and lived through that period. I have this conversation with my clients when I'm talking about why to buy or why to own those hedges that Greg is talking about against vol, or against general loss in risk assets, I always ask them, "Tell me about your experience in the 1970s", and they remember paying a lot for gas.
What they don't remember is what happened to their portfolios, because they didn't have portfolios. Most of them didn't even own their houses. Some of them owned their houses and were paying mortgage interest rates into double digits, right. I get clients talking about how they put on a 14% interest rate mortgage. But they didn't have stock portfolios and they didn't have bond portfolios, so they just don't have any lived -- nobody around now has any lived experience of a period in which it just doesn't work to just buy stocks and then hold that 40% in bonds basically as ballast, or cash equivalent.
Greg Foss: Those mandates though, Andy -- this is cool though. Those mandates were made when interest rates were. When I started trading, US ten-year interest rates were 14%. It's not hard to get an 8% bogey when you're starting with a US treasury yield which, you know, they were quintessential risk free, even though it's never been truly risk free, it is the quintessential risk-free asset, was yielding 14%. You could have just closed your eyes and said, "For the next 30 years, I'm going to earn a 30-year treasury bond that's yielding 14%. Sold to Foss, he's going to manage money and he's going to give you that return". Well, now it's 1.3%; that's all it is, it's 1.3% now. Big, big different game.
Andy Edstrom: It's amazing. Aren't you jealous of guys like Buffet, that started their investment track records back then?
Greg Foss: He never actually bought a bond though. The guy that I'm jealous of is Ray Dalio, because he was smart enough to use this thing called "risk parody", where he balanced leverage in the equity markets against leverage in the bond markets, where interest rates, when they go down, the capital rates in bonds is a mark-to-market gain. Ray Dalio was a genius in his risk parody trading when interest rates actually provided a buffer for you to gain capital appreciation on your bond price.
Guess what, Ray, you don't have that any more dude, and you did go out and say that you'd rather own Bitcoin than a bond; but then, you're dialling it back. You're dialling it back, because you're afraid. You're too smart by a half, Ray Dalio. Stop fucking with the people's mathematics. You understand it, the people don't and it's dangerous when you get a guy like Ray Dalio, who walks back his words, because it's going to penalise his business. Very, very dangerous, okay; this is about the kids.
Peter McCormack: Well, I do wonder how much influence comes in from the banks on this.
Greg Foss: Oh, 100%.
Peter McCormack: Well, a couple of things here. Like, Andy, you said about making a big bet, hyperbitcoinisation happens next year, and we do have these narratives coming in from every different direction, from MSM or opinion leaders against Bitcoin, governments as well. I do wonder a lot about the banks, because I talk a lot about El Salvador. I've been going back and forth for two years now, but the last two trips, or specifically the last trip, when I was there when the Bitcoin law passed, everything that is wrong with the banking system becomes very obvious. I can give just a few small anecdotes, okay.
So, I turn up in the country with no dollars and I go straight to El Zonte and even before the law passed, everywhere I went, I could spend Bitcoin and I did, because it's the Lightning Network, and I'm buying things that are $2, $3. Maybe I'm buying lunch and it's $10, $20. And, I just scan my phone and it's done. But now we have the Bitcoin law passed, and now I can go almost anywhere in El Salvador and I don't have to have cash on me.
Also, even if I didn't have cash on me in the past, I used to be able to just use my debit card; I'd buy a cup of coffee, or whatever. Yes, I'm paying $3 for a cup of coffee, but I'm paying $1 to my bank, or maybe it's £1; I can't even remember. Also, the flipside of that, you've now got Starbucks accepting Bitcoin. Yes, they've got volatility to deal with and think about, but the reality is this other thing they can think about is that when I'm paying, when I bought my coffee in Starbucks with my card, they're paying a much lower fee to the Bitcoin Network than they're paying to the credit card companies. And, all of a sudden, they can consolidate this money and perhaps they have to send some back to Seattle. Maybe that becomes easier to move.
Then we look at the remittance market, which comes up all the time. I think Aaron van Wirdum just said it on a Stephan Livera show; we don't need to talk about the remittance market now, because it's pretty much going to die. Bukele has put 50 Chivo machines across the US so Salvadorans can send money, 3 million Salvadorans, can send money back to the country and can do that for free as well. Everything that the banking system does, it puts up walls to take little bits of money from us and to operate surveillance on behalf of governments. It's collapsing, because we now have something which is instant, final settlement, near zero cost.
It isn't just a novelty to use Bitcoin in El Salvador; it's convenient, it's absolute convenience. So, I look at the banks now and think, "Holy shit, you're fucked. You're about to have your Blockbuster moment. What used to be great for you is that you would have a bank on every single high street; it's now a liability for you, because you've now got these buildings which cost money to operate, need a lot of staff, and you're being outcompeted by the neobanks and Bitcoin".
I know right now I operate with neobanks and Bitcoin; I do not operate with a major high street bank, because they cannot provide a service I need, and this is a different type of contagion that's going to spread throughout the financial system, and it's adapt or die.
Andy Edstrom: Yeah, that's well said, Peter; it's right in front of you, right? It's in stark contrast right in front of your face. I like what you said about, it's Bitcoin and the neobanks which is, the banks really are under assault, not only from Bitcoin, but from, let's call it fintech, right. And services like Venmo and Square, at least here in the US and it's different countries in Europe and different places, it's a different set of tech giants in China, they have really been taking a bite out of the payments function. I mean, they still backend connect to your bank account, so there's still a credit transformation function there for the banks.
What should banks do? Banks should take deposits and they should issue debt and then they should allocate credit. They should lend to businesses and to homeowners and commercial property owners. That's really arguably their core function. But they also have had this nice little transfers business, including all the fees, the overdraft fees that account for billions of dollars in profits just in the US for the banking system, which hit the people that can least afford it the hardest.
Peter McCormack: Andy, can I just jump in and say one point now. I don't have an overdraft facility and I don't need one. Bitcoin is my overdraft.
Andy Edstrom: I love it, "Bitcoin is my overdraft"; meme that!
Greg Foss: And, Andy, as a former hedge fund manager, I'm not sure if you ever worked in the hedge fund business, but I did; what would be a core short of yours?
Andy Edstrom: A core short at the moment, you're saying?
Greg Foss: Yeah, a core short. I'll just set it up for you. Western Union. The two largest owners of Western Union are Vanguard and BlackRock; ETF, passive ETF, get your weighting in exposure to the S&P 500, because that's how much it is in S&P points. My God, come on. Western Union should be on every hedge fund manager's core short position. It has a dividend yield; big deal. It hasn't moved in three years. And the two largest owners are passive ETFs that are just easy to borrow from, meaning you've got to borrow the shares, and they're stupid money, okay.
Andy Edstrom: I like it, I like that. Best short idea I've heard in a while. I'll be honest with you, Foss, I don't personally short anything anymore, because the Fed keeps printing, all dips are bought, it's near impossible to make any money. It used to be, by the way, that when you shorted, you got paid, and now you have to pay to borrow. So, I'm out of the shorting business, but you put it on, my friend. I hope you've got a position on it.
Greg Foss: I don't have it on, it was in my old life. Let's just say this, guys. There are still so many opportunities for the capital markets to actually become efficient. There's too much stupid money out there, or the pressure of money. But over time, Bitcoin will be the benchmark for proper capital allocation and everything else is going to pay the pauper. And Western Union, I'm sorry, guys, but your business is going the way of the horse and buggy, and that's just the way things are.
Don't fire me hate mail if your father works for Western Union. He's probably had a really great career. I don't want the world to unravel, I don't want Western Union to go to zero, but guess what; they've made a lot of money charging people a lot of fees to transfer money in remittances, and that is going away, because there's very simply a better way to do it; upcoming technology.
Peter McCormack: Greg, I'm going to disagree with you there. I want Western Union to go to zero.
Greg Foss: Okay.
Peter McCormack: Not overnight, because I don't want people to lose their jobs, I don't want lots of risks, but I want all remittance companies to go to zero; fuck them. If we can have people transferring money from friend to friend, from friend to family, at zero cost, I think that is great for the world and that's great for people, so fuck Western Union.
Greg Foss: Atta-boy! Then, hear hear! Send hate mail to Peter. I'm good with the trade; send hate mail to Peter.
Andy Edstrom: Along with the Tether hate mail, research mail!
Peter McCormack: You can have that one, Andy.
Greg Foss: Fellas, I'm going to have to sign off shortly, so if you want to wrap it up.
Peter McCormack: Yeah, any closing thoughts, Greg?
Greg Foss: Yeah, here's my closing thoughts. Andy, wow, really loved talking to you, man. I'm looking forward to reading your book. I will just say the Bitcoin community is such an amazing community. I meet new people every day, but when I meet a guy like you, or third time I'm bringing up Jeff Booth, I'm not having a -- Jeff Booth is a fellow Canadian that I'm just in awe of his thought processes and his desire to make the world a better place. And I think, Andy and Peter, you both share those same things.
So, thanks for having me on your show. I do want to make the world a better place. I don't want the financial system to unravel, but I promise you that we're doing everything in our power to try and make it unravel, and that's not a good thing, because we need an orderly transfer of power from a fiat system that is your chequing account, to a Bitcoin standard which is your savings account, your most beautiful technological store of value ever created by man, and you can transfer if across time and space. So, thank you for having me.
Peter McCormack: Amazing, Greg.
Andy Edstrom: Foss, it's been a real pleasure talking with you, man. Nobody wraps up financial knowledge with entertainment value in the same way that you do! This conversation's been a pleasure. I agree with you, man. I used to worry more about Bitcoin being the pin that breaks the bubble, being the catalyst that brings down the financial system. Now that I've seen how long it takes, to get back to my comment that, "Oh, you find the trade and then you buy and then you think it's going to happen tomorrow"; the more I think that actually, it's more and more likely to be relatively orderly, and the more grateful I am that we have Bitcoin as the escape hatch.
I think there's a good chance that we have, I guess, a relatively orderly transition; let's just say, a transition that's not as bad as it could be. So, that's what I hope for, for me. Bitcoin is hope and meanwhile, I just stack sats and we talk Bitcoin and try to get as many as the people we care about into the tent. Thank you, both. Thank you, Peter, for having us on for this chat.
Peter McCormack: No, thank you both for coming along at short notice. Love talking to both of you. Greg, it's happening quite regularly at the moment. Andy, it's been a little while, but you're both always welcome on the show. You're both bringing the fire. I learn a lot from both of you and, yeah, Andy's book's great, you'll enjoy it. Greg, I think you've got a book in you at some point as well.
But appreciate this, I think everyone's going to love this. I think it's a great show, we've got some great knowledge bombs out of this, and best to both of you and hopefully at some point, we'll all see each other in person and have a beer soon.
Greg Foss: Thank you very much.
Andy Edstrom: Cheers.
Peter McCormack: Peace out.
