I welcome first-time guest Zac Prince, founder and CEO of BlockFi—a company that’s raking in $50 million in revenue monthly.
Among its many incredible services, BlockFi lets you earn interest on your crypto and take out crypto-backed loans.
Learn what led Zac to launch the company… its competitive landscape… the future projects it will be undertaking… and where Zac thinks cryptos are headed. [22:44]
Then, Daniel and I discuss President Biden’s infrastructure plans and how they will affect the market… the massive losses from a hedge fund that just blew up… and some wild details about the Suez Canal incident. [59:32]
Wall Street Unplugged | 767
The future of finance will run through crypto
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street, right to you on main street.
Frank Curzio: How’s it going out there? It’s March 31st. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break the headlines and… Tell you what’s really moving these markets. So, we just came back from vacation with my family, went to Orlando, which is a couple hours’ drive. We went there for spring break. My kids were on spring break. And it was really my first vacation in 18 months, or two years… Probably two years, you know, with COVID and everything. We went to Orlando for, I think, a day or two, like, an overnight stay, about four or five months ago. But I had a lot of fun spending time with the family. We all need that from being in our houses. And I know it’s not as bad in Florida, but for people in New York, California, it’s a little crazy. Some schools aren’t open, but at the time, going to Orlando, everything was packed. Everything was packed.
Frank Curzio: I know I’m probably not telling you something you don’t already know, but I’m going to dig into the details here. Because when I say everything was packed, it was a lot different from the last time I went. Unless I went again, it was like a weekend. And what my family did was a quick getaway, and I think Disney just opened, and it was 25% capacity. Which we thought, “Hey, we’ll get in. And all lines are going to be empty.” It wasn’t because the only thing that was open at Disney were the rides. All the shows, none of them, were open. So, everyone that goes in there and all the food stands, it was just a few of them. You had an order online. So, everything was closed basically outside of the rides, and all the rides had big lines on them. But we still had fun. It was cool.
Frank Curzio: They were really aggressive with masks. People were angry back then. But when you look outside of Disney, everything was empty. And I’ve been going there for a lot over the past 10 years. Since I live here, we go there like two, three times a year at least, and get the annual passes of Florida. And you have all these businesses… And I always say they pick up the scraps because there’s so many people there. There’s so many people that are filling up to their capacity when things are busy. So, you have the Denny’s, the Perkins, Dunkin’ Donuts, the souvenir shops. They’re usually crowded. There’s hundreds of souvenir shops. Hundreds, if not thousands, of restaurants, everywhere, just thousands of businesses. And most of them were empty, last time I went. This time, the crowd was back.
Frank Curzio: I wouldn’t say it’s at a hundred percent outside of Disney, outside of the Universal, but they were very big crowds. We went to Volcano Bay, which is a waterpark owned by Universal. The rides there were insane. Yes, I went on every one of them. My daughter, who’s a little crazy too, where the floor drops out and you go like 125 miles an hour… I felt like someone beat the crap out of me, didn’t know who I was. I know for you lifetime members, you don’t want to hear that.
Frank Curzio: But for me, I’m trying to be as young as I can, as I get older. And still try and have fun because I know those days are numbered as we get older. So, I’m pushing 50 now. So, I still like to have fun. I just like to act like a little kid sometimes. We also went to a Fun Spot in Old Town, which on International Drive. They also had a car show going on, which I thought was amazing. It was muscle cars, probably at least a hundred of these cars, and tons of older people. They had a live band playing. Everyone was dancing.
Frank Curzio: All the rides were packed. Many places outside Disney, again, were packed. A little bit different from a few months ago. And some people, when it comes to masks, were wearing them, others not. But most people were confused because you’re outdoors on certain properties. And certain people would say, “Hey, you have to wear a mask,” and other people weren’t. Then, they’re like, “Got to wear a mask over your nose,” which I think everybody knows is pretty ridiculous right now. I mean, you’re wearing masks, and I get it. I understand. I covered this last week and the week before. You wear masks, and it’s cool, and I understand it. You just want to make people feel comfortable. But now, we’re from six feet to three feet. We changed it cause there’s no science behind six feet. So, now, it’s three feet, which means I have to change every single line. Everything pasted on all the lines that we went to at six feet.
Frank Curzio: Now, it’s three feet. So, this shows no difference between three feet and six feet. Again, there’s no science behind it. It was just cut and paste. This is what we think. And this is what we’ll get you to do. And we’re going to force people to do it. But with masks, when you put it over your mouth, it stops droplets from you spitting in someone else’s mouth. Which you’re not going to do. But if it’s going to happen, it’s probably going to be when you’re talking to someone you know because then you would probably be within two feet distance. But covering your nose and enforcing that at this stage, which 75% of all people have already vaccinated have one dose, which means by next month, they’re going to have two doses. You get one dose, and 20 days later, get the second.
Frank Curzio: I don’t understand that part. Even with planes and different places where you’re covering your nose, I mean, is it mucus that’s going to come out, and I’m going to spit it into your mouth somehow? I don’t get that part. It makes no sense. But you have to do what you have to do it in some places. But it was weird because when you walk into restaurants, when you’re eating, nobody, as soon as they sit down, everyone takes their mask off. And when you walk in though, they’re like, you got to wear a mask, but you’re walking to your table past all these people without masks. And then you’re going to take it off anyway. And then when everybody leaves, very few people put their mask back on to leave. It’s kind of like the businesses are being forced to do one thing.
Frank Curzio: But when it comes to like the common sense of it, we know that it’s getting a little crazy. Plus if, if you’re going to force us to get the vaccine, which seems to be the case, especially if you’re going to travel… A lot of states are thinking of doing this, which I think is crazy. I’m someone that had it already. I’m not going to get it again. Yes, you could have a case or two, just like chicken pox, when you say… But most, likely no one, has really gotten it again. So, all right, fine. I’ll get the vaccine. And because I want to travel. I’m going to be traveling, especially if I want to go to Canada, which is like the Middle East now when it comes to COVID. Everything’s shut down.
Frank Curzio: You’re going to die immediately and stuff. So now, if I happen to get that shot, I can tell you, there’s no way I’m wearing a mask. There’s zero chance I could transmit that. And zero chance that I could get it. So, that’s where the frustration is going to come in. If you’re going to mandate and force it, which they kind of force they not going to say, “Hey, you have to take the vaccine or you’re going to go to jail.” But they’re going to say, if you want to travel, we want to see that especially international and that’s going to be a pain in the ass. There’s a lot of people that believe that I shouldn’t get it. There’s certain people that don’t have a problem with it, but once they do get it, I can tell you nobody’s going to be wearing masks, because the frustration is here in Florida, and our laws have laxed. Basically, when it comes to mask, wearing people are sick of it here, and it hasn’t even been that bad. So, I can imagine if you’re in New York, California, some of these other states… It’s nuts…
Frank Curzio: But when it comes to mask wearing, and I saw those old people, just enjoying the car show, dancing in the streets and the band playing. 75% adult population has received at least one shot of that vaccine. That’s an amazing number. So, we look at a month from now, month and a half from now, 85. It’s going to be pretty much everyone who wanted the vaccine has gotten it. And the reason why it’s not a hundred percent is just there’s certain people that are against it. I get it. It’s your choice. Just like when I say schools are open, you should open the schools based on the data. But its your choice. It’s your choice to bring your kids. It should be our choice. It shouldn’t be like, no, you can’t do this. And we don’t have the science to support this, but how can schools still be closed? It’s crazy.
Frank Curzio: We came back to Orlando. We stayed at a place called Bonnet Creek, which is owned by Wyndham. We got there late Tuesday, night around 11:30. And it’s a big property. A six tower structure across all around a big lake and they have a nice walk way around it where each tower has its own pools and certain slides. And you have a mini golf course at another tower, certain restaurants at another. But you could walk around, it took me about 20 minutes to walk around. So, it’s a very, very big property. So, we check in and lady at front desk says, “Hey, okay, you’re in tower one, 3rd floor.” We get there. So, I have to drive to tower one, because again, this is a big place. I drive there and take our luggage up. And now it’s like 12 o’clock at night. And bam, what happens?
Frank Curzio: The key cards don’t work, which is a real pain in the ass. Now, we got to the luggage back to the car. I got to drive back to the place and say, “Hey, you know what? The cards didn’t work.” I was really pissed. And credit to Wyndham, they took care of me. They upgraded us to tower four, which is across the lake. And they said, we’re going to give you the 12th floor, beautiful views, so it’s our fault. And they also sent up a bottle of wine. So, they did the right thing, and I love that because, again, there’s going to be bad experiences with everything even sometimes with our business or whatever we want to make sure that if you do we take care of you. And that’s what you’re supposed to do. And that builds character. That builds a great brand.
Frank Curzio: When things are good, things are good, but when things are bad and how your business or how those people handle it that shows good character and builds loyalty if you do it right. If you can get someone who’s really pissed off and then you really take care of them. They’re going to be a customer for life. It’s a very big deal. So, I love the fact that they did that.
Frank Curzio: But putting us on 12th floor, it was cool, but it came back to bite us in the ass. Because the last night we were there, we got home late. We stopped at an area on International Drive, where they had the world food truck stop. It was amazing. I don’t know if it’s there all the time, but I think it was there just for a few days. So, it’s like 50, 75 trucks from different countries around the world. It’s all street meat, and they’re cooking it. It’s amazing, all week out, its awesome. It’s probably terrible for you, but it’s just, the food tastes great. So, we ended up getting home around 11, since it took over an hour for us to get the food. We just came out from one of the parks.
Frank Curzio: And we started eating and a fire alarm goes off. So, we’re forced to evacuate the buildings. You have to evacuate the building, and you can’t take the elevator, you’ve got to take the stairs. So, we had to go down 12 flights of stairs.
Frank Curzio: And we’re all outside. It was about 150 people. And half the people on the other side, thank God it wasn’t us, all of a sudden the sprinkler start going off and start getting these people soaking wet. It is Florida. You’ve got kids. You’re going to bed early. So, go to the parks the next day. And these people just got forced out of bed to walk down flights of stairs, and then, the sprinklers go off, and they get soaked. So, fire engines came, and then, they’re like, okay, we’ll take care of it. Someone’s oven lit up, caught on fire. They said, like, you can go back up. And everyone wants to go back up at the same time. So, the elevator, line of the elevator, is again, 150 deep and you’re like, forget it. So, we had a walk up 12 flights of stairs at like 12:30 at night, which was a little crazy.
Frank Curzio: But it’s always an adventure, right when you’re with your family and go on a vacation. But, but to the bigger point here…
Frank Curzio: Orlando’s back, parks are crowded, especially if you’re looking at the Universal properties. Since those restrictions aren’t as stringent as Disney, I know Disney parks, I believe, just opened up in California. I was so happy for California. UCLA, congratulations for making the final four, just think about that. You didn’t even know if you were going to be able to play basketball, college basketball, when everything closed.
Frank Curzio: And Gonzaga, as well. Congratulations to those guys. But looking into more of the details the hotels, most of them were packed. People were spending money like crazy. The hotel was charging for things that I have 15% off on every 50% upcharge to every bill that you paid, automatically taking it out. At Volcano Bay, it costs us $80 to eat four burgers and fries with drinks, $80, for four burgers.
Frank Curzio: It was a good burger though, 80 bucks. But the prices were insane. Yet, people were paying them which is interesting.
Frank Curzio: So, we’ve seen inflation yeah prices going up, but, no surprise that people are paying them.
Frank Curzio: Now, again, I’m probably telling you something that you know already where Orlando and Florida, they pass around pictures of spring breakers in Miami. These irresponsible kids going crazy. And everyone’s criticizing these kids. Should we be criticizing them though? At first, we lied to them. When I say we, I mean, our politicians lied to them and told them they were going to die. If they go outside and get COVID, and yet, they really don’t have to have a greater risk of dying from the flu. And this is the statistics. You close their schools, you lock them in the dorms. Forcing them to take classes virtually while still charging the same price as if they were going to class. Because the tuition, nobody ever says anything about the colleges, unbelievable. By the way, watch the college scandal thing. It’s unbelievable. It’s on a Netflix right now.
Frank Curzio: Definitely watch it. Holy cow. You see how much of, and I won’t curse here, but these MF’s are these colleges. It’s amazing. I mean, you donate the right amount of money you’re going to get in. You do the right. And they always get away scot-free, and they always raise their prices. They always make sure they make their money. Always. It was really cool.
Frank Curzio: Definitely watch that. Getting back to the kids in Florida. They see the data now, they see there’s a million kids that are under 18 years old in California, and 13 died from COVID, which is a tragedy. Even one kid dying from COVID, or anyone dying from COVID, is a tragedy, but 13 out of a million…
Frank Curzio: Out of a million. And there’s still schools that are closed.
Frank Curzio: We’re talking about a survival rate of over 99%. Think about that. They told you, you were going to… I want to go skydiving for the first time. If they said, listen, 99%, more than 99% of people that do this, everything turns out okay, you would do it in a heartbeat. You would do it a hundred out of a hundred times. If someone told you that 99% success rate, anything, you would do it.
Frank Curzio: But with COVID, no.
Frank Curzio: We’re program where the news is going to scare the shit out of us. And it’s crazy. And these kids are sick of it. They’re sick of it. And they should be going out. You’re supposed to be irresponsible, right? You’re supposed to be an idiot. Because on the other end, what do we see? We see your Dr. Fauci on TV. We see Biden. And even when we saw Trump, we see in the financial media, Jim Cramer. You got to wear a mask. They’re right. You know why they’re saying that? Because they’re in the danger zone. They’re over 65. They should be wearing masks. It doesn’t mean they should be telling the world to wear masks because really why are we vaccinating kids who are young? We don’t even know the test. There’s no test results for kids under 16 yet, or anything in terms of the vaccine.
Frank Curzio: You can’t.
Frank Curzio: If I was under 18 years old, what do mean I have to take the vaccine? Especially with the statistics that we know that this doesn’t impact you that much…
Frank Curzio: But to really criticize these kids? I don’t know. I mean, are they acting irresponsibly? Yeah, they’re irresponsible, but they’re supposed to; they’re kids. They’re on spring break. They’ve been locked in their house. You’ve been lied to. What do you think is going to happen?
Frank Curzio: They’re going to be irresponsible. You’re supposed to be irresponsible at that age. That’s when you learn now, wow, I was an idiot. You learn from your mistakes. But to just criticize them? It’s the people who are criticizing are people who are over 65 years old.
Frank Curzio: Who really need to wear a mask or get vaccinated, which I get. Look at Orlando. That’s going to be the rest of the United States soon. Every single state. It’s not just Orlando. It’s Florida, where you have Orlando, Miami, Jacksonville. We’re very close to herd immunity. When accounting for people who already got vaccinated, people who already got COVID, and people who are just immune to it. We’re very close to herd immunity here, very, very close. And states are going to open back up. They’re going to have no choice.
Frank Curzio: I know they want to control you and keep you locked in and conditioned. I mean, I talked to so many friends in New York and they’re like, you guys are crazy in Florida. I was like, well, our stats are much better than yours. They’re down, but everything has been open. We’re pretty careful. We wear our masks and are doing the right thing here. You think I’m crazy because I think you’re crazy for locking yourself in your fricking home all day because of some politician telling you to do that, which is insane when you’re looking at the statistics, or closing schools and not opening them.
Frank Curzio: Because I think that is really crazy. Now, we could take one month to open up, two months, maybe four months, depending on where you live. How much your public officials lie to you about how you’re going to die if you go outside, depending on where you live. But it’s going to happen. Everything is going to open up and it’s going to take a few months. What does that mean for you? From an investment point of view? Airlines, cruises, hotels, casinos, things we’ve been pushing for a long time. We have those in our portfolios for a while and doing well still all great buys. Why? One, is they cut costs dramatically so their margins are going to go high when demand comes back. And is demand back? I’d say yes. I mean, if we drove in the recent $1.9 trillion stimulus, people have lots of money to spend. Call it $2 trillion in dry powder.
Frank Curzio: That’s based on an 18% savings rates, which I think Evercore, for that stat, $2 trillion to spend. And they’re spending it even though prices are being raised across the board. I’m seeing that with my phone store right now. Well, we do probably around $900 a day in average sales in the past 10 days, we’ve done 17, 18, 19 to over $2,000, directly linked. And the same thing happened last time stimulus went out, which was April, May, beginning of May, same thing. Our business was deemed essential. Government said, okay, we’ll check that box for this company, because it was. Phones are essential. And we were able to stay open, and we did well. We did incredibly well. When the stimulus, when they got these checks. Then, we’re going to see ups and downs during the reopen like we’re seeing lots of volatility, but demand is going to explode. If you’re an analyst, whatever you’re modeling for when it comes to demand, whatever you’re thinking in terms of what that growth is going to be times it by five, at least. That’s how wrong you were going to be.
Frank Curzio: You’ll go to consumers and say, wow, we’re going to see demand for this, and you run a business. Times it by five. That’s how crazy and busy it’s going to be. Because we’re going to go on one of the biggest spending sprees in this country’s history. Never before have consumers been handed this much money at the exact same time. And not only have they been handed that money, they been locked in their homes, dying to go out and have fun and spend. That’s what we love to do. We all bust our ass. Most of us work, not all of us. Most of us work and we need breaks. You want to work hard, play hard, have fun, hang out with your family. And no one was able to do that. Now, they’re handing you direct checks at the same time. What do you think’s going to happen?
Frank Curzio: And not just travel related stocks or cyclicals. And industrials are, bring it, break that down where the new infrastructure package and the taxes that everyone’s going to be paying everyone. And we should just be honest. “Oh, we’re just going to tax the rich people.” Yeah. Okay. Good luck with that. Everybody’s tax is going to be increased, across the board. We’re seeing that we’re going to see it at corporations, everything. That’s going to filter into infrastructure. That’s another sector that’s going to outperform. And not just infrastructure, cyclicals, travel stocks, but look at the money pouring into cryptos right now.
Frank Curzio: And our portfolio is on fire with five, 10 X plus winners. We just opened membership to Crypto Intelligence, offering a 50% discount. I’ll talk about that later. And the performance of that newsletter and that can be found on our website, curzioresearch.com. And that, everything in that portfolio is cryptos, where we have stocks that are coming out as pure plays that you could buy from E-Trade and Schwab account. And some of those stocks are up enormously. You’re a believer that Bitcoin is going to 100,000 more institutions are coming in. There’s going to be lots of big winners in this space. You look at the past week alone in cryptos: We saw big news out of Visa, allowing payment settlements using cryptocurrencies. We have fidelity come out. They’re launching an ETF. Yes, we’ve seen the Winklevoss twins and other companies…
Frank Curzio: Other shops try to launch a Bitcoin ETF and be unsuccessful. Fidelity is the biggest of the biggest. One of them is the BlackRock, trillions and asset under management. They wouldn’t be requesting this if they didn’t think that we’re very close to having Bitcoin ETFs. We saw PayPal announced a new service called checkout with crypto. So, a user can convert that crypto’s interfere to pay for all their transactions. Think about that for a minute. PayPal has 29 million merchants globally. And they said that this was going to stretch and be available across every single one of them over the next few months, 29 million merchants. Now, there’s one company out there called BlockFi may have heard of, very popular. We’re the biggest in the industry that has ties to a lot of this news, but recently signed a deal Fidelity where Fidelity began accepting Bitcoin as collateral for cash loans.
Frank Curzio: Very big market is loaning and also getting interest on your crypto’s and even stable coins, which they provide. They also announced a partnership with Visa to launch a block file credit card. Which is one of the only ones that gives you rewards gives you a one half percent cash back in Bitcoin with every purchase. And BlockFi also raised capital recently, Peter Teal came in, I think it was in February. Look at Michael Novogratz. One of the biggest names in the space, also an investor, very big names in this company. And at that capital raise it placed a $3 billion valuation on the company. There’s others in this space. And another one, that’s a $5 billion valuation, which you’ll be hearing from next week.
Frank Curzio: And others were billion dollar valuations as these guys have tens of millions of users on their sites and it keeps growing as more people get into crypto. The co-founder of BlockFi is Zac Prince, very smart, energetic due to his position, which is running one of the largest crypto companies. He has his finger on the pulse in terms of finding the next big trends within crypto. Now, the good news for you, you’re about to hear from Zac as I just interviewed him. And talk about institutional money coming into crypto, where he thinks the industry’s headed, and what the next big trends within crypto will be. So, it’s a fantastic interview, and let’s get to it right now. Zac Prince, thanks so much for joining us on Wall Street Unplugged.
Zac Prince: Happy to be here. Thanks for having me.
Frank Curzio: Well, new guests for the podcast. So, I know it’s difficult when people ask me, “Hey, tell me about yourself,” but I want to bring my audience in here and learn something about you because you were one of the early adopters of crypto. Let’s go there, because I know you’re in innovation, and I know that you invested in FinTech and online lending and bringing that all together. But, when did you see crypto where you were investing in it, or you just looked at it and said, “Wow, you know what? This has the power to disrupt so many different industries.”
Zac Prince: So, probably at the end of 2014, second half of 2014, I was actually writing a personal finance blog talking about all things FinTech, online lending, robo lending, investing in commercial real estate on online platforms. And the work that I was doing for that blog, which was just a side project, but it led me to Bitcoin. And I was working in FinTech at the time. And I had realized through my time working in FinTech, that a lot of what happens in FinTech is just companies creating a new user experience on top of the same kind of financial plumbing. So, you’ve got a mobile app that enables you to do things instead of going into a bank branch or there’s automation built around certain types of payments or lending. Whereas before it was a two, three, four, five day process. But behind that new user experience was still the traditional financial system.
Zac Prince: Oftentimes, FinTech companies partner with a bank, or they’re using banks to actually move the money from point A to point B behind the scenes. And so that was the context with which I learned about Bitcoin. And I remember thinking to myself, wow, this is actually something that is truly innovative. Not just on the user experience, but it’s a completely new asset. And, it’s built on top of a new technology that is enabled for the first time, a global, fully digital decentralized payment network that enables folks to move money or value over the internet.
Zac Prince: The same way that we already move information around the world really seamlessly using the internet. And so it really struck me initially. It’s just something that had the potential to be incredibly disruptive, more so than traditional FinTech applications. And when I looked at it that way, I decided I just had to buy some and I was screaming on this blog that wasn’t a particularly popular that I thought everybody should allocate a little bit to it. If you had a part of your assets that you were willing to put in something that had a high risk profile, but a very high potential upside, if things worked out
Frank Curzio: Now, even as bullish as you were back, then I’ll even go into 2017 and you’re so bullish on this industry. Did you ever think it would be where it is today? Where 60,000 Bitcoin… And we’ll go over the partnerships that you have with your amazing massive companies, very well named people in your company block five. We’ll get to that in a second, but did you think we would get here this quickly? Is this, this exceed your expectations or is it, “Hey, I told you so?”
Zac Prince: I think it’s a little bit of both, I guess I kind of a toggle back and forth. I’m a pretty humble person, but I was also very bullish on what could happen with the asset class and what that might look like in terms of the evolution of the industry. Again, really stemming from a lot of my learnings in the FinTech and online lending sector, which started off as just technology companies, but then was adopted via partnerships and financing with traditional institutions. And then ultimately, kind of concluded in terms of the evolution with banks, responding and creating their own products to compete with the FinTech companies that were seeing success. And so, at times, I’ve thought that we’re moving too slow, at times I’ve thought that it’s moving faster than I would have expected. So, it’s a little bit of a mixed bag, but I don’t think that we are anywhere near full maturation.
Zac Prince: I think that myself and anyone else who’s working inside the industry day in and day out would tell you that the pace of adoption is accelerating, not flat-lining or decelerating. And so there’s still in my mind, tons of upside in the same way that when I originally looked at crypto in 2014, I thought that there was tons of future upside because in the grand scheme of things, the asset class, and what’s happening in the ecosystem is still really, really small in terms of the markets that it could potentially disrupt or take share.
Frank Curzio: Yeah. And when you look back and now it’s 2014 to 2015, like I said earlier, you have a background online lending and FinTech. It’s still early on in this trend, right? So, it reminds me of the internet where social media wasn’t a big thing until what? 10 years ago, nine years ago, eight years ago, but the internet, you didn’t know what it was going to evolve. And everybody knew it was a big deal before it disrupted online travel industries and so many different and it’s still disrupting today, 5G, AI, everything, right and cloud. How did you come up with something to bring this all together?
Frank Curzio: And I read a story on this, but I want to hear it from you where your wife’s a mortgage lender and you want them to up your assets, the crypto assets up as ownership for getting a loan. And it turns out that they didn’t want to recognize that or something like that, but was that when the light bulb went off and said, “Hey, you know what? We need to start a company like this that makes things easier. It recognizes crypto.” But I’m curious to hear that whole story other than reading it in an article.
Zac Prince: Yeah, sure. So, the story really starts in 2017, but there’s a few key things that happened before that, which I think are important to call out. One is that it wasn’t like I got into crypto and started personally investing and instantly was validated by the market. I actually originally bought Bitcoin at 300, and then sold it at 600 because I had doubled my money really quickly, and then ended up buying it back at a higher price. I had also invested pretty early into Ethereum, which I made an analogy in my head that Ethereum was kind of like an iPhone and Bitcoin was like a Blackberry, but I invested in Ethereum and six months after I invested in it, I was down 50%. But then late 2016, early 2017, the prices really started to catch some momentum. And that price momentum led me to get more interested in and spend more of my time thinking about it, reading about it.
Zac Prince: And when I was going through that kind of evolution, I was apparently talking about it more at home with my wife. And she wanted me to be talking about it with her. So, she said, “You can have every Tuesday night find a meetup or something and go talk to people about cryptocurrency, because you’re talking about it more than I would like to talk to you about it.” And I started going to those meetups and two things happened. One was, we were working on buying an investment property in Texas, and I submitted an application for the mortgage to buy this investment property. And I listed Bitcoin and Ethereum on my kind of initial statement that I sued the bank. And really, I was just curious what they would say. And what didn’t surprise me is that they said, “We don’t think the Bitcoin and Ethereum is worth anything.”
Zac Prince: And banks still say that today, by the way. I’m doing this again right now. And they still have the same view. Well, those don’t count as assets in terms of our underwriting of your financial condition. But what surprised me back in 2017 was that they also put me through a bunch of extra compliance kind of checks. And they indirectly accused me of being potentially involved in some illicit activities just because I owned Bitcoin. And I thought that was very extreme. And so I had the idea of crypto is going to need debt and credit markets, and it’s going to need lenders just like every other asset class does and banks aren’t going to do that anytime soon.
Zac Prince: And so the next meetup I went to after having that experience and hearing that feedback from the bank on my mortgage application, I asked someone at the meetup, “Hey, do you think it would be a good idea to start a company that would provide capital to folks who want to borrow against their Bitcoin instead of selling it?” And the person that I said that to was like, “That’s the best idea I’ve ever heard? What are you waiting for? This thing’s going to be so huge. You have to do it now.” So, I went home after that meetup and I told my wife, “I think this could potentially have legs.” And a week or so later, I let the company I was working at know that I was going leave and start BlockFi.
Frank Curzio: All right. So, let’s get into BlockFi a little bit. So this is a platform that I signed up to. I noticed a lot of things right away and let me bring it up here for everybody so they can see it and show everyone who stays in a nice… Got it up there, where you can talk about it, but you basically have, I think it’s like a three-prong model and feel free to correct me on this, but you can use cryptocurrency to earn interest and up to 8.6%, we’ll get to that in a minute, also to borrow cash and the buy sell cryptos. Are those the three parts of your business? Or is there more to this because to each one of them, you do a great job explaining, and I can tell you as someone who’s in this industry, we launched a security token with the first ever to launch a security token that has equity stake in our company.
Frank Curzio: And also we pay at 1.7% dividend, and it’s the only security token, I believe, that’s trading on a foreign exchange available to retail investors. So, I’m very familiar with this industry and analyze hundreds, if not over a thousand companies, I have to tell you, this is very simple. And one of the most important thing, I can tell you have a sales background because this is a simple website. It makes it easy. And when you look at some of this stuff, it’s so difficult. So, I want to compliment you on that, but I guess let’s go into some of the things that you could actually do on your site and why people should sign up for it.
Zac Prince: Sure. So, you hit the main product categories that we have available today. So, if someone has an account at, or blackfi.com or downloads our mobile app, after getting onboarded, you can connect your bank account, purchase cryptocurrency instantly. You can also fund your account with cryptocurrency that you already have somewhere else. So, you can buy and sell. After you’ve bought or funded your account with cryptocurrency from elsewhere, you earn interest on it. And we offer really attractive interest rates on both Bitcoin, Ethereum, Litecoin, which are some of the larger cryptocurrencies, but also stable coins and PAX G, which is a gold backed token. So, folks are in 6% on Bitcoin, 8.6% on Stablecoins, which are one-to-one interchangeable with dollars in a bank account. And I believe it’s around 4% on PAX Gold currently. So, in this yield environment, that’s a really attractive proposition, both for someone that is looking to have exposure to Bitcoin and get a little bit of yield on top of that, or just for someone who wants to actually earn an interest rate on their cash in an account that’s liquid.
Zac Prince: And then the last product. Once you have a balance of whatever at BlockFi, you’re able to borrow against the value of the assets that you hold at BlockFi, kind of like the wealth front portfolio line of credit or securities backed loan, except instead of stocks, the assets that you have in our account are Bitcoin and other cryptocurrencies. You can get a loan secured by the value of your BlockFi portfolio at rates as low as 4.5% a year. Those are the three products that we have today. In the second quarter of this year, we’re launching the Bitcoin Rewards credit card. I’ll try and put a little closer to canvas, so you can see it.
Frank Curzio: That’s amazing.
Zac Prince: This will be the world’s first Bitcoin Rewards credit card, 1.5% cash back on every transaction in Bitcoin. And there’s a bunch of other benefits that come with the card, but the idea is simple. And I really appreciate that you called that out. We think that we at BlockFi can play a unique role in the ecosystem, given our FinTech and traditional finance backgrounds is in making products that enable folks to interact with the cryptocurrency ecosystem, but in a way that they’re familiar with. So, earning interest, that’s something that everyone is familiar with as a concept. You don’t have to be a rocket scientist to understand it. Credit card reward points. Just about everybody these days is familiar with credit card reward points. And so, we view our role as being a financial services company for the crypto ecosystem. And so, our products all have that kind of flavor.
Frank Curzio: What are some of the things that they were most interested in? And I guess we could start there because the second part is more about, we’re still in the early stage of institutions, right? I mean, you’re hearing these big names, right? Visa, Fidelity, you could draw PayPal and, Square in there and all the other ones, and MicroStrategy, but it just seems like it’s so small. And I’m curious to hear from you, what is this in terms of institutional adoption? So, two-part question, hopefully, yeah. I didn’t give you too much the same time there, buddy.
Zac Prince: I’ll talk about fundraising first and then what we’re seeing in terms of institutional adoption second. So, I heard an expression recently, which really resonated with me, which is a better word for venture capitalists would be sure thing capitalists, and our experience at BlockFi has definitely been that it’s become a lot easier to raise capital, the more market validation and adoption that we’ve seen in the marketplace for our products. So, about a month ago, we closed our series D round of funding. It was a $350 million round at a $3 billion valuation. It was led by DST and Bain Capital with participation from Tiger Global, Valar Ventures, Anthony Pompliano and Susquehanna. And in general, if you go to blockfi.com/investors, you’ll see the names of the folks that were very fortunate to have equity backing from and partnerships with.
Zac Prince: It was not always easy for us to raise money, and that’s where the sure thing capitalists part comes into it. The hardest that we ever raised for BlockFi was our seed round. We had what we thought was a great idea, and we were trying to raise our seed round in the third quarter of 2017. And if you rewind the clock, what was really huge in the cryptocurrency market at that point in time was ICO’s and BlockFi, with our idea, we were kind of in this awkward middle ground where we weren’t planning on doing an ICO. We didn’t really see a need for it on our platform. And we thought that it would come with some regulatory risks because things were still kind of getting worked out in that space. And so, we were too mainstream for crypto investors who were basically looking for the next ICO to invest in.
Zac Prince: And then when we went in and talked to traditional FinTech investors, we were too crypto for them. They were like, “Oh, you’re telling us people are going to be borrowing against their Bitcoin. This isn’t even a real thing yet. There’s no way that there’s a big enough market for that.” And so, it’s definitely gotten easier over time as we’ve been fortunate to have a fantastic performance in terms of clients on the platform and revenue generation and all of those kinds of key metrics that investors look at, but it wasn’t always easy. And what I would say about institutional adoption is that we’re still in the early innings in a lot of ways. So, when we started BlockFi in 2017, it was a few months before CME futures were approved and launched for Bitcoin. I think that at that point in time was the first time where you really had kind of proper institutions who weren’t just doing crypto, but they were doing other things too. Market-making firms, trading firms, hedge funds start to get active in the space.
Zac Prince: And from that starting point, we’ve had a pretty steady flow of new types of institutions getting involved. And then it started to really accelerate around March of last year. And the reason it accelerated in March of last year is because of COVID and the impact that COVID had on markets, which I would say is two core things. Number one, the government response to the economic impact of quarantines has been to stimulate the economy with monetary policy. And you don’t have to be a rocket scientist, to use that term again, to look into money supply over time chart and think that there is a higher probability of inflation a year or two from now than there was a year or two ago. And Bitcoin, as an asset has started to be thought of by a lot of investors as kind of a digital version of gold, as one of its kind of investment properties.
Zac Prince: And as a result, that has worked out really well for the investment thesis and institutional adoption with that in mind. The other thing that COVID highlighted for investors is that everything digital kind of became preferred to its analog counterpart. So, you’d rather be investing in Zoom versus like a landline telecommunications platform or Amazon versus a traditional retail, all of these trends that were already in place kind of accelerated. And I think that the cryptocurrency ecosystem benefited from kind of clearly fitting into that digital, not physical narrative as well. And so today, you’re seeing a much broader spectrum of institutions getting active in the asset class than what we saw in 2017 or 2018. It’s shifted from being market-making firms and proprietary trading firms and hedge funds to also being corporations like MicroStrategy and Square and others, to being endowments who are investing in venture capital funds that are investing in crypto or who are buying cryptocurrency directly on their balance sheet.
Zac Prince: You’re starting to see sovereign wealth funds, pension plans, insurance firms, all different types of institutional investors are starting to have exposure. And we’re still in the very, very early days of this. So, I think that we’re maybe 5% at best potential institutions that will allocate over the next three to five years and today, but the pace at which those decisions and that investment is happening has accelerated over the last year. And I think it’s going to continue to accelerate. And that’s certainly what we’re seeing at BlockFi.
Frank Curzio: Yeah, that’s incredible. And you brought up a good point too, where, we noticed that as well, I think to get adoption or to be able to scale, you have to have Wall Street kind of merging with crypto. And there was a point there for a while until recently they hated each other, right? It’s like Wall Street is like, “Hey, these young kids and they don’t know how to established companies and whatever.” And then you had these young kids, and they didn’t trust Wall Street. But bringing it all together, you could see just what your accompany of what this could achieve. I mean, global scale, great partners coming in, a huge demand for your products.
Frank Curzio: And I want to talk a little bit more about getting into some of those products. So, let’s start with the interest rate because when, I’m a finance guy of 25 years, when you see eight and a half present interest rate, and it’s probably five, 6% on Bitcoin and Ethereum. I think last time I looked on your site, it’s a very high interest rate and people would say, “Well, how come banks wouldn’t offer that?” Or, “How come you’re not seeing higher rates?” How does that whole system work? What is the risk to the investor? And I know that venture capitalist firms would probably actually do that as well, to see what their risk is by just putting their money into BlockFi earning that interest.
Zac Prince: Yeah. So first off, there’s an important disclosure here, which is that holding assets in a BlockFi account is very different fundamentally from a risk perspective versus holding assets in a savings account at a bank. The biggest difference is that at a bank, your assets are protected by FDIC insurance and at BlockFi, they are not. It’s kind of more like a private credit type investment profile. But that the interest rates are high is precisely because the crypto financial ecosystem is not well connected to the traditional financial ecosystem. And as a result, the cost of borrowing for market activities is a lot higher than what you would experience in traditional finance. And one analogy that I like to use here is the Cannabis industry. So, because there are some still federal regulatory questions being worked out for the Cannabis industry, financing is very, very expensive. If you’re looking to become a grower or a distributor or a retail storefront, you’re not able to access the same types of bank financing that a traditional restaurant is, for example.
Zac Prince: And cryptocurrency is the same with the traditional example of securities. So, the cryptocurrency market is very liquid. It’s actually more liquid in some ways than the securities market. It trades 24/7 in a much more global construct than public equities, but it doesn’t have access to the same financing infrastructure and it’s not connected to the traditional rails. And so as a result, if someone wants to borrow against their Amazon stock, they can do it at 2% a year, 3% a year, depending on what online broker they’re using. But if you want to borrow against your Bitcoin as collateral on BlockFi, for example, the rates are higher than that starting at 4.5% and going up to the high single digits. Those rates that we’re charging borrowers are what we’re using to generate the yield that we’re paying folks who are holding assets in an interest account.
Zac Prince: And when we’re talking about dollars, the borrowers are exclusively clients of BlockFi’s on the retail side of our platform. And what we’re talking about, the borrowers are exclusively institutions who are borrowing Bitcoin and Ethereum and other crypto assets to duct market-making activities, proprietary trading activities, and to take advantage of arbitrage opportunities that exist in the cryptocurrency market. And BlockFi provides them financing the same way a traditional prime broker would in the equities market, except we’re doing it in the crypto market. And we’re not competing with traditional prime brokers yet. So, the rates that we’re able to charge are high, and we’re passing the majority of that through to our clients that are holding assets in an interest account.
Zac Prince: One last thing I would say on the lending, we almost always get the question after explaining at a high level, how the business model works of, “Isn’t this really risky? The cryptocurrency asset class is incredibly volatile.” And the answer is that yes, the cryptocurrency asset class is very volatile, but our risk management system was designed specifically for this cryptocurrency ecosystem. So, we’re operating 24/7. We’re connected to all of the liquidity venues and the focus that we’ve had on risk management from day one has enabled us to operate throughout our entire history without ever experiencing any lending losses. And so, we’ve had perfect performance since we made our first loan in January of 2018, throughout multiple periods of volatility to the downside and to the upside.
Frank Curzio: Yeah. So, I’m sure that you have thresholds where even in the lending portion of the business, I wonder where if Bitcoin fell the 40,000, 30,000, 20,000, what happens? I mean, so this way, I’m sure there’s all, just those checks going through, but I think that’s the biggest concern, right? Because everything works until it doesn’t and Bitcoin’s going higher. So, even the crappy companies associated with Bitcoin are going to do well. That sort of seen a lot of ICO’s and utility tokens. Now, thank you for explaining that. I think that that’s a big deal at that. I know it’s a big question that people ask. I guess, I want to ask you and maybe finish up here with what are the next stages for growth? You know as well as I do. I mean, to see your tremendous growth, and maybe you could talk about some of the numbers, because I thought you won a series B round, but it was series D, which I was wrong about.
Frank Curzio: So, maybe you could talk about your numbers that you’re recently publishing less capital raise, which are incredible, incredible, the growth of the past year. But then also, what are your next steps for growth? Because you said it’s only 5% adoption right now, especially with institutions coming in, which means that you’re going to see tons of competitors. You’re going to see the bigger players start coming in as soon as we get more regulatory issues taken care of in this industry, especially in the US or the Goldman Sachs, Morgan Stanley are really go all in. And you know as well as I do that, if you’re not innovating, you could be the next AOL, the next Blackberry, right? Blackberry invented the smartphone. AOL was the way everybody got online and they don’t really exist anymore, or in that fashion. So, what are the next steps for growth that you guys are focusing on? And please, I want you to share those numbers because they really incredible.
Zac Prince: Sure. So, I mean, just some of the super high level numbers year over year. About a year ago, we had 10,000 funded accounts at BlockFi today, we’re over 300,000. We had around $1 billion in client assets on the platform today, we’re North of $18 billion. A year ago, we were doing around $1 million in revenue a month today it’s around $50 million in gross revenue a month. So, we’ve experienced really tremendous growth, and it’s very clear that the competitive environment is going to become increasingly saturated. We’ve already seen FinTech involved, and I think it’s really interesting to understand that dynamic where the biggest financial company in the world by market cap, isn’t a bank, it’s Visa. And Visa is heavily leaning in to the crypto sector for a reason. And so are others like PayPal and Square.
Zac Prince: And so we believe fundamentally that our market is going to become increasingly competitive for the next decade because it’s a growth area and companies wants to be involved in growth areas. And the way we think about how we stay relevant and how we stay differentiated, given that backdrop is by listening to our clients, building new products and features that will add value for our clients and providing a great client service which were, I think I’m pretty well known for in the marketplace today. There aren’t a lot of FinTech companies and there certainly aren’t maybe any other cryptocurrency companies where there’s a phone number that you can call and talk to someone who’s really smart and nice and informed about the platform.
Zac Prince: But we’ve done that throughout our entire history of operating BlockFi and continue to do it today. So, in terms of categories that we’re building into, payments is a big one. So, we’re coming out with the Bitcoin rewards credit card. We’ll be following that up with a debit card and a bank account offering. And then following that up with peer to peer payment functionality. We’ll be adding incremental traditional currencies to our platform as well, and we’ll be looking to diversify the kind of ease of use features on our platform. So, being able to kind of set it and forget it and set up unique portfolio allocations and automatic deposits or automatic withdrawals, just making things as easy for our clients as we possibly can. Having different account types, accounts for minors or retirement accounts be supported on the platform.
Zac Prince: There’s no shortage of things for us to build that we think will add value. The thing that we really struggle with sometimes is the prioritization of these items and getting them done as quickly as we can with a really high level of quality. But we think there’s still tons of work to do, and lots of exciting stuff that we’ll build. And we think that five or 10 years from now, companies like PayPal and Square and Visa are going to continue to move into the cryptocurrency world and offer products and services in a cryptocurrency context. But we also think that the biggest and most successful cryptocurrency companies of which we intend to be one we’ll move into the traditional financial services world and start to compete, head on with the PayPals and Squares of the world, in areas that used to be kind of exclusively thought of as traditional finance and not crypto.
Frank Curzio: Now, that’s really great stuff too. So, 50 million in sales per month, you said that’s the latest numbers?
Zac Prince: Yeah. Gross revenue.
Frank Curzio: Wow. That’s amazing. So yeah, those guys got a bargain at a $3 billion evaluation, I think. So, they’re going to be pretty happy, but that’s, that’s incredible for you. So, I guess we have time for one more, where is the next, like something that interests you within crypto? Because like you said, the hardest thing is to prioritize, right? Because there’s so many growth avenues and it’s such a new industry right? And you feel like you could be a major player in so many different things. What is your take maybe on NFT tokenization, is there any of the cryptos out there that you see that you’re like, wow, these guys really are doing something that’s special, but you know, do you guys invest in things for your company that you look at things like that or do you see maybe NFT tokenization or any of that stuff really taking off?
Zac Prince: Yeah. I think after closing our series D, we’ve officially launched kind of a corporate development function within BlockFi, which is going to be responsible for investing in other companies, looking at acquisition opportunities. And so we’re definitely starting to become active in that area. I think that the thing that I’m really excited about is stable coins and infrastructure that facilitates a greater scale in terms of transaction processing relative to the cost. So, I’m very bullish on Bitcoin. That’s primarily how I’m allocated personally in terms of what cryptocurrencies I invest in, but I’m also really bullish on the distribution capabilities of blockchain networks as it relates to dollars and other major currencies. I think that these things being more available than they have been historically powered by cryptocurrency networks is going to be a net positive for global society and create kind of more freedom and connectivity around the world.
Zac Prince: And so I guess I will call out one particular thing. I haven’t done a ton of work on this, but I’m starting to look at it a little bit. There’s a blockchain called Solana, which I think intends to be similar to Ethereum in terms of the programming language, but with higher throughput at a lower transaction cost. But I’m very bullish on Ethereum too, D5, NFTs. I think that there’s just so much momentum in so many areas where we’re already seeing early signs of mass adoption for something that’s not just investing in cryptocurrency, but actual applications being built on blockchain rails. And I think that those applications that are already working well, stable coins, NFTs, D5, I think those will continue to work well and we’ll see new ones. So, there’s a lot to be excited about.
Frank Curzio: Now, really great stuff. And Zac, I want to say thank you so much for coming on. I know how busy you are and you travel a lot, doing so much and your company’s growing. So, it really means a lot that you chose a podcast to come on. It’s really cool.
Frank Curzio: Hopefully, that’s going to open back up. I think we’re going to have, I don’t even go to the vaccine part, but I think we might need a card for vaccines. I won’t even go there. It’s all another conversation. But if someone wants to learn more about you, learn more about BlockFi, how could they do it?
Zac Prince: Yeah. BlockFi.com is our website. I’m pretty active on Twitter. My DMs are open there. My handle is @BlockFiZac. And like I mentioned earlier, we’ve got a phone number and great client service. We love hearing from folks, so don’t hesitate to get in touch.
Frank Curzio: All right. Sounds great. And hopefully, you join us again soon. Take it easy.
Zac Prince: Thanks for having me.
Frank Curzio: Great stuff from Zac. You can see super smart guy. One of the biggest takeaways was we’re just 5% in, in terms of institutional adoption of Bitcoin. If he’s right, we’re talking trillions and more capital entering this space. News stories out today Goldman Sachs is very, very close to offering Bitcoin to its international clients. Got to be close to big market. Everyone’s talking about it so just a matter of time now. But think about the trillions. If he’s right, it’s just 5%. This is a person that’s seeing institutional adoption firsthand saying it’s just 5% of the way in right now. We have 50, 60, 70% again, trillions, trillions coming into this market. The entire market cap of crypto is less than $2 trillion. So, we think this trend is over.
Frank Curzio: You’re insane. I mean, it’s in its infancy and Bitcoin may come down. I’ll cover that later where there’s just so many opportunities in different areas that this is opening up and not just Bitcoin. Ethereum, Blockchain it’s crazy, but really great stuff from Zac. So happy you came on. Awesome, awesome guest. But this podcast is about you, not about me. I want to try to bring you good people that’ll educate you. Hopefully, Zac did that but let me know what you thought of that, firstname.lastname@example.org. That’s email@example.com. Now, it’s time to bring in your favorite person. I should say some of your favorite people. Not everybody loves Daniel Creech. Most people do, I think.
Daniel Creech: They should, but most people don’t, you’re right.
Frank Curzio: So, Daniel actually took over because I went on vacation and he did my Frankly Speaking podcast. If you don’t know what that is, because you’re not a paid subscriber to any of our products.
Frank Curzio: If you are, you get that podcast absolutely for free, which comes out on Friday. And I just answer some of the questions that you come in. I tell you, put Frankly Speaking the headline, and you know, so you never know; your question may be the one I read on this podcast. But every Friday, that goes out to our subscribers. That’s only for, you could have a subscription that Dollar Stock Club, $4 a month, and you get it. So, it’s a paid subscriber thing, but Daniel for the first time took it over. And I thought he pretty good.
Daniel Creech: Well, I appreciate that. Yeah. We’ll see if we get any good feedback or anything like that but yeah, I had a blast and for you a lifetime and every other subscriber, don’t worry. I was only in charge of everything for a few days. So, no fires happened. Everything was fine. We’re all right. Hey, happy Wednesday. I love Wednesdays, happy early April Fools. And I got to say something real quick. I don’t know if COVID did it, but somebody killed the sense of humor because Zero Hedge and there was a couple of articles. Did you see the Volkswagen deal?
Frank Curzio: No.
Daniel Creech: Okay. So Volkswagen changed their name from a K to a T to kind of emphasize the electric vehicle. So, they were saying, we’re going to change our name to “Voltwagen.” Stock went up 5%. Now, there’s people pissed off that it’s an April fool’s joke and there’s still some gray area on whether it was or not. But now the management is saying so, and people were upset because the stock price went up 5% on the news.
Frank Curzio: Yeah, the stock prices got… Wasn’t there a company a similar symbol to Tesla that went up tremendously, they’re actually doing well. But there’s so many companies that we’ve seen with that, just in the craziness and the Reddit train, that some of these things that went up tremendously, but that’s kind of funny.
Daniel Creech: Last housekeeping thing here. I know Frank is too humble to say this, but a little behind the scene’s thing. So, what’s a lot of fun is that I’m part of the Curzio family, obviously, because I work here, but Frank’s daughters are in and out of the office quite a bit here. And I’ve always got headphones in or researching or doing stuff. But lately his oldest daughter has been doing a lot of extra work, getting ready for some stuff, and she got accepted into a new school. So, I had to congratulate her yesterday, I got to see her in the office. That was a lot of fun. And Frank is the lucky new owner of a huge bill now!
Frank Curzio: Yeah, she worked really hard. I worked hard with her, especially the last 10 days. She had to take a very, very big test that she did pretty good on. And she got into Bolles, which is a very prestigious school. And which basically means that you guys better start subscribing to more newsletters or I’m not going to do this podcast anymore.
Daniel Creech: Or my youngest daughter isn’t going to get the same opportunity, right?
Frank Curzio: Yeah, exactly, exactly. But you know in all honesty and guys, thank you for your subscriptions. I’m just kidding there, saying, “You know, you need to subscribe.” But it is a big bill. And I think I just went to extremes, because I told you the problems that she had in her current school and how it’s really different and things that teach in our, you know, she was labeled as a racist from something that was ridiculous. You know, it’s a different atmosphere.
Frank Curzio: There’s a lot of anger in these classes. And I went to the full extreme and said, “Listen, I’ve got to get her out of that environment. It’s terrible.” And we went full extreme to one of these private schools. It’s a very good school, but for me, I look at it as more as a generational thing, right? Because when, I looked this far out, and it’s going to be crazy to you. And when I say this, but it’s now, if she’s able to go through this and it’s very, very hard and maybe she doesn’t, if she’s not successful at it, we have to take her out. But if she goes through this and you know, if I do it with my other daughter as well, again, it is a big bill, but she’s going to get used to that, or grow up in that environment.
Frank Curzio: And when she has kids, that’s what she’s going to do for her kid. When they have kids, they’re going to do it for theirs. So, when you’re looking at different things that you do for your generation, I never had those opportunities available to me. I was lucky enough my dad was in the business for a long time. He had some pretty good contacts, but yeah, he was never like a huge millionaire or anything. He just, his definition of success was going upstate for four months out of the year and taking the family up there and didn’t really have great, great contacts in the industry. But he just ran his business, and it was pretty successful and didn’t really look to grow that much. And there’s a lot of businesses like that. People just happy and they have their free time, and they don’t want to go crazy.
Frank Curzio: I’m young. I want to grow this thing and go crazy. As you guys know, with our CEO token and give you guys equity ownership available to anyone when we trade on MERJ exchange Curzio Equity Owners as symbol CEO, but just having that opportunity, I wish I did. I mean, where I am right now is very, very lucky. I’m very, very lucky to be where I am. I just, a lot has to do with luck compared to some of these doors open up for other people and you know, they don’t have to do anything. Not saying that my daughter’s not going to have to, she’s going to have to work her ass off and work hard. But yeah, that’s the way I’m thinking of it where, we’ll see how this is. I thought it was going to be a really stuffy school and I hate that.
Frank Curzio: I hate people who think they’re privileged and stuff. And when I went there, it was totally opposite. It was great. People were nice. I didn’t see any kids on their phones. They have great athletics there, just great projects and just a lot of cool kids. And, yeah so, I’m hoping that works out, Daniel. But thank you so much for mentioning that. And it is pretty cool, but again, it’s going to be a big adjustment, a very big adjustment, but I’m really, really excited to be part of the Bolles community and that’s awesome. So, let’s get some stuff here, because there’s a lot going on in the markets. Talking about the EverGiven, which was stuck in Suez Canal, which I don’t think anyone knew how narrow it was until that boat got stuck.
Daniel Creech: Well, it’s not that narrow. It took 1,300 feet to screw it all up.
Frank Curzio: It’s crazy because when you look at this, and it’s a great story, right? The Suez Canal accounts with 30% of the world’s daily shipping container freight, so close to 20,000 vessels passed through that canal last year. We look at the EverGiven got wedged in the canal. I think it was for six days right, Daniel? And I have a picture up here that I could show you again, if you’re watching this on our YouTube page, Curzio Research, please subscribe. And I think they have it over Texas stadium, and I could show how big the boat is like, people don’t realize how big this thing is and the statistics, but it’s kind of crazy when you look at it. Because the size of it is 1300 feet, Daniel, which is insane. And that’s four football fields. It weighs 200,000 tons, which is twice as heavy as a space shuttle. And it must carry 18,300 containers. And this thing was wedged in the canal, which is pretty crazy, but that was the big news story, right?
Daniel Creech: If this doesn’t make you appreciate logistics and how easy it is for consumers to order things from all over the world, nothing will. This is amazing on so many levels. I’m glad I don’t think anybody got hurt, so that’s amazing. But you have this huge vessel. It gets stuck. I don’t know. I don’t know if it’s actually been released why. I mean, obviously there had to be some human error or technical errors or something to run this giant ship up on the side of the canal, but then you think of six days is a long time. You ever been on a cruise ship, right?
Frank Curzio: Of course.
Daniel Creech: I’ve only been on one and it’s like getting on an airplane for me. I’m still impressed that these giant things float and you can get around and do everything on them.
Daniel Creech: Forget that you’re floating out and chilling out just like an airplane. Every time an airplane takes off, I’m just like, how amazing is this? You just hit the throttle and boom, we go. So, when I was looking at this, it gets stuck. Imagine the 24/7 of dredgers, people removing sand and everything underwater yet backhoes, excavators, tugboats, I don’t know if they had to take any containers off the ship but they were, any and all options were on the table. But the idea that under the pressure you’re under getting this unblocked, getting global trade back up to somewhat normal is amazing. And from an investor’s standpoint, the shipping companies like North America, Tankers, ASC is another symbol. They didn’t really do anything frank, and the other, the crazy thing with that is everybody was just kind of shrugging off Ah, it’ll get fixed, some things are delayed.
Daniel Creech: But Nordic American tanker CEO came out, and I’m not even going to try to butcher his name, but he was saying, “Hey, you know, they came out, whoa, man, they’re just going to call shipping rates to rise and all that kind of stuff.” It felt a little bit, like, “Hey, get our stock up higher.” I’m not saying he was manipulative. I’m just simply saying he’s a good cheerleader for his own company. But the shipping companies didn’t really move. So, that’ll be something to really watch going forward because everything is delayed at least a couple of weeks now. And think of the chaos when everybody starts getting to ports at the same time now.
Frank Curzio: You’re right. It does show how important the global supply chain is and how everything works for those couple more stats. I’m like a history guy. I didn’t know this. As Suez Canal first opened in 1869, it’s incredible. So, 2015, it was expanded. It’s 120 miles long, only 205 meters wide. So, what was it, 600 700?
Daniel Creech: Well, let’s help them out real quick because when you’re looking at… Do you have an overview picture? Because if you don’t take that route, you’ve got to go around Africa.
Frank Curzio: Yeah. Basically, you had no choice. And the amount of money of cost and fuel and stuff. It just wasn’t worth it. And I thought they would get it out of there in two, three days and took six days. But the reason why I’m bringing this up, why it’s a fantastic story, it’s fun. I’m giving you stats, it’s great. It’s everywhere, it’s disrupting global trade, it’s awesome. But I want to try to teach you guys when you look at news here and then Daniel will agree with this is you have to look at it from an investment perspective. How do I make money off of this? Who benefits, who doesn’t? I mean, stats show that the canal generates around $15 billion per day. Okay. So, someone’s going to be losing money over those six days. Is this something that’s going to impact the markets long-term? No, It’s temporary.
Frank Curzio: So, if you’re seeing adjustments or stocks come down from this, they’re probably good buys. And that’s why I find some of my biggest buys where a company misses a quarter and they say, you know, some of our orders got delayed till next quarter. Just like what COVID well, we still have these people on the books, but you know they delayed their orders just to see what’s going on and cut their cap backs. But once this comes back, this stock is going to take off and they’re going to blow out the numbers next time. And a lot of times when they miss that quarter, and they’ll report their guidance, a little light to be safe you’ll see the stock 4 10, 15, 20%. It turns out to be a great buying opportunity because really, you know, if anyone that runs a business, not everything goes smoothly.
Frank Curzio: You’re going to have delays. You’re going to have months that are good, some months that are great, some months that are terrible but overall, if your thesis is still intact you want to be able to buy these things. Now, we’re looking at the shippers, like you said with day rates, you’ll probably look at them going higher. I think they briefly went higher and came down again, we’re talking six days here. But I think there’s a big focus Daniel, from investment opportunity. When you look at the companies behind the data, the analytics and how they keep track of everything, and I think it puts even more emphasis on them because everyone was looking at them to see when, cause no matter what you ordered, right? If you, if you ordered golf clubs, if you want a furniture, anything over anything that’s built over, it’s delayed.
Frank Curzio: It’s delayed right now because it’s not just that boat. It was hundreds of them behind them. That was stuck behind them waiting for this thing to clear up. But you look at Rockwell Automation, Parker Hannifin, Eaton, Emerson electric, PDC. You know, these are company that track the data. They use automation to improve supply chains. For me, I think that’s an area that’s going to get a lot of focus now because people are going to use them even more. Statistics are so amazing. And also what you brought up, which I thought was incredible because not only does it impact commodities and prices because our oil crude, LNG, whatever ships through there. And again, you’re going to see temporary delays here and there. So, there’s more of a training opportunity than a long-term investment, but you brought up the insurance part of it, right? The insurance claims.
Daniel Creech: Yeah. I was reading our joke here is, we get the Wall Street Journal about every other day now on regular basis, Frank. Even though you pay for it every day, it only comes about once every other day.
Frank Curzio: Yeah, it does. Whatever. It depends on time the guy wakes it. Not even wakes up: He doesn’t even deliver it, right? It’s like, sometimes it’s there. I’m like, I don’t even know if I still have a subscription. I do digital anyway.
Daniel Creech: But that’s the funny thing, like, most mornings, I get here, and it’s a good pattern. Every other, there’s a paper waiting on me, and every other day now. But the Wall Street Journal had a great article about at least, or over $3 billion in insurance claims are going to come through delays, perishable items that are no longer good, meeting delivery times and all that kind of stuff. So man, you talk about, it’s not going to affect anybody drastically. I mean, that’s a lot of money, but just the headaches that, it just shows you how everything’s intertwined. And man, the headaches, I would not want to be dealing with the claims on that issue and, and being the middleman or woman with pissed off customers on one end and angry people trying to book more shipping on the other. So, best of luck to them.
Frank Curzio: Yeah. And again, guys, you want to look at every, even everything that you read in the Wall Street Journal, if it’s something that has to do with Boeing and airplanes and, you get Southwest announcing they buy more airplanes. It’s not just Boeing, right? Boeing went up on that news, but start looking at the suppliers for Boeing who has the biggest access to this who has big attack because I’ve done this research, and we did well on a company called Ducommun, which very few people heard of, right? Daniel that recommended it. We did well on it. And they’re a supplier specifically to their max plane. Now, we sold it before it came down because we knew that there was, this is before COVID. This is when the two crashes happened and you know, they hold the production and went through this whole entire crazy thing.
Frank Curzio: But there are suppliers. I’ve been to that site I’ve been to, which is one of the most remarkable things. If you get a chance in Everett, Washington to see the Boeing facility. It’s unbelievable. It’s bigger than Singapore. The facility is bigger than Singapore. That’s how big it is. Fire department police department, it’s unbelievable how big, I can’t even explain it. It’s an assembly line for massive jets and it’s like seven or eight of them that they work on at one time. But there are literally hundreds of supply nuts and bolt companies. So, start looking at those, we’re looking at this and that’s how we want to play this because there’s another big story out that everybody is talking about, which is, I think, Archegos, whatever the name of that fund is, that blew up. And it’s an incredible story on so many levels, how Credit Suisse and Nomura and got caught holding the bag on this thing. And as you know, this fun leverage to whatever but more important is there’s so many aspects. You know what, I’m going to let you start cause I’m really going to go off here because there’s so many things that are wrong with this that I can go to where I’m like, holy shit, and it scares the crap out of me.
Daniel Creech: Yeah. So, the interesting thing was the stocks, Viacom, Discovery. So, what happened was this hedge fund was extremely leveraged, eight to 10 times over the cash they had. Supposedly, the family office has about five to $10 billion give or take, and they had over 30, or maybe $50 billion, of exposure. And I had never heard of a CFD. Frank, had you heard of that? Because there’s so many off balance stuff. And I know you’re going to, you’re going to probably go off on the 2008 rant as well. But the CFDs “contracts for differences,” basically allow hedge funds to settle the gain or loss and just simply cash on a daily close. So, you don’t have to put up money up front. It allows you to get a lot more leverage than what you ever could, which is cash. Now, that’s all well and good when things are going.
Daniel Creech: I started reading about this. It’s all over the Wall Street Journal, it’s all over every financial news site and for good reason, because it caused a big pullback in certain stocks. I mean by common discovery tank, what did they dropped, 25%?
Frank Curzio: Even more than that, yeah, in one day.
Daniel Creech: And everybody keeps asking CNBC, you know what happened? There is nothing new under the sun. You got over leverage, you got caught, and you blew up a bunch of money. And don’t feel sorry for these A-holes and these idiots because they know exactly what they’re doing. I do feel sorry if somebody had their money with them, and you know, they didn’t exactly know what they were doing. I don’t really buy that, but don’t feel sorry for this. This is just another example of over leveraged and not paying attention to the risk that you’re taking on. And I’ll turn it back over to you for a good rant because it’s interesting, but it’s just another story of silliness.
Frank Curzio: Yeah. And it’s funny like these guys who lose these guys who open these funds and lose them, for example, this is like one of the Tiger Cubs. And he was fined for insider trading and paid it and apologized. I mean, it’s like a Catholic background and believes in God and stuff like that. And I don’t know if God told him to steal everybody’s money or not on insider trading, whatever you want to blame it on. But, and what happens, this guy just has a family, and next thing you know, it’s $10 billion and he’s leveraging it 34 40, guys, 30 to 41, $10 billion. I mean, do the math, we’re talking about massive, massive leverage, which is if something little goes wrong, which you saw in the credit crisis, banks were leveraged 30 to one, you just needed a two 3% decline in home prices, not even.
Frank Curzio: And then you’re going to see the market collapse 5%, the whole entire thing collapse, and even the good companies collapse. And now you’re seeing the moral hazard where, I think it’s funny, Credit Suisse and Nomura, I guess, don’t have good contacts because they got nailed with this. But yet, Goldman Morgan Stanley also had leverage to this, but they were negotiating with the company before this, before creditors knew what was going on. And then they were like, you know what, F- this, these guys are done. So, you know, they unwinded their trade and then they said, well, here you go. You guys, here’s the margin call, boom, and these things crash. I know Goldman I know Morgan Stanley, just like Goldman did during the credit crisis, Daniel, the same exact thing I know they did. I know they did, but it’s going to be hidden during a credit crisis.
Frank Curzio: They were betting on housing. They were doing great. Just like everybody else, leveraged. Then, they saw everything starting to collapse. And as it collapsed, they were able to keep the market steady until they unwinded all their positions. And not only they won all the positions, they actually bet against the housing crisis and the housing market and did this true insurance product to AIG. And when AIG was going to fail, that’s when everything blew up because nobody’s going to make money, the whole system breaks. But the fact that Goldman Morgan said it had access to these guys and negotiating and talking to them and then got out of the trade. I can guarantee you that Goldman probably Morgan Stanley shorted the crap out of these things, knowing that what was going to happen was right there. They knew they were talking to them. They were like, look, we’re dead.
Frank Curzio: You know, these things are down here’s a margin call, but how does that, what does that say for Nomura and Credit Suisse? Like, would you put your money there? Would you put it in Goldman Sachs, Stanley? Who seemed like, these are the guys that really knew what was going on and these other guys just got nailed. That’s one aspect of it. The other aspect is what you mentioned, Daniel, is the leverage. This is off balance, this is off-shore stuff that nobody knows about when you’re looking at Reddit. And why was the Reddit crowd able to crush Melvin Capital? Because they saw their positions, which you don’t have to report those positions, but they had options and they report it.
Frank Curzio: If you don’t know the short positions… The government had no idea that these guys will leverage that much.
Daniel Creech: Yes. I’m sure there’ll be another congressional hearing soon or whatever.
Frank Curzio: Yeah. We should do nothing. Right? They’re all getting paid by these big firms and everything. It’s going to be a congressional hearing. We’re going to do this then slap them with a couple of fines, which they all know they generate billions in profits. He has 10 million here, they’ll have a fund, a social fund set up for these, which is great. And they all have contacts at the SEC who worked at the SEC now work at Goldman work at Morgan Stanley and say, “Hey, this is coming down and just to let you know, get ready”. Okay, cool. We admit no guilt. Here’s $2-$3 million and we’re fine. Right? That’s it. That’s the way the games played. We all know it.
Frank Curzio: But to the bigger point, this is not the only company that’s leveraged like this. If you look at a hedge fund and what their positioned to do, their positioned to make as much money as they possibly can and risk isn’t really a problem because they’re using other people’s money. So, if they leverage and go create… Not all hedge funds, but they leverage whatever amount. I mean, you could say, leverage people create… No leverage is a good thing. And Buffet use leverage. That’s why Buffett is so big because he leveraged his assets. That’s why he bought insurance companies, had these massive pools of money that he leveraged. And he’s a great stock picker. And that worked out great for him. It’s not that, “Hey, I bought and hold Wells Fargo and look how good…” No. No. No.
Daniel Creech: And I know you’re not accusing him, but-
Frank Curzio: No. I’m not accusing. I’m just saying how leverage-
Daniel Creech: His leverage was a lot less risky.
Frank Curzio: A lot less risky.
Daniel Creech: Because of what he was focusing on.
Frank Curzio: Absolutely.
Daniel Creech: Leverage is not, leverage is not a bad word by itself. And I know you’re not saying that.
Frank Curzio: But when I look at this and how many… If this guy is able to do this and leverage himself 30 to 41, and nobody knows about it, how many more funds are like that? Because I can tell you, when you take out Bitcoin, they’re giving you like 10, 20 X leverage. And these are kids. What happens to a Bitcoin falls by 20, 30,000
Daniel Creech: Bitcoin doesn’t fall anymore, Frank
Frank Curzio: Will fall. And when it pulls back, you’re going to see, I mean, the leverage is going to come out of this. Market’s incredible. I mean, with all these loans and they have the Bitcoin as collateral and stuff like that, which we just talked to which, is a scary thought. Now, a company like BlockFi and some of the others are well-positioned of algorithms. They have big names, you know, they have, they have those safety controls on there to really, just like ARCOM. If we don’t generate a certain amount of revenue, this is what we have to cut. You always want to look at that good managers, look at that. What, when this happens, this is what we need to do this way. You’re ahead of the game. But this extends to a lot, a lot of code where you don’t even know just like the credit crisis, where the damages and what caused the credit crisis.
Frank Curzio: Well, yeah, we had a housing market that went up, Daniel, and we had low interest rates, relaxed laws that allowed, people who make a $60,000 to buy $700,800,000 homes, three or four of them without putting any money down. So, it tried to fix that up, but what’s causing it now. It’s the Fed, the Fed is promoting this, it’s almost like the college admission scandal where you have Stanford making hundreds of millions of dollars and you pay a tennis coach, 50 grand a year. Of course, he’s going to accept the broad. You’ve got to expect that, right? People, it’s not about morals. It’s about this guys is dealing with kids who are worth hundreds of millions, of dollars. Every place he looks, everyone has the greatest car, the greatest boat, the greatest house in the world.
This is going to make him 50 grand. And some guys says, you know what? I’ll give you 200 grand, if you know, or whatever, I’ll donate it to you too, to tell you what a water polo. I mean, it almost promotes this, that the way systems are set up, but the fed you have easy money. You have QA through the roof, you’re pushing out money. Incredible. You have super low rates. It’s encouraging these guys to take on excess leverage. And I don’t know if the fed sees this or not, because there’s always consequences to what you do. Just like the housing crisis happening. There’s always consequences to interest rates being low and never this low in history. There’s always consequence. You don’t see them right away. But Dan, think about this. If we could have the market push to all-time highs, household wealth go to all-time highs all because we have low interest rates and we continue to throw trillions in the market.
Frank Curzio: Why not for 20 trillion to the market? Why not keep rates low forever for the next 50 years?
Daniel Creech: Well, they plan on it.
Frank Curzio: It’s not the way the system works, right? It’s going to work now until it doesn’t. But this is what happens when you see these risks popping up, because people get greedy, you using other people’s money, teacher, pension funds or whatever. If you lose a big deal, like this idiot who got caught for insider trading, what is he doing? He raises another $10 billion, right? Which happens all the time. These funds blow up and they make a phone call. Next thing you know, they’ve got another two, $3 billion and they’re going to do it all over again until they get lucky on the right play. And then they’re going to have a massive, massive, massive payday.
Daniel Creech: Yeah.
Frank Curzio: But a lot of the Fed has to take responsibility here, and they have to look at this and say, okay, let’s not be idiots.
Frank Curzio: Like, we were in 2006, seven, five, six, and seven. When all this was taking place and we just close our eyes and didn’t care about it. This is two funds now, Melvin Capital leveraged. And now, you have this other fund that was leveraged. It’s not limited to this. And this is just what the past two, three months has happened. You’re going to see a lot more of these come out. And when people, you have a Goldman Sachs down, and you have these guys out there that when they’re able to see these trades they’re sharks.
Daniel Creech: Oh yeah.
Frank Curzio: And when you trigger someone who is four to one, you could see it. Look what Reddit did. What a bunch of kids with two, 3 million followers. When you have a Goldman Sachs, billionaires, love seeing other billionaires get destroyed. That’s the competitive nature in them.
Frank Curzio: And even when it comes to big firms, you want to, you want to dominate and to see other firms. If they see they’re able to see some of these funds in the positions that they’re taking and seeing the leverage on this, they are going to do everything they can to trigger that because they know, look at the map. Imagine you had puts on, what was it? Discovery and Viacom and all these guys. You would’ve made an absolute fortune. It… Those things do crash 40% in a couple of days.
Daniel Creech: Yeah. Heck yeah.
Frank Curzio: It’s a massive amount of money. We’re talking about billions of dollars to be made here. And it’s just a matter of seeing what someone’s doing because they have massive amount of leverage. And then once these stocks turn the wrong way, either way, whatever your best bet against you, you’re going to have to cover it’s for selling a forced buying, whatever it is, short covering. And that’s what scares the out of me, to be honest with you. Yeah.
Daniel Creech: Yeah. A couple of things here real quick. The Fed is not going to take responsibility. The biggest mistake that we, me, Frank, every other individual investor can make. In my opinion, with the Fed is that do not think that they know what they they’re doing. This is the first time in financial history, thousands of years, that we’ve ever experimented. And I don’t use that word lightly with low interest rates for a long time, money printing, different forms of call it whatever you want, democratic socialism, anything like that.
Daniel Creech: Nobody knows the effects of what’s coming because you’ve never been here before. And the people at the very top are not always the smartest people in the room. And I’m not trying to take shots at them because it’s easy to do that, but they’re either too dumb for the position they’re in, which means they shouldn’t be there or they know exactly what they’re doing, and they continue it because it benefits a certain group of people over somebody else. Personally, I think that’s why they do it because you can’t look at reality and not see the affects you have on markets, a wealth inequality and all that kind of stuff.
Daniel Creech: Number two, the only thing that really upsets me about this whole up is that when you have all this off balance sheet stuff, you can’t tell who owns what and not to be nosy, but I have no problem with buffet, go into the security exchange commission saying, “Hey, I’m going to buy XYZ stock. I’m going to buy a bunch of it over the next two months. Don’t make me file and be a huge owner because is it 5% or 10%.”
Frank Curzio: 10%. You have to file for every quarter. You have to. I mean, they don’t go to sec every quarter. They have to.
Daniel Creech: I understand that, but you can go get a buffer zone and say, “Hey, because of me, if I go, if we announce that I’m buying this, it’s going to run up in price and then I have to pay even more.” So, let me go ahead and establish my position. I’m a long-term guy. They’ve done that in the past, which is fine, but I wish they would. That’s a different situation than what we have here. When you have no idea how much leverage he had and how much he owned and all that kind of stuff. That’s the aggravating point for me. And third is into individual investors. That’s why we have Goldman Sachs and CRA because they are the dirtiest best people in the game.
Frank Curzio: It’s like Facebook. You hate them and track everything. They’re going to the zero privacy. But the whole world is going to advertise on that platform.
Daniel Creech: Exactly, and Goldman Sachs is doing great for us, and they’re going to continue to do great.
Frank Curzio: Facebook knows right now how this podcast is going to end. That’s how great they are. Yeah. They’re awesome. Facebook, Facebook knows everything. They know everything, and you could hate them, but you know, as an advertiser, you want to advertise with them because I can advertise with them. I know who’s going to buy a newsletter 15 minutes from now. It’s a crazy, it’s crazy how these things are an algorithm. Let’s get to one more topic real quick. So, we’re a little late and I want to talk about, Biden’s tax bill, infrastructure bill, is being announced. And a lot of things in there, which are pretty crazy that listen Biden said, a few presidents said, listen, I’m raising your taxes and got elected. That’s cool. That’s fine.
Frank Curzio: We… I think that the corporate tax rate from 21%, 20% was kind of expected. We knew that I didn’t think he wants to oppose a 15% minimum tax on big companies. There’s companies like Amazon, who just poured all their profits into growing the company and now they have massive profits, but look at 10, 15 years, you’re automatically going to make these people pay a 15% minimum. Because if you’re looking at that, I’d say it. If you’re on AT&T, Block Find, Adobe, JP Morgan, Intel, Target, these guys are going to get nailed and that is not factored into their price. There’s a lot of these guys pay less by 15% minimum. And it was research done. They said it was embarrassed. And he said, over a third of the companies and hundred largest US companies are going to be on the hook for that 15% tax.
Frank Curzio: And, you know, I don’t think that’s factor. So, that’s what we want you to, from an investment perspective, I don’t care what you think if you hate Biden or you like Biden, I’m saying from an investment perspective, that was a surprise. And also, Daniel, imposing a global minimum tax on profits from foreign subsidies. I didn’t see that one coming. So, companies, this is where a large portion of income from overseas are those who pay effective tax rates below 21%. They have storage companies like that late Seagate Technology. You’ll have Las Vegas Sands and Goldman Sachs and Las Vegas Sands, foreign income exposure at 83%. A lot of these companies generate, I think it’s over a third of their profits overseas, and now they’re going to get taxed, through that as well. And a 15%, I mean, you’re looking at a lot of crazy stuff here, stuff that is going to hurt profits stuff is going to result in, if you don’t, you’re not generating as much profits.
Frank Curzio: What does that mean? You’re not going to be hiring and not going to be spending much cap ex I don’t know if that’s really factored in right now to, you know, this stock’s trading at all-time highs. We saw that in 2018, Dan, when the market really was stagnant, we didn’t really see earnings growth in 2017. And then Trump had the corporate taxes and notice how earnings exploded for these corporate companies. And, you know, they started paying out like checks to people, to employees and stuff like that. But, again, you could argue, well, they’re using it for buybacks or whatever, but it definitely helped these companies. And there’s no denying that the Seagate growth that they saw because of that was huge. Now, you’re going to take that away. You’re going to take a lot of that away. And then you’re adding more taxes and that results in companies hiring less, fewer employees, the CapEx going down.
Frank Curzio: I just don’t think a market at its all-time highs right now. I don’t know if that’s really being factored in of how these taxes are really going to, because that caught me by surprise the 15 minimum and also the, the global minimum tax on profits from foreign subsidiaries that caught me by surprise. Maybe didn’t catch some people by surprise, but even the research reports that I’m reading, it kind of caught them by surprise too, but I wanted to get your thoughts on it. But those were the biggest things that I saw in that.
Daniel Creech: It’s funny because the 15% minimum tax I’m reading off of a white house fact sheet, 15% minimum tax on income corporations use to report their profits. To investors known as book income will backstop the tax payers. The 15% minimum and the multi-national, to be honest with you, I have no idea what those mean and you don’t need to right now, because it’s going to change dramatically between now announcement time. And by the time that these corporations and lobbyists get to go back and forth with voting members and everything, I think you’re right on. It’s not priced in right now, but I don’t think it’s going to be for some time. You have a lot of momentum, consumer confidence going well, stimulus checks are going out. So, we’ve got at least a few months of looking forward. This isn’t going to pass until what? Later this year at the earliest, it’s not going to go into effect probably until next year.
Daniel Creech: That’ll give the market plenty of time. The downside for us as consumers is that you’re right. A CapEx is probably going to go down. Hiring could see a hit, but prices have to rise because if you’re a corporation, your taxes go up. You’re not just going to say, all right, everybody has to deal with less. You’re going to have to try to offset that and keep growing. So that’s the downside for consumers, the biggest beneficiaries on the Trump tax cuts. There’s not that big of a leap to think that they’re going to be the biggest losers on some of this, depending on how management navigates that between now and then. So, I think you’re right. It’s not priced in, but I don’t think this is, I can’t believe I’m saying this because of this taxes and this ridiculousness and this, but this isn’t anything to worry about right now. It will be at the end of summer as they really start hashing out details. But it’s fun to look into now, but this isn’t even done yet. And this is going to change so much between now and the time that they vote on it.
Frank Curzio: No, I agree. And also we’re looking at the infrastructure right? Over 2 trillion. It was 1 trillion, right? Four years ago when Hillary Clinton and both Trump ran on a trillion dollars, but what’s another trillion. Let’s just throw another trillion out there who cares these days as it means nothing. So, and again, politics aside, they’re going to be some really, really big winners there. I mean, you’re looking at EV companies. I don’t know if you saw the charging stations and things like that. I think if we’re looking at stocks and infrastructure side, Terex is one we have in our portfolio, we’re up a lot triple digits in that one, we were very early party in that one. That’s going to benefit caterpillars probably going to benefit again, names that are up huge, but I don’t think this is factored in too much. US concrete.
Daniel Creech: They’re getting a pop today. That’s a good roll up. They just, they buy companies to vertically grow. Meaning they they’re all over Texas, California. That’ll be interesting to watch. I’ve been a big fan of that. Now, it’s an all-time high. So, I look silly, but it’s just roll ups. You got to be careful with roll-ups with interest rates and stuff.
Frank Curzio: Yeah. As long as it’s traits, so a role you guys are just, you know, they buy companies, right?
Daniel Creech: They have a huge runway ahead of them with, if any of this infrastructure stuff goes through, I mean, you’re going to need concrete. You’re going to need building materials and all that.
Frank Curzio: Yes, yes. And summits. Another one that I mentioned, that’s in our portfolio and in our cursory research, Pfizer portfolio work about 80% on that one early to that one, but that’s another beneficiary, but I think that’s an, like I said, it, the sickle is going to continue to do well. Everything’s going to open up. It’s going to be just like it is here in Florida. It’s going to get crazy because skin everyone’s getting the vaccine. Now, we’re going to see masks mandates, no more mess mandates. That’s going to come down and at least over the next two to three months, there’s no reason to wear a mask. If you’re getting the vaccine and, you know, again, Bitcoin and different things that we covered. Lots of stuff going on, Dan, I want to say, thank you so much for joining us. So, we like covering those, those big topics and telling you how you can make money in a vest off of them. So hopefully, you guys enjoy this segment, but thanks so much for coming on, but I appreciate it.
Daniel Creech: Yeah. Always fun. See you guys next week.
Frank Curzio: All right guys. So, a few things here this week, we’re open up Crypto Intelligence, new investors, which I always said that this is going to be the largest product at Curio Research. And those subscribers have sent me emails of the gains that they made, the trips that I’ve taken because of those gains. It’s something I’m very proud of. I spent a lot, a lot of work, you know, just researching companies.
Frank Curzio: We change the editor on the product. We made a very conscious choice of saying, “Hey, you know what that needed to be done for the benefit of subscribers.” And a couple of people were a little off, but yeah, very, very, very happy now because the amount of work I put into this, and as you guys know, you know, our company is based on know where we have the only security token in the world. That’s trading on a foreign exchange, that’s available to retail investors and we paid a dividend. It gives you an equity stake to our company. It’s going to Curio Equity Owners, CEO, and on the MERJ exchange, MERJ, something we’re very, very proud of. But when we’re looking at this product, Crypto Intelligence, to date, the average gain that I recommend a positions is 734%. This includes five positions that have gone up a thousand percent or more, including 16 X, 20 X, 26 X.
Frank Curzio: To put perspective on those gains. I’ve never seen in my career. I mean, maybe I had one 20 X winner. I’ve had, you know, a couple of 10 X winners, but just to see what this portfolio is doing is amazing. And again, it’s not an indication that if you subscribe that you’re going to get these games going forward. But when we’re looking at this newsletter specifically in the fact that the context that we have in the industry and the people that we can get on, like BlockFi, Zac runs, and we’re getting more and more people on, and just the tZERO CEO. And it just… We had access, we had him on and security, just the major players across all the industries are reaching out to us because you know, we’re in this industry now. And we were able to connect Wall Street to crypto, which you’re seeing right now for this product. It’s easy for anyone.
Frank Curzio: I explain what exchanges, some of these crypto trade on, I do 30, 40 minute videos. So, if you’re a subscriber to any of my products, I encourage you to venture or even research advises the same thing, same format. I’m breaking down the markets. Give me the idea, showing you how to buy it going in detail. And I do that. My video it’s that to me on there that you see and not having anybody else write it or do anything like that, which is cool. We also have several stocks in there.
Frank Curzio: There’s more and more stocks that are coming out that are pure plays on crypto. And these names we’ve see it had the biggest gains in our portfolio. So, we look at Silvergate Capital. We bought at 12, when as high as 160. We bought this one well before Cathie Wood got into it. And it’s one of our biggest holdings in her main portfolio. Voyager Digital, we bought at 86 cents. So, well, if you really believe crypto is going to go to the moon, and Chrome is going to go a lot higher. This thing is going to take off and it’s at $25, 2,600% gains. Now, why am I pushing this newsletter so much? Is this trend is still in its infancy?
Frank Curzio: It’s still developing. I’m not saying to buy Bitcoin and Ethereum. We have those in a portfolio. We’re doing fantastic, on them, but there’s more names that you could buy through E-Trade and Schwab account, which is very easy. And if you’re looking at the industry, sell Crypto and Blockchain, it’s like the internet. And the internet began when 1990s around there.
Frank Curzio: I mean, you can say a little bit earlier, but it’s still disrupting markets. I mean, early on it was, let’s get AOL. I can go online and look at different things. This is cool. And then, we had search and Google and all, but then online travel and it disrupted that industry. Then yeah, we have algos coming in. Social media just is, what, ten years old, right?
Frank Curzio: So, and it took a lot of good 10, 12, 15 years for that to develop. It’s just, there’s so many trends within trends like today with the internet yet you have cloud. Now we have ways to, to store more information, which is important. Now that we store it, we have all this information we can analyze using AI that helps you predict using that data of what people are going to do right now, algorithms. And then now it’s 5g. It’s much, much faster and getting into quantum computing. It’s still, that’s how Blockchain that’s how cryptos are. It’s a developing trend. That’s disrupting industry after industry, where if you’re in a defy movement, a decentralization of finance, you’re looking at so much disruption there and these names have taken off 10 X, 20 X, 30 X from their lows. There’s going to be other trends. There’s going to be other companies that have, you know, better services and Ethereum that are out there. You’ve seen those do well because the Ethereum does have flaws, even though it’s one of the biggest smart contracts, biggest companies
Frank Curzio: And crypto. And as these trends develop in the context, you know, unfortunate to have this industry. Now, it’s incredible that we’re getting into a lot of these names. Who heard, avoid your digital before now? You hear it mentioned on TV. You don’t want to heard about an 86 cents. I know what I heard of Silvergate Capital of the bind at 12; that stock came down. They said, we’re going all in a crypto. We’re going to be a pure crypto bank. And now, Goldman Sachs is playing catch up to these guys. So, having access to this information and getting an early could really be life-changing again, these results. That doesn’t mean you’re going to get those results over the next two, three years, but I’m very happy for these subscribers. I’m getting a lot of requests for this product. So for you over the next week, I discounted the price of Crypto Intelligence by 50%.
Frank Curzio: And that offer is only good for you. So, that’s you listening to this. If you’re a subscriber to my other newsletters, you’re going to get this offer. Everyone else has to pay full price. I’m charging full price because that performance demands that I charge full price for everybody else. And you know, the amount of work and the research we put into that and the context we have, it’s worth every penny, but I want to discount. That’s one of the products I love that I believe everyone should have access to because it is opening up a whole new world. And I want to educate you on it. I’ve been you about security tokens. You’ve seen NFTs is another wave of this trend to just so many different aspects that are taking off. And we’re in the middle of all this. And it’s really, really exciting. So, a 50% offset discount.
Frank Curzio: If you’re interested, you go to the curzioresearch.com site. We’re going to have a banner up there, and click it again. That’s not available to anyone other than if you listen to this podcast or subscribers. And we’ll probably have that offer just for a few days, probably around seven days or so, and then we’ll take it off. So, if you’re interested, definitely subscribe right away. If not, no worries. I understand perfectly fine. And you know, thank you for your service and listening and, and everything. But I just want to talk to you about that because it’s something I’m very excited about. And with Zac, this industry’s in its infancy, you see more and more institutions come in and it’s just beginning. You’re going to see a lot, lot more adoption, especially to the rest of this year and to the next, into the future. Next three years, five years, 10 years, I’m really, really excited.
Frank Curzio: So guys, that’s it for me. Thank you so much for listening. Love the final four. The end of the day, most of the good teams made it. Although UCLA was a play in, which is cool, but you got, Houston two seater, UCLA, and Gonzaga, and Baylor, definitely the two top teams in a league. So, it should be a really cool final for next week. I love college basketball. And again, if you guys need anything, feel free to email at firstname.lastname@example.org. Thank you so much for your support. And as always, I’ll see you in seven days. Take care.
Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry, the information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.
- Guest: Zac Prince, founder and CEO of BlockFi [22:44]
- Educational: How Biden’s infrastructure plans will affect the market [59:32]
You don’t need to look further than our Crypto Intelligence advisory to see how much these assets have exploded in recent months. We’re currently sitting on five quadruple-digit winners in the portfolio—gains like 1,014%… 1,210%… 1,767%… 2,461%… and 2,680%.
And Frank may have just spotted his next crypto “10-bagger”…